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VSE Corporation v. Koretzky

United States District Court, E.D. Louisiana

December 20, 2019


         SECTION “R” (4)



         The Court has received the amended motion to stay and administratively close the current proceedings from plaintiff VSE Corporation.[1] Because neither the interests of justice nor federal statute requires a stay, the Court denies the motion.

         I. BACKGROUND

         This case arises from alleged legal malpractice. Plaintiff retained defendants to draft a Collective Bargaining Agreement with the International Association of Machinists and Aerospace Workers, AFL-CIO.[2] Plaintiff alleges that defendant Koretzky recommended that plaintiff include in the Agreement a provision requiring mandatory unpaid breaks.[3] Plaintiff and the machinists' union signed the Agreement.[4] But the requirement for unpaid breaks allegedly violated the Fair Labor Standards Act.[5]Consequently, plaintiff was sued in the Eastern District of Texas.[6]

         Over a year after the Texas suit commenced, plaintiff filed the current malpractice action against defendants.[7] Defendants responded with a motion to dismiss.[8] After defendants' motion to dismiss was submitted and pending, plaintiff filed the current motion to stay.[9] Defendants oppose the stay.[10]


         Plaintiff identifies two reasons for the Court to provide a stay. First, plaintiff argues that since the Texas suit and the current suit are interrelated, the Court should stay the current suit pending the result of the Texas suit. Second, plaintiff alleges that the case is subject to arbitration. The Court will address each issue in turn.

         A. Texas Suit

         Plaintiff argues that the outcome of the Texas suit could influence the current suit, and that as a result, the Court should stay the current suit until the judgment in the Texas suit issues.[11] Because the current suit is perempted on its face, the Court finds the outcome of the Texas suit immaterial, and not a basis for granting a stay.

         “The district court has a general discretionary power to stay proceedings before it in the control of its docket and in the interests of justice.” McKnight v. C.H. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982). The Court must “weigh competing interests and maintain an even balance” between the party advocating a stay and the parties opposing the stay. Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). “[B]efore granting a stay pending the resolution of another case, the court must carefully consider the time reasonably expected for resolution of the ‘other case,' in light of the principle that ‘stay orders will be reversed when they are found to be immoderate or of an indefinite duration.'” Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983) (quoting McKnight, 667 F.2d at 479).

         Here, plaintiff argues that a stay is appropriate for two reasons. First, “the decision in [the Texas suit] is determinative as to whether this case has merit.”[12] That is, if the Texas court rules in plaintiff's favor, it could “render the present suit moot.”[13] Second, plaintiff argues that until that suit concludes “damages are wholly unknown and speculative.”[14] As a result, “a determination of liability against defendant would have no effect for potentially years, ” until the Texas collective action concludes.[15]

         In some scenarios, a pending, related suit can warrant the stay of a legal malpractice action. In Dwyer v. Binegar, 95 So.3d 565 (La.App. 4 Cir. 2012), for instance, the Louisiana Court of Appeal for the Fourth Circuit found a stay appropriate pending the resolution of an issue in an underlying suit that, as here, arose from the alleged error triggering the legal malpractice suit. See Id. at 566-67, 571. The court acknowledged that if the underlying suit concluded in the plaintiff's favor, the malpractice suit could be dismissed. See Id. at 571. But, because of the limitations period applicable to legal malpractice, waiting for the underlying suit to conclude could lead to the peremption of plaintiff's malpractice action. See Id. at 568-69, 571. The court therefore reasoned that failing to issue a stay “could lead to the extinguishment of [the plaintiff's] cause of action against the defendants before one knows whether a party defendant herein actually may have malpracticed-an absurd result.” Id. at 571.

         This logic, though, does not apply here. The Court has considered defendants' motion to dismiss for failure to state a claim, and found plaintiff's suit perempted.[16] As such, unlike in Dwyer, the Court need not await the results of the Texas suit to determine whether defendants actually committed malpractice. Indeed, the Dwyer court ordered a stay only after overturning the trial court's finding that-because no attorney-client relationship existed-the plaintiff had no right of action. See 95 So.3d at 570-71. But here, the Court's finding that plaintiff has no right of action stands. As a result, the Texas court's determination about the merits of and damages arising from the underlying suit will have no bearing on the outcome of the case before this Court. In such circumstances, a stay is not appropriate.

         The other considerations relevant to a stay also militate against issuing one here. Because the Court can adjudicate the case now, defendants have a strong interest in having the case dismissed, rather than prolonged unnecessarily. Furthermore, plaintiff's requesting a stay of indefinite duration-requiring possibly “several years” for the Texas suit to conclude[17]-also weighs against its issuance. Overall, therefore, the Court finds that the interests of justice do not support applying a stay based on the Texas suit.

         B. Arbitration Clause

         Plaintiff also claims that the matter should be stayed pursuant to an arbitration agreement.[18] Plaintiff relies on an unsigned engagement letter from defendants' files, which contains a clause stating that “any claim or controversy” between the parties “shall be settled by . . . binding arbitration.”[19] Because the Court finds that the parties ...

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