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Landesbank Baden- Wurttemberg v. Atradius Trade Credit Insurance

March 19, 2013

LANDESBANK BADEN- WURTTEMBERG, PLAINTIFF
v.
ATRADIUS TRADE CREDIT INSURANCE, INC. ,
DEFENDANT



The opinion of the court was delivered by: James K. Bredar United States District Judge

MEMORANDUM

Landesbank Baden-Wurttemberg ("Plaintiff") brought this suit against Atradius Trade Credit Insurance, Inc. ("Defendant") seeking to recover the attorneys' fees it incurred in a prior arbitration. Now pending before the Court are Defendant's motion to dismiss the complaint or, in the alternative, to compel arbitration (ECF No. 14), and Plaintiff's motion for an order directing the parties to promptly conduct a conference pursuant to FED. R. CIV. P. 26(f) (ECF No. 22). The issues have been briefed and no hearing is required. Local Rule 105.6. For the reasons set forth below, Defendant's motion will be GRANTED IN PART and DENIED IN PART, and Plaintiff's motion will be DENIED AS MOOT.

I.BACKGROUND

Through an affiliate, Plaintiff purchased a credit insurance policy from Defendant with a term effective February 1, 2008 through January 31, 2010 (the "Policy"). (Compl. ¶ 6, ECF No. 1.) The credit insurance policy contained the following arbitration provision:

All disputes arising under, or in connection with this policy, shall exclusively be referred to arbitration in Baltimore, Maryland, unless otherwise agreed by you and us, under the Rules of the American Arbitration Association by one or more arbitrators appointed in accordance with said Rules. (Id. ¶ 7.) At some point before July 2010, Defendant refused to pay a claim made by Plaintiff under the Policy. (Id. ¶ 6.)

In July 2010, Plaintiff initiated an arbitration action in Baltimore, Maryland. (Compl. ¶ 5.) During the course of the arbitration, the parties agreed that the Maryland Uniform Arbitration Act ("MUAA") would govern procedural matters, and "that Texas substantive law applied in respect to the rights and duties of the parties." (Id. ¶ 9.) On December 20, 2011, Plaintiff sent a letter to Defendant outlining its positions that (1) in the event that the arbitration panel found in Plaintiff's favor, Plaintiff was entitled under Texas law to an award of attorneys' fees; and (2) the arbitration panel did not have authority under the MUAA to award Plaintiff its attorneys' fees. (Id. ¶ 14.) In the letter, Plaintiff sought Defendant's consent to expand the scope of the arbitration panel's authority to allow it to determine the issue of attorneys' fees, and asked in the alternative "whether [Defendant] would prefer to litigate the attorney's fee issue in a Maryland district court." (Id.) Defendant responded with an email promising to provide a formal response to Plaintiff's letter, but Defendant never provided such a response. (Id. ¶ 15.)

On July 13, 2012, the arbitration panel entered an award in favor of Plaintiff in the amount of $2,024,293.95, plus interest, administrative fees, and expenses. (Id. ¶ 16.) After the arbitration award was entered, the parties exchanged additional correspondence on the issue of Plaintiff's basis for seeking attorneys' fees. (Id. ¶¶ 17-19.) On October 8, 2012, Plaintiff initiated this action seeking an award of its attorneys' fees incurred in connection with the arbitration proceeding. (Id. ¶ 23.)

II.LEGAL STANDARD

A motion to dismiss under FED. R. CIV. P. 12(b)(6) is a test of the legal sufficiency of a complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). To pass this test, a complaint need only present enough factual content to render its claims "plausible on [their] face" and enable the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plaintiff may not, however, rely on naked assertions, speculation, or legal conclusions. Bell Atl. v. Twombly, 550 U.S. 544, 556-57 (2007). In assessing the merits of a motion to dismiss, the court must take all well-pled factual allegations in the complaint as true and construe them in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). If after viewing the complaint in this light the court cannot infer more than "the mere possibility of misconduct," then the motion should be granted and the complaint dismissed. Iqbal, 556 U.S. at 679.

Federal law controls the interpretation of arbitration agreements, even where a contract includes a choice-of-law provision. Smith Barney, Inc. v. Critical Health Sys. of N.C., Inc., 212 F.3d 858, 861 n.1 (4th Cir. 2000). The Federal Arbitration Act ("FAA") provides that written arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This section is "a congressional declaration of a liberal policy favoring arbitration agreements." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). In order to compel arbitration, the Court must determine that (1) an arbitration agreement exists between the parties; and (2) the dispute at issue falls within the scope of the arbitration agreement. See Hightower v. GMRI, Inc., 272 F.3d 239, 242 (4th Cir. 2001). Any doubts about whether a given dispute falls within the scope of an arbitration clause must be resolved in favor of arbitration. Long v. Silver, 248 F.3d 309, 316 (4th Cir. 2001), overruled on other grounds, Hertz Corp. v. Friend, 559 U.S. 77 (2010).

III.ANALYSIS

Defendant argues that Plaintiff should have presented its request for attorneys' fees to the arbitration panel, and its failure to raise the issue in that forum precludes this claim as res judicata. In the alternative, Defendant argues that Plaintiff's claim for attorneys' fees is subject to the arbitration provision and so should be submitted to arbitration. For reasons explained below, the Court will first address Defendant's motion to compel arbitration.

The parties do not dispute that an arbitration agreement exists between them, or that it applies to "[a]ll disputes arising under, or in connection with" the Policy. (Compl. ¶ 7.) The issue for the Court is arbitrability-whether the parties have submitted this particular dispute to arbitration. An agreement to arbitrate is fundamentally a matter of contract, and "a party cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit." Carson v. Giant Food, Inc., 175 F.3d 325, 328-29 (4th Cir. 1999) (internal citations omitted). For that reason, "the determination of what disputes are arbitrable is focused on the intent of the parties." Id. The question of arbitrability is an issue for judicial determination unless the agreement clearly and unmistakably declares otherwise. Peabody Holding Co., LLC v. United Mine Workers of Am., Int'l Union, 665 F.3d 96, 102 (4th Cir. 2012).

Plaintiff's complaint asks the Court to award it the attorneys' fees it incurred in the previous arbitration, in which Plaintiff was awarded damages for breach of contract. Plaintiff's claim for attorneys' fees arises under the Policy, because Plaintiff seeks an additional remedy to which it is allegedly entitled under the Policy. Alternatively, the claim for attorneys' fees arises ...


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