Lateral Recovery, LLC v. Queen Funding, LLC

Background

The opinion is a March 15, 2022 order addressing Defendants Queen Funding, LLC and Yehuda Klein’s request to stay, or pause, discovery. Defendants’ motion to dismiss was fully submitted and briefed. The plaintiff was seeking broad discovery, including information about individuals who were not parties to the case.

Arguments about the stay

Defendants argued that the pending motion to dismiss could dispose of the entire action, making discovery unnecessary. They also argued that the discovery requests could result in extended discovery disputes. According to Defendants, pausing discovery would not prejudice the plaintiff because the case was in its early stages, discovery had not begun, delay would not cause the loss of evidence, and the plaintiff had not claimed an ongoing injury.

Defendants identified several grounds they had raised in the motion to dismiss, including alleged deficiencies in the Racketeer Influenced and Corrupt Organizations Act claims, lack of required detail in the wire-fraud claim, problems with the alleged enterprise and continuity allegations, a one-year limitations issue concerning recovery of overpaid interest, and arguments that the agreements were not loans under applicable law. The order did not decide those arguments.

Ruling

The court stated: “Application GRANTED. Defendants’ motion to stay discovery is granted substantially for the reasons stated in this letter.” Thus, the court granted the discovery stay. Judge Lorna G. Schofield’s order did not state a separate disposition of the motion to dismiss or resolve the merits of the claims.