Sundial Partners, Inc. v. Atlantic Street Capital Management LLC

Filing 51

ORDER granting 45 Motion for Relief from the Court's Scheduling Order and Joint Case Management Report and to Permit the Deposition of Stephanie Davies. Signed by Magistrate Judge Julie S. Sneed on 10/19/2015. (JR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
SUNDIAL PARTNERS, INC.,
Plaintiff,
v.

Case No: 8:15-cv-861-T-23JSS

ATLANTIC STREET CAPITAL
MANAGEMENT LLC,
Defendant.
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ORDER ON MOTION FOR RELIEF FROM SCHEDULING ORDER
THIS MATTER is before the Court on Plaintiff’s Motion for Relief from the Court’s
Scheduling Order and Joint Case Management Report and to Permit the Deposition of Stephanie
Davies (“Motion”). (Dkt. 45.) Plaintiff requests that the Court relieve Plaintiff from the Court’s
Scheduling Order to permit the deposition of Stephanie Davies. Defendant opposes this motion.
(Dkt. 47.)
BACKGROUND
Plaintiff filed this action against Defendant on April 10, 2015, for breach of an alleged oral
contract or for unjust enrichment. (Dkt. 1.) Specifically, Plaintiff seeks to recover a finder’s fee
for an investment transaction with Defendant that Plaintiff is allegedly entitled to receive pursuant
to an oral contract between the parties. (Dkt. 33.) On July 9, 2015, Defendant filed its Motion to
Compel Arbitration or, in the alternative, Motion to Dismiss, seeking to compel arbitration under
an arbitration provision in a written agreement between the parties (“Finder Agreement”). (Dkt.
17.) In support of the Motion to Compel Arbitration, Defendant filed a Declaration of Stephanie
Davies, Defendant’s former vice president, regarding the Finder Agreement. (Dkt. 18.) Plaintiff
filed its Response in Opposition to the Motion to Compel Arbitration on August 12, 2015, in which

it contests the validity of the Finder Agreement, and filed a Declaration of Douglas Trottier in
support of its response. (Dkt. 33, 34.)
On July 20, 2015, the parties filed a Case Management Report, in which the parties agreed
not to engage in discovery until thirty days after the Court’s ruling on the Motion to Compel
Arbitration. (Dkt. 23.) The Court adopted the Case Management Report in its Case Management
and Scheduling Order dated July 21, 2015. (Dkt. 25.) On August 31, 2015, the Court referred
Defendant’s Motion to Compel Arbitration to the undersigned for an evidentiary hearing and report
and recommendation, finding that “facts material to the arbitrability of this action are in dispute.”
(Dkt. 43.) The evidentiary hearing is scheduled for November 17, 2015. (Dkt. 49.)
In the Motion, Plaintiff seeks relief from the Case Management and Scheduling Order,
contending that, although the parties agreed to stay discovery, the deposition of Ms. Davies is
necessary for Plaintiff to prepare for the evidentiary hearing, as Ms. Davies is a material witness
for the defense and the only individual with knowledge regarding the conversations held between
the parties regarding the Finder Agreement upon which the Motion to Compel Arbitration is based.
In response, Defendant argues that Plaintiff fails to show good cause to be excused from the Case
Management and Scheduling Order and the discovery Plaintiff seeks would frustrate the
application of the Federal Arbitration Act and the parties’ agreement to avoid discovery.
APPLICABLE STANDARDS
District courts enjoy broad discretion in deciding how best to manage the cases before
them, Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1366 (11th Cir. 1997), which includes
the discretion to resolve discovery matters. Lee v. Etowah Cty. Bd. of Educ., 963 F.2d 1416, 1420
(11th Cir. 1992). However, a court’s scheduling order may be modified only for good cause and
with the judge’s consent.

Fed. R. Civ. P. 16(b)(4).

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The good cause standard “precludes

modification unless the schedule cannot be met despite the diligence” of the moving party. Sosa
v. Airprint Sys., Inc., 133 F.3d 1417, 1418 (11th Cir. 1998) (quotation marks omitted).
In cases governed by the Federal Arbitration Act (“FAA”), courts must balance the
underlying purpose of the FAA against the particular issue before the court. It is well-established
that the purpose of the FAA was “to relieve congestion in the courts and to provide parties with an
alternative method for dispute resolution that would be speedier and less costly than litigation.”
Ultracashmere House, Ltd. v. Meyer, 664 F.2d 1176, 1179, (11th Cir. 1981).

