Universal Metro Asian Servs. Ass'n v. Mahmood
| Decision Date | 27 April 2021 |
| Docket Number | 1-20-0584 |
| Citation | 2021 IL App (1st) 200584,195 N.E.3d 1197,457 Ill.Dec. 781 |
| Parties | UNIVERSAL METRO ASIAN SERVICES ASSOCIATION and Universal Industries, Inc., Plaintiffs-Appellees, v. Imran MAHMOOD ; Accurate Consulting Enterprise Group, Ltd.; Accurate Builders Group, Ltd.; Mehnaz Imran; and Chicago Title Land Trust Company, as Trustee on behalf of Trust No. 8002365763, Defendants-Appellants. |
| Court | United States Appellate Court of Illinois |
2021 IL App (1st) 200584
195 N.E.3d 1197
457 Ill.Dec. 781
UNIVERSAL METRO ASIAN SERVICES ASSOCIATION and Universal Industries, Inc., Plaintiffs-Appellees,
v.
Imran MAHMOOD ; Accurate Consulting Enterprise Group, Ltd.; Accurate Builders Group, Ltd.; Mehnaz Imran; and Chicago Title Land Trust Company, as Trustee on behalf of Trust No. 8002365763, Defendants-Appellants.
No. 1-20-0584
Appellate Court of Illinois, First District, Second Division.
Filed April 27, 2021
Michael Lee Tinaglia, of Law Offices of Michael Lee Tinaglia, Ltd., of Park Ridge, for appellants.
Jeffrey Schulman and Katelyn Hodgman, of Wolin & Rosen, Ltd., of Chicago, for appellees.
JUSTICE COBBS delivered the judgment of the court, with opinion.
¶ 1 Plaintiffs-appellees, Universal Metro Asian Services Association (Universal Metro) and Universal Industries, Inc. (collectively, Universal), filed suit in state court against defendants-appellants, Imran Mahmood; Mehnaz Imran; Chicago Title Land Trust Company as trustee on behalf of trust No. 8002365763; and Accurate Consulting Enterprise Group, Ltd., and Accurate Builders Group, Ltd. (collectively, Accurate companies), alleging conversion and unjust enrichment. After Mahmood was criminally charged with tax evasion in federal court, he moved to stay the state court civil proceedings and discovery until the resolution of the federal criminal case. Specifically, Mahmood argued that, without a stay, he would be denied due process in the civil proceedings because he would be forced to assert his fifth amendment right against self-incrimination while the criminal charges were still pending. The Accurate companies moved to adopt and clarify Mahmood's motion to stay. Following the circuit court's denial of their motions, defendants filed the instant interlocutory appeal. Defendants contend that the circuit court erred in denying their motions and therefore request this court to reverse the circuit court's decision and order a stay in the instant matter until the resolution of the federal criminal case. For the following reasons, we affirm.
¶ 2 I. BACKGROUND
¶ 3 Universal Metro is a not-for-profit organization that, inter alia , administers homecare services to "ethnic seniors of India, Pakistan, Bangladesh, the Middle East, Latin America, and Europe." Universal Industries, Inc., is an Illinois corporation which holds homecare services contracts that Universal Metro fulfills. The Accurate companies are accounting corporations solely owned and controlled by Mahmood, who serves as an auditor and accountant.
¶ 4 On January 19, 2017, plaintiffs filed the instant action in state court. Relevant to this appeal is plaintiffs’ second amended complaint, filed on May 7, 2019, which alleged claims of conversion and unjust enrichment.1 The complaint alleged that on or about June 24, 2002, plaintiffs and Accurate Consulting Enterprise Group, Ltd., entered into an agreement to provide a limited financial compliance audit for the period of July 2001 to February 2002. Mahmood was assigned to the audit. Although no further written agreements were executed between the parties, Mahmood continued to provide auditing services to Universal and became its comptroller and bookkeeper. Plaintiffs alleged that beginning in 2011, a series of checks and transfers totaling approximately $9 million were disbursed from Universal to Mahmood and the Accurate companies without authorization.
¶ 5 On March 21, 2019, Mahmood was charged by information with criminal tax evasion in federal court, in a case captioned United States v. Imran Mahmood, No. 18-CR-519 (N.D. Ill.). The charges alleged that in 2014, Mahmood willfully evaded payment of income tax in the amount of $1,215,935 on more than $3 million in income he received from "Company A."2 The information charged that on or about October 10, 2015, Mahmood "willfully failed and caused to be filed a false personal income tax return that failed to report all income he received in [2014]."
