Ohio Security Insurance Company, et al. v. Affinitylifestyles.com, et al.

• Court: District Court, D. Nevada
• Decided: March 23, 2026
• Docket: 2:25-cv-00399
• Status: Unknown

Opinion

1 2 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 3 4 Ohio Security Insurance Company, et al., Case No. 2:25-cv-00399-CDS-EJY

5 Plaintiffs Order Denying in Part the Defendants’ Motions to Dismiss, Granting Alternative 6 v. Relief to Stay the Case, and Approving Stipulation to Extend Briefing 7 Affinitylifestyles.com, et al.,

8 Defendants [ECF Nos. 85, 185, 204]

9 10 This is an interpleader action brought by plaintiffs Ohio Security Insurance Company, 11 Peerless Indemnity Insurance Company, the Ohio Casualty Insurance, and West American 12 Insurance Company against corporate and individual defendants. See Compl., ECF No. 1. On 13 April 2, 2025, several defendants1 moved to dismiss, or in the alternative, stay this action (MTD- 14 1). MTD-1, ECF No. 85. Several defendants2 move to join MTD-1. Joinder, ECF Nos. 89, 90, 94, 15 190. The plaintiffs filed an opposition to the dismissal motion, on April 16, 2025. MTD-1 opp’n, 16 ECF No. 111. This motion is fully briefed. See Reply, ECF Nos. 124, 142, 143, 144, 190.3 17 On September 8, 2025, a second group of defendants filed a motion to dismiss (MTD-2), 18 or in the alternative, to stay this case. MTD-2, ECF No. 185.4 This motion is also fully briefed. See

19 1 This group of defendants are: Agnes Aleksandra, Yvonne Arnone, Niegal Davis-Richard, Tina Hartshorn, Tiquionte Henry, Lela Kaveh, Ginger Land-Van Buuren, Lorenzo Muniz, Cheryl Nally, Patricia 20 Sutherland, as Heir of Kathleen Ryerson, Daniel Taylor, Daisy Wei, Christopher Noah Wren, Christopher Brian Wren, and Emely Wren (herein, Group 1). See MTD-1, ECF No. 85 at 4 n.1. 21 2 These defendants include: Kristina A. Allen, Robert L. McGovern, Grace Zimmerman (ECF No. 89); 22 Lisa King (ECF No. 90); Blain Jones (ECF No. 94); Ryan Carrier and Arika Carrier, individually and on behalf of their minor children H.C. and F.C. (ECF No. 190). The joinders to the motion to dismiss are 23 granted. 3 The individuals that filed a reply to the response include: Group 1 defendants (ECF No. 124); Blain Jones 24 (ECF No. 142); Kristina A. Allen, Robert L. McGovern, Grace Zimmerman (ECF No. 143); Lisa King (ECF No. 144); Ryan Carrier and Arika Carrier, individually and on behalf of their minor children H.C. 25 and F.C. (ECF No. 190). 4 The second group of defendants are: Bryan Abele; Sandra Abele; T.A., a minor child, through his parents 26 Bryan and Sandra Abele; Brenda Alaniz, as Guardian ad Litem for Abraham Olvera; Sylvia Atanasova; Richard Belsky; Andria Bordenave; Jereme Botiz; Monica Branch Noto; Miriam Brody; Hunter Brown; Pamela Brown; Sarah Callovi; Nicole Chang; Jenna Consiglio; James Delmar; Vanya Diaz; Estate of Milo 1 MTD-2 opp’n, ECF No. 191; Reply, ECF No. 193.5 For the reasons set forth herein, I deny in part 2 the defendants’ motions to dismiss, and I grant alternative relief to stay the case.6 3 I. Legal standard 4 A. Motion to dismiss 5 Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the 6 plaintiff’s “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A 7 pleading must give fair notice of a legally cognizable claim and the grounds on which it rests, 8 and although a court must take all factual allegations as true, legal conclusions couched as 9 factual allegations are insufficient. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In reviewing 10 a complaint under Rule 12(b)(6), all well-pleaded allegations of material fact are taken as true 11 and construed in the light most favorable to the non-moving party. Kwan v. SanMedica, Int’l, 854 12 F.3d 1088, 1096 (9th Cir. 2017). However, complaints that offer no more than “labels and 13 conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Ashcroft v. 14 Iqbal, 556 U.S. 662, 678 (2009); Johnson v. Federal Home Loan Mortg. Corp., 793 F.3d 1005, 1008 (9th 15 Cir. 2015). The court is “not ‘required to accept as true allegations that contradict exhibits

