Valley Forge Insurance Company v. Aquawood, LLC

U.S. District Court, District of Minnesota

Valley Forge Insurance Company v. Aquawood, LLC

Trial Court Opinion

                   UNITED STATES DISTRICT COURT                          
                      DISTRICT OF MINNESOTA                              
VALLEY FORGE INSURANCE COMPANY,                                          
                                     Civil No. 24-3769 (JRT/DTS)         
                       Plaintiff,                                        

v.                                                                       
                                 MEMORANDUM OPINION AND ORDER            
AQUAWOOD, LLC and BRIAN DUBINSKY,  AFFIRMING MAGISTRATE JUDGE’S          

ORDER

                     Defendants.                                         

    Leland Partick Abide and Ruth S. Marcott, KUTAK ROCK LLP, 60 South Sixth 
    Street, Suite 3400, Minneapolis, MN 55402, for Plaintiff.            

    Brandon Underwood and Sarah Beth Golwitzer, FREDRIKSON & BYRON,      
    111 East Grand Avenue, Suite 301, Des Moines, IA 50309, for Defendants.  


    After several years of defending its insureds under reservation of rights, Plaintiff 
Valley Forge Insurance Company (“Valley Forge”) seeks a legal declaration that it has no 
duty to defend or indemnify its insureds in the underlying action.  The Court answered 
the precise interpretive question at issue here in a similar case, General Star Indem. Co. 
v. Toy Quest Ltd. (“General Star”), No. 22-2258, 
2025 WL 253413
 (D. Minn. Jan. 21, 2025).  
But Defendants Aquawood, LLC and Brian Dubinsky asked the Court to refrain from 
deciding that same interpretive issue in this action pending the outcome of the appeal in 
General Star.  Magistrate Judge David T. Schultz denied Defendants’ motion to stay, and 
Defendants appealed that decision to this Court.  Because the Magistrate Judge did not 
clearly err in denying Defendants’ motion to stay, the Court will overrule Defendants’ 
appeal and affirm the Magistrate Judge’s order.                           

                          BACKGROUND                                     
    When Defendants were sued for abuse of process in ASI, Inc. v. Aquawood, LLC, et 
al., No. 19-763 (“ASI Action”), they tendered the action to their insurance provider, Valley 
Forge.  (Compl. ¶¶ 3, 15, 17, 21, Sept. 30, 2024, Docket No. 1.)  Valley Forge has been 

defending Defendants under reservation of rights.  (Id. ¶¶ 9, 18.)        
    Valley Forge also filed this action seeking a declaration from the Court that it has 
no duty to defend or indemnify the Defendants in the underlying ASI Action because the 
claim for abuse of process does not trigger policy coverage for malicious prosecution.  (Id. 

¶¶ 22, 29; Pl.’s Mem. Supp. Mot. J. Pleadings at 2, Feb. 19, 2025, Docket No. 19.)   
    Prior to Valley Forge filing this action, the Court addressed virtually an identical 
issue in General Star.  Under the same policy language, the Court determined that General 
Star had no duty to defend or indemnify its insureds because malicious prosecution 

unambiguously meant only malicious prosecution and accordingly the claim for abuse of 
process did not trigger insurance coverage.  General Star, 
2025 WL 253413
, at *6–7.  An 
appeal of that decision is currently pending before the Eighth Circuit.  (No. 22-2258, 

Notice of Appeal, Feb. 11, 2025, Docket No. 123.)                         
    Shortly  after  Valley  Forge  filed  its  motion  for  judgment  on  the  pleadings, 
Defendants filed a motion to stay proceedings pending the outcome of the General Star 
appeal.  (Mot. to Stay, Mar. 21, 2025, Docket No. 30.)  The Magistrate Judge denied 
Defendants’ motion to stay from the bench.  (Order, Apr. 30, 2025, Docket No. 42.)  
Defendants timely appealed that denial.  (Appeal/Obj. of Magistrate Judge Decision, May 

