Cecilia LLC v. Armin Azod

• Court: District Court, C.D. California
• Decided: May 21, 2020
• Docket: 2:19-cv-09552
• Status: Unknown

Opinion

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2 3 4 5 6 7 United States District Court 8 Central District of California 9 10 11 CECILIA LLC, et al., Case No. 2:19-cv-9552-ODW (ASx) 12 Petitioners, ORDER GRANTING 13 v. RESPONDENTS’ MOTION TO STAY 14 ARMIN AZOD, et al., [35] 15 Respondents. 16 I. INTRODUCTION 17 On November 6, 2019, Petitioners Morgan Creek Productions, Inc. (“Morgan 18 Creek”), Good Stuff Inc. (“Good Stuff”), Cecilia LLC (“Cecilia”), and James G. 19 Robinson (“Robinson”) filed a petition to confirm an arbitration award that adjudges 20 Cecilia liable for breach of contract but leaves open the issue of joint and several 21 liability. (Petition, ECF No. 1.) Respondents Armin Azod, Ramez Elgammal, Peter 22 John, Shantanu Sharma, and Dong Zhang file the instant motion to stay this matter 23 pending resolution of the arbitration (“Motion”). (Mot. to Stay, ECF No. 35.) For the 24 reasons discussed below, the Court GRANTS the Motion.1 25 26 27