16 Hurst; Kathleen Gacias; Matthew Gonzalez; James Hu; Myles Hunwardsen; Tevis Hurst, individually and as Administratrix of the Estate of Milo Hurst; Yaniv Ittah, as Special Administrator of the Estate of 17 Adir Ittah, Decedent; Lorraine Kalayanaprapruit; Kourosh Kaveh; Vincent Linke; Cary Mano; Jose 18 Martinez; Gray Maynard; Jorge Morales; S.M., a minor child, by and through his father Jorge Morales; Karla Moreno; Glen Morris; Abraham Olvera; Bruce Parent; Cheri Rasmussen; Jill Raw; Judith Ryerson, 19 as Special Administrator of the Estate of and as Heir of Kathleen Mustain Ryerson; Richard Ryerson, as Heir of Kathleen Mustain Ryerson; Jazmin Schaffer; Candice Sharapov; L.S., a minor child, through his 20 parents Nikolay & Candice Sharapov; Nikolay Sharapov; Z.S., a minor child, through her parents Nikolay & Candice Sharapov; Christina Sosa; Carolyn Strong; Joseph Tegano; Monica Vozza; Steven Wadkins; 21 L.O.W., a minor child, by and through her mother Sante Williams; L.Y.W., a minor child, by and through her mother Sante Williams; Sante Williams; Brandi Wren (herein, Group 2). See MTD-2, ECF No. 185 at 22 3–4 n.1. 5 Theodore Stevens, who is appearing pro se, seeks to join the motion to dismiss the interpleader. Joinder, 23 ECF No. 199. Stevens’s joinder motion is denied without prejudice for failure to comply with Local Rule 7-2. See LR 7-2(d) (explaining that failure of a moving party to file points and authorities in support of 24 the motion constitutes a consent to the denial of the motion). 6 I note that also pending before the court is the debtor defendants’ motion to dismiss (ECF No. 200). 25 This motion will be resolved separately in ordinary course. Also pending before the court is the parties’ stipulation for extension of time (ECF No. 204). Because I find good cause exists to extend time and the 26 parties agree for the extension of time for the plaintiffs to file a response to the motion to dismiss (ECF No. 200), I grant this stipulation. The plaintiffs’ response is due April 3, 2026. 1 attached to the [c]omplaint or matters properly subject to judicial notice, or allegations that are 2 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.’” Seven Arts 3 Filmed Entm’t, Ltd. v. Content Media Corp. PLC, 733 F.3d 1251, 1254 (9th Cir. 2013) (quoting Daniels- 4 Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010)). 5 To avoid a Rule 12(b)(6) dismissal, “a complaint must contain sufficient factual matter, 6 accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678. A 7 claim has facially plausible when “the plaintiff pleads factual content that allows the court to 8 draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. In 9 assessing a motion to dismiss, courts may consider documents attached to the complaint, 10 documents incorporated by reference in the complaint, or matters subject to judicial notice. In re 11 NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1051 (9th Cir. 2014). 12 B. Interpleader complaints 13 The “primary purpose” of an interpleader action is to protect disinterested stakeholders 14 from multiple liability and the expense of several lawsuits. Fed. R. Civ. P. 22; see also Aetna Life Ins. 15 Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000). “An interpleader action typically involves two 16 stages. In the first stage, the district court decides whether the requirements for [a] rule or 17 statutory interpleader action have been met by determining if there is a single fund at issue and 18 whether there are adverse claimants to that fund.” Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1009 19 (9th Cir. 2012) (quoting Mack v. Kuckenmeister, 619 F.3d 1010, 1023 (9th Cir. 2010)) (cleaned up); 20 see also Fed. R. Civ. P. 22(a); 28 U.S.C. § 1335. Then, “[i]f the district court finds that the 21 interpleader action has been properly brought,” in the second stage, “the district court will then 22 make a determination of the respective rights of the claimants.” Id. (quoting Mack, 619 F.3d at 23 1023–24). 