Naegele v. Albers ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
TIMOTHY D. NAEGELE,
Plaintiff,
v. Civil Action No. 03-cv-2507 (RLW)
DEANNA J. ALBERS, et al.
Defendants.
MEMORANDUM OPINION AND ORDER TO SHOW CAUSE
For the reasons set forth herein, Plaintiff Timothy D. Naegele (“Plaintiff” or “Naegele”)
is hereby ORDERED TO SHOW CAUSE in writing as to why the Court should not STAY this
action in its entirety pending the resolution of parallel and/or overlapping California state court
litigation surrounding the same fee dispute at the center of this action. Plaintiff shall also
SHOW CAUSE as to why the Court should not find that he “willfully fail[ed] to appear at the
arbitration hearing” before the Los Angeles Bar Association’s Dispute Resolution Services,
within the meaning of California Business and Professions Code § 6204(a).
Background
The Court begins with a brief summary of these proceedings. This lawsuit was filed in
December 2003, long before the undersigned took the bench, and, as one might expect, it has a
long and gnarled history. For present purposes, however, the Court focuses only on the salient
developments.
At its core, this case arises out of a fee dispute between Naegele, an attorney presently
litigating pro se, and his former clients, Deanna J. Albers and Raymond H. Albers II
(collectively, “the Albers”), whom Naegele formerly represented in a lawsuit in the United States
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District Court for the Central District of California and, subsequently, in the ensuing appeal
before the United States Court of Appeals for the Ninth Circuit. In this action, Naegele alleges
that the Albers breached their fee agreement and failed to pay him for fees earned in connection
with the Ninth Circuit appeal, which appear to total $82,000.00. Naegele, who was originally
represented by counsel, filed his Complaint on December 8, 2003, asserting eight counts against
the Albers and Lloyd J. Michaelson (“Michaelson”)—an attorney who Naegele alleges “advised
the Albers to take certain actions” in their fee dispute with Naegele. (See Dkt. No. 1, Compl.).
Before Naegele filed his lawsuit here in the District of Columbia, however, the Albers,
back in California, invoked their statutory right to mandatory fee arbitration pursuant to
California’s Mandatory Fee Arbitration Act (“MFAA”), CAL. BUS. & PROF. CODE §§ 6200, et
seq. The Albers were represented by Michaelson in connection with their fee arbitration, and
Michaelson notified Naegele of the Albers’ intention to proceed with mandatory arbitration via
letter on August 28, 2003. (Dkt. No. 36-1 at ¶¶ 2-3). In addition, it appears that the Los Angeles
County Bar Association’s Dispute Resolution Services—which administers fee arbitrations
under the MFAA—forwarded a copy of the Albers’ petition for arbitration to Naegele on or
around September 22, 2003. (Id.). Under the MFAA, the initiation of fee arbitration precludes
the concurrent prosecution of any court action surrounding the fee dispute, and any judicial
action that was pending prior to the commencement of fee arbitration is “automatically stayed
until the award of the arbitrators is issued or the arbitration is otherwise terminated.” CAL. BUS.
& PROF. CODE § 6201(c). Nonetheless, Naegele forged ahead and filed his Complaint with this
Court in December 2003, ostensibly relying on a venue selection clause in his fee addendum
with the Albers, which stated that “any disputes or litigation arising out of this [fee] agreement
2
shall be in a court of the District of Columbia and/or in the United States District Court for the
District of Columbia.” (See Dkt. No. 1-4, at ¶ 3).
Shortly thereafter, on January 5, 2004, the Albers and Michaelson filed and served
“Notices of Automatic Stay under California Business and Professions Code § 6201(c).” (Dkt.
Nos. 2, 3, 4). Before the Court acted on those filings, however, Naegele filed a First Amended
Complaint on April 20, 2004, (Dkt. No. 7), which prompted the Albers and Michaelson to file
additional Notices of Stay on May 3, 2004, (Dkt. Nos. 19, 20, 21). 1 A flurry of filings followed,
most of which are not germane to the issues presently before the Court. Ultimately, on January
3, 2005, Judge Ricardo Urbina—who originally presided over this case before it was transferred
to the undersigned—issued a Memorandum Opinion and Order that, inter alia, dismissed
Michaelson from this action for lack of personal jurisdiction and granted the Albers’ request for
a stay pending the completion of the California fee arbitration. See Naegele v. Albers, 355 F.
