UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

NORTHERN DIVISION

DANIEL KAMMER, KELLY KAMMER,

SAND LAKE INN,

Plaintiffs/Counter-Defendants,

Case Number 09-13177-BC

v. Honorable Thomas L. Ludington

CINCINNATI INSURANCE COMPANY,

Defendant/Counter-Claimant.

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ORDER GRANTING PLAINTIFFS’ MOTION TO STAY PROCEEDINGS, STAYING

SCHEDULING ORDER FOR NINETY DAYS, AND CANCELING HEARING

Plaintiffs Daniel and Kelly Kramer, also d/b/a Sand Lake Inn, initially filed a complaint

against Defendant Cincinnati Insurance Company in Iosco County Circuit Court. Plaintiffs served

Defendant on July 20, 2009, and Defendant removed the case to this Court on the basis of diversity

jurisdiction and filed counterclaims on August 12, 2009. Plaintiffs allege a breach of contract claim

against Defendant arising out of the denial of their insurance claim for the loss of the Sand Lake Inn

due to fire on or about February 27, 2008. Plaintiffs allege that Defendant wrongfully denied

coverage on the ground that the loss was due to a “dishonest act.” Plaintiffs allege that Defendant

relied on the unsubstantiated and untrue suggestion that Plaintiff Daniel Kammer caused the fire by

pouring gasoline into a crawl space under the utility room. In its counterclaims, Defendant alleges

breach of contract, fraud, and misrepresentation arising out of Plaintiffs’ conduct during its

investigation of the fire, and seeks to recover investigative costs. Defendant asserts that a witness

saw Plaintiff Daniel Kammer leaving the premises about fifteen minutes before the fire occurred.
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Now before the Court is Plaintiffs’ motion to stay [Dkt. # 15], filed on February 8, 2010.

Plaintiffs request that the Court stay these proceedings, or at least discovery, based on Plaintiff

Daniel Kammer’s fifth amendment right to not incriminate himself as to arson-related criminal

charges that are pending against him in Iosco County. In particular, Plaintiffs assert that Plaintiff

Daniel Kammer’s testimony is important because it is contrary to the circumstantial evidence that

Defendant relied upon. Defendant filed a response [Dkt. # 16] on February 22, 2010; and Plaintiff

filed a reply on February 23, 2010. While the motion was originally scheduled for hearing on April

15, 2010, the hearing was adjourned several times based on the parties’ requests and a conflict on

the Court’s calendar. See [Dkt. # 24]. For the reasons stated below, an initial stay of the scheduling

order for ninety days is appropriate at this juncture.

The Fifth Amendment provides that “No person shall be . . . compelled in any criminal case

to be a witness against himself.” U.S. Const. amend. V. “The fifth amendment privilege not only

protects the individual against being involuntarily called as a witness against himself in a criminal

prosecution but also privileges him not to answer questions put to him in any other proceeding, civil

or criminal, formal or informal, where the answers might incriminate him in future criminal

proceedings.” In re Morganroth, 718 F.2d161, 164-65 (6th Cir. 1983) (citing Lefkowitz v. Turley,

414 U.S. 70 (1973)).

When the Fifth Amendment is implicated in a civil case because of a pending criminal

prosecution, an appropriate remedy may be to “postpon[e] civil discovery until termination of the

criminal action.” United States v. Kordel, 397 U.S. 1, 9 (1970) (footnote omitted). See also id. at

12 n.27 (noting that “[f]ederal courts have deferred civil proceedings pending the completion of

parallel criminal prosecutions when the interests of justice seemed to require such action”); Landis
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v. N. Am. Co., 299 U.S. 248, 255 (1936) (noting generally that a court may stay an action upon

demonstration of “a clear case of hardship or inequity in being required to go forward, if there is

even a fair possibility that the stay for which he prays will work damage to some one else”).

In response to Plaintiffs’ motion, Defendant highlights that there is only partial overlap

between this civil action and the pending criminal proceedings. In particular, Defendant emphasizes

that its breach of contract counterclaim alleges that Plaintiffs did not fully meet their obligation to

cooperate with the investigation of the fire under the insurance policy. Defendant suggests that

Plaintiff Daniel Kammer’s fifth amendment rights would be immaterial to such claims, citing Allen

v. Mich. Basic Property Ins. Co., 640 N.W.2d 903 (Mich. Ct. App. 2001). However, Defendant has

not explained why the possibility that those claims could proceed outweighs the fact that Plaintiff

Daniel Kammer’s fifth amendment rights are implicated by Plaintiffs’ own claims. Nor has

Defendant explained why litigation should proceed on only some claims and not others when such

a procedure would not be efficient. While Defendant asserts that it will be prejudiced by delay, it

did not identify any specific reasons for such prejudice.

In light of the substantial overlap between the events underlying this civil action and the

pending criminal charges against Plaintiff Daniel Kammer, Plaintiff Daniel Kammer’s fifth

amendment rights are highly implicated. The importance of protecting fifth amendment rights

justifies a delay in these proceedings. This is particularly true when Defendant did not identify any

specific form of prejudice that it will suffer from the delay. Thus, the scheduling order in this civil

action will be stayed for an initial period of ninety days. If criminal charges remain pending at that

juncture, the stay may be extended.
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Accordingly, it is ORDERED that Plaintiffs’ motion for stay [Dkt. # 15] is GRANTED.

It is further ORDERED that the Court’s scheduling order [Dkt. # 13] is STAYED until

September 10, 2010.

It is further ORDERED that the hearing scheduled for June 14, 2010, is CANCELED.

s/Thomas L. Ludington 

THOMAS L. LUDINGTON

United States District Judge

Dated: June 11, 2010

PROOF OF SERVICE

The undersigned certifies that a copy of the foregoing order was served

upon each attorney or party of record herein by electronic means or first

class U.S. mail on June 11, 2010.

s/Tracy A. Jacobs 

TRACY A. JACOBS