BIBB COUNTY SCHOOL DISTRICT v. DALLEMAND, et al.

Filing 131

ORDER re 70 MOTION TO Compel Arbitration: The Progressive Defendants do not address in their briefs the standard the Court must use to resolve the arbitrability issue; the School District does. The Progressive Defendants shall respond to the School District's position on that issue within fourteen days. Ordered by US DISTRICT JUDGE MARC THOMAS TREADWELL on 9/18/2017. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION

BIBB COUNTY SCHOOL DISTRICT,
Plaintiff,
v.

ROMAIN DALLEMAND, et al.,
Defendants.

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CIVIL ACTION NO. 5:16-CV-549 (MTT)

ORDER
Isaac Culver, III, and Progressive Consulting Technologies Inc. (the “Progressive
Defendants”) have moved to compel arbitration pursuant to an arbitration clause in a
Services Agreement allegedly executed by the Bibb County School District (the “School
District”). Doc. 70. This Order addresses whether the alleged arbitration agreement
contains a delegation clause—a provision giving the arbitrator the authority to resolve
disputes relating to the enforceability and validity of the agreement. If it does not, then
this Court must decide the issue of arbitrability. As discussed below, the Court finds no
delegation clause in the arbitration agreement.
I. BACKGROUND
On December 15, 2016, the School District filed an eleven-count complaint
against Defendants Romain Dallemand, Thomas Tourand, Progressive Consulting
Technologies, Inc., Isaac Culver, III, CompTech Computer Technologies, Inc., Allen J.
Stephen, III, Pinnacle/CSG, Inc., and Cory McFarlane. See generally Doc. 1. That
complaint asserted claims against the Progressive Defendants for federal and state

RICO violations (Counts I and II), fraud (Count III), breach of contract (Count V against
Defendant Progressive but not Culver), negligence (Count VIII), unjust enrichment
(Count IX), and inducing and aiding breach of fiduciary duty (Count XI). See generally
id. In response to the Progressive Defendants’ motion to dismiss, or in the alternative,
to compel arbitration (Doc. 25), the School District filed an amended complaint on April
3, 2017. See generally Doc. 59. Notably, the amended complaint alleges that the
Services Agreement is void and thus asserts a contract claim against the Progressive
Defendants only in the alternative. See id. at ¶¶ 30, 56, 164, 169, 239, 331. The
Progressive Defendants again moved to dismiss, or in the alternative, to compel
arbitration. Doc. 70. On July 18, 2017, the Court held a hearing to consider various
motions. See generally Doc. 98. At this hearing, the Court announced it would deny
the Progressive Defendants’ motion to dismiss1 but questioned the adequacy of the
parties’ briefs on the arbitration issue. Id. at 2. Thus, the Court instructed both parties
to submit supplemental briefs regarding the motion to compel arbitration. Id. The
parties complied. Docs. 120; 121.
Only in their supplemental brief do the Progressive Defendants claim there is a
delegation clause in the Services Agreement. Doc. 120 at 7. The failure to raise this
issue earlier is significant given that the School District contends the Services
Agreement was the very vehicle employed by the Progressive Defendants and former
District Superintendent and Co-Defendant Romain Dallemand, who purportedly signed
the agreement on behalf of the School District, to defraud the School District of millions
of dollars. See, e.g., Doc. 121 at 10-12. Not surprisingly, the School District claims that
Dallemand, as the Progressive Defendants’ co-conspirator in their fraudulent scheme,
1

The Court did so on July 21, 2017. Doc. 99.

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could not by his fraud bind the School District to a contract. Id. at 12-13. Moreover,
apart from fraud, the School District argues that Dallemand never had authority to sign
the agreement because the Board had not given him that authority. Id. at 9.
II. DISCUSSION
The enforceability of an arbitration agreement is a matter of contract. First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). However, the “question
whether the parties have submitted a particular dispute to arbitration, i.e., the question
of arbitrability, is an issue for judicial determination unless the parties clearly and
unmistakably provide otherwise.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
83 (2002) (emphasis added) (internal quotation marks, citations, and alterations
omitted). Parties may show their clear and unmistakable intent to submit to an arbitrator
the threshold issue of arbitrability by including a delegation clause in their arbitration
agreement. See Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68-69 (2010) (“We
have recognized that parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’
such as whether the parties have agreed to arbitrate or whether their agreement covers
a particular controversy.” (internal citations omitted)). If an arbitration agreement
contains a delegation clause, the arbitrator, rather than the Court, determines
arbitrability. See id. at 72.
In Rent-A-Center, the United States Supreme Court clearly stated what language
constitutes a delegation clause; a delegation clause exists when an arbitration
agreement expressly gives “the arbitrator exclusive authority to resolve any dispute
relating to the . . . enforceability . . . of [the] Agreement.” Rent-A-Center, 561 U.S. at 71
(internal quotation omitted). There is no real mystery to this, and whether a delegation