14, 2025, Docket No. 46.)                                                 
    In the meantime, the parties agreed to stay discovery pending the outcome of 
Valley Forge’s motion for judgment on the pleadings, (Stipulation to Stay Disc., Mar. 12, 
2025, Docket No. 23,) and the motion for judgment on the pleadings has been fully briefed 

and argued, (Min. Entry, July 14, 2025, Docket No. 50.)                   
                           DISCUSSION                                    
I.   STANDARD OF REVIEW                                                   
    Magistrate judges may hear and determine certain pretrial matters under the 

Federal Magistrate Judges Act.  
28 U.S.C. § 636
(b)(1)(A); accord D. Minn. LR 72.1(a)(2). 
The standard of review applicable to an appeal of a magistrate judge’s order on non-
dispositive pretrial matters is extremely deferential.  Roble v. Celestica Corp., 
627 F. Supp. 2d 1008, 1014
 (D. Minn. 2007).  The Court will reverse such an order only if it is clearly 

erroneous or contrary to law.  Id.; 
28 U.S.C. § 636
(b)(1)(A); Fed. R. Civ. P. 72(a); D. Minn. 
LR 72.2(a)(3)(A).  “A finding is clearly erroneous when ‘although there is evidence to 
support it, the reviewing court on the entire evidence is left with the definite and firm 
conviction that a mistake has been committed.’”  Lisdahl v. Mayo Found., 
633 F.3d 712, 717
 (8th Cir. 2011) (quoting Anderson v. City of Bessemer City, 
470 U.S. 564, 573
 (1985)).  
“A decision is contrary to law when it fails to apply or misapplies relevant statutes, case 
law or rules of procedure.”  Knutson v. Blue Cross & Blue Shield of Minn., 
254 F.R.D. 553, 556
 (D. Minn. 2008) (quotation omitted).                                  

II.  ANALYSIS                                                             
    Defendants argue that the Magistrate Judge clearly erred because he did not 
consider the broad factors described in Garcia v. Target Corp., found no irreparable harm 
to Defendants, inadequately considered judicial economy, failed to give weight to the 

impact of the General Star appeal decision, and erroneously determined that Valley Forge 
would be prejudiced.  Each alleged error will be taken in turn.           
    A.   Stay Factors                                                    
    The Magistrate Judge did not clearly err in the factors he considered in evaluating 

Defendants motion to stay.                                                
    The power to issue a stay is within the discretion of the court “to control the 
disposition of the causes 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).  Garcia v. Target 

Corp. delineates several factors for the court to consider in exercising its discretion to 
enter a stay pending appeal.  
276 F. Supp. 3d 921, 924
 (D. Minn. 2016).  The Garcia court 
began by listing the following factors:                                   
         the effect of the decision on the scope of discovery; whether   
         a stay would conserve judicial resources, clarify the law, and  
         aid in the court in making a decision on the merits; whether a  
         stay  would  prejudice  the  plaintiff;  whether  a  stay  would 
         reduce the burden of litigation on the parties; the anticipated 
         length of the stay; and absent a stay, whether the defendant    
         would suffer hardship.                                          
Garcia, 
276 F. Supp. 3d at 924
.  Garcia then described those factors as consistent with the 
“standard factors”: namely likelihood of success on the merits, irreparable injury to the 

movant, balance of equities, and public interest (“Standard Factors”).  
Id.
  Finally, Garcia 
discussed  consideration  of  “maintaining  control  of  [the  Court’s]  docket,  conserving 
judicial resources, and providing for the just determination of cases pending before the 
court.”  
Id.
                                                              

    First, Defendants present no evidence to suggest that in all cases, all factors must 
specifically be considered.  Instead, Defendants argue that courts “often apply a broader 
discretionary standard focused on judicial economy, hardship to the parties, and the 

interests of justice.”  (Defs.’ Mem. Supp. Appeal Magistrate Judge Order at 8, May 14, 
2025, Docket No. 46.)  Accordingly, even if the Magistrate Judge had rigidly applied the 
Standard Factors, the Court is not convinced that would have been clear error.  Cf. Kent 
v. Bank of Am., N.A., No. 11-2315, 
2012 WL 12895016
, at *1 (D. Minn. June 26, 2012) 

