United States District Court, W.D. Wisconsin
OPINION & ORDER
D. PETERSON DISTRICT JUDGE
Waterstone Mortgage Corporation brings this legal malpractice
suit against its former counsel, defendants Offit Kurman,
LLC, and Offit Kurman, P.A. It alleges that Offit Kurman
performed negligently and breached its fiduciary duties while
providing legal services to Waterstone in connection with
Herrington v. Waterstone Mortgage Corp., No.
11-cv-779 (W.D. Wis. filed Nov. 18, 2011), and the related
arbitration. Waterstone moves to stay this case pending
resolution of Herrington, which is on appeal to the
Seventh Circuit, and another case against Waterstone,
Werner v. Waterstone Mortgage Corporation, No.
17-cv-608 (W.D. Wis. filed Aug. 4, 2017). Dkt. 24. The court
will deny the motion to stay for now. Waterstone can file a
new motion if any of the potential problems that it cites
ripen into actual problems.
court “has broad discretion to stay proceedings as an
incident to its power to control its own docket.”
Clinton v. Jones, 520 U.S. 681, 706 (1997). When
exercising that discretion, courts often consider “(1)
whether the litigation is at an early stage; (2) whether a
stay will unduly prejudice or tactically disadvantage the
non-moving party; (3) whether a stay will simplify the issues
in question and streamline the trial; and (4) whether a stay
will reduce the burden of litigation on the parties and on
the court.” Grice Eng'g, Inc. v. JG
Innovations, Inc., 691 F.Supp.2d 915, 920 (W.D. Wis.
2010) (citation omitted). The court must balance these
factors “in light of the court's strict duty to
exercise jurisdiction in a timely manner.” Id.
“The proponent of a stay bears the burden of
establishing its need.” Clinton, 520 U.S. at
offers three arguments in support of a stay, but none are
persuasive at this point. First, a stay pending resolution of
the underlying litigation would allow the parties to
accurately assess the damages allegedly attributable to Offit
Kurman's malpractice, which Waterstone alleges includes
its attorney fees incurred and damages awarded in
Herrington and Werner. But these damages
will only need to be calculated if liability is established.
Both Herrington and Werner may be resolved
before this case, so it would be premature to stay the case
now. And if this case closes in on the damages question
before Herrington and Werner are resolved,
Waterstone can renew its motion to stay.
second reason for a stay is that Offit Kurman will seek
discovery of the defense strategy and advice offered by
Waterstone's current counsel in
Herrington, Ogletree Deakins. Disclosure of this
information heightens the risk that opposing counsel in
Herrington will obtain a copy, even if a protective
order is in place, argues Waterstone. Offit Kurman does not
dispute that it will seek this discovery, but at this point,
it's far from clear that it will be successful.
Privileged matter is usually nondiscoverable. Whether
specific information meets an exception to the
attorney-client privilege or work-product doctrine is an open
question, and if some information may be discoverable, a
protective order will be sufficient. The risk of disclosure
of sensitive information does not warrant a stay.
Waterstone argues that a stay is necessary to avoid a
conflict of interest that would force Ogletree Deakins to
withdraw from Herrington and Werner. The
problem, according to Waterstone, is that Offit Kurman
intends to file a third-party complaint asserting an
equitable contribution claim against Ogletree Deakins, which
would create a conflict of interest for Ogletree Deakins.
Offit Kurman's response to this contention is confusing:
it argues that “there would be no justifiable basis to
seek contribution from [Ogletree Deakins] based on the
current facts before this Court, ” but then it asks the
court to “[e]nter an order granting [it] leave to file
a Third Party Compliant against Ogletree Deakins.” Dkt.
27, at 7, 11. Regardless, as both parties appear to
acknowledge, Offit Kurman must move for leave to file a
third-party complaint-it does not have an automatic right to
do so, as more than 14 days have passed since it filed its
answer. See Fed. R. Civ. P. 14(a)(1). Offit Kurman
has not filed such a motion. And even if it does, the court
may not grant the motion-Waterstone cites some cases
indicating that courts may deny such a motion if the
third-party practice would “unduly complicate the
original suit, ” Cent. States, Se. & Sw. Areas
Pension Fund v. Gopher News. Co., 542 F.Supp.2d 823, 826
(N.D. Ill. 2008), or “prejudice the original
plaintiff.” Dishong v. Peabody Corp., 219
F.R.D. 382, 385 (E.D. Va. 2003); see also 6 Charles
Alan Wright & Arthur R. Miller, Federal Practice and
Procedure, § 1443 (3d ed. 2017). So the
conflict-of-interest problem of which Waterstone complains,
just like the damages problem, is merely hypothetical at this
point. Thus, the court will deny Waterstone's motion
without prejudice to it refiling later in the litigation,
should one of these hypothetical problems materialize.
ORDERED that plaintiff Waterstone Mortgage Corporation's
motion to stay, ...