Indus Ins. Agency, Inc. v. Nationwide Mutual Ins. Co. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 INDUS INSURANCE AGENCY, INC.; No. 2:22-cv-02022-JAM-JDP a California Corporation; and 12 AVERWOOD INSURANCE SERVICES, INC., a California 13 Corporation, ORDER GRANTING DEFENDANTS’ MOTION TO STAY 14 Plaintiffs, 15 v. 16 NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio Corporation, 17 ET AL., 18 Defendants. 19 20 Before the Court is Defendants Nationwide Mutual Insurance 21 Company, Nationwide Insurance Company of America, Nationwide 22 Mutual Capital, LLC, and Nationwide Mutual Fire Insurance 23 Company’s (collectively, “Nationwide”) motion to stay Plaintiff 24 Indus Insurance Agency, Inc.’s claims pending the outcome of 25 arbitration proceedings between Defendants and co-plaintiff 26 Averwood Insurance Services, Inc. See Mot. to Stay (“Mot.”), ECF 27 No. 21. Plaintiffs oppose the motion. See Opp’n, ECF No. 32. 28 Defendants replied. See Reply, ECF No. 34. 1 For the reasons set forth below, the Court GRANTS 2 Defendants’ motion.1 3 4 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 5 As the facts are already known to the parties, the Court 6 repeats them only as necessary to explain its decision. 7 Plaintiffs Indus Insurance Agency, Inc. (“Indus”) and 8 Averwood Insurance Services, Inc. (“Averwood”) are insurance 9 agencies; Plaintiff Averwood is owned by Muhammad Younas Malik, 10 while Plaintiff Indus is owned by Nazia Iqbal. See Compl., 11 Exhibit A to Notice of Removal, ECF No. 1, ¶¶ 3-4. Malik and 12 Iqbal are married and manage the agencies together. Id. ¶ 4. 13 Both Plaintiffs entered into separate contracts with Defendants 14 whereby Plaintiffs were permitted to seek insurance for their 15 customers from Defendants. Id. ¶ 12-13; see Indus Agency 16 Agreement (“Indus Contract”), Exhibit B to Declaration of 17 Muhammad Younas Malik, ECF No. 3; Averwood Agency Agreement 18 (“Averwood Contract”), Exhibit C to Declaration of Muhammad 19 Younas Malik, ECF No. 3. 20 On July 1, 2022, Defendants notified Plaintiff Indus that 21 they intended to cancel their contract with Indus. Compl. ¶ 25. 22 A couple of months later, Defendants notified Plaintiff Averwood 23 that they intended to cancel their contract with Averwood as 24 well. Id. ¶ 27. Plaintiffs Indus and Averwood’s contracts were 25 set to terminate on November 30, 2022 and January 6, 2023, 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for February 14, 2023. 1 respectively. Id. ¶ 32. Several weeks later, Plaintiffs sent 2 demand letters contesting the termination of their contracts and 3 alleging a lack of fair process. Id. ¶ 30. A couple of months 4 later, Plaintiffs jointly filed suit against Defendants. See 5 Compl. The Complaint asserts three causes of action stemming 6 from the cancellation of Plaintiffs’ contracts: (1) violation of 7 the fair procedure doctrine; (2) violation of the unfair 8 competition law under California Business and Professions Code 9 § 17200; and (3) injunctive relief for violation of the fair 10 procedure doctrine. Compl. ¶¶ 33-46. 11 On December 12, 2022, Defendants filed a motion to compel 12 arbitration and dismiss all of Plaintiff Averwood’s claims 13 without prejudice as well as the operative motion to stay 14 Plaintiff Indus’s claims pending completion of arbitration 15 between Plaintiff Averwood and Defendants. See Mot. to Compel, 16 ECF No. 20, Mot. to Stay (“Mot.), ECF No. 21. In an Order filed 17 concurrently with this Order, the Court has granted Defendants’ 18 motion to compel arbitration and dismissed Plaintiff Averwood’s 19 claims without prejudice. Plaintiffs oppose the instant motion. 20 See Opp’n. Defendants replied. See Reply. 21 22 II. OPINION 23 A. Legal Standard 24 “A district court has broad discretion to stay proceedings 25 as an incident to its power to control its own docket.” Clinton 26 v. Jones, 520 U.S. 681, 706 (1997). A court must consider 27 several factors when deciding whether to exercise that discretion 28 to issue a stay:(1) the “possible damage which might result from 1 granting a stay;” (2) the “hardship or inequity which a party 2 might suffer in being required to go forward;” and (3) the 3 “orderly course of justice measured in terms of the simplifying 4 or complicating of issues, proof, and questions of law which 5 could be expected to result from a stay.” CMAX, Inc. v. Hall, 6 300 F.2d 265, 268 (9th Cir. 1962). 