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Fidelity and Deposit Co. of Maryland v. Audubon Commission

United States District Court, E.D. Louisiana

February 7, 2018

FIDELITY AND DEPOSIT CO. OF MARYLAND
v.
AUDUBON COMMISSION

         SECTION L (1)

          ORDER AND REASONS

          ELDON E. FALLON UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant's motion to stay proceedings pending completion of contractual dispute resolution proceedings. R. Doc. 11. Plaintiff opposes the motion. R. Doc. 19. Having considered the parties' arguments, submissions, and applicable law, the Court now issues this Order and Reasons.

         I. BACKGROUND

         This case arises from a contract dispute between Plaintiff Fidelity and Deposit Company of Maryland (“Fidelity”) and Defendant Audubon Commission (“Audubon”), concerning a Takeover Agreement for a construction project effective November 12, 2014. R. Doc. 1 at 5. Plaintiff invokes jurisdiction of this case under 28 U.S.C. § 1332. R. Doc. 1 at 1.

         Audubon entered into a contract with Courseault Commercial, Inc. (“Courseault”), who is not a party in the instant case, in which Courseault agreed to provide materials and labor for a project at One Canal Street in New Orleans, Louisiana. R. Doc. 1 at 2. The contract is an industry standard AIA Construction Contract containing AIA Conditions of the Contract for Construction. R. Doc. 11-1 at 1.

         Plaintiff Fidelity executed a bond for Courseault as a surety in connection with this contract. R. Doc. 1 at 2. The contract contains a liquidated damages clause that would allow for damages if the project was not completed by January 28, 2014. R. Doc. 1 at 2. After Audubon declared Courseault to be in default of the contract, on November 12, 2014, Fidelity agreed to take over the contract between Courseault and Audubon. (“Takeover Agreement”). R. Doc. 1 at 2.

         The Takeover Agreement states that liquidated damages for which Fidelity would be liable would be reduced by 33-percent if the project was completed by January 10, 2014 or by 20-percent if the project was completed between January 11, 2015 and January 21, 2015. R. Doc. 1 at 2. The project was completed on April 17, 2015. R. Doc. 1 at 3.

         Plaintiff argues that Fidelity and/or Courseault validly requested time extensions due to incidents that were either caused by Audubon or were excusable due to the redesign of the exhaustion vents, grating system and event cover, railing modifications, shutdowns for Mardi Gras and French Quarter Fest, and modifications to the pumps. R. Doc. 1 at 3. Plaintiff asserts that if these requests had been granted, Courseault would have had at least 98 more days to complete the project, which would entitle Fidelity to a 33-percent reduction in liquidated damages pursuant to the Takeover Agreement. R. Doc. 1 at 3-4. Plaintiff further alleges that although all work under the contract has been completed and final payment has been sent, Audubon has improperly withheld at least $208, 108.00 from Fidelity. R. Doc. 1 at 4-5. Accordingly, Fidelity filed the instant litigation on February 3, 2017, seeking funds it believes have been improperly withheld. See R. Doc. 1.

         II. PRESENT MOTION

         Defendant Audubon answered the suit on June 23, 2017, alleging that Fidelity failed to follow contractual dispute resolution procedures that were agreed to by both parties and were part of the contract. See R. Doc. 8. Audubon now asks the Court to stay this case pending the outcome of the dispute resolution proceedings provided in the contract. R. Doc. 11.

         III. LEGAL STANDARD

         District courts have the inherent power “to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). It is well established that the power to stay proceedings has been recognized as such inherent power. Id. The decision of whether a stay should be granted is based on the “judicial economy and convenience for the Court, for counsel, and for the parties.” United States v. FEDCON Joint Venture, No. 16-13022, 2017 WL 897852, at *1 (E.D. La. 2017). The decision is made based on an exercise of judgment, which involves balancing competing interests. Id. (quoting In re Beebe, 56 F.3d 1384 (5th Cir. 1995)). The Court has recently noted that the use of a contract dispute resolution proceeding will serve judicial economy, as it has the potential to resolve all or part of the suit, therefore making further proceedings limited or unnecessary. Id., at *2.

         IV. ...


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