Beltsville Land, LLC v. Conaboy et al

Filing 12

Order granting in part denying in part 3 MOTION to Dismiss or, in the Alternative, Motion to Compel Arbitration. This action is STAYED pending arbitration. Status Report regarding arbitration proceedings is due by 3/7/2018 and on or before the first Wednesday of each month. Signed by District Judge William H. Steele on 2/8/2018. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
BELTSVILLE LAND, LLC,
Plaintiff,
v.
THOMAS R. CONABOY, et al.,
Defendants.

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CIVIL ACTION 17-0551-WS-B

ORDER
This matter comes before the Court on defendants’ Motion to Dismiss or, in the
Alternative, Motion to Compel Arbitration (doc. 3). The Motion has been briefed and is now
ripe for disposition.
I.

Background.
This action arises out of a construction agreement between plaintiff, Beltsville Land, LLC

(“Beltsville”), and defendant Caldwell & Santmyer, Inc. (“Caldwell”), for a project located in
Beltsville, Maryland. (Doc. 1-1, ¶ 5.) Caldwell subsequently assigned that agreement to
defendant C&S Design & Development Company, LLC (“C&S”), which (along with Caldwell)
is principally owned by defendant Thomas R. Conaboy (“Conaboy”). (Id., ¶¶ 8, 11.) According
to well-pleaded allegations of the Complaint, Caldwell and C&S “were a mere sham organized
and operated as the alter ego of Conaboy for his personal benefit and advantage,” with Conaboy
“exercis[ing] total dominion and control” over those entities and “intermingl[ing] his personal
and financial affairs with Caldwell and C&S.” (Id., ¶ 12.)
Beltsville’s claims relate to a series of allegedly false applications submitted by
defendants to Beltsville for payment on the Maryland construction project in 2016 and 2017.
Each payment application was accompanied by a waiver in which defendants certified and
represented that all subcontractors had been paid in full for their work on the project to date, and
purported to indemnify Beltsville from any claims resulting from services, labor, material or
equipment furnished to or by defendants. (Doc. 1-1, ¶ 18.) Beltsville alleges that defendants
falsely represented in those payment applications that all subcontractors and suppliers had been

paid in full, and that multiple subcontractors have since pursued legal claims against Beltsville
for nonpayment on the project. (Id., ¶¶ 21-26.) On the strength of these allegations, Beltsville
asserts causes of action for breach of contract (i.e., defendants failing to pay subcontractors and
suppliers as they had promised Beltsville they would), unjust enrichment (i.e., defendants
retained funds from Beltsville that were earmarked to pay subcontractors and suppliers), fraud
(i.e., defendants misrepresented payment status of suppliers and subcontractors in their payment
applications to Beltsville), conversion, negligence and indemnity.1
Defendants now move to dismiss the Complaint for want of personal jurisdiction and to
dismiss all claims against defendant Conaboy for failure to state a claim. Alternatively,
defendants seek an order compelling arbitration of these proceedings.
II.

Motion to Dismiss.
A.

Personal Jurisdiction.

As a threshold matter, defendants argue that this Court lacks jurisdiction over them.
According to defendants, they are Virginia citizens who lack the sort of continuous and
systematic contacts with Alabama to support general personal jurisdiction, and who lack
sufficient Alabama contacts related to this dispute to give rise to specific personal jurisdiction.
In response, Beltsville contends that sufficient contacts exist to allow courts in Alabama to
exercise specific personal jurisdiction over each defendant.
“A plaintiff seeking the exercise of personal jurisdiction over a nonresident defendant
bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie
case of jurisdiction.” United Technologies Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009);
see also Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013) (similar).
“A prima facie case is established if the plaintiff presents affidavits or deposition testimony
sufficient to defeat a motion for judgment as a matter of law.” PVC Windoors, Inc. v. Babbitbay
Beach Const., N.V., 598 F.3d 802, 810 (11th Cir. 2010). “Where, as here, the defendant
challenges jurisdiction by submitting affidavit evidence in support of its position, the burden
1

This action was initially filed in the Circuit Court of Mobile County, Alabama.
On December 14, 2017, however, defendants filed a Notice of Removal (doc. 1), removing the
case to this District Court. Removal jurisdiction was properly predicated on the diversity
provisions of 28 U.S.C. § 1332, inasmuch as plaintiff is an Alabama citizen for diversity
purposes, each defendant is a Virginia citizen for diversity purposes, and the amount in
controversy exceeds the sum or value of $75,000, exclusive of interest and costs.