(applying only the Standard Factors to a motion to stay pending the appeal of other 
cases).                                                                   
    Second, even if the Magistrate Judge was required to consider factors other than 
the Standard Factors, the Court is satisfied he did so.  For example, the Magistrate Judge 

specifically addressed the “efficient use of judicial resources” and the impact any stay 
would have on discovery.  (Hr’g Tr. at 28:10–18, May 6, 2025, Docket No. 44.)  The 
Magistrate Judge also acknowledged the “other factors” while delivering his ruling from 
the bench.  (Id. at 28:10.)  Furthermore, the transcript from the hearings shows that the 
Magistrate Judge engaged in prolonged discussion with the parties about the impact the 

Eighth Circuit’s decision in General Star would have on this litigation.  (See 
Id.
 at 5:22–
8:14.)  Accordingly, the Court finds clear evidence that the Magistrate Judge weighed 
factors outside the Standard Factors in denying Defendants’ motion to stay.     
    Because the Magistrate Judge did not limit his analysis to Standard Factors and the 

Court is not convinced that doing so would have constituted clear error, the Court finds 
no clear error in the factors the Magistrate Judge considered.            
    B.   Irreparable Harm                                                
    The Magistrate Judge also did not clearly err in determining that Defendants are 

unlikely  to  suffer  irreparable  harm.    The  Magistrate  Judge  did  acknowledge  that 
Defendants may suffer “some pain” absent a stay, but that the harm failed to rise to the 
level of irreparable.  (Hr’g Tr. at 27:23.)  In response, Defendants cite to “unrecoverable 
defense and indemnity expenses” as well as “prejudice to the Insureds’ ability to litigate 

the underlying case . . . without coverage.”  (Defs.’ Mem. Supp. Appeal Magistrate Judge 
Order at 8.)                                                              
    The party moving for a stay must show that irreparable harm will occur absent a 

stay.    Landis, 
299 U.S. at 255
.                                         
    Defendants alleged harms are precisely the kind that may remedied by money 
damages or are too speculative.  If Valley Forge withdrew its defense and it was later 
determined they had a duty to defend the abuse of process claims, Valley Forge could be 
ordered to repay any costs expended by the Defendants in the meantime.  As to the other 
“prejudice” that Defendants may suffer, the Court is unsure what that harm may even be 

and is not persuaded that the harm is likely to occur.  Accordingly, the Magistrate Judge 
did not clearly err in determining that Defendants had not met their burden to show 
irreparable harm.                                                         
    C.   Judicial Economy                                                

    Defendants’  disagreement  with  the  weight  afforded  to  the  various  judicial 
economy considerations does not render the Magistrate Judge’s conclusions clearly 
erroneous.  The Magistrate Judge concluded that because the motion for judgment on 
the pleadings is fully briefed and discovery has been stayed, denying Defendants’ motion 

to stay promoted judicial economy.  Defendants instead argue that granting a stay would 
avoid wasting resources on litigation that may be mooted or need to be redone.  
    The motion for judgment on the pleadings is ripe for review.  Issuing a decision in 
due course on a fully briefed, potentially dispositive motion will not squander efforts 

already expended but rather will promote judicial economy.  The Magistrate Judge did 
not clearly err in his weight of the judicial economy in denying Defendants’ motion to 
stay.                                                                     

    D.   General Star Decision                                           
    Defendants argue that the Magistrate Judge “failed to give any weight to the 
likelihood that a decision in the General Star Appeal will have a controlling impact on this 
case,” but that allegation is belied by the hearing transcript.  In fact, the Magistrate Judge 
interrupted Defense Counsel shortly after he began to inquire about precisely this issue.  
(Hr’g Tr. at 5:22–6:3 (“[A]re . . . defendants willing to say however the Eighth Circuit goes, 

