United States District Court, D. South Dakota, Southern Division
LARSON MANUFACTURING COMPANY OF SOUTH DAKOTA, INC., SUPERIOR HOMES, LLC, Plaintiffs,
WESTERN SHOWCASE HOMES, INC., AMERICAN MODULAR HOUSING GROUP, LLC, AMERICAN MODULAR HOUSING GROUP, INC., PAUL THOMAS, Defendants.
ORDER DENYING DEFENDANTS' MOTION TO STAY [DOCKET
VERONICA L. DUFFY, UNITED STATES MAGISTRATE JUDGE.
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.
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.
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.
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. The parties and claims being litigated in
Canada are as follows.
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.
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.
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
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.
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.
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