Smith et al v. Scottsdale Insurance Company et al

Filing 49

MEMORANDUM AND ORDER GRANTING 35 Defendant's Motion to Stay Proceedings. Signed by Senior Judge Frederick P. Stamp, Jr on 10/4/12. (cc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
LEVERT SMITH and NELSON D. RADFORD,
Co-Administrators of the Estate of
JOSEPH JEREMAINE PORTER,
Plaintiffs,
v.

Civil Action No. 5:12CV86
(STAMP)

SCOTTSDALE INSURANCE COMPANY,
SCOTTSDALE INDEMNITY COMPANY,
and NATIONWIDE INSURANCE COMPANY,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS
I. Background
This action was originally filed by the plaintiffs in the
Circuit Court of Ohio County, West Virginia on May 10, 2012.

The

defendants removed the case to this Court on June 13, 2012.
Plaintiffs are the Co-Administrators of the Estate of Joseph
Jeremaine Porter.

Mr. Porter was fatally injured in a shooting

involving a police officer who was an employee of the City of
Huntington’s

Police

Department.

The

defendant,

Scottsdale

Insurance Company (“Scottsdale”), was the City of Huntington’s
insurer at that time of the shooting. The plaintiffs sued the City
of Huntington and the police officer as a result of the shooting.1
The defendant, Scottsdale, provided the City’s and the officer’s
1

Plaintiffs’ claims in the underlying action were for
negligence, wrongful death, and for a deprivation of constitutional
rights under 42 U.S.C. § 1983.

defense in that litigation.

Mediation and settlement negotiations

were unsuccessful in that litigation.

Eventually all claims were

resolved in the City of Huntington’s and the police officer’s
favor, either through summary judgment, judgment as a matter of
law, or through a jury verdict.
unsuccessful

mediation

and

This suit arises from the

subsequent

settlement

negotiations

between Scottsdale and the plaintiffs that took place during such
litigation.

In

this

Scottsdale

violated

complaint,

the

West

the

Virginia

plaintiffs
Human

allege

Rights

that

Act

by

discriminating against the plaintiffs based on their race during
settlement negotiations.
On August 22, 2012, this defendant filed a motion for a
protective order and to stay discovery pending a ruling on the
motion.

The defendant sought to prevent the plaintiffs from

obtaining various materials requested by the plaintiffs, including
the claim file from the underlying action, the underwriting file,
the claims handling guides, and information regarding other claims
against Scottsdale.

The plaintiffs filed a response in which they

argued that these materials were discoverable and should not be
subject to a protective order.

On September 25, 2012, United

States Magistrate Judge James E. Seibert issued an order granting
in part and denying in part the defendant’s motion for a protective
order.

2

On August 31, 2012, the plaintiffs appealed the jury verdict
in the underlying case to the United States Court of Appeals for
the Fourth Circuit.

As a result of this appeal, the defendant

filed a motion to stay proceedings.

In the motion to stay

proceedings, the defendant argues that due to the plaintiffs’
appeal

of

the

underlying

prejudice exists.

case,

a

great

amount

of

potential

The defendant argues that if the Fourth Circuit

Court of Appeals grants the plaintiffs’ appeal and remands the
underlying case, any discovery regarding the defendant’s defense of
its insured in the current case before this Court could and likely
would unduly prejudice the defense of Scottsdale’s insured in any
subsequent trial.

The plaintiffs did not file a response to this

motion.
II.

Discussion

It is well settled law that federal district courts possess
the ability to, under their discretion, stay proceedings before
them when the interests of equity so require.

Williford v.

Armstrong World Indus., Inc., 715 F.2d 124, 125 (4th Cir. 1983).
While no such power has been expressly promulgated by statute or by
the Federal Rules of Civil Procedure, it is inherent within the
courts’ “general equity powers and in the efficient management of
their dockets to grant relief.”
unfettered.

Id.

Still, this power is not

A party seeking a stay must sustain the heavy burden

of justifying it by showing that clear and convincing circumstances

3

support a stay. Landis v. North American Co., 299 U.S. 248, 254-55
(1936).

Further, the Court must weigh the equities when deciding

whether to grant a stay, and must also consider the interests of
judicial economy and the desire for “the orderly and expeditious
disposition of cases.”

See Link v. Wabash R. Co., 370 U.S. 626,

630 (1962).
The defendant argues that based on West Virginia substantive
law, the current action must be stayed until resolution of the
underlying suit against the defendant’s insured because of the
potential prejudice that may result from a continuation of this
action.2

The defendant recognizes, however, that the law it cites

applies to third-party bad faith actions against an insurer, which
the West Virginia legislature abolished in 2005.

The current

action is not a third-party bad faith claim, and it is therefore
unclear whether this law should apply in the current action.
Regardless, this Court believes that in the interests of equity,
proceedings must be stayed in this case.

Continuing discovery in

this matter may in fact prejudice the defendant’s defense of its
insured if the underlying claim is remanded by the Fourth Circuit
Court of Appeals.

Although a protective order in this case was

issued to prevent such prejudice, this Court finds that a stay of
proceedings will further protect the defendant from any prejudice

2

The defendant cites State ex rel. State Farm Fire & Cas. Co.
V. Madden, 452 S.E.2d 721 (1994), for this proposition.
4

and will also allow for more complete discovery after all appeals
in the underlying claim are exhausted.
III.

Conclusion

For the above stated reasons, the defendant’s motion to stay
proceedings (ECF No. 35) is GRANTED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

October 4, 2012

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

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