Supp. 2d 129 (D.D.C. 2005).
Meanwhile, it appears that the fee arbitration in Los Angeles had already proceeded to a
hearing on November 17, 2004, although the arbitration panel did not issue its award until
January 14, 2005. (See Dkt. No. 92-3). 2 In rendering its award, the panel reviewed the
1
Through his First Amended Complaint, Naegele asserted the following claims: (1)
Breach of Contract (Count I); (2) Breach of Contract – Anticipatory Breach (Count II); Breach of
Contract – Estoppel (Count III); (4) Fraud and Deceit (Count IV); (5) Common Law Conspriacy
to Commit Fraud and Deceit (Count V); (6) Negligent Misrepresentation (Count VI); (7) Tortious
Interference with Contract (Count VII); and (8) Conspiracy to Commit Tortious Interference with
Contract (Count VIII). (Dkt. No. 7). As best the Court can tell, these claims were essentially
unchanged from his original Complaint. Naegele asserted Counts I-VI against the Albers, and
Michaelson was named as a defendant only as to Counts V, VII, and VIII. (Id.).
2
In connection with those arbitration proceedings, Naegele objected to the jurisdiction of
Dispute Resolution Services over his fee dispute with the Albers, relying on the above-described
venue-selection clause. (Dkt. No. 8-1). Dispute Resolution Services overruled Naegele’s
objection, however, and concluded that it had jurisdiction. (Dkt. Nos. 56-6, 56-7). Thereafter,
Naegele even went so far as to appeal that determination to the California Supreme Court, where
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reasonableness of both: (1) the amount of attorneys’ fees the Albers had already paid Naegele in
connection with their original lawsuit in the Central District of California, totaling a staggering
$735,481.32; and (2) the $82,000 promissory note Naegele had secured from the Albers for his
anticipated work on the Albers’ appeal with the Ninth Circuit. (Id.). Based on the evidence
presented at the arbitration hearing, the panel issued the following award:
1. The panel finds that the total amount of fees and other costs which should
have reasonably and necessary [sic] been charged in this matter are $8500.00
(20 hours at $425/hr.).
2. The clients (Albers) have overpaid (Naegele) $726,981.32 ($735,481.32 -
$8500.00).
3. Naegele shall refund clients (Albers) the sum of $726,981.32 forthwith.
4. The panel finds Naegele willfully failed to appear at the hearing for non-
binding arbitration and produce documents as required under the Rules, and
should not be entitled to a new trial after arbitration pursuant to Rule 40 of the
Rules For Conduct of Arbitration of Fee Disputes and Other Related Matters
for the Los Angeles County Bar Association Dispute Resolution Services, Inc.
5. All arbitration related fees and costs shall be paid or reimbursed by
Respondent Naegele.
(Id.). The panel also made express findings that Naegele willfully chose not to personally appear
for the arbitration hearing, and that he willfully failed to produce to the arbitration panel a copy
of the file for his work on the Albers’ case(s):
[T]he conduct of Naegele upon learning of the decision of John S. Chang,
Presiding Arbitrator for the State Bar of California Office of Mandatory Fee
Arbitration, that this panel did have jurisdiction to adjudicate the fee dispute
between Albers and Naegele, in not appearing as he was compelled to do, and in
refusing to produce the Albers’ file as he was required to do by Business and
Professions Code 6200 applicable to the arbitration hearing, was willful.
(Id.).
Naegele’s petition for review was denied by former Chief Justice Ronald George on February
16, 2005. (Dkt. No. 92-3, at ECF p. 30).
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On February 22, 2005, Naegele filed a “Rejection of Arbitration Award and Request for
Trial” in this Court, invoking California Business and Professions Code § 6204. (Dkt. No. 64).
Therein, Naegele principally asserted that “the arbitrators had no jurisdiction ab initio owing to a
valid and binding forum-selection clause that provides for the District of Columbia’s exclusive
jurisdiction with respect to ‘any disputes or litigation’ arising between Plaintiff and the Albers.”