As such,

“[a]rbitration proceedings are summary in nature to effectuate the national policy of favoring
arbitration, and they require expeditious and summary hearing, with only restricted inquiry into
factual issues.” O.R. Sec., Inc. v. Prof’l Planning Assocs., Inc., 857 F.2d 742, 747–48 (11th Cir.
1988).
The court can only compel arbitration when the parties have agreed to arbitrate their
dispute. Chastain v. Robinson–Humphrey Co., 957 F.2d 851, 854 (11th Cir. 1992). Thus, before
determining whether to compel arbitration, the court must first determine whether the parties
agreed to arbitrate their dispute. Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473
U.S. 614, 626 (1985); see also Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 853–54 (11th
Cir. 1992) (stating that if the validity of the agreement to arbitrate is in issue, then a district court
must decide if the arbitration clause is enforceable against the parties).

If the validity or

enforceability of an arbitration agreement is challenged, the party disputing the validity of the
agreement to arbitrate must substantiate its denial of the agreement “with enough evidence to make
the denial colorable.” Chastain, 957 at 855; see also Wheat, First Sec., Inc. v. Green, 993 F.2d
814, 817 (11th Cir. 1993) (stating that a party seeking to avoid arbitration must unequivocally deny
that an agreement to arbitrate was reached and must offer “some evidence” to substantiate the

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denial). When factual disputes arise and the written record contains an inadequate basis for the
court to resolve such factual disputes, an evidentiary hearing may be held. Alan v. Paxson
Commc’ns Corp., 239 F. App’x 475, 479 (11th Cir. 2007); CBS Broad., Inc. v. EchoStar
Commc’ns Corp., 265 F.3d 1193, 1207 (11th Cir. 2001) (finding that “[i]n the face of two plausible
interpretations of evidence submitted to demonstrate a contested issue, the district court is not at
liberty to accept one construction of the evidence and reject the other without the benefit of an
evidentiary hearing”).
ANALYSIS
Under the circumstances presented, the Court finds that good cause exists to allow the
depositions of the witnesses who are expected to testify at the evidentiary hearing. Upon review
of the pleadings and declarations filed in this case, the Court found a genuine factual dispute
regarding the existence of an arbitration agreement in this case, specifically stating that Plaintiff
“has substantiated the denial of the contract with enough evidence to make the denial colorable,”
and found that an evidentiary hearing is necessary to resolve this factual dispute before
determining whether to compel arbitration. (Dkt.43.)
Resolution of pretrial motions that turn on findings of fact, such as motions to dismiss for
lack of personal jurisdiction, may require some limited discovery before a meaningful ruling can
be made. Chudasama, 123 F.3d at 1367. Here, the Motion to Compel Arbitration is predicated
on a factual dispute, and the ensuing evidentiary hearing necessitates the presentation of evidence
and testimony regarding facts material to the arbitrability of this action. Therefore, the parties
should be afforded the opportunity to fairly examine the witnesses who will testify at the
evidentiary hearing. See Univ. Commons-Urbana, Ltd. v. Universal Constructors Inc., 304 F.3d
1331, 1342 (11th Cir. 2002) (finding that discovery would have been needed as to the issues raised

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and the evidence presented at an evidentiary hearing); Bradshaw Constr. Corp. v. Underwriters at
Lloyd’s, London, No. 14-24385-CIV, 2015 WL 3539811, at *3 (S.D. Fla. Mar. 25, 2015) (allowing
limited discovery on issue of whether the parties entered into an agreement to arbitrate);
Hidrocarburos y Derivados, C.A. v. Lemos, 453 F. Supp. 160, 178 (S.D.N.Y. 1977) (finding that
an evidentiary hearing was necessary regarding a party’s obligation to arbitrate and that the
evidentiary hearing was to be “preceded, in case of need, by appropriate discovery”). However,
the examination of these witnesses shall be limited to the matters encompassed in the declarations
filed with the Court. See AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649, 106
S. Ct. 1415, 1419, 89 L. Ed. 2d 648 (1986) (stating that when a court considers arbitrability, it “is
not to rule on the potential merits of the underlying claims”). Accordingly, it is
ORDERED:
1. Plaintiff’s Motion for Relief from the Court’s Scheduling Order and Joint Case
Management Report and to Permit the Deposition of Stephanie Davies (Dkt. 45) is
GRANTED.
2. The parties must exchange the witness lists and exhibit lists that will used by each party
at the evidentiary hearing by October 23, 2015.
3. Discovery is permitted for the limited purpose of conducting depositions of Ms.
Stephanie Davies and Mr. Douglas Trottier. The depositions are limited to the matters
encompassed in Ms. Davies’ and Mr. Trottier’s declarations (Dkt. 18, 34).
DONE and ORDERED in Tampa, Florida on October 19, 2015.

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Copies furnished to:
Counsel of Record

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