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traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction.” United
Technologies, 556 F.3d at 1274 (citation and internal quotation marks omitted). “The burden,
however, does not shift back to the plaintiff when the defendant’s affidavits contain only
conclusory assertions that the defendant is not subject to jurisdiction.” Louis Vuitton, 736 F.3d at
1350 (citation and internal quotation marks omitted). “Where the plaintiff’s complaint and
supporting evidence conflict with the defendant’s affidavits, the court must construe all
reasonable inferences in favor of the plaintiff.” Diamond Crystal Brands, Inc. v. Food Movers
Int’l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (citation omitted)
Defendants are correct that the Complaint articulates precious few facts connecting
defendants to the State of Alabama. Indeed, the Complaint reflects that all defendants are
domiciled in Virginia and that they contracted with Beltsville to perform a construction project in
Maryland. (Doc. 1-1, at ¶¶ 2-5.) The discussion of Alabama in the Complaint is confined to the
following allegations: (i) Beltsville is an Alabama limited liability company whose principal
place of business is located in Mobile, Alabama; (ii) the allegedly false payment applications
“were submitted by Defendants to Plaintiff … at [plaintiff’s] office in Mobile County, Alabama”
(id., ¶ 15); and (iii) “[a]ll payments to be made to Defendants pursuant to the Agreement have
been made by Plaintiff through its bank in Mobile County, Alabama” (id., ¶ 24). In briefing the
Motion to Dismiss, Beltsville submits the Declaration of Taylor M. Watson, who declares that (i)
defendants submitted each payment application to Beltsville in Alabama, (ii) “Payments were
issued from Beltsville Land, LLC’s bank in Alabama,” (iii) defendants’ alleged false
representations in 2016 and 2017 were “submitted to Beltsville Land” in Alabama, and (iv)
“Beltsville Land, LLC has conducted much of its business with the Defendants from its offices in
Alabama.” (Doc. 9, Exh. 1, ¶¶ 4-6, 10.) In a nutshell, then, plaintiff’s jurisdictional case is
predicated on evidence that defendants contracted with an Alabama entity, directed false and
fraudulent misrepresentations to that entity in Alabama, and wrongfully induced payments from
that entity via an Alabama bank.
Confronted with these jurisdictional facts, defendants offer the Declaration of Thomas R.
Conaboy (doc. 11, Exh. A). For his part, Conaboy indicates that he submitted or caused to be
submitted the subject payment applications to Beltsville “via electronic mail to Taylor M.
Watson, a representative of Beltsville,” who is also plaintiff’s declarant. (Id., ¶ 5.) Conaboy

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states that to the best of his knowledge, Watson “lived in New York (not Alabama) and
maintained a California phone number” listed in his email correspondence. (Id., ¶ 6.)
The trouble with defendants’ factual submission is that it does nothing more than create a
conflict in the evidence, which must be construed in plaintiff’s favor on a Rule 12(b)(2) motion.
See, e.g., PVC Windoors, 598 F.3d at 810 (“Where the evidence presented by the parties’
affidavits and deposition testimony conflicts, the court must construe all reasonable inferences in
favor of the non-movant plaintiff.”) (citation omitted); S & Davis Int’l, Inc. v. The Republic of
Yemen, 218 F.3d 1292, 1303 (11th Cir. 2000) (“If the parties present conflicting affidavits, all
factual disputes are resolved in the plaintiff’s favor, and the plaintiff’s prima facie showing is
sufficient notwithstanding the contrary presentation by the moving party.”) (citation omitted).
Accordingly, for purposes of the Motion to Dismiss, the Court resolves all disputes regarding
jurisdictional facts in Beltsville’s favor. Doing so yields the following facts as the basis for
exercising personal jurisdiction over defendants: (1) they entered into an agreement with an
Alabama company that conducted business with them from its Alabama offices, (2) they
submitted false and fraudulent payment applications to that Alabama company in Alabama, and
(3) they induced the Alabama company to issue payment to them from an Alabama bank. The
legal question is whether these facts are sufficient to support the exercise of specific personal
jurisdiction over Caldwell, Conaboy and C&S in Alabama. The answer is yes.
When faced with a Rule 12(b)(2) motion, “the plaintiff has the twin burdens of
establishing that personal jurisdiction over the defendant comports with (1) the forum state’s
long-arm provision and (2) the requirements of the due-process clause of the Fourteenth
Amendment.” Continental Motors, Inc. v. Jewell Aircraft, Inc., 882 F. Supp.2d 1296, 1306 (S.D.
Ala. 2012) (citation omitted); see also Jackson, Key Practice Solutions, L.L.C. v. Sullivan, 2015
WL 9275667, *3 (S.D. Ala. Dec. 18, 2015) (same). “In this case, the two inquiries merge,
because Alabama’s long-arm statute permits the exercise of personal jurisdiction to the fullest
extent constitutionally permissible.” Sloss Industries Corp. v. Eurisol, 488 F.3d 922, 925 (11th
Cir. 2007). Thus, the operative inquiry is whether the exercise of personal jurisdiction over
Caldwell, Conaboy and C&S in Alabama comports with the guarantees of due process.
As noted, Beltsville has framed this action exclusively in terms of specific jurisdiction,
rather than general jurisdiction. “Specific jurisdiction refers to jurisdiction over causes of action
arising from or related to a defendant’s actions within the forum.” PVC Windoors, 598 F.3d at