7 The proponent of a stay bears the burden of showing that 8 these factors, on balance, warrant a stay. Clinton, 520 U.S. at 9 708. The moving party “must make out a clear case of hardship or 10 inequity in being required to go forward, if there is even a fair 11 possibility that the stay” will damage an interested party. 12 Landis v. N. Am. Co., 299 U.S. 248, 255 (1936). 13 B. Analysis 14 1. Possible Damage 15 The Court finds that Plaintiffs have failed to sufficiently 16 allege that Plaintiff Indus will suffer damage if the Court 17 grants a stay. Plaintiffs’ claim that a stay will prevent 18 Plaintiff Indus from issuing new insurance policies through 19 Defendants. Opp’n at 2. However, Plaintiffs’ claim is 20 immaterial. Plaintiffs concede that a stay will not affect 21 existing policies. Id. The Court agrees with Defendants’ 22 contention that a stay would not prevent Plaintiff Indus from 23 (1) seeking and acquiring new clients or (2) obtaining insurance 24 policies for those clients from an insurance carrier other than 25 Defendants. Mot. at 2. 26 2. Hardship or Inequity 27 The Court finds that Plaintiff Indus would suffer minimal 28 hardship or inequity if a stay is granted, if at all; Plaintiffs 1 do not allege that Plaintiff Indus would suffer a hardship or 2 inequity. On the other hand, the Court is persuaded by 3 Defendants’ contention that denial of a stay would subject 4 Defendants to litigating similar contracts in two different 5 forums, which could result in conflicting rulings and obligations 6 for Defendants. Id. at 2. 7 3. Orderly Course of Justice 8 The Court finds that granting a stay would promote the 9 orderly course of justice; there is sufficient overlap between 10 the Plaintiffs’ individual proceedings against Defendants that 11 “waiting for one to be resolved would work to simplify issues in 12 the other or preserve judicial resources.” United States v. 13 California, No. 218CV00490JAMKJN, 2018 WL 5310675, at *3 (E.D. 14 Cal. Oct. 19, 2018). As for overlap between Plaintiffs’ 15 circumstances: (1) Plaintiffs are managed together by Malik and 16 Iqbal; (2) Plaintiffs assert identical claims and prayers for 17 relief; (3) Plaintiffs had similar contracts with Defendants; and 18 (4) Plaintiffs had their contracts terminated in the same manner. 19 Mot. at 2-3. This considerable factual overlap and the Court’s 20 determination that all of Plaintiff Averwood’s claims are subject 21 to arbitration create a “substantial risk of duplication of 22 proceedings and waste of judicial resources” if a stay is not 23 granted. United States v. California, No. 218CV00490JAMKJN at 24 *3. Therefore, a stay is warranted to preserve judicial 25 efficiency and as a matter of the Court’s discretion to control 26 its docket. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. 27 Corp., 460 U.S. 1, 21 n.23 (1983) (“In some cases, of course, it 28 may be advisable to stay litigation among the non-arbitrating nee nen eee I III EEE II EIEIO EOE EEO 1 | parties pending the outcome of the arbitration. That decision is 2 one left to the district court (or to the state trial court under 3 applicable state procedural rules) as a matter of its discretion 4 to control its docket.”). 5 6 Til. ORDER 7 For the reasons set forth above, the Court GRANTS 8 Defendants’ motion. The proceedings between Plaintiff Indus and 9 Defendants will be STAYED pending the outcome of the arbitration 10 | proceeding between Plaintiff Averwood and Defendants. The parties 11 shall file a joint status report with the Court within ten days 12 of the completion of the Averwood-Nationwide arbitration. 13 IT IS SO ORDERED. 14 Dated: April 5, 2023 15 cp, JOHN A. MENDEZ 17 SENIOR UNITED*STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28