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Meierhenry Sargent LLP v. Williams

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

May 14, 2019

MEIERHENRY SARGENT LLP, Plaintiff,
v.
BRADLEY WILLIAMS and KERRY WILLIAMS, Defendants.

          MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTION TO STAY PROCEEDINGS ON COUNTERCLAIMS

          Lawrence L. Piersol, United States District Judge.

         On January 29, 2019, Defendants filed a Motion to Stay Proceedings on Counterclaims Pending Appellate Proceedings and Arbitration and this Motion is currently pending before the Court. Doc. 34. For the following reasons, Defendants' Motion to Stay Proceedings on Counterclaims Pending Appellate Proceedings and Arbitration is denied.

         BACKGROUND

         In November 2016, Plaintiff filed a two-count Complaint against Defendants in Minnehaha County state court, seeking payment for legal fees Plaintiff alleges it is owed. Doc. 1-1. On December 30, 2016, Defendants filed a timely notice of removal pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332. On January 6, 2017, Defendants filed a Motion to Stay and Compel Arbitration for claims asserted in Count II. Doc. 7. On May 1, 2017, the Court issued a Memorandum Opinion and Order granting the stay and compelling arbitration of Count II. Doc. 14.

         When the Court stayed the lawsuit and compelled arbitration of Count II in its May 1, 2017, order, there were no counterclaims pending. The Court retained jurisdiction over the case. On August 23, 2017, Defendants presented Plaintiff with their Answer, Affirmative Defenses, and Counterclaims during the arbitration proceedings. Doc. 26 at 6.

         On August 23, 2017, Plaintiff filed a Motion for Relief from Stay and Motion for Order to Declare the Scope of the Arbitration Proceedings. Doc. 16. On August 23, 2017, and September 27, 2017, respectively, Plaintiff filed affidavits in support of its opening and reply briefs in support of its motion, and attached as exhibits to the affidavits, a copy of Defendants' Answer, Affirmative Defenses, and Counterclaims that it presented during the arbitration proceedings. Doc. 18-2, 23-1. In its motion, Plaintiff requested an order from the Court determining the arbitrability of Defendants' Counterclaims. On November 20, 2017, the Court issued a Memorandum Opinion and Order holding that only some of Defendants' Counterclaims remain in arbitration and granted in part and denied in part Plaintiffs Motion for Relief from Stay and Motion for Order to Declare the Scope of the Arbitration Proceedings. Doc. 26.

         On December 18, 2017, Defendants filed a notice of appeal of the Court's November 20, 2017, order with the Eighth Circuit Court of Appeals. Doc. 27.

         On January 29, 2019, Defendants filed a Motion to Stay Proceedings on Counterclaims Pending Appellate Proceedings and Arbitration and this Motion is currently pending before the Court. Doc. 34. Attached as an exhibit to Defendants' brief in support of its Motion to stay is a copy of Defendants' Answer Affirmative Defenses, and Counterclaims that was presented in the arbitration proceedings. Doc. 35-1. The caption on Defendants' Answer, Affirmative Defenses, and Counterclaims states "IN PRIVATE ARBITRATION" (AS ORDERED BY THE UNITED STATES DISTRICT COURT, DISTRICT OF SOUTH DAKOTA, SOUTHERN DIVISION, CIV. NO. 16-4180, DOCKET ENTRY 14). Doc. 35-1.

         On February 6, 2019, the Eighth Circuit Court of Appeals issued its opinion affirming the Court's November 20, 2017, order, except the Court's finding that the Williamses, not the firm, terminated the representation with that being a determination to be made within and for the arbitration proceedings and the court remanded for further proceedings. Doc. 36.

         On February 15, 2019, Plaintiff filed its response to Defendants' Motion to Stay Proceedings on Counterclaims Pending Appellate Proceedings and Arbitration. Doc. 38. Plaintiff stated that it has no objection to Defendants filing their Answer, Affirmative Defenses and Counterclaims, but contends that that pleading has not been served to date in these proceedings. Doc. 38.

         On April 2, 2019, the Court ordered Plaintiff to file with the court legal authority to support its argument that it has not been served with Defendants' Answers, Affirmative Defenses, and Counterclaims. Doc. 41. Plaintiff filed its Memorandum of Law in response to the Court's Order on April 8, 2019, and Defendants filed their response brief on April 16, 2019. Docs. 42 & 44.

         DISCUSSION

         Pending before the Court is Defendants' Motion to Stay Proceedings on Counterclaims Pending Appellate Proceedings and Arbitration. Doc. 34. Therein, Defendants ask the Court to stay its non-arbitrable Counterclaims pending the conclusion of arbitration.[1] Doc. 34. Attached as an exhibit to its memorandum of law in support of its motion is a copy of the Defendants Answer, Affirmative Defenses, and Counterclaims that was presented during the arbitration proceedings. Doc. 35-1. In their brief in support of their Motion to Stay, Defendants state "[t]o avoid any contention a statute of limitations may apply to bar any Counterclaims, defendants file this motion and their Counterclaims, without prejudice to the pending appeal and the arbitration proceedings, solely to avoid any contention a statute of limitations may apply to bar them based on not having been filed with the Court or served on plaintiff." Doc. 35 at 3.

         In response, Plaintiff contends that the Court is precluded from granting Defendants' Motion to Stay proceedings on Defendants' Counterclaims on the basis that Defendants' Counterclaims are not properly before the Court. Docs. 38 & 42. In the alternative, Plaintiff argues that Defendants' Motion to Stay "should be denied on the basis that Defendants' ...


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