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808 (citation and internal quotation marks omitted). “In specific personal jurisdiction cases, we
apply the three-part due process test, which examines: (1) whether the plaintiff’s claims ‘arise
out of or relate to’ at least one of the defendant’s contacts with the forum; (2) whether the
nonresident defendant ‘purposefully availed’ himself of the privilege of conducting activities
within the forum state, thus invoking the benefit of the forum state’s laws; and (3) whether the
exercise of personal jurisdiction comports with ‘traditional notions of fair play and substantial
justice.’” Louis Vuitton, 736 F.3d at 1355 (citations omitted). The plaintiff bears the burden of
establishing each of the first two prongs, after which the defendant/movant must make a
“compelling case” that exercising jurisdiction would violate traditional notions of fair play and
substantial justice. Id.
Upon careful review of the parties’ arguments and the record facts, the Court concludes
that Beltsville has met its threshold burden. For the first prong of the due process test, the
Court’s “inquiry must focus on the direct causal relationship among the defendant, the forum,
and the litigation.” Fraser v. Smith, 594 F.3d 842, 850 (11th Cir. 2010) (citation and internal
quotation marks omitted). Here, Beltsville’s contract and tort claims against defendants arise
directly out of those defendants’ contacts with Alabama. After all, defendants are connected to
Alabama by virtue of having contracted with an Alabama entity and having directed allegedly
fraudulent payment applications to that Alabama entity in Alabama. Thus, there is a direct
causal relationship among defendants, Alabama, and Beltsville’s claims. The first prong is
plainly satisfied.
As for the second prong, Beltsville properly alludes to the “effects test” for purposeful
availment, pursuant to which “a nonresident defendant’s single tortious act can establish
purposeful availment, without regard to whether the defendant had any other contacts with the
forum state.” Louis Vuitton, 736 F.3d at 1356. The “effects test” is satisfied when the
defendant’s tort is “intentional,” “aimed at the forum state,” and “caused harm that the defendant
should have anticipated would be suffered in the forum state.” Id. (citation omitted). Plaintiff’s
factual showing is that defendants intentionally submitted false payment applications to
Beltsville, which is an Alabama-based entity conducting business with defendants from its
Alabama offices and making payments to defendants via an Alabama bank. Such circumstances
are sufficient to satisfy Beltsville’s burden under the “effects test” for purposeful availment;
indeed, they tend to show that defendants committed an intentional tort aimed at Alabama and

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causing harm that defendants should have anticipated would be suffered in Alabama.2 See, e.g.,
Felland v. Clifton, 682 F.3d 665 (7th Cir. 2012) (effects test satisfied where nonresident
defendant directed multiple communications containing misrepresentations to resident defendant
in forum state in furtherance of ongoing fraudulent scheme, such that those communications
were expressly aimed at forum state); Neal v. Janssen, 270 F.3d 328, 332 (6th Cir. 2001)
(“[M]aking phone calls and sending facsimiles into the forum, standing alone, may be sufficient
to confer jurisdiction on the foreign defendant where the phone calls and faxes form the bases for
the action.”); Brown v. Flowers Industries, Inc., 688 F.2d 328, 333-34 (5th Cir. 1982)
(nonresident defendant purposefully availed himself of forum state’s benefits by placing
defamatory telephone call to forum state, the injurious effect of which was felt entirely by a
resident of the forum state); Hutton & Hutton Law Firm, LLC v. Girardi & Keese, 96 F. Supp.3d
1208, 1224 (D. Kan. 2015) (finding effects test satisfied where nonresident defendant mailed
false and defamatory statements to Kansas). Defendants’ briefs neither address the effects test
nor rebut its application here.3
2