so goes these cases or is that not the case?”).)   Though the Magistrate Judge may not 
have given the impact of the General Star decision the weight Defendants would have 
liked, the Court is satisfied that the Magistrate Judge gave thoughtful consideration to the 
effect of the General Star appeal in in making his decision; thus, denying Defendants’ 

motion to stay was not clearly erroneous.                                 
    E.   Prejudice to Valley Forge                                       
    The Magistrate Judge did not clearly err in determining that a stay would prejudice 
Valley Forge.  Defendants claim that a stay would in fact benefit Valley Forge by “avoiding 

duplicative or unnecessary legal costs.”  (Defs.’ Mem. Supp. Appeal Magistrate Judge 
Order at 12.)  However, Defendants acknowledged at the hearing that if Valley Forge 
continues to defend the Defendants in the underlying ASI Action and it is later determined 
that Valley Forge had no duty to defend, Valley Forge may not be able to recover the 

money expended on the defense.  (Hr’g Tr. at 12:24–13:21.)  The Magistrate Judge 
correctly concluded that Valley Forge would likely suffer prejudice if Defendants’ motion 
to stay was granted.  Landis, 
299 U.S. at 255
 (noting that damage to the non-movant must 

only be “a fair possibility”).                                            
                          CONCLUSION                                     
    Defendants want to delay the Court’s ruling on Valley Forge’s motion for judgment 
on the pleadings pending resolution of the General Star appeal.  The Magistrate Judge, 
however, determined that the factors did  not support issuing a  stay.  Defendants cite 
several alleged errors by the Magistrate Judge in reaching his conclusion, but the Court 
finds no clear error.  Accordingly, the Court will overrule Defendants’ appeal and affirm 
the Magistrate Judge’s order denying Defendants’ motion to stay. 

ORDER

     Based  on the foregoing, and all the files,  records, and  proceedings herein,  IT IS 
HEREBY ORDERED that: 
     1.  Defendants’ Appeal/Objection of Magistrate Judge Decision [Docket No. 46] is 
        OVERRULED. 
     2.  Magistrate Judge Order [Docket No. 42] is AFFIRMED. 

DATED:  August 18, 2025                           dotien K. (ese 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                            United States District Judge 

                                    -9- 

Trial Court Opinion

                   UNITED STATES DISTRICT COURT                          
                      DISTRICT OF MINNESOTA                              
VALLEY FORGE INSURANCE COMPANY,                                          
                                     Civil No. 24-3769 (JRT/DTS)         
                       Plaintiff,                                        

v.                                                                       
                                 MEMORANDUM OPINION AND ORDER            
AQUAWOOD, LLC and BRIAN DUBINSKY,  AFFIRMING MAGISTRATE JUDGE’S          

ORDER

                     Defendants.                                         

    Leland Partick Abide and Ruth S. Marcott, KUTAK ROCK LLP, 60 South Sixth 
    Street, Suite 3400, Minneapolis, MN 55402, for Plaintiff.            

    Brandon Underwood and Sarah Beth Golwitzer, FREDRIKSON & BYRON,      
    111 East Grand Avenue, Suite 301, Des Moines, IA 50309, for Defendants.  


    After several years of defending its insureds under reservation of rights, Plaintiff 
Valley Forge Insurance Company (“Valley Forge”) seeks a legal declaration that it has no 
duty to defend or indemnify its insureds in the underlying action.  The Court answered 
the precise interpretive question at issue here in a similar case, General Star Indem. Co. 
v. Toy Quest Ltd. (“General Star”), No. 22-2258, 
2025 WL 253413
 (D. Minn. Jan. 21, 2025).  
But Defendants Aquawood, LLC and Brian Dubinsky asked the Court to refrain from 
deciding that same interpretive issue in this action pending the outcome of the appeal in 
General Star.  Magistrate Judge David T. Schultz denied Defendants’ motion to stay, and 
Defendants appealed that decision to this Court.  Because the Magistrate Judge did not 
clearly err in denying Defendants’ motion to stay, the Court will overrule Defendants’ 
appeal and affirm the Magistrate Judge’s order.                           

