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Branch Banking and Trust Co. v. Servisfirst Bank

United States District Court, S.D. West Virginia

November 1, 2019

BRANCH BANKING AND TRUST COMPANY, a North Carolina corporation, Plaintiff,
v.
SERVISFIRST BANK; MBH HIGHLAND, LLC d/b/a HIGHLAND HOSPITAL; WORLD GLOBAL CAPITAL, LLC d/b/a FUNDKITE FUNDING; GREEN CAPITAL FUNDING, LLC; and MCA RECOVERY LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          John T. Copenhaver, Senior United States District Judge

         Pending is a motion to stay discovery, filed June 20, 2019 by defendants World Global Capital, LLC, Green Capital Funding, LLC, and MCA Recovery, LLC (collectively the “New York Defendants”).

         I.

         Plaintiff Branch Banking and Trust Company (“BB&T”) instituted this interpleader action in the Circuit Court of Kanawha County, West Virginia on April 5, 2019. The underlying dispute revolves around competing claims to certain deposit accounts opened and maintained by defendant MBH Highland Hospital, LLC (“Highland Hospital”) at BB&T, with which Highland Hospital maintains its account at the BB&T branch located at 300 Summers Street, Charleston, West Virginia. Compl. ¶¶ 9, 15-17, ECF No. 1-1. As a disinterested stakeholder, BB&T asserts no claim to the money in Highland Hospital's deposit accounts. Id. ¶ 22. Rather, BB&T seeks a court's determination of the proper distribution of the funds in these accounts among the conflicting claims of the defendants. Id. ¶¶ 15, 20.[1]

         The interpleader complaint alleges that Highland Hospital's ultimate parent company is nonparty Meridian Behavioral Health Systems, LLC (“MBHS”), whose sole member is a nonparty individual, Wesley E. Mason III (“Mason”). Compl. ¶ 2, ECF No. 1-1. In February 2019, defendants World Global Capital, LLC (“WGC”) and Green Capital Funding, LLC, (“GCF”) were each awarded a judgment in the Supreme Court of the State of New York against Mason and MBHS and its affiliates, including Highland Hospital. Id. ¶¶ 10-11.[2] On February 27, 2019 and March 1, 2019, BB&T received two Information Subpoenas with Restraining Notices in connection with the two New York judgments stating that $305, 466.91 (WGC) and $834, 001.00 (GCF), respectively, remained due on the judgments plus interest. Id. ¶¶ 12-13. On March 1, 2019, BB&T also received a levy and demand on Highland Hospital's deposit accounts, directing BB&T to remit the sum of $876, 113.65 to GCF. Id. ¶ 14. The interpleader complaint further alleges that “BB&T has been notified” by unidentified sources that the funds requested may not properly belong to WGC or GCF and that ServisFirst Bank (“ServisFirst”) “may hold a first priority perfected security interest in all assets of MBHS and its affiliates, including Highland Hospital, and has filed UCC financing statements regarding the same.” Id. ¶ 15.

         BB&T has named all of the above-named entities as defendants in this action. Both Highland Hospital and ServisFirst asserted crossclaims against the New York Defendants in the state court action[3] seeking, inter alia, an order that Highland Hospital possesses a valid claim to the deposit funds, subject to ServisFirst's perfected security interest. See ServisFirst's Answer, ECF No. 18; Highland Hospital's Answer, ECF No. 3.

         On May 8, 2019, the New York Defendants removed the interpleader action to this court. On May 30, 2019, the New York Defendants filed (1) a motion to dismiss Highland Hospital's crossclaims for lack of personal jurisdiction and lack of subject matter jurisdiction, or, in the alternative, transfer of venue to the Western District of New York; and (2) a motion to dismiss BB&T's interpleader complaint for lack of personal jurisdiction, or, in the alternative, transfer venue to the Western District of New York. On June 7, 2019, Highland Hospital moved to remand the case to state court because the New York Defendants failed to obtain the consent of either Highland Hospital or ServisFirst before removal. On June 20, 2019, the New York Defendants filed (1) a motion to stay discovery pending a decision on the above jurisdictional motions, and (2) a motion to realign ServisFirst and Highland Hospital as plaintiffs prior to any determination on whether removal was proper.

         The parties have filed several additional motions since then: (1) the New York Defendants filed a motion on June 28, 2019 to dismiss ServisFirst's crossclaims for lack of subject matter jurisdiction and for failure to state a claim, or, in the alternative, transfer venue to the Western District of New York; (2) BB&T filed a motion on July 12, 2019 to deposit the interpleader funds with the court; and (3) BB&T filed a motion on July 26, 2019 requesting leave to file an amended complaint. In total, there are eight pending motions in this case.

         II.

         Federal Rule of Civil Procedure 26(c) provides pertinently as follows:

         A party or any person from whom discovery is sought may move for a protective order . . . . The court may, for good cause, issue an order to protect a party or person from . . . undue burden or expense, including one or more of the following: (A) forbidding the disclosure or discovery; (B) specifying terms, including time and place . . . for the disclosure or discovery . . . .

Fed. R. Civ. P. 26(c).

         The Rule vests the court with discretion to stay discovery in advance of deciding a pending dispositive motion. See Thigpen v. United States, 800 F.2d 393, 396-97 (4th Cir. 1986) overruled on other grounds, Sheridan v. United States, 487 U.S. 392 (1988) (“Nor did the court err by granting the government's motion under Fed.R.Civ.P. 26(c) to stay discovery pending disposition of the 12(b)(1) motion. . . . Trial courts . . . are given wide discretion to control this discovery process . . . .”).

         As noted by one court, “such a procedure is an eminently logical means to prevent wasting the time and effort of all concerned, and to make the most efficient use of judicial resources.” Coastal States Gas Corp. v. Department of Energy, 84 F.R.D. 278, 282 (D.C. Del. 1979). The ...


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