28 1 After carefully considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 On October 15, 2014, Cecilia, a limited liability company solely owned by 3 Robinson, entered into an Asset Purchase Agreement (“APA”) with the Respondents. 4 (Mot. 4.) On January 20, 2016, Respondents filed suit in the Central District of 5 California against Cecilia for failing to pay over $850,000 per the APA. (Mot. 4.) 6 On March 10, 2016, Judge Walter granted Petitioners’ motion to compel 7 arbitration and parties proceeded to adjudicate the matter through JAMS. (Mot. 5.) 8 Petitioners objected to financial discovery into Robinson and Morgan Creek, the 9 JAMS arbitrator, Judge Legg, then ruled that such discovery would be reserved until 10 after liability was determined. (Mot. 5–6.) On February 7, 2019, Judge Legg issued a 11 Partial Final Award (“PFA”) in which he ruled “that the APA is a valid contract, 12 unbreached by Claimants,” and awarded “judgment in favor of Claimants against 13 Cecilia, LLC” in the amount of $856,886. (Mot. 6 (citing Pet. Ex. 4 (“PFA”) 64, ECF 14 No. 1-4.).) The PFA states that “[t]he liability of Mr. Robinson and Morgan Creek for 15 breach of contract damages other than for potential lost profits and royalties was left 16 open.” (PFA 8.) On March 1, 2019, the Hon. Judge Legg held a telephonic 17 conference with the parties to identify the issues remaining to be decided and 18 proceeded to set a briefing schedule. (Mot. 7–8.) 19 However, on November 6, 2019, Petitioners commenced this action to confirm 20 the PFA. Respondents filed this motion to stay the case pending completion of the 21 arbitration. 22 III. LEGAL STANDARD 23 “[T]he power to stay proceedings is incidental to the power inherent in every 24 court to control the disposition of the causes on its docket with economy of time and 25 effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 26 254 (1936); Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 27 1066 (9th Cir. 2007). Courts must weigh competing interests when determining 28 whether to grant a stay. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). “Among these competing interests are [1] the possible damage which 1 may result from the granting of a stay, [2] the hardship or inequity which 2 a party may suffer in being required to go forward, and [3] the orderly 3 course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result 4 from a stay.” 5 Id. The burden is on the moving party to show a stay is appropriate. AmTrust 6 Int’l Underwriters Ltd. v. Silver Star Constr. Eng’g, Inc., No. CV-18-4776-MWF- 7 JEMX, 2018 WL 5819454, at *4 (C.D. Cal. Oct. 30, 2018) (citing Landis, 299 U.S. 8 at 255). 9 Courts “must be mindful that, ‘if there is even a fair possibility that the stay for 10 which [the movant] prays will work damage to someone else,’ then the movant ‘must 11 make out a clear case of hardship or inequity in being required to go forward.’” Id. 12 (alteration in original) (quoting Landis, 299 U.S. at 255). 13 IV. DISCUSSION 14 Respondents primarily argue that the Court should stay this case pending a final 15 decision from the arbitrator as the PFA is not final. (See Mot. 8–11, 13–14.) To 16 determine whether the Court should stay the case, the Court now addresses the factors 17 enumerated above. First, Petitioners argue that staying the case and continuing 18 arbitration would cause an undue burden of re-litigating questions of liability. (Opp’n 19 to Mot. 1, ECF No. 38.) However, the arbitrator has yet to determine the issue of joint 20 and several liability, specifically because Morgan Creek and Robinson declined to 21 provide financial discovery. (Mot. 5–6.) As the arbitrator will determine the issue of 22 joint and several liability and not reconsider issues previously determined, the Court 23 sees no prejudice to the Petitioners in staying the case. CMAX, Inc., 300 F.2d at 268. 24 Next, the Court weighs the hardship Respondents face if forced to continue litigation 25 simultaneous to the arbitration. Respondents indirectly assert that litigation in this 26 forum would delay resolution and increase the costs of adjudicating the matter. 27 (Mot. 3.) Thus, this factor weighs in favor of a stay. CMAX, Inc., 300 F.2d at 268. 28 Finally, the Court addresses the third factor—the orderly course of justice. The 1 district court should only confirm an arbitration award when it is the final 2 determination of the arbitrator; Tentative or interim awards should not be confirmed. 3 See Millmen Local 550 v. Wells Exterior Trim, 828 F.2d 1373, 1375 (9th Cir. 1987). 4 Respondents assert that the PFA is not final because the arbitrator retained jurisdiction 5 to determine the issue of joint and several liability. (See Mot. 8–11, 13–14.) 6 Petitioners do not proffer arguments addressing the finality of the award but argue 7 instead that the question is inappropriate for a pre-answer motion.2 (Opp’n to Mot. 6– 8 7.) Petitioners also argue that this Court may confirm a partial arbitration award as 9 final if the award disposes of a discrete issue unaffected by any future determinations 10 by citing to a single Northern District of California case and several out of Circuit 11 cases. (Opp’n to Mot. 7–8.) Yet here, the arbitrators have found Cecilia liable for the 12 breach of contract claim but still retained jurisdiction to determine the issue of joint 13 and several liability. Clearly, the arbitrator’s future determination will affect the issue 14 of liability. See Cal. Pac. Med. Ctr. v. Serv. Employees Int’l Union, 300 F. App’x 15 471, 473 (9th Cir. 2008) (“The [arbitration award] was not final because the arbitrator 16 retained jurisdiction to resolve disputed damages issues between the parties.”) As the 17 arbitrator has yet to apportion liability in its entirety, the Court finds that staying the 18 case pending the completion of arbitration would serve the orderly course of justice. 19 CMAX, Inc, 300 F.2d at 268. 20 As all three factors weigh in favor of a stay, the Court GRANTS the motion 21 and stays the case pending completion of arbitration. 22 23 24 25 26

2 Petitioners assert that determining the finality of the PFA is a question of fact and the motion 27 should accordingly, be converted into a motion for summary judgment per Federal Rule of Civil 28 Procedure (“Rule”) 12(d). (Opp’n to Mot. 8–9.) Not so. Rule 12(d) only permits Rule 12(b)(6) or Rule 12(c) motions to be converted to motions for summary judgment. 1 V. CONCLUSION 2 For the reasons stated above, the Court GRANTS the motion to stay the case 3 || pending completion of the arbitration. (ECF No. 35.) Parties shall file a joint status 4 || report every 90 days from the date of this order and a joint status report within 15 days 5 || of completion of the arbitration. 6 7 IT IS SO ORDERED. 8 9 May 21, 2020 10 . “ g

D OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE

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