United States District Court, W.D. Washington, Seattle
ORDER DENYING MOTION FOR STAY
BARBARA J. ROTHSTEIN, UNITED STATES DISTRICT JUDGE.
Nelson Capital, LLC, brings this complaint claiming that
Defendants Kevin J. Campbell and Jonathan D. Lee offered and
sold an unregistered security and committed securities fraud.
Plaintiff further alleges breach of fiduciary duty, negligent
misrepresentation, unjust enrichment, and violation of the
Washington Consumer Protection Act. Currently before the
Court is Defendants' motion for a temporary stay of this
case while a related bankruptcy case proceeds. Plaintiff
opposes the motion. Having reviewed the motion, the
opposition thereto, the record of the case, and the relevant
legal authorities, the Court will deny the motion.
Nelson Capital is owned by Doug and Karina Nelson. The
Nelsons sought investment advice from Defendants, investment
advisors Kevin Campbell and Jonathan Lee, to prepare for the
costs of funding college tuition for their children and to
diversify their portfolio. Compl., Dkt. No. 1 at ¶¶
17, 24. The Nelsons met several times with Defendants in
Campbell's office, with Lee participating remotely
through an internet meeting service. Id. at ¶
20. Defendants recommended that the Nelsons invest in a
company called 1 Global Capital LLC (“1 Global”).
Defendants allegedly presented the Nelsons with investment
statements of other investors enjoying highly profitable
returns along with 1 Global's marketing materials.
Further, Plaintiff alleges that Defendants assured them that
“these guys are solid, ” that a 1 Global
investment posed almost no risk, and that 1 Global had
rigorous underwriting and electronic collection processes
which guaranteed that investors would make a profit.
Id. at ¶¶ 1, 29, 38, 39. Relying on this
information, Nelson Capital invested $250, 000 in 1 Global on
June 22, 2018. Id. at 1.
27, 2018, a little over one month later, 1 Global filed for
Chapter 11 bankruptcy in the United States Bankruptcy Court
for the Southern District of Florida. Id. at ¶
3; In re: 1 Global Capital, 18-19121-RBR (Bankr.
S.D. Fla.). The Securities and Exchange Commission filed a
complaint against 1 Global, its owner, and others on August
23, 2018. Id. at ¶¶ 55, 56; Securities
and Exchange Commission v. Carl Ruderman, No.
18-cv-61991-BB (S.D. Fla.).
alleges that Lee received tens of thousands of dollars in
finder's fees from 1 Global which he shared with Campbell
but that neither disclosed this to the Nelsons, even when
asked (id. at ¶¶ 3, 33, 34, 39, 40).
Plaintiff further alleges that the 1 Global marketing
materials that Defendants showed to Plaintiff were false and
misleading (id. at ¶ 1). The Nelsons were among
more than 3, 400 investors who invested a total of more than
$287 million in 1 Global. Id. at ¶ 27.
seeks actual damages against Defendants of “not less
than $250, 000, less the value of Nelson Capital's proof
of claim” in the bankruptcy case, interest,
restitution, treble damages (for the Consumer Protection Act
violation), and costs of investigation, suit, and
attorneys' fees. Id. at ¶¶ 24, 25.
Court, through its inherent power to control its docket, has
broad discretion over whether to stay proceedings.
Clinton v. Jones, 520 U.S. 681, 706-07 (1997). The
party seeking a stay bears the burden of establishing its
need. Id. (citing Landis v. North American
Co., 299 U.S. 248, 254 (1936)). In deciding whether or
not to grant a stay, the Court must consider the potential
harm of a proposed stay. If the stay will “work
damage” to a party, the stay may be inappropriate
unless the moving party demonstrates a clear case of
“hardship or inequity.” Landis, 299 U.S.
by Landis, the Ninth Circuit holds that district
courts should weigh three factors in deciding whether to stay
Where it is proposed that a pending proceeding be stayed, the
competing interests which will be affected by the granting or
refusal to grant a stay must be weighed. Among these
competing interests are the possible damage which may result
from the granting of a stay, the hardship or inequity which a
party may suffer in being required to go forward, and the
orderly course of justice measured in terms of the
simplifying or complicating of issues, proof, and questions
of law which could be expected to result from a stay.
Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th
Cir. 2005) (quoting CMAX, Inc. v. Hall, 300 F.2d
265, 268 (9th Cir. 1962)).