United States District Court, D. Minnesota
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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