                          BACKGROUND                                     
    When Defendants were sued for abuse of process in ASI, Inc. v. Aquawood, LLC, et 
al., No. 19-763 (“ASI Action”), they tendered the action to their insurance provider, Valley 
Forge.  (Compl. ¶¶ 3, 15, 17, 21, Sept. 30, 2024, Docket No. 1.)  Valley Forge has been 

defending Defendants under reservation of rights.  (Id. ¶¶ 9, 18.)        
    Valley Forge also filed this action seeking a declaration from the Court that it has 
no duty to defend or indemnify the Defendants in the underlying ASI Action because the 
claim for abuse of process does not trigger policy coverage for malicious prosecution.  (Id. 

¶¶ 22, 29; Pl.’s Mem. Supp. Mot. J. Pleadings at 2, Feb. 19, 2025, Docket No. 19.)   
    Prior to Valley Forge filing this action, the Court addressed virtually an identical 
issue in General Star.  Under the same policy language, the Court determined that General 
Star had no duty to defend or indemnify its insureds because malicious prosecution 

unambiguously meant only malicious prosecution and accordingly the claim for abuse of 
process did not trigger insurance coverage.  General Star, 
2025 WL 253413
, at *6–7.  An 
appeal of that decision is currently pending before the Eighth Circuit.  (No. 22-2258, 

Notice of Appeal, Feb. 11, 2025, Docket No. 123.)                         
    Shortly  after  Valley  Forge  filed  its  motion  for  judgment  on  the  pleadings, 
Defendants filed a motion to stay proceedings pending the outcome of the General Star 
appeal.  (Mot. to Stay, Mar. 21, 2025, Docket No. 30.)  The Magistrate Judge denied 
Defendants’ motion to stay from the bench.  (Order, Apr. 30, 2025, Docket No. 42.)  
Defendants timely appealed that denial.  (Appeal/Obj. of Magistrate Judge Decision, May 

14, 2025, Docket No. 46.)                                                 
    In the meantime, the parties agreed to stay discovery pending the outcome of 
Valley Forge’s motion for judgment on the pleadings, (Stipulation to Stay Disc., Mar. 12, 
2025, Docket No. 23,) and the motion for judgment on the pleadings has been fully briefed 

and argued, (Min. Entry, July 14, 2025, Docket No. 50.)                   
                           DISCUSSION                                    
I.   STANDARD OF REVIEW                                                   
    Magistrate judges may hear and determine certain pretrial matters under the 

Federal Magistrate Judges Act.  
28 U.S.C. § 636
(b)(1)(A); accord D. Minn. LR 72.1(a)(2). 
The standard of review applicable to an appeal of a magistrate judge’s order on non-
dispositive pretrial matters is extremely deferential.  Roble v. Celestica Corp., 
627 F. Supp. 2d 1008, 1014
 (D. Minn. 2007).  The Court will reverse such an order only if it is clearly 

erroneous or contrary to law.  Id.; 
28 U.S.C. § 636
(b)(1)(A); Fed. R. Civ. P. 72(a); D. Minn. 
LR 72.2(a)(3)(A).  “A finding is clearly erroneous when ‘although there is evidence to 
support it, the reviewing court on the entire evidence is left with the definite and firm 
conviction that a mistake has been committed.’”  Lisdahl v. Mayo Found., 
633 F.3d 712, 717
 (8th Cir. 2011) (quoting Anderson v. City of Bessemer City, 
470 U.S. 564, 573
 (1985)).  
“A decision is contrary to law when it fails to apply or misapplies relevant statutes, case 
law or rules of procedure.”  Knutson v. Blue Cross & Blue Shield of Minn., 
254 F.R.D. 553, 556
 (D. Minn. 2008) (quotation omitted).                                  

