Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-02904/USCOURTS-cand-5_05-cv-02904-4/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NOT FOR CITATION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 IN PART AND

DENYING IN PART THE SUMMIT

DEFENDANTS’ REQUEST TO EXTEND

STAY

[Re: C04-02904, Docket No. 46]

[Re: C05-02905, Docket No. 95]

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. Both lawsuits are currently stayed in light of an ongoing state criminal proceeding

against defendants Esperanza Valverde and Herman Corvarrubias. The stay originally was to

expire on January 30, 2007; however, defendants Summit Mortgage Realty, Esperanza

Valverde, Herman Covarrubias and Cesar Valverde (aka Cesar Ponte) (the “Summit

Defendants”) report that the criminal action is still ongoing. They request that the stay be

*E-FILED ON 3/21/07*

Case 5:05-cv-02904-HRL Document 51 Filed 03/21/07 Page 1 of 5
United States District Court

For the Northern District of California

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extended through June 30, 2007.

There is no objection to the requested extension in Case No. C05-02904 HRL (the

Rodriguez Action). However, the plaintiffs in Case No. C05-02905 (the Medina Action)

oppose the Summit Defendants’ request. The stay has been extended pending resolution of this

dispute. Upon consideration of the papers filed by the parties, and the arguments presented at

the March 13, 2007 hearing, the court grants in part and denies in part the Summit Defendants’

request.

“The 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.

Id. at 325.

Case 5:05-cv-02904-HRL Document 51 Filed 03/21/07 Page 2 of 5
United States District Court

For the Northern District of California

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1 Relying upon the declaration of Christian Picone, Valverde’s criminal defense

attorney, the Summit Defendants suggest that any delay in the criminal action is entirely the

fault of the District Attorney and the Medina plaintiffs. The Medina plaintiffs dispute many

of the assertions in Picone’s declaration and move to strike it. Suffice to say, this court has

simply noted that the conduct of the parallel criminal proceedings apparently is a matter of

some disagreement between the parties. Plaintiffs’ motion to strike is denied as moot.

3

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

Defendants’ request is granted as to that proceeding.

As for the Medina Action, the court previously concluded that the Fifth Amendment

rights of defendants Valverde and Covarrubias are clearly implicated in light of the similarity of

the allegations in the criminal action and those raised in the instant proceeding. Further,

although defendant Summit Mortgage Realty enjoys no such privilege, the court found that (a)

Valverde and Covarrubias are the persons most knowledgeable whom the corporate defendant

would designate to testify on its behalf; and (b) there appear to be no other corporate personnel

who could be so designated. The parties have provided no reason to depart from these

conclusions.

It is true that the instant actions have been stayed for a longer period of time than

anyone thought would be necessary.1

 Additionally, as the Medina plaintiffs point out, the Ninth

Circuit has stated 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)).

Nevertheless, plaintiffs have failed to present evidence substantiating their assertions

that they have been prejudiced by the stay and will continue to suffer prejudice if the stay is

extended for several more months. Nor have they presented any evidence indicating that third

parties are vulnerable to becoming victims of the Summit Defendants’ alleged fraudulent

practices. Moreover, and notwithstanding the stay, plaintiffs have been permitted to file a

Second Amended Complaint, as well as a consent decree with respect to a settlement that they

Case 5:05-cv-02904-HRL Document 51 Filed 03/21/07 Page 3 of 5
United States District Court

For the Northern District of California

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reportedly have reached with defendant R+Financial. In sum, plaintiffs have not supported

their assertions that the stay is harming them in a way that outweighs the Summit Defendants’

Fifth Amendment interests. Accordingly, this court concludes that the stay should be extended

for a time as to the Summit Defendants.

However, not all of the defendants in the instant action are defendants in the parallel

criminal proceeding, and the stay will be lifted in the Medina Action as to the non-Summit

Defendants. Moreover, the Summit Defendants are advised that this court is not inclined to stay

these proceedings indefinitely. Additionally, on a going-forward basis, the court will require

the Summit Defendants to provide monthly reports as to the progress of the criminal case.

Based on the foregoing, IT IS ORDERED THAT:

1. The stay will be extended in the Rodriguez Action through June 30, 2007. The

stay will also be extended through June 30, 2007 in the Medina Action – but only as to the

Summit Defendants. If the criminal trial is completed before then, the Summit Defendants shall

promptly file a status report so advising the court and the parties in the Rodriguez and Medina

cases.

2. Beginning in April, and on a going-forward basis in both the Rodriguez and

Medina Actions, counsel for the Summit Defendants shall file a monthly status report as to the

progress of the criminal case (i.e., what is going on in the case, why, and who is responsible). 

The status report shall be filed by the fifteenth day of each month. (If the fifteenth day falls on

a weekend or a court holiday, the report shall be filed by the next court day).

Dated:

 

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

March 21, 2007

Case 5:05-cv-02904-HRL Document 51 Filed 03/21/07 Page 4 of 5
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 51 Filed 03/21/07 Page 5 of 5