LTD v. LLC (2013)

Memorandum of Decision on Motion to Stay Proceedings (No. 103)

This is a civil action by Polymer Resources, Ltd., a Connecticut corporation against Polysource, LLC, a Missouri limited liability company.   The plaintiff alleges nonpayment in the amount of $194,950.27 for goods sold pursuant to a credit agreement.   There are three counts:  breach of contract, account stated, and unjust enrichment.   The defendant, Polysource, LLC, seeks a discretionary stay “pending the resolution of a prior pending action brought by the defendant against the plaintiff, arising out of the same transactions giving rise to the instant case, in the Circuit Court of Cass County Missouri.”   The Missouri case has been removed to the United States District Court for the Western District of Missouri, styled as Polysource, LLC v. Polymer Resources, Ltd., Case No.4:12 cv–01429–ODS.   In the Missouri case, Polysource, LLC sues Polymer Resources in tort, alleging that Polymer Resources has improperly taken customer data provided to it by Polysource and has begun selling directly to Polysource's customers, and has even told Polysource's customers to cancel their purchase orders with Polysource and resubmit them directly to Polymer Resources.   Polysource's Missouri complaint sounds in breach of fiduciary duty, tortious interference with business expectations and contracts, quantum meruit, unjust enrichment, and a claim for punitive damages.   The motion for stay is denied for the following reasons.

(1) Although the two cases deal with the same subject matter in the broadest sense, namely the business relationship between the parties in the distribution of engineering plastic compounds (also known as polymer resins) manufactured by Polymer Resources, the claims are not sufficiently similar to enter a stay of these proceedings.   Polymer Resources is suing in Connecticut primarily in breach of contract for goods it actually sold on credit to Polysource as a distributor for resale to Polysource's customers.   Polysource is alleged as the party responsible for payment, which has not been made.   Polysource is suing in Missouri for alleged tortious conduct relating to customers it referred as an independent representative to Polymer Resources to purchase polymer resins.   Polysource was not the direct customer of Polymer Resources with regard to those transactions in which Polymer Resources looks to the ultimate customer for payment and pays a commission to Polysource.   The specific claims and issues of the two actions are dissimilar even though the parties are identical.   The proceedings in Connecticut involve interests that are not part of the Missouri proceedings, namely nonpayment for the goods ordered by Polysource as a distributor for Polymer Recources.   See Voluntown v. Rytman, 21 Conn.App. 275, 287 (1990) where the defendant property owner whose home and business were being foreclosed by the Town of Voluntown for nonpayment of taxes had asked the trial court to stay the case pending the outcome of a separate foreclosure on the property commenced by the mortgagee, Connecticut National Bank. The motion for stay was denied.   The Appellate Court affirmed, because there was not total identity of parties in the two foreclosure actions, but also “particularly when priority is given to tax liens under General Statutes § 12–172.” ¹  In other words, two foreclosure cases on the same property were insufficiently similar to invoke a stay because the plaintiff in one case had the benefit of a super-priority lien.   See, also In Re Mary Bachand, Superior Court, Judicial District of Hartford, Docket No. HHDCV09–4041883S (July 27, 2010, Prescott, J.) 2010WL3326755 [50 Conn. L. Rptr. 429] (daughter's alleged misconduct as attorney in fact for her mother not stayed because of proceedings in Massachusetts concerning daughter's alleged misconduct as trustee of trust established by mother).   The evidence in the Missouri action would not be the same as that in the Connecticut collection action, where no defense has been pleaded and the evidence therefore would go to the direct sales pursuant to the credit agreement, and nonpayment by Polysource, which are not alleged in the Missouri tort case.

(2) Although the Missouri case was filed prior to the service of process in this Connecticut case, Polymer Resources was not served with process in the Missouri case, and did not even know of the Missouri case, until after Polysource had been served by long-arm service with Connecticut process in this case.   The winner of a “race to the courthouse” is not necessarily always the winner of a disputed motion to stay.   KI, Inc. v. KP Acquisition Partners, LLC, Superior Court, Judicial District of Stamford/Norwalk at Stamford, Docket No. X05CV09–60027474S, (September 24, 2010, Blawie, J.), 2010 WL 4276764, *6. Although the parties agree that, technically, the Missouri case was filed first, the finish line of the race was somewhat blurry and Polysource's victory in that race was not sufficiently clear to be outcome determinative on the question of a stay.

(3) A stay would not result in judicial economy, which has been described as the “overarching” reason for granting a stay.   Travelers Insurance Co. v. Howmet Corp., Superior Court, Judicial District of Hartford, Docket No. CV95–0550685, (September 27, 1997, Teller, J.), 2010 WL 4276764 (granting a motion to stay for judicial economy with similar actions in Connecticut and New Jersey).   No matter what the outcome of the tort action in Missouri, that will not dispose of the Connecticut collection case which would still have to be tried here.   The Missouri tort claims do not “have as their lynchpin the resolution of the issues in the present [Connecticut] case.”   Lewis v. Primerica Corp., Superior Court, Judicial District of Fairfield at Bridgeport, Docket No. 255328 (May 10, 1990, Jones, J.) 1990 WL 271150, *4. Consequently, there is no risk of inconsistent judgments if both actions are permitted to proceed simultaneously.   It has been suggested that Polymer Resources might be compelled to file its case in Missouri as a mandatory counterclaim under Federal Rules of Civil Procedure, Rule 13(a)(1,) but that suggestion is doubtful because subparagraph (3) of that rule requires that “substantially the same evidence will support or refute plaintiff's claim as well as defendant's counterclaim.”, which is not the case here.

(4) A stay would not advance the interest of justice to Polymer Resources, Ltd., which would have to wait months or even years before it could conduct discovery, attempt to secure assets or income streams, or prosecute its collection/breach of contract case against an out-of-state limited liability company which may or may not still be in business or have any solvent assets that far into the future.

After balancing the equities of the parties' conflicting interests, the court concludes that the interests of justice are better served by denial of the requested stay.   The Motion to Stay Proceedings is therefore denied.²

Alfred J. Jennings, Jr.

Judge Trial Referee

FOOTNOTES

FN1. Section 12–172 provides that municipal tax liens take effect from the first of October or other assessment date of the municipality in the year previous to that in which such tax, or the first installment thereof, became due, and “during its existence shall take precedence of all transfers and encumbrances in any manner affecting such interest in such item, or any part of it.”.  FN1. Section 12–172 provides that municipal tax liens take effect from the first of October or other assessment date of the municipality in the year previous to that in which such tax, or the first installment thereof, became due, and “during its existence shall take precedence of all transfers and encumbrances in any manner affecting such interest in such item, or any part of it.”

FN2. The court has not reviewed the motion to stay in another more recent case in this court in which Polymer Resources, Ltd. and Polysource, LLC are parties:  Polymer Resources, Ltd. v. William R. Feldman and Polysource, LLC, Docket No. FSTCV13–6016944S.   The motion for stay in that case has been argued before another judge and is presently under consideration..  FN2. The court has not reviewed the motion to stay in another more recent case in this court in which Polymer Resources, Ltd. and Polysource, LLC are parties:  Polymer Resources, Ltd. v. William R. Feldman and Polysource, LLC, Docket No. FSTCV13–6016944S.   The motion for stay in that case has been argued before another judge and is presently under consideration.

Jennings, Alfred J., J.T.R.