Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-02904/USCOURTS-cand-5_05-cv-02904-6/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

BRAULIO RODRIGUEZ, et al.,

Plaintiffs,

 v.

SUMMIT MORTGAGE REALTY, INC., et al.,

Defendants. /

JUAN MEDINA, et al.,

Plaintiffs,

 v.

ARGENT MORTGAGE COMPANY, et al.,

Defendants.

 /

No. C05-02904 HRL

No. C05-02905 HRL

ORDER GRANTING THE SUMMIT

DEFENDANTS’ REQUEST TO EXTEND

STAY

[Re: C04-02904, Docket No. 56]

[Re: C05-02905, Docket No. 135]

These civil actions arise from alleged predatory lending practices in connection with

home loan mortgages for which plaintiffs seek damages, as well as declaratory and injunctive

relief. A stay currently is in effect in both cases in light of ongoing state criminal proceedings

against defendants Esperanza Valverde, Herman Covarrubias and Cesar Valverde (aka Cesar

Ponte). Case No. C05-02904HRL, Rodriguez v. Summit Mortgage Realty, Inc., et al. (the

“Rodriguez Action”) is stayed in its entirety as to all defendants. Case No. C05-02905HRL,

Medina, et al. v. Argent Mortgage Company, et al., (the “Medina Action”) is stayed only as to

*E-FILED: 7.11.2007*

Case 5:05-cv-02904-HRL Document 64 Filed 07/11/07 Page 1 of 6
United States District Court

For the Northern District of California

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Summit Mortgage Realty, Esperanza Valverde, Herman Covarrubias and Cesar Valverde (the

“Summit Defendants”).

The current stay was to expire on June 30, 2007. Once again, the Summit Defendants

request that it be extended. They advise that trial in the criminal matter has been set for January

14, 2008, and they seek to extend the stay of these civil proceedings through at least February

14, 2008. There evidently is no objection to the requested extension in the Rodriguez Action. 

However, plaintiffs in the Medina Action oppose the Summit Defendants’ request. The stay

remains in effect pending resolution of this dispute. The court finds that the instant matter is

suitable for determination without oral argument. See CIV. L.R. 7-1(b). Upon consideration of

the papers filed by the parties, the court grants the Summit Defendants’ request.

As previously observed by this court, “[t]he Constitution does not ordinarily require a

stay of civil proceedings pending the outcome of criminal proceedings.” Keating v. Office of

Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 1995) (citing Federal Savings & Loan Ins. Corp.

v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989)). Absent substantial prejudice to the parties

involved, simultaneous parallel civil and criminal actions are unobjectionable. Id. Nonetheless,

a court may exercise its discretion to stay civil proceedings when the interests of justice so

require. Id. “The decision whether to stay civil proceedings in the face of a parallel criminal

proceeding should be made ‘in light of the particular circumstances and competing interests

involved in the case.’” Id. (quoting Molinaro, 889 F.2d at 902). The court “should consider

‘the extent to which the defendant’s fifth amendment rights are implicated.’” Id. Additionally,

the court should also generally consider the following factors:

(1) the interest of the plaintiffs in proceeding expeditiously

with this litigation or any particular aspect of it, and the

potential prejudice to plaintiffs of a delay;

(2) the burden which any particular aspect of the proceedings

may impose on defendants;

(3) the convenience of the court in the management of its cases,

and the efficient use of judicial resources;

(4) the interests of persons not parties to the civil litigation; and

(5) the interest of the public in the pending civil and criminal

litigation.

Case 5:05-cv-02904-HRL Document 64 Filed 07/11/07 Page 2 of 6
United States District Court

For the Northern District of California

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1 To the extent there are other concerns, the Summit Defendants have not

clearly identified them to the court. Esperanza Valverde’s criminal defense counsel attests –

but only in very conclusory fashion – that Valverde will be irreparably harmed if she is

forced to simultaneously defend against the Medina plaintiff’s civil lawsuit. (See Picone

Decl. ¶ 10).

3

Id. at 325.

There being no objection to a continued stay in the Rodriguez Action, the Summit

Defendants’ request is granted as to that proceeding. The court will now turn to an evaluation

of the arguments presented by the Medina plaintiffs and the Summit Defendants.

The Summit Defendants maintain that lifting the stay will impose an undue burden upon

their fifth amendment rights.1

 There is no serious dispute that the fifth amendment rights of the

individual Summit Defendants are implicated because of the parallel criminal proceedings

against them. Moreover, the court previously found that while Summit Mortgage Realty enjoys

no such privilege, there apparently is no other corporate personnel who could be designated to

testify on its behalf.

At the same time, however, even where a defendant has a strong fifth amendment

interest, this court also recognizes that:

[a] defendant has no absolute right not to be forced to choose between

testifying in a civil matter and asserting his Fifth Amendment privilege. Not

only is it permissible to conduct a civil proceeding at the same time as a

related criminal proceeding, even if that necessitates invocation of the Fifth

Amendment privilege, but it is even permissible for the trier of fact to draw

adverse inferences from the invocation of the Fifth Amendment in a civil

proceeding.

Keating, 43 F.3d 322, 326 (1995) (citing Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)). 

