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American Senior Communities, LLC v. Burkhart

United States District Court, S.D. Indiana, Indianapolis Division

February 1, 2019

AMERICAN SENIOR COMMUNITIES, LLC, Plaintiffs,
v.
JAMES BURKHART, DANIEL BENSON, ROGER WERNER, STEVEN GANOTE, JOSHUA BURKHART, ACCD LLC., AMERICAN SENIOR CARE, LLC., BRIGHT HVAC, LLC., BTS SOLUTIONS, LLC, BTS VENTURES LLC, CARDINAL DISTRIBUTION LLC, CIRCLE CONSULTING LLC, FINITE CAPITAL LLC, FORCE HOLDING COMPANY LLC, HEARTLAND FLAG LLC, JACCD LLC, MED-HEALTHLINE SUPPLY LLC, OREGON PROPERTIES LLC, 105214 INVESTMENTS LLC, 105210 INVESTMENTS LLC, INDIANA UNIFORM COMPANY LLC, Defendants
v.
JAMES BURKHART, Counter Claimant
v.
AMERICAN SENIOR COMMUNITIES LLC, Counter Defendant.

          ENTRY ON DEFENDANT JAMES BURKHART'S MOTION TO STAY CIVIL PROCEEDINGS

          TANYA WALTON PRATT, UNITED STATES DISTRICT COURT JUDGE

         This matter is before the Court on Defendant James Burkhart's (“Burkhart”) Motion to Stay Civil Proceedings (Filing No. 87). Burkhart asks the Court to stay the instant civil lawsuit until thirty (30) days after entry of judgment regarding his Motion to Vacate or Set Aside Sentence Under 28 U.S.C. § 2255 filed on December 20, 2018 in United States of America v. James Burkhart, Case No. 1:16-cr-00212-TWP-TAB-01 (“Crim. Dkt.”). For the reasons stated below the Court denies the motion to stay.

         I. PROCEDURAL BACKGROUND

         In October 2016, a federal grand jury returned a thirty-two count Sealed Indictment against James Burkhart, Joshua Burkhart, Daniel Benson and Steven Ganote charging them with violating 18 U.S.C. § 1349 (conspiracy to commit mail, wire and health care fraud), 18 U.S.C. §§ 1341 and 1343 (mail and wire fraud), 18 U.S.C. § 371 and 42 U.S.C. § 1320a-7b(b) (conspiracy to violate anti-kickback laws), and 18 U.S.C. §§ 1956(a)(1)(B)(i) and 1957 (money laundering). United States of America v. Burkhart, et al., Case No. 1:16-cr-00212-TWP-TAB.

         On September 15, 2017, Plaintiff American Senior Communities, L.L.C. (“ASC”), filed the instant civil action against five individuals, four of whom (James Burkhart, Joshua Burkhart, Daniel Benson and Steven Ganote) were named defendants in the above-referenced criminal case, and the fifth of whom, Roger Werner (“Werner”), served as the former Chief Financial Officer of ASC. This action also names several corporate defendants. The Complaint alleges violations of the Racketeer Influence and Corrupt Organizations Act (“RICO”), conspiracy to violate RICO, and several state law and common law causes of action.

         On December 1, 2017, this Court stayed this action pending the entry of judgment in the criminal case (Filing No. 44.) The Order directed the Clerk of the Court to administratively close this case and that the parties may seek to reopen the case by filing joint status report 30 days after entry of judgment in the criminal case. Id.

         Burkhart and the other individual defendants in the criminal case each entered pleas of guilty. Judgments of conviction were entered against James Burkhart on July 10, 2018, Steven Ganote on July 19, 2018, Joshua Burkhart on July 20, 2018, and Daniel Benson on July 27, 2018. The Court left open the issue of restitution and ordered the parties to meet and confer on that outstanding issue within sixty (60) days of the dates on which each defendant was sentenced. A final Amended Order of Restitution was entered on January 17, 2019. (Crim. Dkt. 376.)

         Following entry of judgments of conviction in the criminal case, ASC and Werner filed a Joint Status Report explaining that the criminal action has been resolved and requested that the civil matter be reopened. (Filing No. 51.) The matter was reopened via a Scheduling Order on August 26, 2018. (Filing No. 53.) On October 17, 2018, counsel for each of the individual defendants participated in an initial pretrial conference and thereafter negotiated and signed a Case Management Plan which was later approved by the Court. (Filing No. 67.)

         On December 20, 2018, Burkhart, ACCD LLC d/b/a Crusader Healthcare Services III, American Senior Care LLC, JACCD LLC d/b/a Crusader IV, 105214 Investments LLC d/b/a Crusader Healthcare Services, and 105210 Investments LLC d/b/a Crusader Healthcare Services II (collectively the “Burkhart Defendants”) filed an Answer, Affirmative Defenses and Counterclaims. (Filing No. 83.) On that same date, December 20, 2018, Burkhart filed a Motion Under 28 U.S.C. § 2255 to Vacate, Set Aside, or Correct Sentence (the “§ 2255 petition”), and a new civil case was opened under Case No. 1:18-cv-4013-TWP-DLP in which he asserts ineffective assistance of trial counsel in his criminal case. On January 2, 2019, Burkhart filed the instant Motion to Stay Civil Proceedings wherein he asks this Court to stay any further proceedings in the instant civil action, pending resolution of the § 2255 petition. (Filing No. 87.) In its Response in Opposition to Motion to Stay (Filing No. 96), ASC objects to any further stay of these proceedings and argues that a stay would not serve the interests of justice and would severely prejudice ASC.

         Also pending in this action is a Motion to Dismiss for failure to state a claim filed by Werner (Filing No. 75), and Plaintiff and Counter-Defendant American Senior Communities' Motion to Dismiss James Burkhart's Counterclaims (Filing No. 100).

         II. LEGAL STANDARD

         “[T]he 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.” Landis v. North American Co., 299 U.S. 248, 254 (1936). In considering a stay request, the Court should consider: “(i) whether a stay will unduly prejudice or tactically disadvantage the non-moving party, (ii) whether a stay will simplify the issues in question and streamline the trial, and (iii) whether a stay will reduce the burden of litigation on the parties and on the court.” Pfizer Inc. v. Apotex Inc. 640 F.Supp.2d 1006, 1007 (N.D. Ill. 2009). Moreover, “[c]ourts disfavor stays of discovery ‘because they bring resolution of the dispute to a standstill.'” Red Barn Motors, Inc. v. Cox Enterprises, Inc., No. 1:14-CV-01589, 2016 WL 1731328, at *3 (S.D. Ind. May 2, 2016) (quoting New England Carpenters Health & Welfare Fund v. Abbott Labs, No. 12 C 1662, 2013 WL 690613, at *2 (N.D. Ill. Feb. 20, 2013).

         III. DISCUSSION

         In his memorandum of law, Burkhart asked that this action be stayed while his collateral attack on his criminal conviction goes forward. He argued that the parallel proceedings of this civil case and his § 2255 “criminal action” would have implications if he were to prevail and be granted a new trial. For example, he contends that the potential exists for exploitation of civil discovery to ...


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