24 Depositing the disputed funds into the court’s registry is also “a jurisdictional 25 requirement to statutory interpleader under 28 U.S.C. § 1335.” Gelfgren v. Republic Nat’l Life Ins. Co., 26 680 F.2d 79, 81–82 (9th Cir. 1982). Federal Rule of Civil Procedure 67 “provides the mechanism” 1 for a party to relieve itself of responsibility for a disputed fund by depositing it with the court. 2 Methven & Assocs. Pro. Corp. v. Paradies-Stroud, 2014 WL 231654, at *2 (N.D. Cal. Jan. 21, 2014). The 3 decision whether to grant a motion to deposit is committed to the Court’s discretion. Id. 4 However, “[i]n order to avail itself of the interpleader remedy, a stakeholder must have a 5 good faith belief that there are or may be colorable competing claims to the stake.” Michelman v. 6 Lincoln Nat’l Life Ins. Co., 685 F. 3d 887, 894 (9th Cir. 2012). The good-faith standard “is not an 7 onerous requirement.” Id. (citing 4 James Wm. Moore, Moore’s Federal Practice § 22.03 (3d ed. 8 1997)). The threshold for establishing good faith is necessarily low as not to conflict with the 9 pragmatic purpose behind interpleader; that is “for the stakeholder to protect itself against the 10 problems posed by multiple claimants to a single fund.” Id. 11 II. Discussion 12 A. The motions to dismiss are denied. 13 As set forth in the complaint, the plaintiffs seek to interplead the full remaining 14 aggregate limits of liability insurance policies issued by them to Affinitylifestyles.com, Real 15 Water of Tennessee LLC, and Real Water, Inc. ECF No. 1 at 4, ¶ 1. Those limits total 16 $22,000,000 of which $940,000 has been paid to resolve claims against Real Water. Id. The 17 plaintiffs seek to interplead the remaining policy limits amount in light of many competing 18 claims made by dozens of individuals who suffered bodily injuries after consuming Real 19 Alkalized Water. Id. 20 The plaintiffs filed a declaratory relief action to obtain a judicial determination of their 21 rights and obligations under the policies issued by them to Real Water. ECF No. 1 at 4, ¶ 2. As 22 explained in the complaint, plaintiff Peerless Indemnity Insurance Company issued four primary 23 policies;7 West American Insurance Company issued two primary policies;8 and Ohio Security 24 Insurance Company issued two primary policies.9 ECF No. 1 at 13–14, ¶ 105. These policies 25 7 Policy number CBP1031766. ECF No. 1 at ¶ 105. 26 8 Policy numbers BKW (17) 56 93 29 40 and BKW (18) 56 93 29 40. Id. 9 Policy numbers BLS (20) 59 96 11 64 and BLS (21) 59 96 11 64. Id. 1 contain limits of $1 million for bodily injury and property damage and a $2 million general 2 aggregate. Id. at ¶ 105. Peerless Indemnity Insurance Company and Ohio Casualty Insurance 3 Company issued umbrella policies as well. 10 Id. at ¶ 106. The umbrella policies contain limits of 4 $1 million each occurrence and a $1 million aggregate. Id. 5 Ultimately, the plaintiffs seek in their prayer for relief an order requiring the defendants 6 to interplead their claims for proceeds from the plaintiffs’ insurance policies; an order dismissing 7 the plaintiffs with prejudice and discharging the plaintiffs, and an order enjoining and 8 restraining the defendants from bringing an action against the plaintiffs in connection with the 9 plaintiffs’ insurance policies and proceeds. ECF No. 1 at 19. 