II.  ANALYSIS                                                             
    Defendants argue that the Magistrate Judge clearly erred because he did not 
consider the broad factors described in Garcia v. Target Corp., found no irreparable harm 
to Defendants, inadequately considered judicial economy, failed to give weight to the 

impact of the General Star appeal decision, and erroneously determined that Valley Forge 
would be prejudiced.  Each alleged error will be taken in turn.           
    A.   Stay Factors                                                    
    The Magistrate Judge did not clearly err in the factors he considered in evaluating 

Defendants motion to stay.                                                
    The power to issue a stay is within the discretion of the court “to control the 
disposition of the causes 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).  Garcia v. Target 

Corp. delineates several factors for the court to consider in exercising its discretion to 
enter a stay pending appeal.  
276 F. Supp. 3d 921, 924
 (D. Minn. 2016).  The Garcia court 
began by listing the following factors:                                   
         the effect of the decision on the scope of discovery; whether   
         a stay would conserve judicial resources, clarify the law, and  
         aid in the court in making a decision on the merits; whether a  
         stay  would  prejudice  the  plaintiff;  whether  a  stay  would 
         reduce the burden of litigation on the parties; the anticipated 
         length of the stay; and absent a stay, whether the defendant    
         would suffer hardship.                                          
Garcia, 
276 F. Supp. 3d at 924
.  Garcia then described those factors as consistent with the 
“standard factors”: namely likelihood of success on the merits, irreparable injury to the 

movant, balance of equities, and public interest (“Standard Factors”).  
Id.
  Finally, Garcia 
discussed  consideration  of  “maintaining  control  of  [the  Court’s]  docket,  conserving 
judicial resources, and providing for the just determination of cases pending before the 
court.”  
Id.
                                                              

    First, Defendants present no evidence to suggest that in all cases, all factors must 
specifically be considered.  Instead, Defendants argue that courts “often apply a broader 
discretionary standard focused on judicial economy, hardship to the parties, and the 

interests of justice.”  (Defs.’ Mem. Supp. Appeal Magistrate Judge Order at 8, May 14, 
2025, Docket No. 46.)  Accordingly, even if the Magistrate Judge had rigidly applied the 
Standard Factors, the Court is not convinced that would have been clear error.  Cf. Kent 
v. Bank of Am., N.A., No. 11-2315, 
2012 WL 12895016
, at *1 (D. Minn. June 26, 2012) 

(applying only the Standard Factors to a motion to stay pending the appeal of other 
cases).                                                                   
    Second, even if the Magistrate Judge was required to consider factors other than 
the Standard Factors, the Court is satisfied he did so.  For example, the Magistrate Judge 

specifically addressed the “efficient use of judicial resources” and the impact any stay 
would have on discovery.  (Hr’g Tr. at 28:10–18, May 6, 2025, Docket No. 44.)  The 
Magistrate Judge also acknowledged the “other factors” while delivering his ruling from 
the bench.  (Id. at 28:10.)  Furthermore, the transcript from the hearings shows that the 
Magistrate Judge engaged in prolonged discussion with the parties about the impact the 

Eighth Circuit’s decision in General Star would have on this litigation.  (See 
Id.
 at 5:22–
8:14.)  Accordingly, the Court finds clear evidence that the Magistrate Judge weighed 
factors outside the Standard Factors in denying Defendants’ motion to stay.     
    Because the Magistrate Judge did not limit his analysis to Standard Factors and the 

Court is not convinced that doing so would have constituted clear error, the Court finds 
no clear error in the factors the Magistrate Judge considered.            
    B.   Irreparable Harm                                                
    The Magistrate Judge also did not clearly err in determining that Defendants are 

unlikely  to  suffer  irreparable  harm.    The  Magistrate  Judge  did  acknowledge  that 
Defendants may suffer “some pain” absent a stay, but that the harm failed to rise to the 
level of irreparable.  (Hr’g Tr. at 27:23.)  In response, Defendants cite to “unrecoverable 
defense and indemnity expenses” as well as “prejudice to the Insureds’ ability to litigate 

the underlying case . . . without coverage.”  (Defs.’ Mem. Supp. Appeal Magistrate Judge 
Order at 8.)                                                              
    The party moving for a stay must show that irreparable harm will occur absent a 

stay.    Landis, 
299 U.S. at 255
.                                         
    Defendants alleged harms are precisely the kind that may remedied by money 
damages or are too speculative.  If Valley Forge withdrew its defense and it was later 
determined they had a duty to defend the abuse of process claims, Valley Forge could be 
ordered to repay any costs expended by the Defendants in the meantime.  As to the other 
“prejudice” that Defendants may suffer, the Court is unsure what that harm may even be 

and is not persuaded that the harm is likely to occur.  Accordingly, the Magistrate Judge 
did not clearly err in determining that Defendants had not met their burden to show 
irreparable harm.                                                         
    C.   Judicial Economy                                                

