Alapaha View Ltd. v. Prodigy Network, LLC
- Denise Cote
- 1:20-cv-07572
- U.S. District Court · Southern District of New York
- 7
In Alapaha View v. Prodigy Network, Judge Broderick granted PSIM’s motion to stay discovery while its motion to dismiss remained pending.
The order directly affects the plaintiffs and Prodigy Shorewood Investment Management, LLC by pausing discovery concerning PSIM until the court decides PSIM’s motion to dismiss. The other five defendants were already subject to a judgment as to liability, so the court stated that the stay would affect only PSIM.
What happened
Alapaha View Ltd. and 25 other plaintiffs sued six defendants over investments in a New York real estate project, asserting contract, fraud, misrepresentation, and negligence claims. Prodigy Shorewood Investment Management, LLC (PSIM) asked the court to pause discovery while it sought dismissal of the claims against it.
The court found that PSIM’s motion to dismiss could potentially resolve the claims against PSIM, that discovery would be burdensome because of the case’s size and complexity, and that delaying discovery would not unfairly harm the plaintiffs. Five other defendants were already subject to a judgment on liability, with the damages inquiry held until the case against PSIM was resolved.
Judge Broderick granted PSIM’s motion to stay discovery and ordered that discovery remain stayed until the court decided PSIM’s motion to dismiss. The court did not decide the merits of that dismissal motion.
The detailed version
- Alapaha View Ltd. v. Prodigy Network, LLC · No. 1:20-cv-07572
- Denise Cote
- May 10, 2021
Background
Twenty-six plaintiffs sued Prodigy Shorewood Investment Management, LLC (PSIM), Prodigy Network, LLC, Prodigy Shorewood New York Rep Co., 84 William Street Newco, Inc., 84 William Mezz Newco, Inc., and 84 William Street Realty Associates LLC. The plaintiffs asserted breach of contract, common-law fraud, fraudulent inducement, negligent representation, and negligence claims arising from investments in a New York real estate project.
The plaintiffs filed a second amended complaint on March 12, 2021. That complaint added a negligence claim against PSIM. On the same day, PSIM filed a motion to dismiss the second amended complaint, and that motion was fully briefed when the court considered the discovery issue.
The plaintiffs had also moved for default against the other five defendants. The court entered a judgment as to liability against those defendants and held the damages inquiry until the case against PSIM was resolved. As a result, PSIM was the only defendant not in default.
Motion to Stay Discovery
PSIM asked the court to stay discovery under Federal Rule of Civil Procedure 26(c), which allows a court to limit or delay discovery for good cause. Courts considering a stay while a motion to dismiss is pending generally examine the strength of the dismissal motion, the scope and burden of discovery, and the risk of unfair prejudice to the opposing party.
The court did not decide the merits of PSIM’s motion to dismiss. It nevertheless found that the motion supported a stay because it was potentially dispositive and was not apparently unfounded. PSIM argued in large part that it had not been involved in the alleged conduct and that dismissal could eliminate the claims against it.
The court also found discovery likely to be burdensome. The case involved conduct over multiple years, 26 plaintiffs, six defendants, numerous transactional documents, a second amended complaint exceeding 200 paragraphs, and five counts. No discovery had yet been served, but the plaintiffs planned to seek documents, interrogatory responses, a deposition, and third-party subpoenas.
Finally, the court concluded that the stay would not unfairly prejudice the plaintiffs. The case was relatively new, PSIM’s dismissal motion had been fully briefed, and the stay would affect only PSIM because the other defendants were already subject to the liability judgment. The court rejected the plaintiffs’ proposal to allow some document discovery and interrogatories to proceed because of the action’s complexity.
Ruling
Judge Vernon S. Broderick granted PSIM’s motion to stay discovery. Discovery was stayed pending a decision on PSIM’s motion to dismiss. The court directed the Clerk of Court to terminate docket entries 46 and 78. The opinion did not decide whether PSIM’s motion to dismiss should be granted or denied.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.