(Id. at 2). In turn, Naegele argued that “the arbitration award is a nullity as a matter of law.”
(Id.). Shortly thereafter, on April 20, 2005, the Albers filed a motion to dismiss for lack of
personal jurisdiction and subject matter jurisdiction, among other grounds. (Dkt. No. 68). On
August 8, 2005, Judge Urbina denied Naegele’s “Motion for Trial” via Minute Order: “Because
the court is on notice of the plaintiff’s objection to the arbitration award, and in light of the
defendants’ pending motion to dismiss, the court denies without prejudice the plaintiff’s motion
for trial.” (See Minute Entry, Aug. 8, 2005).
At this point, the case began to move in fits and starts. Naegele’s attorney sought leave
to withdraw as counsel, which the Court approved on October 28, 2005. (Dkt. No. 82).
Thereafter, nearly seven months later, Naegele filed a motion to stay this action on May 11,
2006, in light of criminal bankruptcy fraud charges brought against him by the United States
Attorney for the District of Columbia. (Dkt. No. 87). Judge Urbina granted that stay request on
June 6, 2006. (Dkt. No. 89).
Nearly two years later, after Naegele was acquitted of those criminal charges, the Albers
filed a motion to lift the stay in this case on April 14, 2008; more than nine months later, in the
absence of any action on that request, the Albers re-filed an identical motion on January 15,
2009. (Dkt. Nos. 90, 91). Ultimately, Judge Urbina lifted the stay on June 17, 2009. (See
Minute Entry, June 17, 2009). Nine months passed again without any developments in this case
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until, on March 31, 2010, the Albers renewed their motion to dismiss, which the Court
apparently still had not ruled upon. (Dkt. No. 92). On the heels of the Albers’ renewed motion,
Naegele sought leave to file a Second Amended Complaint on April 12, 2010, principally to
assert additional claims against both the Albers and Michaelson based on their alleged wrongful
involvement in inciting the criminal indictment handed down against Naegele. (Dkt. No. 93).
Meanwhile, back in California, the Albers had filed a petition to confirm their arbitration
award in California Superior Court on January 13, 2009, 3 in a matter designated Raymond H.
Albers II v. Timothy D. Naegele, Los Angeles Superior Court, Northwest Division, Case No.
LS018168. (Dkt. No. 93-2). Eventually—but not until nearly three years after the Albers filed
that case—Naegele sought injunctive relief from this Court on December 23, 2011, asking Judge
Urbina to stay the Albers’ California action until the instant litigation was resolved. (Dkt. No.
99). According to Naegele, his delay in seeking such relief was due to the fact that the California
proceedings “effectively sat dormant until a new judge was assigned to the case.” (Id. at 5). The
parties fully briefed Naegele’s preliminary injunction motion, but before Judge Urbina ruled on
the request, Naegele moved for a temporary restraining order seeking the same relief on
February 16, 2012. (Dkt. No. 102). By that time, the California Superior Court had already
confirmed the Albers’ arbitration award, and the Albers had been directed to submit a proposed
judgment by no later than February 28, 2012. (See Dkt. No. 103 at 2). Through his request for a
temporary restraining order, Naegele sought to obtain relief before the California judgment was
entered, averring that “[o]nce the Albers and Michaelson have a judgment [from California
3
Apparently, the Albers had previously filed a petition to confirm their arbitration award
in Los Angeles Superior Court back in 2005, but they agreed to dismiss that case without
prejudice, in an effort to allow the pending litigation in this courthouse to run its course. (Dkt.
No. 93-3). Ultimately, however, it seems that the Albers were running up against a statute of
limitations in California and, to preserve their rights, went ahead and filed confirmation
proceedings in January 2009.
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Superior Court] in hand, there will be no way to stop them and the Plaintiff will be irreparably
injured.” (Dkt. No. 103 at 2).
