The opinion of the court was delivered by: Telesca, District Judge.
By motion filed on March 1, 2001, defendants move to stay any
further proceedings in this action pending final judgments in
two related Canadian criminal actions currently pending against
Acura West and Leon.*fn1 In addition, to the extent
necessary, pursuant to Rule 6(b)(1) of the Federal Rules of
Civil Procedure, defendants request an enlargement of their time
to answer or move respecting the complaint. Plaintiffs oppose
the motion for a stay.
Gregory Leon is the president and part-owner of Acura-West, a
Canadian corporation that sells and services automobiles in
southwestern Ontario, Canada. (Compl. ¶ 11-13). Defendant World
Imports is located in Rochester, New York and is in the business
of purchasing automobiles for resale in the United States and
Europe. (Compl. ¶¶ 14-18). Defendant Lukner is the president and
owner of World Imports and defendant Sydorowicz is employed by
World Imports. (Compl. ¶¶ 19-20).
Beginning in 1994 through November of 1995, plaintiffs
purchased twenty vehicles in Canada that they sold and exported
to defendants in the United States. (Compl. ¶ 37, 75). Vehicles
exported from Canada to other countries are exempt from the
Canadian GST tax and dealers can either; (1) collect the GST at
the time of the sale and give the foreign buyer proof of payment
so that the buyer can request a rebate from the Canadian
government; or (2) the dealer can declare the sale exempt from
the GST and not collect the tax. (Compl. ¶ 3).
In connection with plaintiffs sale and export of vehicles to
defendants, the Canadian government alleges in the two related
criminal actions, that plaintiffs violated Canadian tax laws by,
among other things, attempting to evade payment of the GST. In
the instant lawsuit, plaintiffs claim that it was the defendants
who committed tax fraud by falsely claiming that they had paid
GST taxes and receiving rebates from the Canadian government
when in fact plaintiffs sold the vehicles as tax exempt. (Compl.
This court has the inherent power to stay any further
proceedings in the instant civil action in favor of the Canadian
criminal litigation. See Landis v. North American Co.,
299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936); see also Dragon
Capital Partners L.P. v. Merrill Lynch Capital Svcs., Inc.,
949 F. Supp. 1123, 1127 (S.D.N.Y. 1997). Whether the court should do
so is based on several factors including: (1) whether the
identity of the parties and issues in both actions are the same
or similar; (2) whether the alternative forum is likely to
render a prompt disposition; (3) the temporal sequence of the
filing of the actions; (4) whether a stay will promote judicial
efficiency; (5) the convenience of the parties, counsel and
witnesses; and (6) the possibility of prejudice
to the parties. See e.g., Continental Time Corp. v. Swiss
Credit Bank, 543 F. Supp. 408 (S.D.N.Y. 1982); Ronar Inc. v.
Wallace, 649 F. Supp. 310 (S.D.N.Y. 1986).
There is no question that the parties in the Canadian criminal
actions are not identical to the parties in the instant action.
Nonetheless, contrary to plaintiffs' assertions, that fact alone
does not compel the conclusion that a stay is inappropriate.
See e.g., Caspian Investments Ltd. v. Vicom Holdings, Ltd.,
770 F. Supp. 880 (S.D.N.Y. 1991), citing, Landis, 299 U.S. at
254, 57 S.Ct. 163 (court may stay proceedings in deference to a
foreign action even if the parties and issues are not
identical); see also Dragon Capital, 949 F. Supp. at 1127
(courts repeatedly rule that parties and issues need not be
identical in order for one action to be stayed in deference to
an earlier action).
Moreover, the issues in the actions are sufficiently similar
to favor a stay. Both actions arise out of the same events and
present the same central question — e.g., who, if anyone,
violated the Canadian tax laws in connection with the transfer
of vehicles from plaintiffs to defendants. Accordingly, even if
as plaintiffs argue, the required elements of proof in each of
the actions are not identical, there is no question that the
fundamental issues to be resolved are substantially similar and
a stay is appropriate. See e.g., Landis, 299 U.S. at 256, 57
S.Ct. 163 (it is not necessary that the foreign action settle
every question of fact or law to support a stay).
In addition, in light of the similarity of issues, resolution
of the Canadian criminal actions will more than likely narrow
the issues before this Court and ultimately save the parties and
the Court from a needless or duplicative expenditure of
With regard to the temporal filing of the actions, when as
here, the foreign action is pending, principles of comity
counsel that priority generally goes to the suit first filed.
Ronar, 649 F. Supp. at 318. There is no dispute that the
Canadian criminal actions filed in February of 1999 ...