Southern Industrial Contractors, LLC v. Neel-Schaffer, Inc. et al

Filing 313

ORDER denying 287 Motion to Stay Proceedings; denying 292 Motion to Stay Proceedings Signed by District Judge Louis Guirola, Jr on 04/18/2019 (Guirola, Louis)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
SOUTHERN INDUSTRIAL
CONTRACTORS, LLC

PLAINTIFF

v.

CAUSE NO. 1:17cv255-LG-JCG

NEEL-SCHAFFER, INC., et al.

DEFENDANTS

ORDER DENYING MOTIONS TO STAY PROCEEDINGS
BEFORE THE COURT are the [287] Motion to Stay Proceedings filed by
the defendants Roy Anderson Corp., W.G. Yates & Sons Construction Company, and
Yates Anderson, JV, and the [292] Motion to Stay Proceedings filed by the
defendant, Thompson Engineering, Inc. All the other defendants have joined in
each of these Motions, and the parties have fully briefed the Motions. After
reviewing the submissions of the parties, the record in this matter, and the
applicable law, the Court finds that both Motions to Stay should be denied.
BACKGROUND
The plaintiff, Southern Industrial Contractors, LLC, served as the general
contractor for the West Pier Facilities project at the Port of Gulfport, Mississippi. It
filed this lawsuit against the project’s consultants and engineers — Neel-Schaffer,
Inc., CH2M, T.L. Wallace Construction, Inc., Thompson Engineering, Inc., W.G.
Yates & Sons Construction Company, Roy Anderson Corp., Yates Anderson, JV, and
Quality Engineering Services, Inc. Southern Industrial alleges that these
defendants failed to provide notice of a large underground debris field at the project
site, which made the project much more expensive and time-consuming. At the

defendants’ request, the Court stayed this lawsuit pending the appeal of the
decision ordering arbitration in the separate state court lawsuit Southern
Industrial had filed against the project’s owner, Mississippi State Port Authority.
The Mississippi Court of Appeals reversed the lower court’s decision compelling
arbitration of Southern Industrial’s claims against the Port Authority.
Following the conclusion of the state court appeal, this Court lifted the stay
imposed in the present case. The defendants Roy Anderson, W.G. Yates & Sons,
and Yates Anderson then filed a Motion seeking a stay pending resolution of the
arbitration of Southern Industrial’s claims against ADS, LLC, which was one of
Southern Industrial’s subcontractors during the project. The defendant Thompson
Engineering filed a separate Motion requesting a stay pending (1) resolution of the
ADS, LLC, arbitration; (2) resolution of Southern Industrial’s state court lawsuit
against another subcontractor, Baker Pile Driving & Work, LLC; and (3) resolution
of the state court lawsuit Southern Industrial filed against the Port Authority.
DISCUSSION
I. SOUTHERN INDUSTRIAL’S ARBITRATION AGAINST ADS
After the parties finished briefing the Motions to Stay, Southern Industrial
settled its claims against ADS, and the arbitration was canceled. As a result, the
defendants’ Motions requesting a stay pending the ADS arbitration must be denied.
II. SOUTHERN INDUSTRIAL’S LAWSUIT AGAINST BAKER
Thompson argues that this lawsuit should be stayed pending resolution of
Southern Industrial’s lawsuit against its subcontractor Baker, but Thompson has

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not provided sufficient information concerning the Baker lawsuit to demonstrate
that a stay is warranted. Therefore, Thompson has not demonstrated that the
Baker case justifies a stay of the present lawsuit.
III. SOUTHERN INDUSTRIAL’S LAWSUIT AGAINST THE PORT
AUTHORITY
Thompson argues that the Landis standard should apply to the
determination of whether this lawsuit should be stayed pending resolution of the
Port Authority case in state court. In Landis, the United States Supreme Court
held that courts have authority and discretion to stay proceedings to further the
goal of judicial economy. Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). Southern
Industrial counters that this Court must apply the Colorado River “exceptional
circumstances” standard to determine whether a stay is appropriate. See Colo.
River Water Conservation Dist. v. United States, 424 U.S. 800, 814 (1976). For the
reasons stated below, a stay is unwarranted under either standard; thus, it is not
necessary to determine which standard is most appropriate.
A. LANDIS
In Landis, the United States Supreme Court held that “the power to stay
proceedings is incidental to the power inherent in every court to control the
disposition of the causes on its docket with economy of time and effort for itself, for
counsel, and for litigants.” Landis, 299 U.S. at 254. To accomplish this, the court
“must weigh competing interests and maintain an even balance.” Id. “A stay can
be justified only if, based on a balancing of the parties’ interests, there is a clear
inequity to the suppliant who is required to defend while another action remains
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unresolved and if the order granting a stay can be framed to contain reasonable
limits on its duration.” GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711,
716 (5th Cir. 1985). As a result, “before granting a stay pending resolution of
another case, the court must carefully consider the time reasonably expected for
resolution of the ‘other case,’ in light of the principle that stay orders will be
reversed when they are found to be immoderate or of an indefinite duration.” In re
Beebe, 56 F.3d 1384, *3 (5th Cir. 1995) (citing Wedgeworth v. Fibreboard Corp., 706
F.2d 541, 545 (5th Cir. 1983)).
Thompson argues that denial of its Motion to Stay would expose the
defendants to this lawsuit to double exposure, because many of the defendants have
agreed to indemnify the Port Authority under certain circumstances. Thus,
according to Thompson, even if the defendants are found to have no liability in the
present lawsuit, the Port Authority could still seek indemnity from the defendants
if the state court finds that the Port Authority is liable to Southern Industrial.
Thompson also asserts that a stay could save judicial resources, because this
lawsuit would likely be dismissed pursuant to the doctrines of collateral estoppel
and/or res judicata if the Port Authority prevails in the state court lawsuit.
Thompson does not address the amount of time that it would take to resolve the
state court action, aside from estimating that the federal case would likely go to
trial first.
Southern Industrial counters that the stay Thompson seeks would be
impermissibly lengthy. In addition, Southern Industrial has represented to the

