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Medical Investment Company, Ltd. v. International Portfolio, Inc.

United States District Court, E.D. Pennsylvania

May 30, 2014

MEDICAL INVESTMENT COMPANY, LTD., ERGOSERVE CORPORATE SERVICES, LLC, and NORTHSTAR INDUSTRIAL LTD., Plaintiffs,
v.
INTERNATIONAL PORTFOLIO, INC., Defendant.

MEMORANDUM

JAN E. DUBOIS, District Judge.

I. INTRODUCTION

This action arises out of the sale of medical debt portfolios by defendant, International Portfolio, Inc. ("IPC"), to plaintiffs, Medical Investment Co., Ltd. ("MIC"), Ergoserve Corporate Services, LLC ("Ergoserve"), and Northstar Industrial Ltd ("Northstar"). Presently before the Court are (1) Plaintiffs' Motion for Summary Judgment and (2) defendant's Cross-Motion for Deferral of Disposition of Plaintiff's Motion for Summary Judgment Pursuant to Fed.R.Civ.P. 56(d) and for a Stay of the Case Due to Pending Indictment ("Cross-Motion to Stay"). For the reasons that follow, the Court grants defendant's Cross-Motion to Stay, and denies Plaintiffs' Motion for Summary Judgment without prejudice to plaintiffs' right to resubmit the Motion or to file an amended motion after the Court vacates the stay.

II. BACKGROUND

Plaintiffs commenced this action on June 25, 2012, alleging that defendant breached a series of nine contracts, which required it to make a series of ongoing payments to plaintiffs. Am. Compl. ¶¶ 8, 11. Seven of these contracts were Purchase and Sale Agreements, pursuant to which plaintiffs purchased accounts receivable medical debt portfolios from defendant. Id. ¶¶ 7-8. The two remaining contracts were Marketing Fee Agreements, under which plaintiff MIC agreed to introduce plaintiffs Ergostar and Northstar to defendant in exchange for a monthly marketing fee. Id. ¶ 11.

On September 4, 2014, a Grand Jury in the District of Maryland returned a ten-count Indictment against Richard Shusterman, shareholder and president of IPI, charging him and his codefendant, Jonathan E. Rosenberg, with (1) wire fraud, in violation of 18 U.S.C. § 1343, and (2) conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349. According to the Indictment, Shusterman and Rosenberg devised a scheme "to obtain money using materially false, and fraudulent representations and omissions regarding purchase prices, collection results, and resale values of IPI medical debt portfolios in order to persuade investors to invest in those portfolios." Indictment ¶ 21, United States v. Shusterman, No. 13-cr-460 (D. Md. Sept. 4, 2013).

On November 26, 2013, plaintiffs moved for summary judgment on all of their claims asserted in this case against defendant. Defendant then filed a Cross-Motion to Stay, "ask[ing either that] this Court... defer consideration of Plaintiffs' Motion for Summary Judgment pending resolution of the criminal indictment" or that the Court "stay the entire case, because IPI cannot properly respond to the Motion for Summary Judgment at this time, and cannot otherwise defend itself in this action." Def.'s Br. at 1-2.

III. LEGAL STANDARD

"The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with the economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S. 248, 254-55, 57 (1936). In deciding whether to stay a civil case pending parallel criminal proceedings, courts in this District typically consider six factors: (1) "the extent to which the issues in the criminal and civil cases overlap"; (2) "the status of the criminal proceedings, including whether any defendants have been indicted"; (3) "the plaintiff[s'] interests in expeditious civil proceedings weighed against the prejudiced to the plaintiff[s] caused by the delay"; (4) "the burden on the defendant[]"; (5) "the interests of the court"; and (6) "the public interest." In re Adelphia Commc'ns Sec. Litig., No. 02-cv-1781, 2003 WL 22358819, at *3 (E.D. Pa. May 13, 2003). The Court addresses each factor in turn.

IV. ANALYSIS

A. Similarity of Issues

"The degree to which issues in simultaneous civil and criminal proceedings overlap is considered the most important threshold issue when determining whether or not to grant a stay." State Farm Mut. Auto. Ins. Co. v. Beckham-Easley, No. 01-cv-5530, 2002 WL 31111766, at *2 (E.D. Pa. Sept. 18, 2002). Defendant argues - and plaintiffs do not dispute - that the criminal and civil cases involve common factual and legal issues. See, e.g., Def.'s Br. at 9. Indeed, plaintiffs rely on Shusterman's Indictment as an "undisputed material fact" entitling them to summary judgment. See Pls.' Statement of Undisputed Material Facts ¶¶ 10-12. Accordingly, this factor weighs in favor of a stay.

B. Status of the Criminal Case

"In determining whether to grant a stay, a court must also consider the status of the related criminal proceedings, which can have a substantial effect on the balancing of the equities." In re Adelphia, 2003 WL 22358819, at *3. Defendant argues that this factor weighs in favor of a stay because the criminal case proceeding in the District of Maryland is already in a fairly advanced stage of litigation. Plaintiffs disagree, asserting that defendant has waived its right to seek a stay of this ...


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