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Larson Manufacturing Company of South Dakota, Inc. v. Western Showcase Homes, Inc.

United States District Court, D. South Dakota, Southern Division

January 24, 2019

LARSON MANUFACTURING COMPANY OF SOUTH DAKOTA, INC., SUPERIOR HOMES, LLC, Plaintiffs,
v.
WESTERN SHOWCASE HOMES, INC., AMERICAN MODULAR HOUSING GROUP, LLC, AMERICAN MODULAR HOUSING GROUP, INC., PAUL THOMAS, Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO STAY [DOCKET NO. 145]

          VERONICA L. DUFFY, UNITED STATES MAGISTRATE JUDGE.

         INTRODUCTION

         This matter is pending before the court pursuant to defendants' removal of the action from South Dakota state court. Jurisdiction is premised on diversity of citizenship of the adverse parties and an amount in controversy in excess of $75, 000. See 28 U.S.C. § 1332. The parties have consented to this court's handling of their case pursuant to 28 U.S.C. § 636(c). Now pending is a motion by defendants to stay these proceedings pending resolution of litigation in Canada. See Docket No. 145. Plaintiffs oppose the motion. See Docket No. 154.

         FACTS

         This case arises out of contracts between plaintiffs and defendants for the production and sale of modular housing units by plaintiffs to defendants and related financing agreements. A more complete recitation of the facts is contained in this court's order denying the parties' cross-motions for partial summary judgment. See Docket No. 142. The facts from that earlier opinion are incorporated herein by reference.

         Plaintiffs' original complaint contained 21 counts involving nine separately-named projects. See Docket No. 1-1. Midway through this litigation, the parties settled the claims relating to five of those projects so that the remaining claims concern only four projects, plus some free-standing claims of debt, guarantee, fraud and deceit, conversion, and piercing the corporate veil. The housing projects still being litigated herein are the [Doug] Simon Unit, Units C5452HTC 1 & 2, Unit 5383, and the Aspen project. See Docket No. 58. The claims related to the following projects have been settled: the Carlyle Units (Waugh Who), the Heidt Unit, Unit 5334, the Colt Unit, and the Stephenson Unit.

         In addition to the present litigation pending before this court, there are at least four lawsuits pending in Canada. Two of those cases, like this one, were begun in 2016 and two were initiated in 2017.[1] The parties and claims being litigated in Canada are as follows.

         In Larson Manufacturing Co. v. Aspen Village Properties Ltd., QBG 16-2044, plaintiff herein Larson Manufacturing Company of South Dakota, Inc. is suing Aspen Village Properties Ltd., the Canada Revenue Agency, and various contractors or subcontractors seeking to foreclose its mortgage interest in the Aspen project.

         In Jahnke v. Thomas, QBG 16-2125, Gregory Jahnke, the principal in the Aspen properties, is suing defendant herein Paul Thomas, and Craig Johnson, Dale Larson, and Jeffrey Ries, the latter three of which are principals in plaintiffs herein. The subject of that lawsuit involves the credit agreement and mortgages involved in the Aspen project.

         In Western v. Aspen Village Properties, Ltd., QBG 17-2616, plaintiff herein Western Showcase Homes, Inc. is suing Aspen Village Properties, Ltd.; Aspen Village Developments, Ltd.; Aspen Creek Developments Ltd.; and Gregory Jahnke. The subject matter of that suit is apparently enforcement of the sales agreement related to the Aspen project.

         In Mauri Gwyn v. Larson Manufacturing Co., QBG 17-2404, plaintiff Mauri Gwyn is suing plaintiff herein Larson Manufacturing Co. and defendant herein American Modular Housing Group, Inc. seeking an accounting upon the sale of condominiums by Larson and AMHG.

         DISCUSSION

         Defendants move to stay this case until the Canadian foreclosure lawsuit is concluded. Defendants purport to express “surprise” at the “recent” discovery of this foreign litigation. However, on July 9, 2018, defendants filed with the court answers to interrogatories they propounded to plaintiffs in which plaintiffs state, under oath, that in order to mitigate their losses, they inter alia began foreclosure proceedings in Canada. See Docket No. 107-7 at p. 11. Although defendants filed these with the court in July, 2018--six months ago--plaintiffs signed the interrogatories in late January, 2018, and presumably defendants were served shortly thereafter. Id. at p. 12. Therefore, the court infers defendants' “surprise” at discovering the foreclosure lawsuit is approximately a year old.

         In addition, defendants assert they served plaintiffs with requests for documents regarding the Canadian lawsuits and that plaintiffs did not provide copies of such documents until this month-January, 2019. This assertion is not persuasive. First, the court notes that defendants themselves filed documents from the Jahnke v. Thomas lawsuit with this court in July, 2018. See Docket No. 107-10. Therefore, these documents were in defendants' possession for at least the last 7 months. Secondly, the court notes that two of the named defendants in this lawsuit-Paul Thomas and American Modular Housing Group, Inc.-were named defendants in two of the Canadian lawsuits: Jahnke v. Thomas and Mauri Gwyn v. Larson Manufacturing Co. These defendants would have been served personally with pleadings in these lawsuits ...


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