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Matrix North American Construction, Inc. v. SNC Lavalin Constructors Inc.

United States District Court, D. Maryland, Southern Division

August 2, 2018

MATRIX NORTH AMERICAN CONSTRUCTION, INC., Plaintiff,
v.
SNC LAVALIN CONSTRUCTORS, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm, United States District Judge.

         Plaintiff Matrix North American Construction, Inc. (“Matrix”) filed suit, alleging three breach-of-contract claims and one claim for violating Maryland's Prompt Payment Statute, Md. Code Ann., Real Prop. §§ 9-301 - 9-305, against Defendant SNC Lavalin Constructors Inc. (“SNC”). Compl., ECF No. 1. SNC seeks to stay the proceedings in this Court and to compel arbitration based on the parties' construction contract. Def.'s Mot. to Stay & Compel Arbitration, ECF No. 22.[1] As SNC sees it, the parties' construction contract (the “Contract”), ECF No. 2-2, requires them to settle all disputes by arbitration. Matrix disagrees. Construed as a motion for summary judgment, I will grant SNC's motion because the parties agreed to arbitrate disputes arising from the Contract. This case will be stayed and administratively closed to permit the arbitration to take place.

         Standard of Review

         SNC moves to stay the proceedings and compel arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16.[2] Congress enacted the FAA “to promote the enforceability of arbitration agreements and to make arbitration a more viable option to parties weary of the ever-increasing ‘costliness and delays of litigation.'” Saturn Distribution Corp. v. Williams, 905 F.2d 719, 722 (4th Cir. 1990) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 220 (1985) (quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 2 (1924) (quotation marks omitted))). It “reflects ‘a liberal federal policy favoring arbitration agreements.'” Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). If an issue is “‘referable to arbitration under an agreement in writing for such arbitration, '” then a stay is mandatory and a motion to compel must be granted. Id. (quoting 9 U.S.C. § 3).

         When a party moves to compel arbitration, or to dismiss on the basis of a governing arbitration agreement, the Court first must “determine whether the parties agreed to arbitrate that dispute.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). The moving party must show

(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the [plaintiff] to arbitrate the dispute.

Adkins, 303 F.3d at 500-01 (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991)). While the Court applies the “federal substantive law of arbitrability, ” id. (quoting Moses H. Cone Mem'l Hosp., 460 U.S. 1, 24 (1983)), it applies “state law governing contract formation” to determine “[w]hether a party agreed to arbitrate a particular dispute, ” Adkins, 303 F.3d at 501.

         Relevantly, “‘even though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate.'” Id. at 501 (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997)). Here, Matrix challenges the very existence of a mandatory arbitration clause, rather than its scope.[3] See Pl.'s Opp'n 1. Essentially, it argues that a provision allowing for—but not requiring—arbitration is not an agreement to arbitrate. When a party moves to compel arbitration and the validity of the purported arbitration agreement between the parties is disputed, the motion is treated as one for summary judgment. See Rose v. New Day Fin., LLC, 816 F.Supp.2d 245, 251 (D. Md. 2011); see also Id. at 252 n.5 (“If the parties dispute the existence of an arbitration agreement, the court must ‘hear the parties' on the issue, and the party alleged to have violated the arbitration agreement is entitled to a jury trial on the existence of an agreement. Standard summary judgment rules apply.” (quoting 9 U.S.C. § 4 and citing Shaffer v. ACS Gov't Servs., Inc., 321 F.Supp.2d 682, 684 n.1 (D. Md. 2004))). Therefore, I will treat Defendant's motion as one for summary judgment. See id.; see also Fed. R. Civ. P. 12(d) (requiring conversion of motion to dismiss to motion for summary judgment where, as here, movant attaches affidavits in support that are not integral to the pleadings).

         Summary judgment is proper when the moving party demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). The question here is “whether a contract to arbitrate was formed, ” and “unless there is no genuine issue of fact as to whether a contract was formed, the court must submit the question to the jury.” Galloway v. Santander Consumer USA, Inc., No. CCB-13-3240, 2014 WL 4384641, at *2 (D. Md. Sept. 3, 2014). To determine whether an arbitration agreement exists, “[c]ourts apply ‘ordinary state-law principles that govern the formation of contracts.'” Id. (quoting Noohi v. Toll Bros., Inc., 708 F.3d 599, 607 (4th Cir. 2013) (internal quotation marks and citations omitted)).

         Background

         SNC entered into the Contract with Matrix. Matrix agreed to be a subcontractor providing labor and materials in constructing the Keys Energy Center in Prince George's County. Def.'s Mem. 2. The Contract states:

22. RESOLUTION OF DISPUTES
22.2 NEGOTIATION - If the Parties cannot reach resolution on a matter relating to or arising out of the Agreement, the Parties shall endeavor to reach resolution through good faith direct discussions between the Parties' representatives, who shall possess the necessary authority to resolve such matter and who shall record the date of first discussions. If the Parties' representatives are not able to resolve such matter within five (5) business Days of the date of first discussion, the Parties' representatives shall immediately inform senior executives of the Parties in writing that resolution was not affected. Upon receipt of such notice, the senior executives of the Parties shall meet within five (5) Business Days to endeavor to reach resolution. If the dispute remains unresolved after fifteen (15) Days from the date of first discussion or longer period if the Parties agree, the Parties shall submit such matter to the dispute mitigation and dispute resolution procedures selected herein.
22.3 MEDIATION - the dispute may be settled by a single arbitrator, in accordance with the rules of the American Arbitration Association (“AAA”), which shall use commercially reasonable efforts to make a determination within two (2) weeks of such arbitrator's engagement, which determination shall be in writing and final and binding on the Parties. The parties shall cooperate in providing reasonable disclosure of relevant documents. The exclusive venue and place of arbitration shall be in Maryland pursuant to the AAA's Construction Industry Arbitration Rules and Mediation Procedures then in effect. Seller agrees to participate in and be bound by anything between Owner and Construction Manager that relates in any manner to the Work furnished by Seller. Each party shall bear its own expenses, and the costs and fees of the arbitration shall be borne equally by the Parties. The arbitrator shall not award punitive damages nor include interest in any determination[.]
22.4 LITIGATION - Any Dispute not resolved through negotiation or mediation shall be decided by litigation brought exclusively in either the state or federal court within Prince George's County, Maryland. Construction Manager and Trade Contractor hereby consent to personal jurisdiction in any legal action, suit, or proceeding brought in any court, federal or state, within Prince George's County, Maryland, having subject matter jurisdiction and irrevocably waive, to the fullest extent permitted by applicable laws and the laws of the state of Maryland, any claim or any objection it may now or hereafter have, that venue or personal jurisdiction is not proper with respect to any such legal action, suit, or proceeding brought in such a court in Prince George's County, Maryland, including any claim that such legal action, suit, or proceeding brought in such court has been brought in an inconvenient forum. Each of Owner and Contractor further consents to the service of process out of any of the aforementioned courts in any such ...

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