Moreover, the court may deny a stay where less drastic remedies can protect defendants’ fifth

amendment privileges – e.g., by answering with truthful information that does not incriminate

them or through appropriate protective orders. See Molinaro, 899 F.2d at 903. Nevertheless,

unlike Molinaro, the Summit Defendants have been indicted and have not yet given any

depositions concerning the instant action. Accordingly, the court concludes that defendants

have a significant fifth amendment interest – which nonetheless is but one factor to be weighed

against other considerations.

Case 5:05-cv-02904-HRL Document 64 Filed 07/11/07 Page 3 of 6
United States District Court

For the Northern District of California

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For their part, the Medina plaintiffs contend that an extended stay will threaten their

ability to effectively prosecute their claims – e.g., because of the general risk that witnesses may

relocate and memories may fade over time. They also assert that their ability to obtain any

recovery against the Summit Defendants will be compromised. Here, they express concern that

the Summit Defendants will dissipate their assets by, for example, continuing to pay their

private criminal defense counsel.

Plaintiffs do have an interest in proceeding promptly and expeditiously with their

claims. Nevertheless, under the particular circumstances presented here, the court finds these

arguments underwhelming. In its March 21, 2007 order, the court expressed a desire to see

some substantiation of plaintiffs’ assertions of prejudice. In their present opposition papers,

plaintiffs have declined to do so and merely refer the court to the allegations of their Second

Amended Complaint. Plaintiffs are free at this time to take discovery of other defendants, talk

with witnesses and, if necessary, take steps to preserve their own testimony as to the events in

question. Moreover, it is not clear that dissipation of assets (if any) would be alleviated if the

Summit Defendants were compelled to simultaneously defend the criminal and civil actions.

The Medina plaintiffs nonetheless argue that they are being hampered from discovering

the identity of any potential new “victims,” and, further, they express concern that the statute of

limitations may be running as to any unknown and unidentified claims. Additionally, they

contend that the Summit Defendants continue to pose a threat to the public at large because

their real estate licenses have not been suspended or revoked and they continue to operate their

business while on out on bail pending their criminal trial. Here, they point to testimony from a

June 2006 bail hearing which, plaintiffs say, establish that Esperanza Valverde continues to

breach her fiduciary duties. (See Zahradka Decl., ¶ 6, Ex. B at pp. 35-36). The Summit

Defendants object to the evidentiary value of that testimony here as hearsay.

This court finds that any risk of harm to third parties, although theoretically possible,

does not, on the record presented, outweigh the Summit Defendants’ fifth amendment interests. 

The state court apparently has seen fit to keep the Summit Defendants free on bail, and they are

entitled to due process of law as to the charges against them. While the court and the public

Case 5:05-cv-02904-HRL Document 64 Filed 07/11/07 Page 4 of 6
United States District Court

For the Northern District of California

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generally have an interest in the expeditious resolution of litigation, under the circumstances

presented here, the court concludes that, on balance, the interests of justice require an extension

of the stay of these proceedings.

Based on the foregoing, IT IS ORDERED THAT:

1. The Summit Defendants’ request to extend the stay is GRANTED. The stay of

the Rodriguez Action (as to all defendants) and the Medina Action (as to the Summit

Defendants only) is extended until the resolution of the state criminal proceedings or February

14, 2008, whichever occurs first. If the criminal trial is completed before February 14, 2008,

the Summit Defendants shall promptly file a report so advising the court and the parties in the

Rodriguez and Medina Actions.

No later than February 19, 2008, the parties shall file a joint case management

statement in their respective actions. The parties in both actions shall appear for a case

management conference on February 26, 2008, 1:30 p.m. in Courtroom 2.

2. The Summit Defendants shall continue to provide monthly status reports as to

the progress of the criminal case pursuant to this court’s March 21, 2007 order.

Dated:

 

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

July 11, 2007

Case 5:05-cv-02904-HRL Document 64 Filed 07/11/07 Page 5 of 6
United States District Court

For the Northern District of California

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5:05-cv-2904 Notice will be electronically mailed to: 

Philip M. Adleson padleson@ahk-law.com, tclark@ahk-law.com 

Nancy M. Battel nancy@battelaw.com, battelaw@aol.com 

Hsiao C. Mao mmao@ahk-law.com, dvajretti@ahk-law.com 

James L. Stoelker jstoelker@mount.com, sretes@mount.com 

Glenn H. Wechsler glenn@glennwechsler.com

5:05-cv-2905 Notice will be electronically mailed to: 

Philip M. Adleson padleson@ahk-law.com, tclark@ahk-law.com 

Kerstin Arusha kerstina@lawfoundation.org 

Peter N. Brewer pbrewer@brewerfirm.com, julia@brewerfirm.com 

Moses Diaz mosesd@lawfoundation.org, moses@ucdavis-alumni.com 

Matthew Greinert greinertm@howrey.com, jamesjimmy@howrey.com 

Kyra Ann Kazantzis kyrak@lawfoundation.org 

David A. Makman makmand@howrey.com, 

Hsiao C. Mao mmao@ahk-law.com, dvajretti@ahk-law.com 

Jack R. Nelson jnelson@reedsmith.com, cahunt@reedsmith.com; jnelson@reedsmith.com 

Paul E. Rice price@rutan.com, jmccluskey@rutan.com 

James F. Zahradka , II jamesz@lawfoundation.org, teresam@lawfoundation.org 

Counsel are responsible for distributing copies of this document to co-counsel who have

not registered for e-filing under the court’s CM/ECF program.

Case 5:05-cv-02904-HRL Document 64 Filed 07/11/07 Page 6 of 6