¶ 6 On November 6, 2019, Mahmood filed a motion to stay the civil proceedings, pending disposition of the federal criminal case. Mahmood argued that the civil proceedings should be stayed because without a stay he would be "seriously and unfairly prejudice[d]" and "will be denied due process if he is forced to assert his Fifth Amendment right against self-incrimination in these civil proceedings." Further, Mahmood argued that he would be denied his right to effective assistance of counsel.
¶ 7 While defendants’ motion was pending, plaintiffs propounded interrogatories, a request to produce documents, and a request to admit. On November 13, 2019, Mahmood moved to stay discovery, arguing that discovery should be stayed until there was a determination by the court on the motion to stay proceedings. On November 21, 2019, the circuit court ordered "[a]ll discovery as to Mahmood *** tolled pending ruling on [the] motion to stay" and set a briefing schedule on the motion to stay.
¶ 8 On December 9, 2019, the Accurate companies joined in Mahmood's motion to stay proceedings via a motion to adopt and clarify. In their motion to adopt and clarify, the Accurate companies argued that a "full stay of proceedings as to Mahmood and [the Accurate companies should be granted]" because they "must rely on Mahmood, their sole shareholder, director, and officer to answer discovery requests" and he "cannot do so without imperiling self-incrimination or adverse inferences." The Accurate companies contended that the "Fifth Amendment privilege" would be implicated where the information sought was testimonial, as the "review of the interrogatories and request to produce in the instant case reveals that every question
or request seeks testimonial responses."
¶ 9 On March 11, 2020, a hearing was held on the motions. The court found that "[t]his case is unlike some cases where the request for a stay is made due to a parallel criminal proceeding." According to the court, the federal action was different from the instant civil proceeding because it required proving that Mahmood did not pay taxes and not that he "came into possession of *** money unlawfully or illicitly." The court further considered the five factors articulated in Davies v. Pasamba , 2014 IL App (1st) 133551, ¶ 52, 384 Ill.Dec. 781, 17 N.E.3d 763, in determining whether a stay was appropriate, including (1) the plaintiff's interest in an expeditious resolution of the civil case and any prejudice to the plaintiff in not proceeding, (2) the interests and burdens on the defendant, including the extent to which defendant's fifth amendment rights are implicated, (3) the convenience to the court in managing its docket and efficiently using judicial resources, (4) the interests of persons who are not parties to the civil proceeding, and (5) the interests of the public in the pending civil and criminal actions.
¶ 10 The circuit court found that four of the five factors favored denial of the motion for a stay. First, the court noted that plaintiffs clearly have an interest in the expeditious resolution of the civil case because they allege being deprived of approximately $9 million. However, the second factor weighed in favor of defendants, who established "some tension between [Mahmood's fifth amendment] rights and moving forward with this case." As to the third factor, the court found that it "clearly notates against the stay in this case" because the issue could have been raised previously, given that this was a 2017 case and, "although the information was not filed until 2019 [in the criminal case], the criminal complaint has been on file since 2018." Fourth, the court noted that a stay in this case may potentially delay a consolidated case, Universal Metro Asian Services Ass'n v. Ekhomu , No. 2018-L-011704 (Cir. Ct. Cook County), where plaintiff Universal Metro filed suit against its auditor or accountant. Finally, the court noted that the fifth factor could go "either way, the public has an interest in [the] swift prosecution of criminal matters, but also in justice for individuals who claim to have been defrauded." With respect to the stay of discovery, the court found that there was no "clear-cut case and the briefs did not make out one that any specific interrogatory or document request seeks or that a response to any of them *** would be clearly testimonial in nature." Nevertheless, the court stated that, "if the [d]efendants do wish to object to any particular interrogatory request or request for production on [Fifth] Amendment grounds, I'm not precluding them from doing so as the case moves forward."
¶ 11 After the hearing, the court entered an order denying (1) Mahmood's motion to stay proceedings, (2) Mahmood's motion to stay discovery, and (3) the Accurate companies’ motion to adopt and clarify Mahmood's motion to stay. The court further ordered defendants "to answer the second amended complaint and all written discovery." On March 30, 2020, defendants filed a notice of interlocutory appeal pursuant to Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017).
¶ 12 On or about April 9, 2020, Mahmood responded to plaintiffs’ first set of...
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