Sammons et al v. COR Clearing et al

Filing 22

ORDER granting 18 the defendants' Emergency Joint Motion For Extension or, in the alternative, Emergency Motion to Stay (Filing No. 18) as follows: 1. The deadlines for the defendants to respond to Mr. Sammons' Motions for Partial Summary Judgment (Filing Nos. 6 and 8) are stayed pending a ruling on the defendants' motion to dismiss in the United States District Court for the District of Nevada, China Energy Corporation v. Alan T. Hill, et al., 3:13CV562, (D. Nev.), or upon further order of this court. 2. The defendants shall file their motions to dismiss in this case within ten (10) business days of this Order. Ordered by Magistrate Judge Thomas D. Thalken. (BJC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

ELENA SAMMONS and MICHAEL
SAMMONS,
8:14CV136
Plaintiffs,
vs.

ORDER

COR CLEARING, LLC, CEDE & CO.,
and THE DEPOSITORY TRUST
COMPANY,
Defendants.
This matter is before the court on the defendants’ Emergency Joint Motion For
Extension or, in the alternative, Emergency Motion to Stay (Filing No. 18).

The

defendants filed a brief (Filing No. 19) in support of the motion. The plaintiff, Michael
Sammons (Mr. Sammons), filed a brief (Filing No. 20) in response.

BACKGROUND
This case involves the defendants’ alleged failure to timely express the plaintiffs’
intention to perfect the plaintiffs’ dissenters’ rights to a “cash-out reverse split” of shares,
which the plaintiffs beneficially owned, effectuated by China Energy Corporation (CEC).
See Filing No. 1 - Complaint. Generally, the plaintiffs seek two declaratory judgments
against the defendants: 1) “[T]he Defendants failed to properly assert dissenter’s rights
as required by NRS 92A.300-500 on behalf of the Plaintiffs, and as a result the Plaintiffs
lost their right to judicial appraisal of their 650,000 shares of CEC.” and 2) “[T]he
Plaintiffs were the intended third-party beneficiaries to the agreement or contract
between the DTC and COR . . . .” Id.
The plaintiffs filed their complaint on April 28, 2014.

Id.

After obtaining

extensions to file responsive pleadings to the plaintiffs’ Complaint,1 COR Clearing,
LLC’s (COR) responsive pleading is due June 20, 2014, and Cede & Co.’s (Cede) and
The Depository Trust Company’s (DTC) responsive pleading is due June 26, 2014. See
Filing Nos. 10 and 15. Shortly after filing the complaint, the plaintiff, Mr. Sammons, filed
1

The plaintiff, Mr. Sammons, objects to these extensions. See Filing Nos. 11 and 16.

two motions for partial summary judgment. See Filing Nos. 6 and 8.2 COR’s and
Cede’s responses to the motions for partial summary judgment are due prior to any
responsive pleading to the plaintiffs’ Complaint. Previously, the plaintiffs filed a ThirdParty Complaint against the defendants in the United States District Court for the
District of Nevada. See Filing No. 19 - Brief.3
The defendants filed the instant motion on May 22, 2014. See Filing No. 18 Motion. The defendants request an extension of time to respond to Mr. Sammons’
partial summary judgment motions or, in the alternative, stay briefing on the motions
until the court has the opportunity to render a decision on the defendants’ forthcoming
motions to dismiss.

Id.

First, the defendants argue Mr. Sammons’ motions are

premature as the motions are made pre-responsive pleading and pre-discovery. See
Filing No. 19 - Brief.

The defendants contend requiring a response would be

fundamentally unfair and a waste of judicial resources as well as significant and
unnecessary burden of time and expense on the defendants.

Id.

Second, the

defendants argue they will file a motion to dismiss, based, in part, on the first-filed rule,
which has merit because the plaintiffs are asserting nearly identical claims against the
defendants in the Nevada case. Id. The defendants assert it would be a waste of
judicial resources and time and expense to require the defendants to substantively
oppose the Mr. Sammons’ motions before the court determines whether to hear this
action, which was filed in complete derogation of the first-filed rule. Id.
In response, Mr. Sammons agrees the Complaint in this case is “virtually
identical to a Third-Party Complaint filed four months ago in Nevada.” See Filing No. 20
- Response. However, Mr. Sammons argues the Third-Party Complaint in Nevada will
likely be dismissed for lack of jurisdiction. Id. Such dismissal, Mr. Sammons contends,
will render the first-filed rule inapplicable.

Id.

Mr. Sammons argues there are no

disputed facts in this case and the briefing on his motions should proceed. Id.

2

The plaintiff, Elena Sammons, has not filed a motion for partial summary judgment against any
defendants. Additionally, Mr. Sammons has not filed a motion for partial summary judgment against DTC.
3
China Energy Corporation v. Alan T. Hill, et al., 3:13CV562, (D. Nev.).
2

ANALYSIS
The power of a district court to stay an action pending on its docket is “incidental
to the power inherent in every court to control the disposition of the causes on its docket
with economy of time and effort for itself, for counsel, and for litigants.” Landis v. North
Am. Co., 299 U.S. 248, 254 (1936); see Kreditverein der Bank Austria Creditanstalt
fur Niederosterreich und Bergenland v. Nejezchleba, 477 F.3d 942, 945 (8th Cir.
2007) (recognizing a district court’s inherent power to stay an action). Similarly, it is a
“settled proposition that a court has broad discretion and inherent power to stay
discovery until preliminary questions that may dispose of the case are determined.”
Farouki v. Petra Int’l Banking, Corp., 683 F. Supp. 2d 23, 26 (D. D.C. 2010) (citations
and quotations omitted). In determining whether staying a case is appropriate, the court
will consider factors such as the economy of judicial resources and balancing the
potential prejudice, hardship, and inequity to the parties. See Benge v. Eli Lilly & Co.,
553 F. Supp. 2d 1049, 1050 (N.D. Ind. 2008); see also Nken v. Holder, 556 U.S. 418,
434 (2009) (noting the court may consider the public interest and the parties’ likelihood
of success on the case’s merits). “The party requesting a stay bears the burden of
showing that the circumstances justify [a stay].” Nken, 556 U.S. at 433-34.
A stay of the deadlines for the defendants to respond to Mr. Sammons’ motions
is justified in this matter. At this time, proceeding with the briefing schedule would
potentially waste the parties’ and court’s resources and time. The period of stay will
likely be short compared with the burden of responding to potentially unnecessary
motions. The court has considered all relevant factors and finds the balance weighs in
favor of a stay because a stay would best serve the interests of all parties and the
court.4 Upon consideration,

IT IS ORDERED:
The defendants’ Emergency Joint Motion For Extension or, in the alternative,
Emergency Motion to Stay (Filing No. 18) is granted as follows:

4

The court is not impressed with the “emergency” nature of the defendants’ motion considering the
motions for partial summary judgment were filed on May 3 and 7, 2014.
3

1.

The deadlines for the defendants to respond to Mr. Sammons’

Motions for Partial Summary Judgment (Filing Nos. 6 and 8) are stayed pending
a ruling on the defendants’ motion to dismiss in the United States District Court
for the District of Nevada, China Energy Corporation v. Alan T. Hill, et al.,
3:13CV562, (D. Nev.), or upon further order of this court.
2.

The defendants shall file their motions to dismiss in this case within

ten (10) business days of this Order.

Dated this 23rd day of May, 2014.
BY THE COURT:
s/ Thomas D. Thalken
United States Magistrate Judge

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