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clause exists is generally easy to determine. See, e.g., Jones v. Waffle House, Inc.,
866 F.3d 1257, 1263 (11th Cir. 2017) (noting that the relevant arbitration agreement
contained a delegation clause which stated “[t]he Arbitrator, and not any federal, state,
or local court or agency, shall have authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement, including but
not limited to any claim that all or any part of this Agreement is void or voidable.”);
Parnell v. Cashcall, Inc., 804 F.3d 1142, 1147-48 (11th Cir. 2015) (holding that a subprovision defining the word “dispute” to include “any issue concerning the validity,
enforceability, or scope of . . . the Arbitration agreement” is an express delegation
clause that “unambiguously commits to the arbitrator the power to determine the
enforceability of the agreement to arbitrate.”) (internal quotations omitted); Johnson v.
Keybank Nat’l Ass’n, 754 F.3d 1290, 1292 (11th Cir. 2014) (noting that the relevant
agreement contained a delegation clause which stated “[a]ny Claim shall be resolved . .
. by binding arbitration” and defined a “Claim” as “any claim, dispute, or controversy
between you and us arising from or relating to this Agreement . . . including, without
limitation, the validity, enforceability, or scope of this Arbitration Provision or this Deposit
Account Agreement.”).2
Here, the Progressive Defendants belatedly contend that the first sentence of the
arbitration agreement contains a delegation clause which is “broad in scope.” Doc. 120
2

Parties may also incorporate the American Arbitration Association’s Commercial Arbitration Rules into
their arbitration agreement to establish a delegation clause. See, e.g., U.S. Nutraceuticals, LLC v.
Cyanotech Corp., 769 F.3d 1308, 1311 (11th Cir. 2014); see also Terminix Int’l Co. v. Palmer Ranch Ltd.,
432 F.3d 1327, 1332 (11th Cir. 2005) ([b]y incorporating the AAA Rules . . . into their agreement, the
parties clearly and unmistakably agreed that the arbitrator should decide whether the arbitration clause is
valid.”). Of relevance, the AAA Rules provide that the 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 the arbitrability of any claim or counterclaim.” Commercial Arbitration Rules and Mediation
Procedure, AM. ARB. ASS’N Rule 7(a) (Oct. 13, 2013), available at
https://www.adr.org/sites/default/files/CommercialRules.pdf (emphasis added).

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at 7. Indeed, what they contend to be the delegation clause is the arbitration agreement
itself.
Section 6.04 – Arbitration: Any controversy or claim arising
out of or relating to this Agreement, or breach thereof, shall
be settled by arbitration in accordance with the Arbitration
Rules of the state [sic.] of Georgia. Judgment upon the
award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. Qualified Arbitrators shall be
selected by the parties in accordance with the Arbitration
Rules of the state [sic.] of Georgia. Each party shall have the
right of discovery as set forth in the Federal Rules of Civil
Procedure. The Arbitration shall be administered by a
mutually agreed upon third party.
Doc. 70-2 at 4 (emphasis added). The Progressive Defendants cite no authority
supporting their assertion that the general delegation of disputes to arbitration can also
be a delegation of the issue of arbitrability. Most certainly, this is because none exists.
Nothing in this sentence shows unambiguous evidence that the parties intended to
commit the issue of arbitrability to an arbitrator. The Supreme Court could not have
been more clear—that intent must be “clear and unmistakable.” First Options, 514 U.S.
at 944; see also Rent-A-Center, 561 U.S. at 69 n.1 (noting the requirement for “clear
and unmistakable evidence” to arbitrate arbitrability is a heightened standard).
Accordingly, the Court has the power to address the validity and enforceability of the
arbitration agreement.
The Progressive Defendants do not address in their briefs the standard the Court
must use to resolve the arbitrability issue; the School District does. The Progressive
Defendants shall respond to the School District’s position on that issue within fourteen
days.

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SO ORDERED, this 18th day of September, 2017.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

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