The opinion of the court was delivered by: ARTHUR SPATT, District Judge Page 2
DECISION AND ORDER
This case involves an action by Crawford & Sons, Ltd. Profit Sharing
Plan, James A. Crawford Profit Sharing Plan, East Prospect State Bank,
Equitable Bank, First National Bank, First Security State Bank, Northwest
Bank, People's Bank, Sand Ridge Bank, Bluestem National Bank, First
Victoria National Bank, FSB, Mutual Federal Savings Bank, First National
Bank, The Dime Savings Bank, Third Federal Savings Bank, Fidelity Bank of
Florida, Citizens National Bank, City National Bank (collectively the
"plaintiffs") against Rochelle Besser, Barry Drayer, and RW Professional
Leasing Services, Inc. (collectively, the "defendants"), alleging common
law fraud claims and RICO claims pursuant to 18 U.S.C. § 1962(c) and
The background of this case is set forth in the Court's July 11, 2003
memorandum of decision and order ("Order"), familiarity with which is
assumed. In the Order, the Court granted the defendants' motion to
dismiss the plaintiffs' RICO claims under Sections 1962(a) and (b), but
denied the motion as to the RICO claims under Sections 1962(c) and (d).
The defendants now seek reconsideration of the Order on the ground that,
among other things, the plaintiffs failed to plead any allegations to
sustain their burden of pleading the RICO or the common law fraud
asserted against the defendants in the amended complaint. In the
alternative, the defendants move to
stay this civil action pending the resolution of the parallel criminal
action, United States v. RW Leasing, et al, 02 CR 767.
It is well established that district courts have discretionary
authority to stay a case when the interests of justice so require. See
United States v. Kordel, 397 U.S. 1, 12 n.27, 25 L.Ed.2d 1, 12, n.27, 90
S.Ct. 763, 770 n.27 (1970); Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d
Cir. 1986) (citing SEC v. Dresser Indus., Inc. 628 F.2d 1368, 1375 (D.C.
Cir. 1980) (en banc), cert. denied, 449 U.S. 993, 101 S.Ct. 529 (1980)).
Courts may decide to stay civil proceedings, postpone civil discovery, or
impose protective orders. Dresser, 628 F.2d at 1375. However, a stay of a
civil case is an extraordinary remedy. See Jackson v. Johnson,
985 F. Supp.2d 422, 424 (S.D.N.Y. 1997).
In determining whether to stay a civil proceeding pending the outcome
of a related criminal case, courts consider a number of factors,
including (1) the extent to which the issues in the criminal case overlap
with those presented in the civil case; (2) the status of the criminal
case, including whether the defendants have been indicted; (3) the
private interests of the plaintiffs in proceeding expeditiously; (4) the
private interests of, and the burden on, the defendants; (5) the interests
of the courts and the public. See Gala Enterprises, Inc., v. Hewlett
Packard Co., No. 96 Civ. 4864, 1996 U.S. Dist. LEXIS 18867, at *4
(S.D.N.Y. Dec. 16, 1996); Trustees of Plumbers Pen.
Fund v. Transworld Mech., 886 F. Supp. 1134, 1139 (S.D.N.Y. 1995)
(footnotes omitted). In this case, these factors clearly weigh in favor
of granting a stay.
"A stay of civil proceedings is most likely to be granted where the
civil and criminal actions involve the same subject matter." Johnson v.
New York City Police Dep't, No. 01 Civ. 6570, 2003 U.S. Dist. LEXIS
12111, at *14 (S.D.N.Y. July 16, 2003) (internal quotations and citation
omitted). Here, the civil and criminal cases arise from the same
underlying events, and the defendants have been indicted in the criminal
case. Denying the stay may undermine the defendants' Fifth Amendment
privilege against self-incrimination; expose the basis of the defendants'
criminal defense in advance of trial; or otherwise prejudice the criminal
or civil case. See Rosenthal v. Guiliani, No. 98 Civ. 8408, 2001 U.S.
Dist. LEXIS 1207, at *6 (S.D.N.Y. Feb. 6, 2001); In re Par
Pharmaceutical, Inc., 133 F.R.D. 12, 13 (S.D.N.Y. 1990).
In addition, the plaintiffs have not opposed the motion to stay this
action and have therefore asserted no undue prejudice that they might
suffer as a result of a stay. Moreover, a stay in this action pending
resolution of the criminal matter serves both the interests of the Court
and the public. A stay would promote efficiency and avoid duplication as
this Court and the parties would have the benefit of the transcripts and
rulings in the criminal action. In addition, the public's interest is
also served by preserving the integrity of the criminal case. See In
re Ivan F. Boesky Sec. Litig., 128 F.R.D. 47, 49 (S.D.N.Y. 1989).
Furthermore, a conviction or acquittal in the criminal
action may negate or buttress some or all of the plaintiffs' claims.
For these reasons, the Court finds that each of these factors clearly
militate in favor of a stay of the civil proceedings. Accordingly, the
Court grants a stay of all the proceedings in this action, including the
service of the defendants' answers, pending the resolution of the
With regard to the motion for reconsideration, the results of the
criminal proceedings will aid the Court in the determination of this
motion. As such, the Court denies this motion without prejudice with
leave to refile upon the resolution of the criminal case.
Based on the foregoing, it is hereby
ORDERED, that the motion to stay this action is GRANTED; and it is
ORDERED, that the motion for reconsideration is DENIED without
prejudice with leave to refile upon the ...