Moto Tech, LLC v. KTM North America, Inc.

Filing 50

MEMORANDUM DECISION AND ORDER. Motion 42 is DENIED. Motion 43 is MOOT. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

MOTO TECH, LLC, an Idaho limited
liability company,

Case No. 1:13-cv-00165-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
KTM NORTH AMERICA, INC., an
Ohio corporation,
Defendant.

Before the Court are the following motions: (1) Defendant KTM North American,
Inc’s Motion to Compel Arbitration and for Stay of Proceedings Pending Arbitration
(Dkt. 42); and (2) Plaintiff Moto Tech, LLC’s Motion for Leave to Conduct Limited
Discovery (Dkt. 43). The motion is fully briefed and at issue, and the Court has
determined that oral argument would not significantly assist the decisional process.
Accordingly, the Court will resolve the motion without a hearing. Having thoroughly
considered the pleadings, the Court will deny the motion to compel arbitration at this
point in the proceedings.

MEMORANDUM DECISION AND ORDER - 1

LEGAL STANDARD
A party aggrieved by another’s failure to submit a dispute to arbitration instead of
proceeding in court may petition the court for an order compelling the parties to submit to
arbitration. 9 U.S.C. § 4. There is a “liberal federal policy favoring arbitration,” and
“questions of arbitrability must be addressed with a healthy regard for the federal policy
favoring arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24 (1983). Any doubts about the scope of arbitrable issues are to be resolved in favor of
arbitration, Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 626
(1985), and the party seeking to avoid arbitration has the burden of establishing that
Congress intended to preclude arbitration, Green Tree Fin. Corp. v. Randolph, 531 U.S.
79, 91–92 (2000).
An arbitration petition need only assert: “(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 opposing party’s] failure,
neglect, or refusal . . . to arbitrate the dispute.” Whiteside v. Telltech Corp., 940 F. 2d 99,
102 (4th Cir. 1991).
ANALYSIS
KTM contends Moto Tech raised in its opposition to KTM’s motion to dismiss the
Second Amended Complaint – for the very first time – the theory that Moto Tech’s
standing to pursue a claim under the Idaho Consumer Protection Act is based on an oral
MEMORANDUM DECISION AND ORDER - 2

modification to an existing written agreement between the two parties – the Husaberg
Dealership Agreement. This agreement contains an arbitration clause mandating that all
disputes arising from the agreement must be arbitrated. Therefore, KTM argues, the
Court should order this dispute to arbitration in the parties’ chosen forum (i.e., Lorain
County, Ohio) and stay all proceedings until the arbitration concludes.
There is no doubt that Moto Tech suggested in its opposition to KTM’s second
motion to dismiss, as an alternative theory, that it had standing to pursue its claim under
the ICPA because Moto Tech and KTM had agreed to orally modify the existing
Husaberg Dealership Agreement. For example, Moto Tech argued, “If this were a
summary judgment motion, Moto Tech would argue that a jury could reasonably
conclude that KTM and Moto Tech orally agreed to modify or add an additional product
line to the existing contractual relationship.” Response to KTM’s Motion to Dismiss the
SAC, Dkt. 37, at 2. At another point in their opposition, Moto Tech again suggested that it
had pleaded an oral modification to the Husaberg Dealership Agreement: “There is no
legal reason KTM and Moto Tech could not orally negotiate to add another product line
to the existing contract. They had a contractual relationship and not only is that
“plausibly” pled in the SAC, KTM does not contend otherwise.” Id. at 3.
Now, however, Moto Tech says it never alleged an oral modification to the
Husaberg Dealership Agreement in the Second Amended Complaint: “But Moto Tech
never alleged this oral modification theory in its Complaint.” Response to Motion to
Compel Arbitration, Dkt. 44 at 4.
MEMORANDUM DECISION AND ORDER - 3

Given these two contradictory statements, the Court does not know what to think –
did Moto Tech intend to plead an oral modification theory, or didn’t it? The Court,
however, will take Moto Tech at its most recent word: it has not and does not intend to
plead an oral modification theory. Because the stand-alone-contract theory the Court
allowed to proceed in its most recent Memorandum Decision and Order denying in part
KTM’s motion to dismiss the Second Amended Complaint (Dkt. 40) does not involve the
Husaberg Dealership Agreement, the Court will deny KTM’s motion to compel
arbitration based on the arbitration clause contained in that agreement.
In giving credence to Moto Tech’s most recent statements regarding its wish to
purse an oral-modification theory, the Court notes that it expressly refused to consider
this theory in deciding KTM’s motion to dismiss the Second Amended Complaint:
“Given the above rulings, the Court will not address various alternative arguments
MotoTech advanced relating to contractual privity, [including the theory that the parties
agreed to orally modify the Husaberg Dealership Agreement].” Memorandum Decision
and Order entered on Sept. 24, 2014, p. 15, Dkt. 40. Thus, the Court finds Moto Tech is
not judicially estopped from changing its position because it did not gain any advantage
from advancing that theory. See New Hampshire v. Maine, 532 U.S. 742, 750 (2001)
(noting that “courts regularly inquire whether the party has succeeded in persuading a
court to accept that party's earlier position” when deciding to invoke judicial estoppel).
If, however, the Court somehow misconstrued Moto Tech’s most recent statement
that “Moto Tech never alleged this oral modification theory in its Complaint,” and Moto
MEMORANDUM DECISION AND ORDER - 4

tually does intend to pu
ursue an or modifica
ral
ation theory based on t Husaber
y
the
rg
Tech act
Dealersh Agreem
hip
ment, the Co will rec
ourt
consider its decision de
enying the m
motion to
compel arbitration and likely will order th parties to arbitrate. Moto Tech cannot say it
a
a
w
he
o
h
y
is pursui an oral modificatio theory when it suits them and t
ing
on
w
s
then deny it when it do
t
oes
not. It must choose. New Hamp
m
pshire, 532 U.S. at 749 (describin doctrine of judicial
2
ng
estoppel So either the case pr
l).
r
roceeds in this Court, a Moto T
t
and
Tech is foreclosed from
m
arguing that the par
rties orally modified th Husaberg Dealershi Agreeme or Moto
m
he
g
ip
ent;
o
Tech ma pursue th theory, and the Cou will like send the matter to a
ay
his
a
urt
ely
arbitration.
ORDER
O
IT IS ORDE
T
ERED that
t:
n
1. Defe
endant KTM North Am
M
merican, Inc Motion to Compel Arbitration and for Stay
c.’s
n
l
of Proceedings Pending Arbitration (D 42) is DENIED. I however Moto Tec
A
Dkt.
If,
r,
ch
choo to purs a theory that the pa
oses
sue
y
arties orally modified t existing Husaberg
y
the
g
Dealership Agr
reement, the Court will reconsider this decisi
e
l
r
ion.
2. Plain Moto Tech, LLC’ Motion for Leave to Conduct L
ntiff
T
’s
f
o
Limited Dis
scovery (Dk
kt.
43) is MOOT.
i
DAT
TED: Febru
uary 17, 20
015

__________
__________
_____
___
B. L
Lynn Winm
mill
Chief Judge
ited
District Cou
urt
Uni States D

MEMORA
ANDUM DECIS
SION AND ORDER - 5
R