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Safway Services, LLC v. P.A.L. Environmental Safety Corp

United States District Court, N.D. Mississippi, Greenville Division

August 13, 2019

SAFWAY SERVICES, LLC PLAINTIFF
v.
P.A.L. ENVIRONMENTAL SAFETY CORP., and FIDELITY AND DEPOSIT COMPANY OF MARYLAND DEFENDANTS

          ORDER

          SHARION AYCOCK, UNITED STATES DISTRICT JUDGE

         This action was originally filed in the Circuit Court of Bolivar County, Mississippi but properly removed to this Court on January 10, 2019. In its Complaint [2], Safway Services, LLC alleges that it rented scaffolding and provided labor to P.A.L Environmental Safety Corporation for a construction project in Mississippi, and that P.A.L. failed to pay for the scaffolding and labor. A similar action was filed previously in a Wisconsin State Court. See Wisconsin State Court Complaint [4-1]. The Defendants filed a Motion [4] to Dismiss this Federal lawsuit arguing that it is duplicative of the Wisconsin suit. Briefing is complete and the issues are ripe for review.

         Factual and Procedural Background

         P.A.L. entered into a Rental/Sales Agreement on May 8, 2017, with Safway Services, LLC, for the rental of scaffolding materials and labor. The Rental/Sales Agreement provided that any dispute between the parties would be governed by Wisconsin law and any lawsuit must be commenced either in the Waukesha County Circuit Court in Waukesha, Wisconsin, or in the United States District Court for the Eastern District of Wisconsin.

         According to Safway, it provided the materials and labor fulfilling its contractual obligation. At the conclusion of the work, Safway gave P.A.L. an invoice with a balance due of $716, 875.72. According to Safway Services, P.A.L. never paid the balance. This prompted Safway Services to file a Notice of Construction Lien against the project. In order to continue the work despite the construction lien, P.A.L. obtained a Mechanic's Lien Discharge Bond issued by Fidelity and Deposit Company of Maryland.

         These facts gave rise to two separate law suits. First, Safway filed suit in the Circuit Court of Waukesha County, Wisconsin, against P.A.L. for breach of contract and unjust enrichment.[1]Then, Safway filed a second law suit in the Circuit Court of Bolivar County, Mississippi, against P.A.L. and Fidelity for breach of contract, enforcement of the construction lien, and prompt payment penalties. The Defendants removed the Mississippi case to this Court, premising federal jurisdiction on diversity of citizenship.

         The procedural postures of the two cases are different. While the Mississippi case is still in its early stages of litigation, the Wisconsin case is set for trial in the Summer of 2019.

         The Defendants in this Mississippi action filed a Motion [4] to Dismiss claiming that the duplicative nature of the case warrants a dismissal or in the alternative a stay until the Wisconsin action is resolved. In opposition, the Plaintiff argues that because this case involves a lien on property located in Mississippi and because the cause of action derives from Mississippi law, this case should be adjudicated in Mississippi. While the parties disagree about dismissal of the case, they agree that a stay is an appropriate remedy.

         Legal Standard and Discussion

         In their Motion [4], the Defendants urge the Court to abstain from adjudicating this matter due to a duplicative suit filed in Wisconsin. The Defendants also petition the Court in the alternative for a stay of proceedings pending a jury verdict in the Wisconsin state court matter.

         Abstention is a two-part inquiry. The Court must first assess whether the two actions are parallel, and if so, the court must apply the test articulated in Colorado River Water Conservation District v. United States. See African Methodist Episcopal Church v. Lucien, 756 F.3d 788, 797 (5th Cir. 2014); Colorado River Water Conservation District v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976).

         A federal court may stay an action pending disposition of a state court action when the state and federal actions are “parallel.” African Methodist Episcopal Church, 756 F.3d at 797. The Fifth Circuit has identified parallel actions as “those involving the same parties and the same issues.” Id. Stated differently, the court looks to the identity of the parties and the associated claims in both pending suits and determines whether there is substantial similarity between the two.

         Because the Mississippi action includes an additional defendant, Fidelity, and an additional legal issue, enforcement of the lien, the cases are not precisely parallel under the Fifth Circuit's standard. The lack of formal symmetry, however, does not automatically defeat a stay. See RepublicBank Dallas Nat. Ass'n v. McIntosh, 828 F.2d 1120, 1121 (5th Cir. 1987) (finding that it may be that there need not be applied in every instance a mincing on precise identity of parties and issues.). “In light of our duty to consider wise judicial administration, conservation of judicial resources, and comprehensive disposition of litigation, we look both to the named parties and to the substance of the claims asserted in each proceeding.” African Methodist Episcopal Church v. Lucien, 756 F.3d at 797 (emphasis added). “The decision whether to dismiss a federal action because of parallel state-court litigation does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 16, 103 S.Ct. 927, 937, 74 L.Ed.2d 765 (1983).

         The substance of the claims asserted in each proceeding differ only as to the lien enforcement claim. The lien enforcement claim depends wholly on the resolution of the Wisconsin breach of contract claim because the statute which provides the plaintiff an enforcement cause of action requires first a party to prevail on the overarching claim.[2] Here, the breach of contract claim is the overarching claim. A dismissal of the Mississippi action would deprive the Plaintiff of their legal right to the cause of action as to the lien. For these ...


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