10 Group 1 moves to dismiss the plaintiffs’ interpleader complaint, arguing: (1) the 11 interpleader is premature and unripe; (2) the plaintiffs fail to properly invoke interpleader 12 because the allegations in their complaint confirm that they are not a disinterested stakeholder; 13 (3) there are significant equitable concerns precluding the use of interpleader; (4) the plaintiffs 14 failed to properly serve and join indispensable parties; and (5) ongoing state court proceedings 15 obviate the need for interpleader.11 See ECF No. 85 at 5–6, 20. Among other arguments, the 16 plaintiffs argue in opposition that the court should deny Group 1’s motion to dismiss because 17 each of the elements for 28 U.S.C. § 1335 are met. ECF No. 111 at 3. I address each argument in 18 turn. 19 First, Group 1’s argument that this complaint is not ripe is unpersuasive. Group 1 20 conclusively asserts that the plaintiffs’ interpleader action is premature and unripe because the 21 plaintiffs are currently pursuing an appeal from the bankruptcy court’s order denying their 22 motion to approve compromise. ECF No. 85 at 12 (citing 21-14099). Group 1 further argues that 23 any determination as to the plaintiffs’ complaint is contingent on the outcome of the plaintiffs’ 24 appeal. Id. at 12–13. In opposition, the plaintiffs assert that its interpleader action is ripe. ECF 25 10 Peerless issued policy numbers: CU8899267, CU8899267, CU8899267; and CU8899267; Ohio Casualty 26 issued policy numbers USO (17) 56 93 29 40 and USO (18) 56 93 29 40. ECF No. 1 at 14, ¶ 106. 11 I address Group 1’s fourth ground for relief in the motion to stay analysis. 1 No. 111 at 12. The plaintiffs clarify that its appeal before the Bankruptcy Appellate Panel (BAP) is 2 only on whether the bankruptcy court erred in denying the motion to compromise, not as to the 3 dismissal of its interpleader action. Id. at 12 n.7. 4 Group 1’s argument fails for various reasons. First, it fails to cite any authority to support 5 its proposition that a pending appeal before the BAP renders an action in this court premature 6 or unripe. Second, the plaintiffs’ complaint is ripe for adjudication because it has sufficiently 7 alleged an interpleader action and there are no facts before this court that render this action 8 premature. See Twombly, 550 U.S. at 570 (explaining that the plaintiff must only allege facts 9 sufficient to state a plausible claim). As such, I deny Group 1’s motion to dismiss on this basis. 10 Second, Group 1’s argument that the plaintiffs are not a disinterested stakeholder is 11 essentially two-fold—that is, (1) the plaintiffs have an ongoing duty to defend in the underlying 12 product liability actions and (2) they have incurred independent liability to multiple claimants 13 by failing to accept reasonable offers of judgment. See ECF No. 85 at 13–15. To support their 14 position, Group 1 states “if an insurance company in bad faith refuses to settle or compromise 15 with the policy limits it is liable for the amount of the judgment in excess of the policy limit.” Id. 16 at 15 (citing Found. Rsrv. Ins. Co. v. Kelly, 388 F.2d 528, 531 (10th Cir. 1968) (citation modified). 17 In opposition, the plaintiffs first argue that they do not seek to resolve any ongoing duty 18 to defend Real Water, nor does their complaint address independent liability. ECF No. 111 at 11. 19 Further, the plaintiffs argue in opposition, they are claiming no interest in the insurance 20 proceeds. Id. The plaintiffs also argue that Group 1’s assertion that they have incurred 21 independent liability to multiple claimants by failing to accept reasonable offers of judgment is 22 wrong. Id. at 12. 23 “A court should readily discharge a disinterested stakeholder from further liability 24 absent a stakeholder’s bad faith in commencing an interpleader action, potential independent 25 liability to a claimant, or failure to satisfy requirements of rule or statutory interpleader.” 