Judge Urbina denied Naegele’s motion for a temporary restraining order on February 21,
2012. Naegele v. Albers, 843 F. Supp. 2d 123 (D.D.C. 2012). In so doing, Judge Urbina found
that Naegele failed to demonstrate a likelihood of success on the merits, and also that Naegele
was unable to articulate the requisite irreparable harm. Id. Naegele never appealed the denial of
his motion for a temporary restraining order to the U.S. Court of Appeals for the D.C. Circuit.
As reflected by the docket in the Albers’ California lawsuit, on February 24, 2012, the
Los Angeles Superior Court proceeded to enter judgment in favor of the Albers and against
Naegele, in the amount of $781,831.25. The Superior Court docket also reflects that Naegele
appealed that judgment to the Second Appellate District of the California Court of Appeal on
April 5, 2012, and his appeal remains pending to this day. 4
Back in this case, the Albers filed a motion for a ruling on their motion to dismiss on
February 23, 2012. (Dkt. No. 106). Shortly thereafter, on March 9, 2012, Judge Urbina issued a
Memorandum Order granting Naegele’s request to file a Second Amended Complaint, largely
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based on the fact that the Albers failed to oppose Naegele’s motion. (See Dkt. No. 107). In
turn, Judge Urbina denied the Albers’ motion to dismiss, reasoning that “[b]ecause the plaintiff’s
amended complaint supersedes the original complaint, the defendants’ motion to dismiss must be
4
Based on the Court’s review of the docket in the California appeal, it appears the parties
are still engaged in briefing and no date has been set for oral argument. See Albers et al. v.
Naegele et al., Case No. B240455 (Cal. Ct. App. 2d. App. Dist.).
5
Through his Second Amended Complaint, Naegele added five additional counts to his
lawsuit, all of which are pled against both the Albers and Michaelson (who had previously been
dismissed from this action altogether): Intentional Infliction of Emotional Distress (Count IX);
Conspiracy to Commit Intentional Infliction of Emotional Distress (Count X); Negligent
Infliction of Emotional Distress (Count XI); Malicious Prosecution (Count XII); and Conspiracy
to Commit Malicious Prosecution (Count XIII). (See Dkt. No. 109).
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denied as moot.” (See Minute Entry, Mar. 9, 2012). Naegele’s Second Amended Complaint was
filed on March 9, 2012, (Dkt. No. 109), and shortly thereafter, Naegele filed a “Motion for
Reconsideration” of his “Rejection of Arbitration Award and Motion for Trial” on April 9, 2012.
(Dkt. No. 110). This case was then transferred to the undersigned on April 20, 2012.
Basis for Order to Show Cause
At this juncture, the only matter pending before the Court is Naegele’s “Motion for
Reconsideration,” (Dkt. No. 110), through which Naegele asks the Court to entertain the relief he
sought long ago in his “Rejection of Arbitration Award and Motion for Trial,” (Dkt. No. 64).
Naegele’s “Rejection” and “Motion for Trial” was filed pursuant to California Business and
Professions Code § 6204, which effectively allows any party dissatisfied with the results of non-
binding fee arbitration under the MFAA to seek a trial de novo following the issuance of an
award. See CAL. BUS. & PROF. CODE § 6204. The statute provides that, “[i]f there is an action
pending, the trial after arbitration shall be initiated by filing a rejection of the arbitration award
and request for trial after arbitration in that action within 30 days after service of notice of the
award.” Id. § 6204(b). These provisions, however, are subject to one important exception: “if
either party willfully fails to appear at the arbitration hearing . . ., that party shall not be entitled
to a trial after arbitration.” Id. § 6204(a). Under the statute, “[t]he determination of willfulness
shall be made by the court,” although “the court may consider any findings made by the
arbitrators on the subject of a party’s failure to appear.” Id.
As preliminary matters, it appears to the Court that Naegele properly filed his “Rejection”
and “Motion for Trial” in this case and with this Court, and that he did so in a timely manner.
