Barron et al v. The Bank of New York Mellon et al

Filing 37

ORDER Granting 17 Motion to Stay Discovery. Signed by Magistrate Judge George Foley, Jr on 4/16/2015. (Copies have been distributed pursuant to the NEF - DC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ROBERT BARRON and JOHN TURCO,

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Plaintiffs,
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vs.
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THE BANK OF NEW YORK MELLON FKA,
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THE BANK OF NEW YORK AS TRUSTEE FOR )
CWALT, INC., ALTERNATIVE LOAN TRUST )
2005-56, MORTGAGE PASS-THROUGH
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CERTIFICATES, SERIES 2005-56, et al.,
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Defendant.
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__________________________________________)

Case No. 2:15-cv-00242-APG-GWF
ORDER
Defendants’ Motion to Stay
Discovery (#17/19)

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This matter is before the Court on Defendants’ Motion to Stay Discovery (#17/19), filed on

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March 6/9, 2015. Defendants seek an order staying discovery pending a decision on their Motion

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to Dismiss Plaintiffs’ Complaint (#16/18), also filed on March 6/9, 2015. Plaintiffs filed a

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Response (#23) to Defendants’ motion to dismiss on March 23, 2015. However, Plaintiffs have not

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filed a response to Defendants’ motion to stay discovery pending a decision on the motion to

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dismiss.

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The law in the Ninth Circuit and in this district regarding motions to stay discovery pending

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the decision on a dispositive motion is set forth in Trade Bay, LLC v. Ebay, Inc., 278 F.R.D. 597,

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600-03 (D.Nev. 2011). As stated therein, “[t]he Federal Rules of Civil Procedure do not provide

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for automatic or blanket stays of discovery when a potentially dispositive motion is pending.

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Skellerup Indus. Ltd. v. City of L.A., 163 F.R.D. 598, 600–01 (C.D.Cal.1995) (stating that if the

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Federal Rules contemplated a motion to dismiss under Rule 12(b)(6) would stay discovery, the

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Rules would contain such a provision, and finding that a stay of discovery is directly at odds with

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the need for expeditious resolution of litigation).” 278 F.R.D. at 600-01. Ordinarily, a motion to

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dismiss based on failure to state a claim does not warrant a stay of discovery. Twin City Fire

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Insurance v. Employers of Wausau, 124 F.R.D. 652, 653 ( D.Nev. 1989; Turner Broadcasting

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System, Inc. v. Tracinda Corp., 175 F.R.D. 554, 556 (D.Nev.1997).1 Tradebay notes that federal

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district courts in the Northern and Eastern Districts of California have applied a two-part test when

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evaluating whether discovery should be stayed. See, e.g., Mlejnecky v. Olympus Imaging America,

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Inc., 2011 WL 489743 at *6 (E.D.Cal. Feb. 7, 2011) (collecting cases). First, the pending motion

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must be potentially dispositive of the entire case or at least dispositive on the issue on which

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discovery is sought. Second, the court must determine whether the pending potentially dispositive

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motion can be decided without additional discovery. In applying this two-factor test, the court

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deciding the motion to stay must take a “preliminary peek” at the merits of the pending dispositive

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motion to assess whether a stay is warranted. If the party moving to stay satisfies both prongs, a

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protective order may issue; otherwise, discovery should proceed. Id.

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Noting that courts in other districts have applied different standards in evaluating the

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underlying motion to dismiss, the court in Tradebay followed the standard enunciated in Twin City

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and Turner that a stay of all discovery should only be ordered if the court is convinced that a

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plaintiff will be unable to state a claim for relief. The court’s preliminary peek at the merits of the

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underlying motion is not intended to prejudge its outcome. Rather, the court’s role is to evaluate

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the propriety of an order staying or limiting discovery with the goal of accomplishing the objectives

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of Fed.R.Civ.Pro. 1 – “to secure the just, speedy, and inexpensive determination of every action

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and proceeding.” The court must decide whether it is more just to speed the parties along in

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discovery and other proceedings while a dispositive motion is pending, or whether it is more just to

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delay or limit discovery and other proceedings to accomplish the inexpensive determination of the

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case.

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This action arises out of a foreclosure proceeding on Plaintiffs’ property after Plaintiffs
defaulted in their payments on the promissory note secured by a deed of trust. Plaintiff Turco

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Discovery stays are commonly granted when the underlying motion raises issues of jurisdiction,
venue or immunity. Tradebay, 278 F.R.D. at 601.

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halted the foreclosure proceeding when he filed for bankruptcy and the trustee later rescinded the

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Notice of Default, terminating the foreclosure. Plaintiffs challenge the validity of an assignment of

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the deed of trust which they allege clouded their title and impaired their ability to identify and

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negotiate with the true and correct beneficiary of the deed of trust. Plaintiffs alternatively allege

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that if the assignment is found valid, then Defendants have committed securities fraud and tax

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evasion, and Plaintiffs should receive substantial damages as a reward for alerting the government

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to Defendants’ conduct. Defendants move to dismiss Plaintiffs’ claim on several grounds,

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including that Plaintiffs are judicially estopped from pursuing the claims in this action, as they

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failed to list them in their bankruptcy schedules. Defendants further allege that the claims asserted

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by Plaintiffs lack merit. Having conducted a preliminary review of the motion to dismiss, this

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Court is convinced that Plaintiffs’ first amended complaint will be dismissed either on grounds of

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judicial estoppel or because Plaintiffs fail to state claims upon which relief can be granted. Even

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assuming that some claims survive the motion to dismiss, a stay of discovery is justified until it is

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determined which claims survive, at which point discovery can be properly focused and directed at

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those claims. Accordingly,

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IT IS HEREBY ORDERED that Defendants’ Motion to Stay Discovery (#17/19) is

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granted. Discovery in this action is stayed pending a decision on Defendants’ motion to dismiss.

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If the motion to dismiss is denied, in whole or in part, the parties shall file a proposed discovery

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plan and scheduling order within thirty (30) days after the decision on the motion to dismiss.

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DATED this 16th day of April, 2015.

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______________________________________
GEORGE FOLEY, JR.
United States Magistrate Judge

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