26 Augustar Life Assur. Corp. v. Terrana, 2025 U.S. Dist. LEXIS 161014, at *6 (E.D. Cal. Aug. 18, 2025) 1 (citing OM Fin. Life Ins. Co. v. Helton, 2010 WL 3825655, at *3 (E.D. Cal. Sep. 28, 2010)). Here, the 2 crux of Group 1’s argument is that the plaintiffs are subject to bad faith claims, so they cannot be 3 a disinterested stakeholder. ECF No. 85 at 15. But, as I have explained in resolving similar 4 motions involving other interpleader actions related to Real Water litigation,12 it is not for this 5 court to decide the merits of bad faith claims against the plaintiffs. See Mack, 619 F.3d at 1024 6 (“For interpleader to be held improper based on the merits of the claims being asserted against 7 [the] stakeholder, courts would be required to address the merits of the claims before propriety 8 of the interpleader.”). Indeed, even Group 1 acknowledges that the alleged “bad faith” claims are 9 subject to separate issues being pursued in state court action. ECF No. 85 at 15. As such, even if 10 the plaintiffs are liable for bad faith claims, that will be the subject of separate litigation, and any 11 awards associated with such claims would not come from interpleaded funds at issue here. 12 Accordingly, this argument does not entitle Group 1 to relief. 13 Third, Group 1 argues that this action should be dismissed because of serious equitable 14 concerns, namely the application of the doctrine of laches applies. ECF No. 85 at 15–17. Laches 15 bars a plaintiff who, “with full knowledge of the facts, acquiesces in a transaction and sleeps 16 upon [their] rights.” Danjaq LLC v. Sony Corp., 263 F.3d 942, 950–51 (9th Cir. 2001) (citation 17 modified). A defendant is entitled to relief under the doctrine where the defendant proves “both 18 an unreasonable delay by the plaintiff and prejudice to itself.” Couveau v. Am. Airlines, Inc., 218 F.3d 19 1078, 1083 (9th Cir. 2000); see also Evergreen Safety Council, 697 F.3d at 1226 (“To prove laches, a 20 claimant must show unreasonable delay and prejudice”). Interpleader may be inappropriate if a 21 claimant asserts laches. See U.S. Fire Ins. Co. v. Asbestospray, Inc., 182 F.3d 201, 208 (3d Cir. 1999). 22 Group 1 argues that this action is barred by the doctrine of laches because the plaintiffs 23 unreasonably delayed filing its interpleader action for years, and the delay has prejudiced 24 claimants. ECF No. 85 at 16 (citing Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, 1226 25 12 See National Union Fire Insurance Company of Pittsburgh v. Affinitylifestyles.com, Inc., 2:25-cv-00083-CDS-EJY at 26 ECF Nos. 172, 176; Evanston Insurance Company v. Affinitylifestyles.com, et al., 25-cv-00670-CDS-EJY at ECF No. 186. 1 (9th Cir. 2012). Group 1 also argues that the plaintiffs have been on notice of potential claims 2 against its policy coverage since early 2021, and the Real Water victims have invested 3 substantial time and millions of dollars in pursing their claims in state court. Id. at 16. Group 1 4 also argues that the plaintiffs “naked aim is to disrupt and delay its clear bad faith and tort 5 liability.” Id. 6 In opposition, the plaintiffs argue that Group 1 fails to demonstrate the elements of 7 either doctrine. ECF No. 111 at 14. First, the plaintiffs assert that it did not delay in pursuing 8 available remedies because when it became clear that there were competing claims to the limited 9 fund, the plaintiffs pursued a declaratory relief in the bankruptcy case. Id. at 15. Second, the 10 plaintiffs assert that Group 1 failed to articulate any prejudice. Id. In support of their opposition, 11 they argue that Group 1 did not assert that it incurred litigation costs due to the plaintiffs’ 12 failure to file an interpleader action sooner. Id. 13 I find the plaintiffs’ years-long delay in initiating this action unreasonable. Compare United 14 Invs. Life Ins. Co. v. Grant, 387 F. App’x 683, 688 (9th Cir. 2010) (applying California law and 15 determining that the filing an interpleader action fifteen months after receiving a claim and after 16 a minimal, pro forma investigation, was not reasonable as a matter of law), with In re Tech. Equities 17 Corp., 163 B.R. 350, 356 (Bankr. N.D. Cal. 1993) (finding National Union unreasonably delayed 18 filing the interpleader action for a year where National Union never contested its liability an at- 19 