Duncan v. Banks
5:15-cv-00148
W.D. Tex.Oct 24, 2017Background
- Duncan sued his former financial adviser Banks for breach of fiduciary duty and fraud relating to investments; claims involving LMBIP were retained in this District.
- Banks was criminally indicted and later pled guilty to wire fraud relating to separate Gameday transactions; he was sentenced and ordered to pay $7.5 million restitution and appealed his sentence.
- The civil action was stayed after Banks requested a stay pending the related criminal proceedings; the stay remained in place for over a year.
- Duncan moved to reopen the civil matter and lift the stay to resume discovery and move the case toward resolution.
- Banks opposed lifting the stay, arguing continued Fifth Amendment risks during his criminal appeal and possible re-sentencing; Duncan argued the civil claims concern different investments and the need to avoid further delay.
- The Court applied the established six-factor test for stays implicating Fifth Amendment concerns and considered narrowing discovery or protective orders as alternatives.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the stay should be lifted | Lift the stay; civil claims involve a different investment (LMBIP) so no self-incrimination risk | Keep the stay; appeal and possible re-sentencing could implicate Fifth Amendment and require silence in civil discovery | Stay lifted — court found stay not necessary to protect Fifth Amendment rights |
| Extent of overlap between criminal and civil matters | Little/no overlap — criminal relates to Gameday, civil to LMBIP | Overlap in course of dealing could risk incrimination | Found minimal overlap; factor favors lifting stay |
| Status of criminal case and Fifth Amendment implication | Guilty plea limits Fifth Amendment concerns because conviction facts not in dispute | Appeal of sentence and potential re-sentencing could still implicate rights | Because Banks pled guilty and appeals only sentence, this factor favors lifting stay |
| Prejudice and burden (private/public/court interests) | Continued delay harms plaintiff’s interest in timely resolution; remedies are distinct from criminal restitution | Reopening discovery may force invocation of Fifth Amendment and impair defense | Court: plaintiff’s delay claim is not shown beyond delay (neutral); defendant’s claimed harm is speculative; court and public interests favor lifting stay |
Key Cases Cited
- Sec. Exch. Comm’n v. First Fin. Grp. of Tex., Inc., 659 F.2d 660 (5th Cir. 1981) (district court may stay civil proceedings to prevent prejudice when Fifth Amendment issues arise)
- Bean v. Alcorta, 220 F. Supp. 3d 772 (W.D. Tex. 2016) (stay appropriate when asserting Fifth Amendment would conflict with civil defense)
- Alcala v. Tex. Webb Cty., 625 F. Supp. 2d 391 (S.D. Tex. 2009) (courts weigh six-factor test including judicial economy and defendant’s privilege)
- United States v. Roundtree, 420 F.2d 845 (5th Cir. 1969) (party must elect privilege question-by-question in civil discovery)
- United States v. Melchor Moreno, 536 F.2d 1042 (5th Cir. 1976) (Fifth Amendment protects only genuinely threatening questions)
- United States v. Gomez-Rojas, 507 F.2d 1213 (5th Cir. 1975) (blanket invocation of Fifth insufficient; only where nearly all relevant questions legitimately threaten incrimination may a party refuse)
- Campbell v. Eastland, 307 F.2d 478 (5th Cir. 1962) (trial court has discretion to narrow discovery where appropriate)