UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

WEST PALM BEACH DIVISION

CASE NO. 22-81913-CIV-CANNON/Reinhart

OASIS CAPITAL, LLC,

 

Plaintiff, 

v. 

NASON, YEAGER, GERSON, 

HARRIS & FUMERO, P.A., and

BRIAN S. BERNSTEIN, 

Defendants.

_______________________________________/ 

ORDER ACCEPTING MAGISTRATE JUDGE’S

REPORT AND RECOMMENDATIONS [ECF No. 87] 

THIS CAUSE comes before the Court upon Defendants’ Motion to Stay Case Pending 

Resolution of SEC Litigation Against Plaintiff (the “Motion”) [ECF No. 82]. The Motion was 

referred to Magistrate Judge Bruce E. Reinhart for a report and recommendation [ECF No. 85]. 

On February 2, 2024, Judge Reinhart issued a report recommending denial of the Motion (the 

“Report”) [ECF No. 87]. Defendants filed timely Objections to the Report [ECF No. 97], to which 

Plaintiff responded [ECF No. 113]. The Court has reviewed the Report [ECF No. 87], Defendants’

Objections [ECF No. 97], Plaintiff’s Response [ECF No. 113], and the full record. For the reasons 

set forth below, the Report [ECF No. 87] is ACCEPTED, and the Motion [ECF No. 82] is 

DENIED. 

RELEVANT BACKGROUND

Plaintiff brings this action against its former lawyers, alleging malpractice, breach of 

contract, and breach of fiduciary duty [ECF No. 23]. Plaintiff alleges that Defendants mishandled 

a series of convertible promissory note transactions related to dealings with Molecular Data Inc. 

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(“MKD”), Generex Biotechnology Corporation (“Generex”), and Fact Molecular Data Inc. 

(“FCTI”) [ECF No. 23 ¶ 39]. Specifically, Plaintiff asserts that Defendants improperly drafted

documents concerning a transaction involving MKD, and that as a result, Plaintiff did not receive 

the proper number of shares [ECF No. 23 ¶ 53]. In addition, Plaintiff alleges that Defendants 

failed to file the necessary paperwork to perfect Plaintiff’s security interests in the Generex and 

FCTI transactions [ECF No. 23 ¶ 109]. 

On September 28, 2023, in a separate federal action, the Securities and Exchange 

Commission (“SEC”) filed a complaint against Plaintiff in the U.S. District Court for the Northern 

District of Illinois, Eastern Division [ECF No. 82-1]. In that pending action, which was recently 

transferred to a different U.S. District Judge,1 the SEC alleges that Plaintiff acted as an unregistered

dealer and yielded significant profits from engaging “in at least 20 Variable Convertible Note 

Transactions with at least 15 microcap or penny stock companies between November 2018 and 

August 2021” [ECF No. 82-1 ¶ 36]. The SEC did not specifically identify any transactions with 

MKD, Generex, or FCTI in its complaint. 

PROCEDURAL HISTORY

On January 31, 2024, Defendants filed the instant Motion to Stay Case Pending Resolution 

of the SEC Litigation Against Plaintiff [ECF No. 82]. Following referral, Judge Reinhart issued 

the instant Report [ECF No. 87]. The Report recommends denying Defendants’ Motion for three 

overall reasons: (1) a stay would not promote judicial economy or save party resources given the 

early stages of the SEC case as compared to the significantly more developed posture of this 

proceeding; (2) the extent to which a potential resolution in the SEC matter would clarify or resolve 

issues in this case is unclear and attenuated; and (3) Plaintiffs would be prejudiced by a stay in the 

1 See Case No. 23-14260-CIV (N.D. Ill.) 

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form of unnecessary delay [ECF No. 87]. The Report is ripe for adjudication [ECF Nos. 87, 97, 

113]. 

LEGAL STANDARD

To challenge the findings and recommendations of a magistrate judge, a party must file 

specific written objections identifying the portions of the proposed findings and recommendation 

to which objection is made. See Fed. R. Civ. P. 72(b)(3); Heath v. Jones, 863 F.2d 815, 822 

(11th Cir. 1989); Macort v. Prem, Inc., 208 F. App’x 781, 784 (11th Cir. 2006). A district court 

reviews de novo those portions of the report to which objection is made and may accept, reject, or 

modify in whole or in part, the findings or recommendations made by the magistrate judge. 