issue), with Macpherson-Pomeroy v. N. Am. Co. for Life & Health Ins., 2025 WL 1727092, at *6 (E.D. Cal. 20 June 20, 2025) (determining as a matter of law that North American’s delay in interpleading 21 funds from July 2019 to February 2020 was unreasonable in light of the circumstances of 22 underlying facts). Attempts to settle the policy through the bankruptcy court aside, the 23 plaintiffs have long known of the judgments issued and the plaintiffs acknowledge that there 24 have been prior actions (ECF No. 85 at 16; ECF No. 111 at 4, 6), yet the plaintiffs did not bring 25 this claim for years after first learning of the claims. 26 1 Nonetheless, while Group 1 meets its burden showing that the plaintiffs were 2 unreasonable in delaying this action, it does not meet its burden showing it is prejudiced by the 3 delay. Indeed, Group 1’s own motion argues that the complaint is both premature and not ripe 4 for adjudication. ECF No. 85 at 12. Further, Group 1 only conclusively asserts that it has spent 5 time and money litigating their claims in state court. Id. at 16.13 But such allegations are 6 insufficient to find prejudice. For these reasons, Group 1’s motion to dismiss on this basis is 7 denied. 8 Finally, Group 1 argues that they are entitled to relief because the plaintiffs failed to 9 properly serve and join indispensable parties. Id. at 20. In opposition, the plaintiffs assert that 10 Group 1 misunderstands the difference between joinder and service. ECF No. 111 at 18. Further, 11 the plaintiffs assert that Group 1 has failed to identify a single person or entity that should have 12 been named as a defendant in the interpleader but has not yet been named. Id. At the time that 13 Group 1 filed their dismissal motion,14 the time to effectuate service had not yet run, so this 14 argument was not ripe and is denied accordingly.15 15 13 Group 1’s argument that the plaintiffs have unclean hands also fails. ECF No. 85 at 17. Group 1 16 conclusively asserts that the plaintiffs have unclean hands because they have not acted in good faith. Id. To support their position, they assert, without providing support, the plaintiffs filed “a sham declaratory 17 relief action; they intentionally interfered” with their contracts with the Trustee; and they filed a federal 18 injunction action to torpedo the Gallagher trial. Id. But it is unclear how this constitutes unclean hands when Group 1 has not provided any evidence to support their argument. 19 14 The complaint was filed on March 5, 2025 (ECF No. 1), and the motion to dismiss was filed April 2, 2025 (ECF No. 85). 20 15 Because Group 2’s motion to dismiss (ECF No. 185 at 3–4) is premised on the same arguments, I apply the same reasoning and deny their motion on this ground. I note that Group 2 raises additional 21 arguments concerning the plaintiffs not being disinterested stakeholders, and also find that those arguments fail for the reasons stated in this order. Second, Group 2 also separately raised an argument 22 concerning ineffective service for: Karla Moreno; Monica Branch-Noto; Pamela Brown; Cary Mano; and Sante Williams, along with her two minor children, L.O.W. and L.Y.W. ECF No. 185 at 5. However, 23 Group 2’s reply indicates that Sante Williams has been properly served. ECF No. 193 at 12 n. 4. But Group 2 argues that the plaintiffs have relied on inaccurate affidavits of service for Karla Moreno, Monica 24 Branch-Noto, Pamela Brown, and Cary Mano. ECF No. 193 at 12. I find that Group 2’s argument also fails because the affidavits of service properly satisfy Federal Rule of Civil Procedure 4. See ECF No. 53 (As to 25 Karla Moreno, documents were served on Miranda Moreno, co-resident and sister of Karla); ECF No. 41 (As to Monica Branch-Noto, documents were served on Devin Branch, Monica’s son and co-resident); 26 ECF No. 43 (As to Pamela Brown, documents were served on Hunter Brown, Pamela’s spouse/co- resident); ECF No. 79 (As to Cary Mano, documents were served on Taeko Yanagi, co-resident of Mano). 