Any suggestion that defendants did not know where Beltsville was receiving its
payment applications or conducting business with them is not persuasive for purposes of a Rule
12(b)(2) analysis. After all, the Construction Agreement between Beltsville and Caldwell (which
was later assigned to C&S) specifies that all notices under the contract are to be delivered to
Beltsville at a mailing address in Mobile, Alabama (which accompanied the email address to
which defendants directed their payment applications). (Doc. 1-1, Exh. 1, at Article 24.) On this
record and on Rule 12(b)(2) review, the Court cannot credit any contention by defendants that
they lacked knowledge that Beltsville was conducting its business activities from Alabama, or
that plaintiff would receive and process their payment applications in Alabama.
3

To be sure, defendants correctly observe that merely contracting with an Alabama
entity does not create minimum contacts with Alabama, and that Beltsville’s unilateral acts
cannot create minimum contacts for defendants in Alabama. See, e.g., Walden v. Fiore, 134
S.Ct. 1115, 1125, 199 L.Ed.2d 12 (2014) (“Regardless of where a plaintiff lives or works, an
injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact
with the forum State.”); Diamond Crystal, 593 F.3d at 1268 (“neither merely contracting with a
forum resident nor the forum resident’s unilateral acts can establish sufficient minimum
contacts”). But Beltsville’s facts show a direct connection among defendants, Alabama and this
litigation; in particular, defendants submitted the false payment applications on which
Beltsville’s claims are based to Beltsville in Alabama. Defendants’ transmission of fraudulent
material to Beltsville in Alabama distinguishes this case from those cited by defendants, and
provides a proper jurisdictional hook under the purposeful availment prong, whether analyzed
using the effects test or the traditional minimum contacts analysis. The traditional test turns on
whether a nonresident defendant’s contacts with the forum “(1) are related to the plaintiff’s cause
(Continued)
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Beltsville having satisfied the first two prongs of the due process test, defendants “must
make a ‘compelling case’ that the exercise of jurisdiction would violate traditional notions of fair
play and substantial justice.” Diamond Crystal, 593 F.3d at 1267. The Eleventh Circuit has
emphasized that “only in highly unusual cases” will this requirement be satisfied, and only where
the defendant “demonstrate[s] that the assertion of jurisdiction in the forum will make litigation
so gravely difficult and inconvenient that he unfairly is at a severe disadvantage in comparison to
his opponent.” Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 948
(11th Cir. 1997) (citation and internal marks omitted). The sum total of defendants’ argument on
this point in their principal brief is subsumed within a footnote. In that footnote, defendants state
that (i) they are not from Alabama, (ii) most evidence and witnesses are likely in Maryland, (iii)
Beltsville’s only interest in litigating the case here is one of convenience, and (iv) Alabama has
little interest in a dispute about a Maryland construction project. (Doc. 3, at 7-8 n.5.) This
showing does not come close to the requisite “constitutionally significant inconvenience.”
Republic of Panama, 119 F.3d at 948. Simply put, defendants have not presented a compelling
case that exercising personal jurisdiction over them would be unconstitutionally unfair.4

of action; (2) involve some act by which the defendant purposefully availed himself of the
privileges of doing business within the forum; and (3) are such that the defendant should
reasonably anticipate being haled into court in the forum.” Louis Vuitton, 736 F.3d at 1357.
Again, defendants’ contacts with Alabama include directing numerous payment applications
containing false representations to Alabama in order to receive payment from an Alabama entity.
Under the circumstances, all three questions are properly answered in the affirmative.
4

In particular, defendants have made no specific showing that litigating this action
in Alabama will make litigation “so gravely difficult and inconvenient” as to place them at a
“severe disadvantage” relative to Beltsville. There are simply no facts to support such a
conclusion. Even if there were, other aspects of defendants’ “fair play and substantial justice”
analysis are misguided. Contrary to defendants’ characterization, this is not a case about a
Maryland construction project. Rather, it is a case about allegedly fraudulent representations
directed to an Alabama business in Alabama that deceived said business into making payments
to the perpetrators of the fraud. Alabama certainly does have a strong interest in adjudicating
that dispute. The Court also has no facts before it that might support a conclusion that most
evidence and witnesses are located in Maryland, or somewhere other than Alabama. Defendants
have not come close to meeting their stringent burden of showing that the exercise of jurisdiction
over them here would implicate traditional notions of fair play and substantial justice.

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For all of these reasons, the Court concludes that personal jurisdiction is properly
exercised over defendants Caldwell and C&S in this forum on a specific personal jurisdiction
theory. The Motion to Dismiss is denied as to this issue.
B.

