GRANT et al v. PERFORMANCE CONTRACTING, INC. et al
ORDER granting in part and denying in part Defendants' 25 Motion to Compel; and 25 Motion to Stay Proceedings. The Motion is DENIED with respect to Count I and GRANTED with respect to Counts II-VII of Plaintiffs' Complaint. Counts I-VII are STAYED pending the disposition of the arbitration of Counts II-VII. Signed by Judge Richard L. Young on 7/24/2017. (TMD)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
WILLIAM GRANT and
GRANT PROFESSIONAL PAINTING
PERFORMANCE CONTRACTING, INC., )
HUNT CONSTRUCTION GROUP, INC., )
and HCW EVANSVILLE HOTEL, LLC,
ENTRY ON DEFENDANTS’ MOTION TO COMPEL ARBITRATION
Defendants, Performance Contracting, Inc. (“PCI) and Hunt Construction Group,
Inc., move to compel arbitration and to stay proceedings as to Counts I-VII of the
Complaint filed by Plaintiffs, William Grant and Grant Professional Painting Services,
LLC (“GPPS”). For the reasons that follow, Defendants’ Motion is GRANTED in part
and DENIED in part.
Plaintiffs’ seven-count Complaint against the Defendants arises out of the
construction of the Doubletree Hotel & Conference Center facility located in downtown
Evansville. Hunt was the project General Contractor and subcontracted a portion of the
work to PCI, which in turn subcontracted a portion of the work to Plaintiff GPPS. The
Subcontract between PCI and GPPS relating to the Project contained an arbitration clause
which provides, in relevant part:
All disputes arising under this Subcontract shall be determined in accordance
with the dispute resolution mechanism set forth in the Contract Documents,
including without limitation, any requirements for joinder and consolidation
of claims. Unless the parties mutually agree otherwise, in the absence of any
such dispute resolution mechanism provided in the Contract Documents, all
claims, disputes, and other matters in question between Contractor and
the Subcontractor shall be decided by arbitration and in accordance with
the Construction Industry Arbitration Rules of the American Arbitration
Association then in effect, . . . . In any such event, the Subcontractor shall
not be entitled to recover any greater amount from the Contractor as the
Contractor shall obtain from the Upper Tier Contractor(s) or Owner with
respect to the Subcontractor’s Work.
(Filing No. 1-5, Subcontract Agreement, Art. 32) (emphasis added). Plaintiffs consent to
submitting Counts II-VII 1 of their Complaint to arbitration. However, Plaintiffs object to
Defendants’ Motion as it pertains to Count I for race discrimination under 42 U.S.C. §
The Federal Arbitration Act, 9 U.S.C. § 1, et seq., states that arbitration provisions
in commercial contracts “shall be valid, irrevocable, and enforceable, save upon grounds
such as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
“[I]f the parties have a valid arbitration agreement and the asserted claim is within the
scope of the agreement,” the arbitration clause must be enforced. Sharif v. Wellness Int’l
Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (citing Kiefer Specialty Flooring, Inc. v.
Those counts are for breach of contract (Counts II and III), unjust enrichment (Count IV),
promissory estoppel (Count V), fraudulent inducement (Count VI), and lien foreclosure (Count
Tarkett, Inc., 174 F.3d 907, 909 (7th Cir. 1999)). “Although it is often said that there is a
federal policy in favor of arbitration, federal law places arbitration clauses on equal
footing with other contracts, not above them.” Janiga v. Questar Capital Corp., 615 F.3d
735, 740 (7th Cir. 2010) (citing Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68
Motion to Compel Arbitration
To compel arbitration, a party must show: “(1) an agreement to arbitrate, (2) a
dispute within the scope of the arbitration agreement, and (3) a refusal by the opposing
party to proceed to arbitration.” Zurich Am. Ins. Co. v. Watts Indus., Inc., 466 F.3d 577,
580 (7th Cir. 2006). “The party seeking to invalidate or oppose the arbitration agreement
bears the burden of demonstrating that the arbitration agreement is unenforceable and that
the claims are unsuitable for arbitration.” Paragon Micro, Inc. v. Bundy, 22 F.Supp.3d
880, 887 (N.D. Ill. 2014). Under the FAA, however, “any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
In the present case, Plaintiffs argue the arbitration clause at issue is not
enforceable for two reasons: (1) their Section 1981 race discrimination claims are not
within the scope of the arbitration agreement, and (2) the arbitration clause impermissibly
limits the remedies and monetary award available to them. Because the court resolves
this Motion on the basis of the first argument above, it will not address the second.
The terms of Article 32 provide that “all claims, disputes, and other matters in
question between Contractor and the Subcontractor shall be decided by arbitration and in
accordance with the Construction Industry Arbitration Rules.” The court interprets
Article 32 under state laws of contract interpretation—here, the law of Indiana applies.
Stone v. Doerge, 328 F.3d 343, 345 (7th Cir. 2003). Under Indiana law, the court is
required to consider the contract as a whole, and accept an interpretation of the contract
that harmonizes its provisions and not one which places the provisions in conflict.