First, the statute expressly provides that “if there is an action pending,” the rejection should be
filed in that action. Id. § 6204(b). According to the California Court of Appeal, “the term
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‘action pending’ used in the MFAA refers to a lawsuit in which the parties include both the
attorney and the client who had their fee dispute arbitrated,” and consists of “the type of action
described in [California] Business and Professions Code section 6201.” Loeb v. Record, 162
Cal. App. 4th 431, 445 (Ct. App. 2008) (concluding that personal injury action between client
and his attorneys was not “action pending” under MFAA). Compare CAL. BUS. & PROF. CODE §
6201(a) (encompassing actions “for recovery of fees, costs, or both”). Inasmuch as this lawsuit
concerns Naegele’s attempt to recover fees from the Albers, and since it was pending at the time
the arbitration award was issued, Naegele properly sought relief under § 6204(b) with this Court.
Second, Naegele filed his original “Rejection” and “Motion for Trial” on February 22, 2005,
within thirty days after the underlying arbitration award was served on January 24, 2005. (See
Dkt. No. 64). In denying that motion without prejudice, Judge Urbina’s ruling indicated that the
thirty-day window under § 6204(a) would not bar Naegele from renewing his request at the
appropriate juncture—i.e., after the jurisdictional issues raised in the Albers motion to dismiss
had been resolved. (See Minute Entry, Aug. 8, 2005) (“Because the court is on notice of the
plaintiff’s objection to the arbitration award, and in light of the defendants’ pending motion to
dismiss, the court denies without prejudice the plaintiff’s motion for trial.”) (emphasis added).
Ultimately, once the Albers’ motion was denied as moot—albeit nearly seven years later on
March 9, 2012—Naegele promptly renewed his request under § 6204, filing a “Motion for
Reconsideration” on April 9, 2012. (Dkt. No. 110). In view of all this, Naegele’s request for
relief under § 6204 was timely and appropriately filed with this Court.
With these threshold issues addressed, the Court now turns to the predicament at hand.
By way of his “Rejection” and “Motion for Trial,” Naegele seeks a trial de novo on the claims
adjudicated in the underlying fee arbitration with the L.A. County Bar Association’s Dispute
9
Resolution Services. In objecting under California Business and Professions Code § 6204,
Naegele appears to have pursued the proper avenue of relief to prevent the arbitration award
from becoming final and binding. See, e.g., Loeb, 162 Cal. App. 4th at 443 (“[A]n arbitration
award rendered under the MFAA becomes binding if it is not challenged by the proper
procedure. Specifically, the award is not binding if either party initiates a trial after arbitration
within 30 days after mailing of the notice of the award.”) (internal citation omitted). While the
instant action was pending, however, the Albers commenced an independent lawsuit in
California Superior Court to confirm the fee award issued by the arbitration panel. Although
Naegele ultimately made some efforts to stay the California lawsuit—though only after that case
had been active for more than three years—his efforts proved unsuccessful, and he was unable to
convince Judge Urbina to stay those proceedings. Furthermore, although he could have done so,
Naegele elected not to appeal that ruling to the D.C. Circuit. As it happened, the Los Angeles
Superior Court subsequently confirmed the Albers’ arbitration award and entered a judgment in
their favor on February 24, 2012. And at this point in time, although Naegele has appealed the
Superior Court’s decision to the California Court of Appeal, the underlying judgment against
Naegele remains on the books.
Here lies the problem: the Albers’ California litigation overtook this action, and the fee
dispute between Naegele and the Albers proceeded to judgment in California state court. In the
Court’s view, not only does that state court judgment severely inhibit this Court’s ability to
afford Naegele the relief he seeks, but it also seems that it may tie this Court’s hands altogether
under long-settled principles of preclusion and res judicata.
The Court initially considered whether the entry of the Albers’ state court judgment
divested this Court of jurisdiction altogether under the Rooker-Feldman doctrine. This doctrine,
10
derived from two Supreme Court decisions, “prevents lower federal courts from hearing cases
that amount to the functional equivalent of an appeal from a state court.” Gray v. Poole, 275
F.3d 1113, 1119 (D.C. Cir. 2002) (citing District of Columbia Court of Appeals v. Feldman, 460
U.S. 462 (1983); Rooker v. Fid. Trust Co., 263 U.S. 413 (1923)). More recently, however, in
response to concerns that the doctrine was being “[v]ariously interpreted in the lower courts” and
“construed to extend far beyond the contours of the Rooker and Feldman cases,” the Supreme
Court clarified the bounds of the doctrine’s application and announced that “[t]he Rooker-
Feldman doctrine . . . is confined to cases of the kind from which the doctrine acquired its name:
cases brought by state-court losers complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district court review and
rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S.