Personal Jurisdiction and Sufficiency of Claims Against Defendant Conaboy.

Defendants’ Motion to Dismiss also raises Rule 12(b)(2) and 12(b)(6) issues specific to
defendant Thomas R. Conaboy. Those issues are intertwined, and may be addressed efficiently
together. As to Rule 12(b)(2), defendants’ position is that personal jurisdiction is lacking as to
Conaboy individually because there is no allegation that he entered into a contract with
Beltsville, or that he had ever been to Alabama, and the corporate defendants’ contacts cannot be
ascribed to Conaboy in his individual capacity. As to Rule 12(b)(6), defendants similarly posit
that Beltsville “has failed to allege any facts that would give rise to a claim against Conaboy
individually,” inasmuch as he is not a party to the Beltsville contract and no factual basis for
piercing the corporate veil has been pleaded. (Doc. 3, at 8-10.)
Defendants are, of course, correct that the contacts of Caldwell and C&S with Alabama,
without more, do not create personal jurisdiction over Conaboy individually. See, e.g.,
Continental Motors, 882 F. Supp.2d at 1311 (“Pursuant to the fiduciary shield doctrine embraced
by Alabama courts, jurisdiction over individual officers and employees of a corporation may not
be predicated on the court’s jurisdiction over the corporation itself, but instead there must be a
showing that the individual officers engaged in some activity that would subject them to the
state’s long-arm statute before in personam jurisdiction can attach.”) (citations and internal
quotation marks omitted). That said, a defendant’s status as a corporate agent does not shield
him from personal jurisdiction for his own jurisdictional contacts, irrespective of whether his acts
directed at the forum state were performed on his own behalf or on behalf of the entity as to
which he is an agent. See, e.g., Ex parte Kohlberg Kravis Roberts & Co., L.P., 78 So.3d 959,
977 (Ala. 2011) (recognizing that “corporate agent status does not insulate the agent personally
from his or her jurisdictional contacts with a state or from personal jurisdiction in the state,” and
finding that personal jurisdiction existed where “individual defendants allegedly engaged in

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tortious activity directed toward the State of Alabama in connection with the leveraged
recapitalization and resulting acquisition of Bruno’s”).5
Beltsville’s Complaint alleges that each of the fraudulent payment applications (or, more
precisely, the fraudulent “Partial Release and Waiver of Lien” statements submitted with those
payment applications, falsely certifying that all subcontractors had been paid in full) “was signed
by Defendant Conaboy on behalf of himself and the other Defendants.” (Doc. 1-1, ¶ 18.) Thus,
Beltsville’s pleading reflects that Conaboy himself made the fraudulent misrepresentations on
which the causes of action delineated in the Complaint are predicated. Those misrepresentations
were directed to Beltsville at its Alabama offices. Thus, personal jurisdiction over Conaboy is
appropriate pursuant to the above-cited authorities not because of his business connection to the
other defendants, but because he is being sued in this action for his own contacts directed at
Alabama, thereby creating the requisite nexus between and among Conaboy, Beltsville’s claims,
and this forum so as to give rise to personal jurisdiction. Defendants’ Rule 12(b)(2) Motion as to
defendant Conaboy lacks merit.
The analysis is much the same with respect to defendants’ Rule 12(b)(6) argument that
the Complaint fails to state a claim against Conaboy. Defendants reason that Conaboy cannot be
held liable for signing fraudulent “Partial Release and Waiver of Lien Statements” as alleged in
the Complaint because “[a]ll documents signed by Conaboy clearly indicate that Conaboy signed
them only in his capacity as officer and/or member of a separate corporate entity.” (Doc. 11, at
7.) Such reasoning (i.e., that Conaboy is exempt from individual liability for alleged fraudulent
conduct in which he engaged in a corporate capacity) is irreconcilable with settled law. In
Alabama, “[a] corporate agent who personally participates, albeit in his or her capacity as such
5

See also Sieber v. Campbell, 810 So.2d 641, 645 (Ala. 2001) (“corporate-agent
status does not insulate the agent from the personal jurisdiction of a state court for the litigation
of those torts, or any other claims pendent to that lawsuit”); Williams Elec. Co. v. Honeywell,
Inc., 854 F.2d 389, 392 (11th Cir. 1988) (“[A] defendant’s status as an employee does not
somehow insulate him from jurisdiction. … The critical inquiry is whether the individual
defendant can incur personal liability for his acts in the forum.”) (citations and internal marks
omitted); Hampton-Muhamed v. James B. Nutter & Co., 2015 WL 13322125, *5 (N.D. Ga. Feb.
20, 2015) (“If substantive liability can extend to an individual for acts performed on behalf of a
corporation, then the individual may be amenable to suit in the forum state if the individual is
within the reach of the forum’s long arm statute and can survive the minimum contacts
analysis.”).

