United States District Court, S.D. Ohio, Eastern Division
OPINION AND ORDER
C. SMITH, JUDGE.
matter is before the Court upon Defendant XPO Global
Forwarding, Inc.'s (“XPO”) Motion to Stay
(Doc. 85). Plaintiff Great Southland Limited
(“GSL”) filed a response in opposition and the
time for reply has now expired. For the following reasons,
XPO's Motion to Stay is GRANTED.
case arises out of an alleged fraudulent scheme involving the
sale of off-the-road mining tires. Defendant Jason Adkins and
his company, Defendant Landash Corporation, are alleged to
have approached GSL to obtain purchase order financing for
the already-negotiated sale of the tires by the seller,
Defendant Mid-America Tire of Hillsboro, to the buyer,
Defendant Production Tire Company. (Doc. 1, Compl.
¶¶ 40-42). Pending completion of the sale, the
tires were to be transferred to XPO's warehouse.
(Id. ¶ 42). However, GSL alleges that although
it provided a $3.5 million loan to Landash to facilitate the
tire sale, Production Tire never actually purchased the tires
and made no payment to GSL as required by the loan terms.
(Id. ¶¶ 58-59).
alleges that the parties never intended to complete the sale
of the tires and that it was fraudulently induced to provide
the loan to Landash. GSL now seeks damages in the amount of
the loan balance and unpaid interest and asserts twelve
causes of action in its Complaint against Adkins, Landash,
Mid-America, Production Tire, XPO, and several other
defendants alleged to have been involved in the fraudulent
GSL is not the only financial institution claiming that it
was defrauded through a sham sale of tires orchestrated by
Adkins, Landash, Mid-America, and XPO. This Court recently
stayed all proceedings in a related case involving many of
the same players in an alleged fraudulent tire sale in which
Adkins procured financing from Abington Emerson Capital, LLC.
(Abington Emerson Capital, LLC v. Adkins, No.
2:17-cv-143, Doc. 144, June 1, 2018).
January and February of this year, respectively, Landash
Corporation and Jason Adkins filed for bankruptcy. (Docs. 69,
73). Accordingly, all claims by GSL against Landash and
Adkins are automatically stayed pending resolution of the
bankruptcy proceedings under 11 U.S.C. § 362(a). XPO now
asks the Court to exercise its inherent authority to further
stay proceedings as against all defendants until the
bankruptcy stay is lifted.
STANDARD OF REVIEW
power to stay proceedings is incidental to the power inherent
in every court to control the disposition of the causes in
its docket with economy of time and effort for itself, for
counsel and for litigants, and the entry of such an order
ordinarily rests with the sound discretion of the District
Court.” F.T.C. v. E.M.A. Nationwide, Inc., 767
F.3d 611, 626 (6th Cir. 2014) (quoting Ohio Envtl.
Council v. U.S. Dist. Court, S. Dist. of Ohio, E. Div.,
565 F.2d 393, 396 (6th Cir. 1977)); see also Landis v. N.
Am. Co., 299 U.S. 248, 254-55 (1936). In deciding
whether to grant a stay, courts commonly consider factors
such as: (1) the need for a stay; (2) the stage of
litigation; (3) whether the non-moving party will be unduly
prejudiced or tactically disadvantaged; (4) whether a stay
will simplify the issues; and (5) whether burden of
litigation will be reduced for both the parties and the
court. Grice Eng'g, Inc. v. JG Innovs., Inc.,
691 F.Supp.2d 915, 920 (W.D. Wis. 2010) (citations omitted);
see also Ferrell v. Wyeth-Ayerst Labs., Inc., No.
1:01-cv-447, 2005 WL 2709623, at *1 (S.D. Ohio Oct. 21, 2005)
(“There is no precise test in this Circuit for when a
stay is appropriate. However, district courts often consider
the following factors: the need for a stay, the balance of
potential hardship to the parties and the public, and the
promotion of judicial economy.”). The movant bears the
burden of showing both a need for delay and that
“neither the other party nor the public will suffer
harm from entry of the order.” Ohio Envtl.
Council, 565 F.2d at 396.
same reasons that a full stay was warranted in Abington
Emerson Capital, the Court finds a full stay of
proceedings appropriate in this case until the automatic
bankruptcy stay is lifted as to Landash and Adkins. The Court
is mindful that staying the entire action until the Landash
and Adkins bankruptcy stays are lifted will result in a delay
of as-yet-unknown duration. However, if this case were to
proceed, the Court anticipates significant difficulties for
example, Adkins and Landash are not shielded from obligations
to respond to discovery requests in furtherance of GSL's
claims against the solvent co-defendants. In re
Privett, 557 B.R. 580, 586 (S.D. Ohio 2016) (holding
that the automatic stay under § 362 does not shield a
debtor “from complying with discovery requests in a
multi-defendant action where the debtor is a Defendant, but
where the requests for discovery pertain to the claims
against the other non-debtor Defendants.”). But because
Adkins and his co-defendants are all alleged to have
participated in the same integrated fraudulent scheme, it
seems inevitable that time-consuming disputes will arise as
to which discovery requests pertain to GSL's claims
against Adkins or Landash, and which pertain to claims
against the other defendants. Indeed, the Court has trouble
envisioning significant discovery that could be undertaken
without implicating GSL's claims against the
debtors-which means that very little discovery could proceed
even without a stay.
even if the Court were able to identify a subset of discovery
requests that pertain only to claims against the non-debtors,
Adkins and Landash are key figures in GSL's theory of the
case. It seems unlikely that any party could fully present
their claims or defenses without their participation. And
finally, even if the remaining parties were able to complete
discovery and fully present their claims and defenses,
proceeding in the ...