280, 284 (2005). The Court was also clear to emphasize that “[w]hen there is parallel state and
federal litigation, Rooker-Feldman is not triggered simply by the entry of judgment in state
court.” Id. at 292. Instead, the Court instructed, “[c]omity or abstention doctrines may, in
various circumstances, permit or require the federal court to stay or dismiss the federal action in
favor of the state-court litigation,” and “[d]isposition of the federal action, once the state-court
adjudication is complete, would be governed by preclusion law.” Id. at 292-93 (internal citations
omitted); see also id. at 284 (“Rooker-Feldman does not otherwise override or supplant
preclusion doctrine or augment the circumscribed doctrines that allow federal courts to stay or
dismiss proceedings in deference to state-court actions.”).
In view of the Supreme Court’s guidance in Exxon Mobil, the Court concludes that the
Rooker-Feldman doctrine does not operate as a jurisdictional bar to Naegele’s claims in this
matter or to his objection under Section 6204(b). At the same time, however, the Court cannot
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simply turn a blind eye to the judgment entered in Los Angeles Superior Court, which may have
a preclusive impact on these proceedings. Exxon Mobil, 544 U.S. at 293 (“In parallel litigation, a
federal court may be bound to recognize the claim- and issue-preclusive effects of a state-court
judgment.”). Indeed, under the Full Faith and Credit Clause, 28 U.S.C. § 1738, a federal court
must “give the same preclusive effect to a state-court judgment as another court of that State
would give.” Id. (internal citations omitted); see also Migra v. Warren City Sch. Dist. Bd. of
Educ., 465 U.S. 75, 81 (1984). And under California law—which this Court would necessarily
look to in determining whether to apply the doctrine of res judicata to a California judgment—it
is well settled that a judicially-confirmed arbitration award is afforded res judicata effect. See
CAL. CIV. PROC. CODE §1287.4 (“If an [arbitration] award is confirmed, judgment shall be
entered in conformity therewith. The judgment so entered has the same force and effect as, and
is subject to all the provisions of law relating to, a judgment in a civil action of the same
jurisdictional classification; and it may be enforced like any other judgment of the court in which
it is entered, in an action of the same jurisdictional classification.”); Dial 800 v. Fesbinder, 118
Cal. App. 4th 32, 50 (Ct. App. 2004) (“As a general matter, an arbitration award is the equivalent
of a final judgment which renders all factual and legal matters in the award res judicata.”).
Given the pendency of Naegele’s appeal with the California Court of Appeal, however,
the Albers’ judgment is not yet “final” for purposes of res judicata under California law.
Agarwal v. Johnson, 25 Cal. 3d 932, 954 (1979), disapproved of on other grounds by White v.
Ultramar, Inc., 21 Cal. 4th 563, 575 n.4 (1999) (“Under the California rule, the instant judgment
. . . is not final for purposes of res judicata during the pendency of and until the resolution of the
appeal.”); People ex rel. Gow v. Mitchell Brothers' Santa Ana Theater, 101 Cal. App. 3d 296,
306 (Ct. App. 1980) (“A judgment is not final while an appeal therefrom is pending.”). But
12
regardless of how the California Court of Appeal rules on Naegele’s claims, the outcome of that
appeal will undoubtedly have an impact on the Court’s path forward in this case. If the Albers’
judgment remains in place, the California judgment will likely have res judicata impact on at
least some aspects of this action. On the other hand, if the California Court of Appeal reverses
the Superior Court’s judgment, then this Court may be able to pass on Naegele’s objection under
Business and Professions Code § 6204(b) and his fee-based claims more generally.