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agent, in a tort is personally liable for the tort.” Sieber v. Campbell, 810 So.2d 641, 645 (Ala.
2001).6 In its current form, the Complaint alleges that Conaboy personally participated in the
fraudulent activity directed at Beltsville in Alabama; therefore, plaintiff has stated a cognizable
claim against Conaboy, notwithstanding defendants’ assertion that he was acting solely in his
capacity as an officer or member of C&S or Caldwell. Defendants’ Rule 12(b)(6) Motion
concerning the claims against Conaboy is properly denied.
III.

Motion to Compel Arbitration.
In the alternative to their unsuccessful Rule 12(b)(2) and Rule 12(b)(6) Motions,

defendants move to compel this case to arbitration. As grounds for this Motion, defendants point
to the arbitration provision embedded in the Construction Agreement between Beltsville and
defendant Caldwell, which was later assigned to (and is binding on) defendant C&S. The
relevant portion of the Agreement states provides as follows:
“The parties hereto agree that all disputes, claims or controversies of any kind or
nature arising between the parties or arising from or relating to this contract or the
relationships which result from this contract, including, but not limited to, all
controversies relating to the existence, construction, performance, enforcement or
breach of the contract, claims against a party’s bond, or tort claims shall be fully
and finally resolved by binding arbitration. It is the intent of the parties that these
provisions shall apply to all controversies to the fullest extent. … In all other
respects, the parties and arbitrators shall be guided by the Construction Industry
and Commercial rules and procedures of the American Arbitration Association.”
(Doc. 1-1, Exh. 1, ¶ 18.4.)
The Federal Arbitration Act (“FAA”), which governs the Motion to Compel Arbitration,
provides that written agreements to arbitrate “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.
In conformity with the FAA, “courts must place arbitration agreements on an equal footing with
6

See also Bethel v. Thorn, 757 So.2d 1154, 1158 (Ala. 1999) (“Bethel argues that
Thorn, as president of Diesel, can be held individually liable for the fraudulent acts or omissions
he personally committed in his capacity as a corporate officer. We agree that this is a correct
statement of law.”); Ex parte Charles Bell Pontiac-Buick-Cadillac-GMC, Inc., 496 So.2d 774,
775 (Ala. 1986) (“In Alabama, the general rule is that officers or employees of a corporation are
liable for torts in which they have personally participated, irrespective of whether they were
acting in a corporate capacity.”); Allstate Ins. Co. v. Regions Bank, 2015 WL 4073184, *22 (S.D.
Ala. July 2, 2015) (“If Jones committed those torts, it makes no legal difference whether he did
so in a representative / agency capacity or not. Either way, he would remain liable for his own
tortious conduct.”).

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other contracts, and enforce them according to their terms.” Inetianbor v. CashCall, Inc., 768
F.3d 1346, 1349 (11th Cir. 2014) (citations omitted). Indeed, the Supreme Court has directed that
“[w]hether enforcing an agreement to arbitrate or construing an arbitration clause, courts and
arbitrators must give effect to the contractual rights and expectations of the parties.” StoltNielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682, 130 S.Ct. 1758, 176 L.Ed.2d 605
(2010) (citation and internal quotation marks omitted). Also, when courts are tasked with
enforcing arbitration agreements, “due regard must be given to the federal policy favoring
arbitration, and ambiguities to the scope of the arbitration clause itself resolved in favor of
arbitration.” Inetianbor, 768 F.3d at 1353 (citation and internal quotation marks omitted); see
also Parnell v. CashCall, Inc., 804 F.3d 1142, 1146 (11th Cir. 2015) (observing that the FAA
“sets forth a clear presumption – ‘a national policy’ – in favor of arbitration”).
Faced with the clear language of Paragraph 18.4, Beltsville offers two arguments against
referring this matter to arbitration. First, Beltsville maintains that compelling arbitration here
would be “truly inequitable” because (i) the arbitration clause may not cover its claims against
Conaboy, and (ii) given its “lack of awareness of Conaboy’s fraudulent scheme, Plaintiff did not
have the opportunity to make an informed choice in choosing to enter into an arbitration
agreement” that would be binding on Conaboy, such that (iii) the arbitration clause is
unconscionable. (Doc. 9, at 10-11.) Second, Beltsville argues that compelling arbitration would
be inefficient because its claims against Conaboy may be excluded from the arbitration of its
claims against C&S and Caldwell. (Id. at 11.) Plaintiff’s contentions overlook the fact that
Conaboy is not asking to be excluded from the arbitration referral and is not arguing that Section
18.4 does not apply to Beltsville’s claims against him; to the contrary, Conaboy has expressly
moved this Court to refer those claims to arbitration, just like Beltsville’s claims against C&S
and Caldwell. (See doc. 3, at 12 n.7 (“Although Conaboy is not a named party to the Contract,
he is still entitled to enforce the arbitration provision ….”); doc. 11, at 3 (“Beltsville’s claims
against Conaboy … must also be sent to arbitration if this Court does not dismiss them”).)
Defendants are not asking for arbitration to proceed only as to the claims against C&S and
Caldwell, but not those against Conaboy. Instead, defendants specifically seek to enforce the
arbitration provision as to the claims against Conaboy, same as C&S and Caldwell. Thus,
Beltsville’s objections to the fairness (or lack thereof) of a scenario in which only the C&S /