Whitaker v. Brunner, 814 N.E.2d 288, 294 (Ind. Ct. App. 2004).
Courts in this circuit compel arbitration where the arbitration clause encompasses
claims that relate to the employee’s employment or termination of employment. See
Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 363 (7th Cir. 1999) (finding
discrimination claim subject to arbitration where securities representative’s Form U-4
required arbitration of all disputes, including employment disputes, between members
and registered representatives); Wright v. Washington Mut. Home Loans, Inc., No. 08 C
4423, 2009 WL 2704577, at *2 (N.D. Ill. Aug. 20, 2009) (finding discrimination claim
fell within the scope of an arbitration clause that included “[a]ny and all disputes that
involve or relate in any way to [plaintiff’s] employment (or termination of employment)
with Washington Mutual”). See also Michalski v. Circuit City Stores, Inc., 177 F.R.D.
634, 635 (7th Cir. 1999) (finding policy which asked all employees to agree to have
employment related disputes, including Title VII discrimination suits, decided in binding
arbitration subject to binding arbitration); Farris v. Western and Southern Life Ins. Co.,
1:14-cv-421-WTL-DML, 2014 WL 5465947, at *3 (S.D. Ind. Oct. 28, 2014) (finding
discrimination claim within the scope of arbitration clause where it included claims for
discrimination); Chambliss v. Darden Rest., Inc., No. 1:12-cv-485-SEB-MJD, 2012 WL
4936400, at *3 (S.D. Ind. Oct. 15, 2012) (finding discrimination claim fell within
arbitration clause that applied to “all employment-related disputes or claims brought by
the Employee against the Company,” including disputes about “discrimination and
harassment”); Westmeier v. Meijer Grocery Store, No. 4:10-cv-46-TWP-WGH, 2010 WL
5104825, at * 2 (S.D. Ind. Dec. 7, 2010) (finding discrimination subject to arbitration
where Meijer’s Dispute Resolution Policy included “all claims that arise out of or relate
to the team member’s employment and/or separation from employment with Meijer” and
noted that claims subject to arbitration included “claims of employment discrimination”).
Here, by contrast, the arbitration clause applies to claims “arising under” the Subcontract,
thus limiting the reach of the provision to the terms of the contract itself. Sweet Dreams
Unlimited, Inc. v. Dial-A-Mattress Int’l, Ltd., 1 F.3d 639, 642 (7th Cir. 1993) (noting that
the term “‘arising under’ may denote a dispute somehow limited to the interpretation and
performance of the contract”; whereas the phrase ‘arising out of’ reaches all disputes
having their origin or genesis in the contract”). The terms of the Subcontract relate solely
to Plaintiffs’ drywall finishing work.
Furthermore, Article 32 contains a limitation on damages that limits Plaintiffs’
potential recovery to the monetary value of their work on the Project:
In any such event, the Subcontractor shall not be entitled to recover any
greater amount from the Contractor as the Contractor shall obtain from the
Upper Tier Contractor(s) or Owner with respect to the Subcontractor’s Work.
(Arbitration Agreement, Art. 32). And last, but not least, any arbitration between the
Contractor and Subcontractor must be in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association. Those rules apply to
construction-related disputes. See Construction Industry Arbitration Rules and Mediation
Procedures, www.adr.org/sites/default/ files/Construction%20Rules.pdf, last visited July
After considering the entirety of Article 32 coupled with Subcontract Agreement
as a whole, the court finds Plaintiffs’ Section 1981 claim for race discrimination is not
within the scope of Article 32. Therefore, Count I is not subject to arbitration.
Motion to Stay
Pursuant to 9 U.S.C. § 3, Counts II-VII must be stayed. Volkawagen of America v.
Sud’s of Peoria, 474 F.3d 966, 971 (7th Cir. 2007) (“For arbitrable issues, a § 3 stay is
mandatory”). Whether to stay the litigation of a non-arbitrable claim like Count I is a
matter of the court’s discretion. Id. at 972.
Here, Plaintiff’s Section 1981 claim is premised on the same facts as those which
form the basis of Counts II, IV, V, VI, and VII—the alleged failure by PCI to pay
Plaintiffs for their services. (See Filing No. 1, Compl. ¶¶ 52-53). Because the arbitration
will resolve this pivotal issue, the court finds the interests of justice warrant that Count I
be stayed pending the resolution of Plaintiffs’ arbitrable claims.
Accordingly, Defendants’ Motion to Compel Arbitration and to Stay Proceedings
(Filing No. 25) is GRANTED in part and DENIED in part. The Motion is DENIED
with respect to Count I and GRANTED with respect to Counts II-VII of Plaintiffs’
Complaint. Counts I-VII are STAYED pending the disposition of the arbitration of
SO ORDERED this 24th day of July 2017.
Distributed Electronically to Registered Counsel of Record.
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