United States District Court, S.D. California
ORDER DENYING DEFENDANT'S MOTION TO STAY
James Lorenz, United States District Judge
before the Court is Defendant Jonathan Bruce Sandler’s
(“Sandler”) motion to stay this action pending
the resolution of another action pending in state court.
Plaintiff Handal & Associates, Inc.
(“Handal”) opposed, and Sandler replied. The
Court decides this matter on the briefs without oral
argument. See Civ. L. R. 7.1.d.1. For the reasons
stated below, Defendant’s motion is denied.
to the operative First Amended Complaint, Handal entered into
a written retainer agreement. (First Am. Compl. (doc. no. 10,
“FAC”); FAC Ex. A (doc. no. 10-1,
“Agreement”)). The purpose of the Agreement was
to represent several clients as "Plaintiffs in the
African Wireless, Inc., Derivative Action"
("Derivative Action"). (Agreement at
see also FAC ¶¶ 1, 6.) Among other things,
the Agreement provides for a 15% contingency fee of up to $5
million. (Agreement at 3.) Handal claims it litigated the
Derivative Action to judgment that exceeded $93 million and
contends this entitles it to the maximum fee of $5 million.
(FAC ¶ 9.)
was a representative of one of Handal's clients, Wymont
Services, Ltd. ("Wymont"). (Agreement at 2, 7.)
Handal claims that Sandler, acting for his personal financial
gain, falsely told Handal's clients that Handal was
negligent and committed malpractice in the Derivative Action.
(FAC ¶ 10.) Sandler allegedly offered to assist
Handal's clients to avoid paying Handal in exchange for a
percentage of the money they would save. (Id.
¶11.) Specifically, Sandler told the clients that by
suing Handal for malpractice, he "would get
[Handal's] malpractice carrier to pay an amount to offset
the fees owed to [Handal]." (Id.)
alleges that based on Sandler's statements the clients
refused to pay the $5 million contingency fee. (Id.
¶ 13). On May 17, 2017, the clients filed a malpractice
action against Handal, Wymont Servs. Ltd. et al. v.
Handal & Assocs. et al., Cal. Super. Ct., Orange
County case no. 30-217-00920613 ("Malpractice
Action"). (Def.'s Req. for Judicial Notice Ex. D
(doc. no. 12-4, "Def.'s Ex. D") at 2.) Handal
filed a cross-complaint against them alleging breach of
contract and anticipatory breach. (Id. at 4; see
also Mtn to Stay (doc. no. 23-1) at 3-4.) In addition,
Handal filed this action for intentional interference with
contract, intentional interference with prospective economic
advantage, and defamation against Sandler, who is not a party
to the Malpractice Action. On January 18, 2019, the
California Court of Appeal affirmed the judgment in the
Derivative Action. (Doc. no. 18-1.) The Malpractice Action
was stayed during the appeal of the Derivative Action and is
now set for trial in December 2019. (Mtn to Stay at 2-3, 4.)
moves to stay this action pending the conclusion of the
Malpractice Action pending in state court, arguing that a
stay will prevent inconsistent rulings and conserve
resources. He invokes both, the first-to-file rule (Reply
(doc. no. 29) at 6), and the Court's discretionary power
to control its docket (Mtn to Stay at 4-5). Neither argument
area of concurrent state and federal actions, as a general
rule, "federal courts lack the authority to abstain from
the exercise of jurisdiction that has been conferred."
New Orleans Public Serv., Inc. v. Council of City of New
Orleans, 491 U.S. 350, 358 (1989). "[T]he courts of
the United States are bound to proceed to judgment and to
afford redress to suitors before them in every case to which
their jurisdiction extends." Id. (internal
quotation marks and citation omitted, brackets in original).
Sandler does not question that the pending case falls within
first-to-file rule is "a judicially created doctrine of
federal comity, which applies when two cases involving
substantially similar issues and parties have been filed in
different districts." In re Bozic, 888 F.3d
1048, 1051 (9th Cir. 2018) (internal quotation
marks and citations omitted). The doctrine applies to
concurrent federal actions and is therefore not applicable
here. Moreover, the pending action and the Malpractice Action
involve different parties and different legal claims. Even if
the actions were concurrently pending in federal courts, the
doctrine would not apply.
Sandler requests a stay under the Court's inherent power
to "control the disposition of the causes on its docket
with economy of time and effort for itself, for counsel, and
for litigants." Landis v. N. Am. Co., 299 U.S.
248, 254 (1936). In this regard, the movant
must make out a clear case of hardship or inequity in being
required to go forward, if there is even a fair possibility
that the stay for which he prays will work damage to someone
else. Only in rare circumstances will a litigant in one cause
be compelled to stand aside while a litigant in another
settles the rule of law that will define the rights of both.
Id. at 255. Even where the other action in all
likelihood will settle many issues of law or fact and
simplify the action sought to be stayed, the "burden of
making out the justice and wisdom of a departure from the
beaten track lay[s] heavily on the . . . suppliants for
relief, and discretion [is] abused if the stay [is] not kept
within the bounds of moderation." Id. at 256.
Accordingly, to warrant a stay of even modest duration, the
moving party must "make out a clear case of hardship or
inequity." Id. at 255.
claims it would be prejudiced by a stay, even a stay of short
duration, because of potential loss of evidence, including
the fact that one of the witnesses it wants to depose is
elderly and in poor health. (Opp'n (doc. no. 28) at 12.)
Accordingly, to warrant a stay of any length, Sandler must
show a clear case of hardship or inequity. Sandler claims he
will be prejudiced if this action proceeds because of the
overlap between the actions, which will force him to
duplicate his efforts in discovery and may result in
overstates the extent of the overlap between this action and
the Malpractice Action. He is not a party in the Malpractice
Action, and the claims alleged are different. There is some
overlap between Handal's former clients' malpractice
claim against Handal and Handal's claim for defamation
against Sandler. Handal's defamation claim will require
proof that Sandler's statement that Handal committed
malpractice was false. Whether Handal committed malpractice
is an issue in the Malpractice Action. However, Handal's
claims for intentional interference with contract and
intentional interference with prospective economic advantage
against Sandler are not presented in the Malpractice Action.
in the legal and factual issues regarding malpractice does
not mandate a stay in the absence of a clear case of hardship
or inequity. See Landis, 299 U.S. at 255. In this
regard, Sandler points to the potential overlap in discovery.
That discovery in both actions may cover some of the same
information is not a sufficient ground to stay this action.