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Pioneer Power, Inc. v. St. Paul Park Refining Co. LLC

United States District Court, D. Minnesota

February 5, 2019

PIONEER POWER, INC., Plaintiff,
v.
ST. PAUL PARK REFINING CO. LLC AND LAUREN ENGINEERS & CONSTRUCTORS, INC., Defendants.

          Aaron A Dean, MOSS & BARNETT, P.A., for plaintiff.

          Shawn M Raiter, LARSON KING, LLP, and Paul Mitchell, HICKS THOMAS LLP, for defendants.

          ORDER ADOPTING REPORT AND RECOMMENDATION

          JOHN R. TUNHEIM CHIEF JUDGE

         Pioneer Power, Inc. (“Pioneer”) brings this lawsuit to recover money owed to it by defendants St. Paul Pioneer Refining Co., LLC (“SPPRC”) and Lauren Engineers & Constructors, Inc. (“Lauren”) for work it performed at a refinery owned by SPPRC. SPPRC has filed a limited objection to Magistrate Judge Bowbeer's Report and Recommendation (“R&R”). Because the Court does not find the language SPPRC objected to clearly erroneous, the Court will deny the objection and adopt the R&R.

         BACKGROUND

         1. Factual Background

         SPPRC hired Lauren as a general contractor for a construction project to be completed at a refinery owned by SPPRC. (Notice of Removal ¶ 1, Ex. A (“Compl.”) ¶ 6, June 7, 2018, Docket No. 1-1.) Lauren, in turn, subcontracted with Pioneer to perform piping fabrication and installation. (Id. ¶ 7.) The original subcontract was for $6, 748, 624.80, but subsequent changes increased the amount to $8, 679, 888.74. (Id. ¶ 8- 9.) Pioneer claims that Lauren has paid all but $729, 761.28 of that amount. (Id. ¶ 10.) Additionally, Pioneer alleges that Lauren and SPPRC owe Pioneer an additional $2, 026, 214.41 for costs associated with delays and disruptions caused by Lauren and SPPRC. (Id. ¶ 15.) This brings Pioneer's total demand to $2, 755, 975.69. (Id.)

         The subcontract between Pioneer and Lauren contains a binding arbitration clause, and on January 11, 2018, Pioneer served an arbitration demand on Lauren. (Id. ¶¶ 7, 27, Ex. B at 44-45.) On May 18, 2018, Pioneer filed a lawsuit in Minnesota state court against Lauren and SPPRC, seeking to foreclose on a mechanic's lien, and asserting quantum meruit, unjust enrichment, and breach of contract. (Compl. ¶¶ 34-56.) SPPRC removed the lawsuit to federal court on June 7, 2018. (Notice of Removal, June 7, 2018, Docket No. 1)

         On July 27, 2018, Pioneer moved to have this lawsuit stayed pending the outcome of its arbitration with Lauren. (Mot. to Stay the Proceedings, July 27, 2018, Docket No. 28.) In response, Lauren filed a Motion to Stay the arbitration pending the outcome of this lawsuit. (Mot. to Stay Arbitration, Aug. 10, 2018, Docket No. 30.) Additionally, SPPRC brought a Motion for Judgment on the Pleadings (Mot. for J. on Pleadings, June 14, 2018, Docket No. 15), that Lauren seeks to join (Mot. for Joinder, June 14, 2018, Docket No. 21.)

         2. The Report and Recommendation

          These Motions were submitted to Magistrate Judge Hildy Bowbeer. She filed an R&R recommending that the Court grant Pioneer's Motion to Stay Proceedings and deny Lauren's Motion to Stay Arbitration. (R. & R. at 12, Oct. 16, 2018, Docket No. 73.) Because she recommended staying the court proceedings, she also recommended denying SPPRC's Motion for Judgment on the pleadings and Lauren's Motion for Joinder, without prejudice. (Id.)

         Even though not all the claims asserted by Pioneer in this case will be arbitrated, and not all of the parties are subject to the arbitration, the Magistrate Judge found that significant factors weighed in favor of staying the entire lawsuit. She noted that both Pioneer and Lauren will be bound by the arbitrator's decision regarding what the value of the work done by Pioneer was, and that similar questions of law and fact are at issue in this case. (Id. at 9-10.) Additionally, because the value of the work done by Pioneer will impact the non-arbitrable claims, given that the non-arbitrable claims involve how much money Pioneer is due, the “outcome of the non-arbitrable claims will depend in large part on the outcome of the arbitration.” (Id. at 11) (emphasis added.)

         Additionally, the Magistrate Judge did not believe that SPPRC's interests would be prejudiced by a stay to this lawsuit, and in fact found that the exact opposite may be true. For instance, the heart of the current litigation is the payment dispute between Lauren and Pioneer, something that will be decided at arbitration. Should Pioneer recover fully at arbitration, it would have no basis to pursue any relief from SPPRC. This outcome, combined with a stay, would save SPPRC significant time and legal fees. Moreover, the Magistrate Judge reasoned that “[SPPRC] has the option to intervene in the [arbitration] action should it wish to participate in that proceeding, though it is not required to do so.” (Id. at 10) (emphasis added.) Thus, any prejudice to SPPRC in staying this lawsuit would be minimal.

         3. ...


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