Accordingly, the Court believes it appropriate at this juncture to stay the entirety of these
proceedings pending the outcome of Naegele’s appellate litigation in California. As Judge
Urbina succinctly explained much earlier in this case:
A trial court has broad discretion to stay all proceedings in an action pending the
resolution of independent proceedings elsewhere. See Landis v. N. Am. Co., 299
U.S. 248, 254 (1936). “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
economy of time and effort for itself, for counsel, and for litigants.” Airline Pilots
Ass'n v. Miller, 523 U.S. 866, 879 n.6 (1998) (quoting Landis, 299 U.S. at 254-
55). Indeed, “[a] trial court may, with propriety, find it is efficient for its own
docket and the fairest course for the parties to enter a stay of an action before it,
pending resolution of independent proceedings which bear upon the case.” Leyva
v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979).
Naegele, 355 F. Supp. 2d at 140. Given the foregoing, the Court believes that the important
interests of comity and “wise judicial administration” counsel in favor of a stay of this action.
See Colo. River Water Cons. Dist. v. United States, 424 U.S. 800 (1976); Handy v. Shaw,
Bransford, Veilleux & Roth, 325 F.3d 346, 349-53 (D.C. Cir. 1993) (“[P]arallel litigation of
factually related cases is separate fora is inefficient.”). While a district court’s discretion to stay
“for the purpose of judicial economy” is carefully circumscribed, the Court believes that this
matter presents the sort of “exceptional circumstances” that warrant its application, Handy, 325
F.3d at 352-53, particularly given the fact that the California matter already progressed all the
way to judgment and is presently positioned for review by the California Court of Appeal.
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Finally, as a related matter, the Court observes that, regardless of how Naegele’s
California appeal is resolved, he may well be foreclosed from seeking a new trial under any
circumstances if he “willfully fail[ed] to appear at the arbitration hearing.” CAL. BUS. & PROF.
CODE § 6204(a). Notably, the arbitration panel made several express findings on this issue,
concluding that Naegele “willfully failed to appear at the hearing for non-binding arbitration and
produce documents as required under the Rules.” (Dkt. No. 92-3). While the issue is for a court
to determine in the first instance, the statute plainly allows the reviewing court to consider “any
findings made by the arbitrators on the subject of a party’s failure to appear,” and Naegele bears
“the burden of proving that his failure to appear was not willful.” Id.§ 6204(a); see also
Isaacson v. Maatuk, No. B224217, 2011 Cal. App. Unpub. LEXIS 5653 (Ct. App. July 28, 2011)
(affirming trial court’s determination that attorney’s failure to appear at non-binding MFAA
arbitration was willful).
Accordingly, it is hereby ORDERED that:
1. Naegele shall SHOW CAUSE in writing: (1) as to why this Court should not STAY
this action in its entirety pending a decision from the California Court of Appeal’s
Second Appellate District in Case No. B240455; and (2) as to why this Court should
not find that Naegele willfully failed to appear at the arbitration hearing within the
meaning of Section 6204(a). Naegele’s response shall be filed by no later than May
10, 2013, and shall not exceed twenty-five (25) pages.
2. By this same date, Naegele shall separately file with the Court an appendix comprised
of: (1) all of the filings in the California Superior Court action, Raymond H. Albers II
v. Timothy D. Naegele, Los Angeles Superior Court, Northwest Division, Case No.
LS018168, along with a copy of the docket sheet from that action; and (2) all of the
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filings in his appeal with California Court of Appeal’s Second Appellate District,
Albers et al. v. Naegele et al., Case No. B240455.
3. By no later than June 7, 2013, Defendants—Deanna Albers, Raymond Albers, and
Lloyd Michaelson—may file a written response, not to exceed twenty-five (25)
pages.
4. Thereafter, by no later than June 21, 2013, Naegele shall file his reply, if any, which
shall not exceed ten (10) pages in length.
5. The Clerk is directed to mail a copy of this Order to Naegele and to each of the
Defendants at their address of record on file with the Court.
SO ORDERED. Digitally signed by Judge Robert
L. Wilkins
DN: cn=Judge Robert L. Wilkins,
o=U.S. District Court,
Date: April 18, 2013 ou=Chambers of Honorable
Robert L. Wilkins,
email=RW@dc.uscourt.gov, c=US
Date: 2013.04.18 08:56:13 -04'00'
ROBERT L. WILKINS
United States District Judge
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