1 B. Alternative relief seeking to stay the case is granted. 2 “[T]he power to stay proceedings is incidental to the power inherent in every court to 3 control the disposition of the causes on its docket with economy of time and effort for itself, for 4 counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). Thus, a district court 5 “may, with propriety, find it is efficient for its own docket and the fairest course for the parties 6 to enter a stay of an action before it, pending resolution of independent proceedings which bear 7 upon the case.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979). “This rule . . . 8 does not require that the issues in such [separate] proceedings [be] necessarily controlling of the 9 action before the court.” Id. at 863–64. However, “‘if there is even a fair possibility that the stay 10 will work damage to someone else,’ the stay may be inappropriate absent a showing by the 11 moving party of ‘hardship or inequity.’” Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 12 1059, 1066 (9th Cir. 2007) (citation modified) (quoting Landis, 299 U.S. at 255)). A district 13 court must weigh the competing interests that may be affected by the granting or refusal to 14 grant a stay. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). Among those competing 15 interests are “the possible damage which may result from the granting of a stay” and “the 16 hardship or inequity which a party may suffer in being required to go forward.” Id. 17 Considering those standards, the court finds a stay is warranted here.16 The concurrent 18 actions in this court and the bankruptcy court pose potential res judicata concerns. I therefore 19 grant the motion to stay this action until the bankruptcy proceeding (21-14099-nmc) 20 21 See also Fed. R. Civ. P. 4(e)(2)(B) (explaining service may be proper by “leaving a copy of [the summons 22 and complaint] at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there”); Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 1982) (explaining if 23 service was not made in substantial compliance with Rule 4, actual notice will not subject the defendants to personal jurisdiction). Here, I have that substantial compliance with Rule 4 was 24 effectuated and the defendants have actual notice of this litigation. 16 The court also considers its prior ruling (National Union Fire Insurance Company of Pittsburgh v. 25 Affinitylifestyles.com, Inc., 2:25-cv-00083-CDS-EJY; Evanston Insurance Company v. Affinitylifestyles.com, et al., 25- cv-00670-CDS-EJY), Group 1’s argument that state court action will adequately resolve the issues 26 presented by the interpleader complaint (ECF No. 85 at 18), and its authority to manage its docket. See Ready Transp., Inc. v. AAR Mfg., 627 F.3d 402, 404 (9th Cir. 2010). concludes.” If the bankruptcy proceeding concludes and the parties still seek to bring a motion to dismiss, it must file a motion for leave to do so setting forth the reasons why it is necessary to this action. Conclusion 5 IT IS HEREBY ORDERED that Group 1 and Group 2 defendants’ motions to dismiss [ECF Nos. 85, 185] are DENIED in part as set forth in this order. Alternative relief staying the case is GRANTED. 8 IT IS FURTHER ORDERED that the defendants’ joinders [ECF Nos. 89, 90, 94, 190] are GRANTED. 10 IT IS FURTHER ORDERED that counterclaimant Theodore Stevens’s joinder [ECF No. is DENIED without prejudice. 12 IT IS FURTHER ORDERED that the parties’ stipulation for extension of time to file a response as to the debtor’s motion to dismiss [ECF No. 204 is APPROVED. The plaintiffs’ response is due by April 3, 2026. /, / 15 Dated: March 23, 2026 . LL

Vv d/States District Judge / 18 19 20 21 22 23 24 25 A review of the bankruptcy docket indicates that there remain ongoing matters to be resolved. See ECF No. 924 in 21-14099-nmc.

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