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Bobys & Associates Inc. v. Paetec Communications Inc.

United States District Court, Fourth Circuit

August 26, 2013



ALEXANDER WILLIAMS, Jr., District Judge.

Pending before the Court is Defendants' Motion to Dismiss in Favor of Arbitration (Motion to Dismiss). The Court has reviewed the record and deems a hearing unnecessary. For the following reasons, the Court GRANTS Defendants' Motion to Dismiss.


In May 2013, Plaintiff filed a Complaint in the Circuit Court for Montgomery County, Maryland. Plaintiff's Complaint sounds in breach of contract. Plaintiff alleges that it entered into a sales agreement (Agreement) with Defendant Paetec Communication, Inc.'s (Paetec) predecessor in interest. Plaintiff further alleges that Defendant Windstream Corporation acquired Paetec. Plaintiff alleges that Defendants failed to pay it adequate commissions in accordance with the Agreement. Plaintiff further alleges that Defendants unlawfully terminated the Agreement. Finally, Plaintiff alleges that Defendants improperly blocked its access to files and/or paperwork necessary to verify that Defendants had properly compensated it under the Agreement. Out of these core allegations, Plaintiff asserts a breach of contract claim with associated claims for declaratory relief and accounting. Doc. No. 2.

Defendants removed the case on June 21, 2013. A week later, Defendants filed their Motion to Dismiss. Doc. No. 8. Defendants assert that Section 13.1 of the Agreement contains a mandatory arbitration clause and ask this Court to refer the action to arbitration. In pertinent part, Section 13.1 reads as follows: "Any dispute relating to this Agreement will be finally settled by arbitration by one arbiter according to the then current Commercial Arbitration Rules of the American Arbitration Association." Doc. No. 8-2 ยง 13.2, at 7.


A. Preliminary Issues

"[M]otions to compel arbitration exist in the netherworld between a motion to dismiss and a motion for summary judgment." PC Constr. Co. v. City of Salisbury, 871 F.Supp.2d 475, 477 (D. Md. 2012) (alteration in original) (citation and internal quotation marks omitted). "Whether the motion should be treated as a motion to dismiss or a motion for summary judgment turns on whether the court must consider documents outside the pleadings." Id. (citation omitted).

In this case, the only document outside the Complaint that the Court must consider is the Agreement. However, the Plaintiff attaches the Agreement to the Complaint and refers to it therein. Likewise, the Agreement is integral to the Complaint. Therefore, the Court treats the Agreement as a part of the Complaint. See, e.g., Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Accordingly, the Court considers the instant Motion under a Rule 12(b)(6) analysis.

B. Motion to Dismiss-Rule 12(b)(6)

The purpose of a motion to dismiss is to test the sufficiency of the plaintiff's complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). In two recent cases, the U.S. Supreme Court has clarified the standard applicable to Rule 12(b)(6) motions. Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). These cases make clear that Rule 8 "requires a showing, ' rather than a blanket assertion, of entitlement to relief." Twombly, 550 U.S. at 556 n.3 (quoting Fed.R.Civ.P. 8(a)(2)). This showing must consist of at least "enough facts to state a claim to relief that is plausible on its face." Id. at 570.

In deciding a motion to dismiss, the court should first review the complaint to determine which pleadings are entitled to the assumption of truth. See Iqbal, 129 S.Ct. at 1949-50. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 1950. In so doing, the court must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999). The Court need not, however, accept unsupported legal allegations, Revene v. Charles County Commissioners 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual allegations, Papasan v. Allain, 478 U.S. 265, 286 (1986), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979).


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