    Defendants’  disagreement  with  the  weight  afforded  to  the  various  judicial 
economy considerations does not render the Magistrate Judge’s conclusions clearly 
erroneous.  The Magistrate Judge concluded that because the motion for judgment on 
the pleadings is fully briefed and discovery has been stayed, denying Defendants’ motion 

to stay promoted judicial economy.  Defendants instead argue that granting a stay would 
avoid wasting resources on litigation that may be mooted or need to be redone.  
    The motion for judgment on the pleadings is ripe for review.  Issuing a decision in 
due course on a fully briefed, potentially dispositive motion will not squander efforts 

already expended but rather will promote judicial economy.  The Magistrate Judge did 
not clearly err in his weight of the judicial economy in denying Defendants’ motion to 
stay.                                                                     

    D.   General Star Decision                                           
    Defendants argue that the Magistrate Judge “failed to give any weight to the 
likelihood that a decision in the General Star Appeal will have a controlling impact on this 
case,” but that allegation is belied by the hearing transcript.  In fact, the Magistrate Judge 
interrupted Defense Counsel shortly after he began to inquire about precisely this issue.  
(Hr’g Tr. at 5:22–6:3 (“[A]re . . . defendants willing to say however the Eighth Circuit goes, 

so goes these cases or is that not the case?”).)   Though the Magistrate Judge may not 
have given the impact of the General Star decision the weight Defendants would have 
liked, the Court is satisfied that the Magistrate Judge gave thoughtful consideration to the 
effect of the General Star appeal in in making his decision; thus, denying Defendants’ 

motion to stay was not clearly erroneous.                                 
    E.   Prejudice to Valley Forge                                       
    The Magistrate Judge did not clearly err in determining that a stay would prejudice 
Valley Forge.  Defendants claim that a stay would in fact benefit Valley Forge by “avoiding 

duplicative or unnecessary legal costs.”  (Defs.’ Mem. Supp. Appeal Magistrate Judge 
Order at 12.)  However, Defendants acknowledged at the hearing that if Valley Forge 
continues to defend the Defendants in the underlying ASI Action and it is later determined 
that Valley Forge had no duty to defend, Valley Forge may not be able to recover the 

money expended on the defense.  (Hr’g Tr. at 12:24–13:21.)  The Magistrate Judge 
correctly concluded that Valley Forge would likely suffer prejudice if Defendants’ motion 
to stay was granted.  Landis, 
299 U.S. at 255
 (noting that damage to the non-movant must 

only be “a fair possibility”).                                            
                          CONCLUSION                                     
    Defendants want to delay the Court’s ruling on Valley Forge’s motion for judgment 
on the pleadings pending resolution of the General Star appeal.  The Magistrate Judge, 
however, determined that the factors did  not support issuing a  stay.  Defendants cite 
several alleged errors by the Magistrate Judge in reaching his conclusion, but the Court 
finds no clear error.  Accordingly, the Court will overrule Defendants’ appeal and affirm 
the Magistrate Judge’s order denying Defendants’ motion to stay. 

ORDER

     Based  on the foregoing, and all the files,  records, and  proceedings herein,  IT IS 
HEREBY ORDERED that: 
     1.  Defendants’ Appeal/Objection of Magistrate Judge Decision [Docket No. 46] is 
        OVERRULED. 
     2.  Magistrate Judge Order [Docket No. 42] is AFFIRMED. 

DATED:  August 18, 2025                           dotien K. (ese 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                            United States District Judge 

                                    -9- 

Reference

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