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Caldwell claims are arbitrated amount to speculation about improbable hypotheticals that appear
to have no grounding in fact.7
Besides, Beltsville’s objections go to the validity and scope of the arbitration clause.
Such questions are for the arbitrator to decide where there is “clear and unmistakable evidence
that the parties intended the arbitrator to rule on the validity of the arbitration agreement itself.”
Terminix Int’l Co. v. Palmer Ranch Ltd. Partnership, 432 F.3d 1327, 1331 (11th Cir. 2005)
(citations and internal quotation marks omitted). When an arbitration agreement expressly
adopts AAA rules conferring authority on the arbitrator to adjudicate objections to the
agreement’s existence, scope or validity, courts have routinely found the requisite “clear and
unmistakable evidence.” See U.S. Nutraceuticals, LLC v. Cyanotech Corp., 769 F.3d 1308, 1311
(11th Cir. 2014) (“When the parties incorporated into the 2007 contract the rules of the
Association, they clearly and unmistakably contracted to submit questions of arbitrability to an
arbitrator.”).8 Section 18.4 of the Construction Agreement specifies that the parties’ arbitration
“shall be guided by the Construction Industry and Commercial rules and procedures of the
American Arbitration Association.” Those rules specify that “[t]he arbitrator shall have the
power to rule on his or her own jurisdiction, including any objections with respect to the
existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or
counterclaim.” Rule R-7(a), Commercial Arbitration Rules and Mediation Procedures of the

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Having vigorously urged this Court to refer Beltsville’s claims against him to
arbitration pursuant to Paragraph 18.4, Conaboy would likely be judicially estopped from
arguing to the arbitrator that Beltsville’s claims against him exceed the scope of the arbitration
clause. Certainly, Beltsville’s brief confirms that it has no intention of asking the arbitrator to
declare its claims against Conaboy not to be arbitrable, or seeking to limit arbitration to the
claims against C&S and Caldwell. In short, all parties appear to agree that Beltsville’s claims
against Conaboy should be arbitrated alongside those against C&S and Caldwell, thereby
negating Beltsville’s articulated concerns about inequity, unconscionability, and inefficiency if
the arbitration moved forward without Conaboy.
8

See also Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d
671, 675 (5th Cir. 2012) (“We agree with most of our sister circuits that the express adoption of
[AAA rules into an arbitration agreement] presents clear and unmistakable evidence that the
parties agreed to arbitrate arbitrability.”) (citations omitted); Terminix, 432 F.3d at 1332-33 (“By
incorporating the AAA Rules … into their agreement, the parties clearly and unmistakably
agreed that the arbitrator should decide whether the arbitration clause is valid.”).

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American Arbitration Association (effective October 1, 2013).9 Thus, even if a party were
actually arguing that (i) only Beltsville’s claims against C&S and Caldwell (and not those against
Conaboy) should be arbitrated, thereby triggering Beltsville’s unconscionability / invalidity
arguments concerning Paragraph 18.4, or (ii) Beltsville’s claims against Conaboy are outside the
scope of Paragraph 18.4, there is clear and unmistakable evidence that the parties agreed to
arbitrate issues of validity and scope of their arbitration agreement. In short, these issues (if they
are even properly raised by a party, as opposed to being a mere hypothetical exercise instigated
by Beltsville) are properly decided in this case by the arbitrator, not by this Court.10
For all of these reasons, plaintiff’s objections to defendants’ Motion to Compel
Arbitration are not well-taken and provide no viable basis for declining to compel arbitration
here. Contrary to Beltsville’s assertions, it would not be inequitable, unconscionable, or
inefficient to compel arbitration in these circumstances. Accordingly, the Court will enforce the
parties’ clear and unmistakable agreement that the arbitrator shall resolve arbitrability objections
and decide on the existence, scope and validity of the arbitration agreement. Defendants’ Motion
to Compel Arbitration is granted.
The parties’ briefs do not address whether Beltsville’s claims should be stayed or
dismissed pending arbitration. According to the text of the FAA, when a court finds that an issue
is properly referred to arbitration pursuant to an agreement, the court “shall on application of one
of the parties stay the trial of the action until such arbitration has been had ….” 9 U.S.C. § 3.
Moreover, the Eleventh Circuit has opined that where a district court found that claims were
9

