Del Mar TIC I, LLC v. The Bancorp Bank
- Rochon
- 1:23-cv-08999
- U.S. District Court · Southern District of New York
- 4
In Del Mar TIC I v. The Bancorp Bank, Judge Rochon granted a discovery stay while considering the Bank’s motion to dismiss.
The order pauses discovery sought by Del Mar TIC I, LLC and Del Mar TIC II, LLC from The Bancorp Bank while the court considers the Bank’s pending motion to dismiss. It does not decide the underlying claims.
What happened
Del Mar TIC I, LLC and Del Mar TIC II, LLC sued The Bancorp Bank. The Bank asked the court to pause discovery while it considered the Bank’s motion to dismiss the amended complaint, which could end the entire case.
The plaintiffs opposed the pause, saying they needed information from the Bank and had narrowed their expected document requests. The Bank argued that discovery would be broad and burdensome. The court found that the discovery requests were still significant and that the motion to dismiss appeared legally substantial, while a short delay would not significantly harm the plaintiffs.
Judge Jennifer L. Rochon granted The Bancorp Bank’s motion and stayed discovery until the court issues its decision on the motion to dismiss. The order did not decide the motion to dismiss or the underlying claims.
The detailed version
- Del Mar TIC I, LLC v. The Bancorp Bank · No. 1:23-cv-08999
- Rochon
- Mar. 29, 2024
Background
Del Mar TIC I, LLC and Del Mar TIC II, LLC began the action in New York state court on September 8,
- The Bancorp Bank removed the case to the Southern District of New York on October 12,
- After the plaintiffs amended their complaint, the Bank filed a motion to dismiss the amended complaint on December 22,
- That motion seeks dismissal of the entire amended complaint based on the parties’ contract and was fully briefed when the court considered the discovery-stay request.
The Motion to Stay Discovery
The Bank asked the court to stay, or pause, discovery until the court ruled on the motion to dismiss. The plaintiffs opposed the request. They argued that their earlier state-court document requests had been made moot by removal to federal court and that they had narrowed their expected discovery. They also argued that they needed meaningful information from the Bank about their claims.
The court explained that filing a motion to dismiss does not automatically justify stopping discovery. It considered the expected breadth and burden of discovery, possible prejudice to the plaintiffs, and the strength of the pending motion to dismiss, including whether that motion could dispose of the entire case.
Court’s Analysis
The court found that the motion to dismiss could dispose of the entire action. After an initial review, without deciding the motion’s merits, the court also found that the motion appeared not to be unfounded in law. Those factors favored a stay.
The court further found that the plaintiffs’ anticipated discovery, although narrowed, remained significant. The requests included the Bank’s internal policies and procedures concerning withdrawals from a borrower’s tax and insurance escrow subaccount, documents and communications about placing an insurance policy related to the property, and documents and communications about using the plaintiffs’ escrow account to pay insurance premiums under the Bank’s policy for the Del Mar Apartments. The court concluded that proceeding with such discovery while the dismissal motion was pending could waste resources and impose an undue burden on the Bank.
The court treated prejudice to the plaintiffs as a neutral factor. The case had been filed about six months earlier and removed about five months earlier, and the dismissal motion had recently become fully briefed. The court concluded that a slight delay would not significantly prejudice the plaintiffs and that delay in discovery alone did not establish unfair prejudice.
Disposition
The court granted The Bancorp Bank’s motion to stay discovery. Discovery is stayed until the court issues its opinion on the Bank’s motion to dismiss the amended complaint. This order did not rule on the motion to dismiss or decide the parties’ underlying claims.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.