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Court that, due to the amended complaint it filed in state court, it is not asserting
the same claims or seeking the same damages in the Port Authority lawsuit that it
is seeking in this lawsuit. Thus, Southern Industrial notes that Thompson and the
other defendants will not be subjected to the possibility of a double recovery.
As explained previously, this Court is required to consider the length of time
likely required for resolution of the state court case before granting a Landis stay.
The state court case was recently transferred to a new venue, and Thompson and
Southern Industrial appear to agree that little progress has been made. Thus,
complete resolution of the state court case could take years. The Court finds that
the possibility that the defendants will be subjected to double exposure is remote
and does not justify the lengthy stay that Thompson seeks. Thompson has not
demonstrated that it is entitled to a stay under the Landis standard.
B. COLORADO RIVER
As the Fifth Circuit has explained,
[a] Colorado River abstention analysis begins with a heavy thumb on
the scale in favor of exercising federal jurisdiction, and that
presumption is overcome only by exceptional circumstances. Federal
courts have a virtually unflagging obligation to exercise the
jurisdiction given them. Even so, a court may choose to abstain,
awaiting the conclusion of state-court proceedings in a parallel case,
based on principles of wise judicial administration, giving regard to
conservation of judicial resources and comprehensive disposition of
litigation.
Aptim Corp. v. McCall, 888 F.3d 129, 135 (5th Cir. 2018) (internal quotation marks
and citations omitted).

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Colorado River discretion to stay is available only where the state and federal
proceedings are parallel. Generally, the two lawsuits must involve the same parties
and the same issues. Am. Guarantee & Liab. Ins. Co. v. Anco Insulations, Inc., 408
F.3d 248, 251 (5th Cir. 2005). However, the Fifth Circuit has recognized that “it
may be that there need not be applied in every instance a mincing insistence on
precise identity of these [requirements] . . . .” RepublicBank Dall. Nat’l Ass’n v.
McIntosh, 828 F.2d 1120, 1121 (5th Cir. 1987). This is not a case in which the
general requirement of identity of parties and issues should be relaxed, because
Southern Industrial is the only entity that is a party to both proceedings and the
state court action concerns the termination of Southern Industrial’s contract, which
is not at issue in the present federal case.
Even where the actions are parallel, the court must balance the following
factors before granting a stay pursuant to the Colorado River doctrine:
(1) assumption by either court of jurisdiction over a res, (2) relative
inconvenience of the forums, (3) avoidance of piecemeal litigation, (4)
the order in which jurisdiction was obtained by the concurrent forums,
(5) to what extent federal law provides the rules of decision on the
merits, and (6) the adequacy of the state proceedings in protecting the
rights of the party invoking federal jurisdiction.
Id. at 135-36. Although the Court has found that the state and federal actions at
issue are not parallel, the Court will consider these factors out of an abundance of
caution.
Since the present case is an in personam action, the first factor favors the
exercise of federal jurisdiction. See Aptim, 888 F.3d at 136. Both the state action
and the present case are now pending in Harrison County, Mississippi; thus, the
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second factor also favors exercising federal jurisdiction. See Stewart v. W. Heritage
Ins. Co., 438 F.3d 488, 492 (5th Cir. 2006). As for the third factor, the possibility of
piecemeal litigation weighs in favor of granting a stay. The fourth factor “centers
more on the progress made in the relative forums, not on the date of initial filing.”
Aptim, 888 F.3d at 137. IN the present lawsuit, the parties have conducted some
discovery, and several motions have been filed and ruled on. There has been little
progress in the state court lawsuit due to motion practice and an appeal concerning
arbitration. Therefore, the fourth factor favors the exercise of federal jurisdiction.
Regarding the fifth factor, “[t]he presence of a federal law issue must always
be a major consideration weighing against surrender of jurisdiction, but the
presence of state law issues weighs in favor of surrender only in rare
circumstances.” Id. at 138 (internal quotation marks and brackets omitted). As a
result, this factor weighs in favor of federal jurisdiction. See id. The sixth factor
can only be neutral or weigh in favor of federal jurisdiction. Id. at 139. Since there
is no indication that the state court cannot fairly adjudicate the Port Authority
lawsuit, this factor is neutral. See id.
In summary, four factors weigh in favor of exercising federal jurisdiction.
One factor weighs in favor of granting a stay, and one factor is neutral. Exceptional
circumstances justifying a stay are not present here. Thompson has not
demonstrated that it is entitled to a stay under Colorado River.

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CONCLUSION
For the foregoing reasons, both the Motions to Stay pending in this case must
be denied.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the [287] Motion
to Stay Proceedings filed by the defendants Roy Anderson Corp., W.G. Yates & Sons
Construction Company, and Yates Anderson, JV, and the [292] Motion to Stay
Proceedings filed by the defendant, Thompson Engineering, Inc., are DENIED.
IT IS, FURTHER, ORDERED AND ADJUDGED that the plaintiff,
Southern Industrial, is directed to contact the Magistrate Judge assigned to this
case in order to schedule a case management conference.
SO ORDERED AND ADJUDGED this the 18th day of April, 2019.
s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
UNITED STATES DISTRICT JUDGE

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