No party has submitted these rules as exhibits in briefing the Motion to Compel
Arbitration; however, the content of the rules is not in dispute and may be confirmed by visiting
www.adr.org, as the Eleventh Circuit and district courts in this Circuit have routinely done in
similar circumstances. See, e.g., Terminix, 432 F.3d at 1332 (citing www.adr.org as source in
identifying and quoting specific AAA rules incorporated into parties’ arbitration agreement for
purposes of ascertaining whether parties had clearly and unmistakably agreed that arbitrator
should decide validity of arbitration clause).
10

See Rainbow Cinemas, LLC v. Consolidated Construction Company of Alabama,
--- So.3d ----, 2017 WL 2610506, *6 (Ala. June 16, 2017) (in a case where arbitration provision
had incorporated AAA rules, explaining that “although the question whether an arbitration
provision may be used to compel arbitration between a signatory and a nonsignatory is a
threshold question of arbitrability usually decided by the court, here that question has been
delegated to the arbitrator. The arbitrator, not the court, must decide that threshold issue.”)
(citation omitted).

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subject to arbitration, it “erred in dismissing the claims rather than staying them. Upon finding
that a claim is subject to an arbitration agreement, the court should order that the action be stayed
pending arbitration.” Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698, 699 (11th Cir. 1992).11
In light of these authorities, and in the absence of any contrary argument by any party,
Beltsville’s claims will be stayed, not dismissed, pending arbitration.
IV.

Conclusion.
For all of the foregoing reasons, it is ordered as follows:
1.

Defendants’ Motion to Dismiss or, in the Alternative, Motion to Compel
Arbitration (doc. 3) is granted in part, and denied in part;

2.

The Motion is granted insofar as defendants seek to compel arbitration of all
claims asserted by plaintiff, Beltsville Land, LLC, against them in the Complaint,
and all such claims are hereby referred to binding arbitration in accordance with
the terms of Paragraph 18.4 of the Construction Agreement attached to the
Complaint as Exhibit 1 (see doc. 1-1, at Exh. 1);

3.

The Motion is denied in all other respects, including specifically defendants’
Motion to Dismiss pursuant to Rule 12(b)(2) for lack of personal jurisdiction and
defendants’ Motion to Dismiss pursuant to Rule 12(b)(6) for failure to state a
claim against defendant Thomas R. Conaboy;

4.

There being no remaining issues for litigation in these court proceedings, this
action is stayed pending arbitration; and

5.

Notwithstanding this determination, the Court retains jurisdiction to confirm or
vacate any resulting arbitration award under 9 U.S.C. §§ 9-10. See TranSouth
Financial Corp. v. Bell, 149 F.3d 1292, 1297 (11th Cir. 1998). To keep the Court
apprised of developments in the arbitral proceedings, defendants are ordered to

11

See also Thomas v. Port II Seafood & Oyster Bar, Inc., 2016 WL 8732527, *4
(S.D. Ala. July 8, 2016) (“[W]here a plaintiff initiates litigation without satisfying arbitration
requirements, courts routinely stay rather than dismiss the proceedings to allow for
implementation of the agreed-upon dispute resolution mechanism.”) (citation omitted); Hughes
v. Butch Oustalet Chevrolet-Cadillac, LLC, 2016 WL 1732750, *2 (S.D. Ala. Apr. 29, 2016)
(“Even if … this Court has discretion to dismiss, rather than stay, plaintiffs’ claims, the Court
declines to exercise that discretion and expressly concludes that a stay, rather than dismissal, is
appropriate under the circumstances presented here.”).

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file, on or before the first Wednesday of each month, a written report reflecting
the status of the arbitration proceedings. The first such report is due on or before
March 7, 2018.
DONE and ORDERED this 8th day of February, 2018.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE

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