28 U.S.C. § 636(b)(1). To the extent a party fails to object to parts of the magistrate judge’s report, 

the Court may accept the recommendation so long as there is no clear error on the face of the 

record. Macort, 208 F. App’x at 784. Legal conclusions are reviewed de novo, even in the absence 

of an objection. See LeCroy v. McNeil, 397 F. App’x 554, 556 (11th Cir. 2010); Cooper-Houston 

v. S. Ry. Co., 37 F.3d 603, 604 (11th Cir. 1994). And more generally, it is well-established that 

the standard for granting a stay is discretionary [ECF No. 87 p. 3].

DISCUSSION

Upon de novo review of the Report in light of Defendants’ Objections and the full record, 

the Court agrees with the Report’s discretionary recommendation that a stay is not warranted. The 

Report properly evaluates the factors applicable to evaluating a stay request. See Buchalter v. 

AstraZeneca Pharms., LP, No. 17-61630-CIV, 2018 WL 8244794, at *1 (S.D. Fla. July 24, 2018). 

As the Report determines, this case has been active for over a year, with discovery completed last 

month, and mediation scheduled to take place on April 8, 2024 [ECF Nos. 1, 45, 64, 74]. 

Additionally, Plaintiffs have made an adequate showing that they will be prejudiced by a stay. By 

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reasonable estimates, the SEC action, recently transferred to a different judge, likely will take years 

to resolve, if not more, creating an undue delay in Plaintiff’s ability to seek the very substantial 

damages sought in this action [see ECF No. 87 p. 4; ECF No. 23 ¶ 121]. More fundamentally, 

Defendants have not established a sufficient basis to believe that waiting likely years until 

resolution of the SEC case will materially impact resolution of this proceeding or otherwise 

simplify the issues in question—at least not to a degree warranting the discretionary grant of a 

stay. This is especially so given that the pending SEC litigation does not expressly concern the 

disputed transactions in this case [ECF No. 82-1]. In sum, the Court agrees with the Report that 

Defendants “have not shown that the stay will simplify the issues in question or streamline the 

trial” [ECF No. 87 p. 5].

Defendants’ Objections do not reveal error in the Report’s ultimate decision to recommend 

against a stay. Defendants state, for example, that the pending SEC litigation will “preclude the 

pending claims” in this case, because a finding in the SEC action that Plaintiff acted as an 

unlicensed securities dealer will invalidate all of Plaintiff’s transactions and therefore preclude 

Plaintiff’s recovery of damages in this case in light of Defendants’ in pari delicto affirmative 

defense [ECF No. 97 p. 2]. Although somewhat reasonable, Defendants’ Objection (crystalized 

really for the first time in the form of Objections) does not change the Court’s discretionary stay 

calculus. It remains the case that any impact from the SEC case on Defendants’ equal-fault defense 

and Plaintiff’s recovery of damages is attenuated and hinges on a series of uncertain variables—a 

finding of liability in the SEC action (whenever, and if, it comes to pass), clear application of that 

finding of liability to invalidate the subject transactions in this case on the multiple theories of 

liability raised (an unsettled question), and application of that finding of liability to any 

hypothetical damages awarded in this case based on the affirmative defenses raised [ECF No. 87 

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pp. 4–5]. Those uncertain contingencies do not sufficiently tip the scales in favor of a stay given 

the unavoidable, substantial delay that any such stay would cause on Plaintiff’s entitlement to 

proceed with its case. Defendants also take issue with the Report’s finding that Defendants will 

not be unduly prejudiced by a stay, citing difficulties in obtaining discovery [ECF No. 97 pp. 8–

10]. As the record reflects, however, Magistrate Judge Reinhart continues to responsibly manage 

contested discovery matters in this case, including as relate to matters in the SEC case 

[see ECF No. 121]. 

For these reasons, and for the reasons stated in the Report, the Court exercises its discretion 

not to grant the requested stay, which Defendants sought nearly four months after the SEC case 

commenced on September 28, 2023. The Report and Recommendation [ECF No. 87] is 

ACCEPTED. Defendants’ Motion to Stay [ECF No. 82] is DENIED.

DONE AND ORDERED in Chambers at Fort Pierce, Florida, this 4th day of April 2024.

 _________________________________

 AILEEN M. CANNON

 UNITED STATES DISTRICT JUDGE

cc: counsel of record

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