James T. Scatuorchio Racing Stable, LLC et al v. Walmac Stud Management, LLC et al
Filing
86
MEMORANDUM OPINION & ORDER: Dft's 75 second renewed motion to dismiss in favor of arbitration or mediation is DENIED; Dfts 76 motion to stay any non-arbitrable claims pending completion of arbitration is DENIED; Pla's claims in the 2nd amended verified complaint shall be submitted to arbitration; Remaining claims in this action shall proceed in the ordinary course of litigation as directed by further order of the Court; Dft's 31 renewed motion to dismiss in favor of arbitrat ion or mediation is DENIED as moot; Parties shall file a joint written report as to the status of arbitrable claims on 12/15/2012 or w/i 10 days of the conclusion of arbitration, whichever occurs earlier. Signed by Judge Jennifer B Coffman on 09/13/2012. (KLB) cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
LEXINGTON
CIVIL ACTION NO. 11-374-JBC
JAMES T. SCATUORCHIO
RACING STABLE, LLC, et al.,
V.
PLAINTIFFS,
MEMORANDUM OPINION & ORDER
WALMAC STUD MANAGEMENT,
LLC, et al.,
DEFENDANTS.
**********
This matter is before the court upon the defendants’ renewed motion to
dismiss in favor of arbitration or mediation, R. 75, and the defendant’s motion to
stay any non-arbitrable claims pending completion of arbitration, R.76. Because
only a portion of the claims brought by the plaintiffs in this action will be submitted
to arbitration, the motion to dismiss will be denied. The court will deny the motion
to stay non-arbitrable claims because the defendants have not furnished a
sufficient basis for such a stay.
I. BACKGROUND
This action originated in New Jersey state court, where the defendants
moved to dismiss the case. The defendants then removed the case to the District
Court of New Jersey and renewed their motion. Before ruling on the merits of the
motion, the district court transferred the action here. After a hearing on the
renewed motion to dismiss, this court permitted the plaintiffs to file a second
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amended complaint. The defendants have now filed a second renewed motion to
dismiss in favor of arbitration or mediation, as well as a motion to stay nonarbitrable claims.
The defendants seek to compel arbitration of certain claims arising from the
ownership and management of the thoroughbred Stallion commonly known as
“Ready’s Image.” The plaintiffs, part owners of Ready’s Image, claim wrongful
conduct by the defendants during the transfer of ownership and management rights
of Ready’s Image. The plaintiffs allege that the defendants fraudulently induced
them to transfer ownership interests in Ready’s Image to the defendants and that
after the ownership and management interests were transferred, the defendants
acted in violation of the relevant agreements, resulting in breach of contract and
fiduciary duties, fraud, waste, and slander.
The parties executed several agreements, including a purchase agreement,
stallion co-ownership agreement (“COA”), installment agreement, southern
hemisphere co-ownership agreement (“southern hemisphere COA”), southern
hemisphere lease agreement, and mare agreement. The defendants assert that
these valid agreements contain or incorporate binding arbitration or mediation
provisions. Because most of the claims supposedly fall within the scope of the
arbitration or mediation provisions, they argue that those claims should be
submitted to arbitration or mediation and that a stay should be imposed on the
remaining claims.
II. ANALYSIS
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a. Choice of Law
The parties dispute whether New Jersey or Kentucky law should be applied
in the event of a conflict. The court will apply Kentucky law because the controlling
agreements between the parties and Kentucky’s conflict-of-law rules lean in favor
of applying Kentucky law. The purchase agreement, COA, and installment
agreement all state that the agreements “shall be governed by, and construed in
accordance with, the laws of the State of Kentucky.” R.4-9, p.12, R.1-13, p.5.
Additionally, applying Kentucky’s conflict-of-law rules, which tend to display a
strong preference for applying Kentucky law, see Hayes v. Equitable Energy Res.
Co., 266 F.3d 560, 566 (6th Cir. 2001) (finding that courts sitting in diversity
should apply the conflict-of-law rules of the forum state); see also Wallace
Hardware Co. Inc. v. Abrams, 223 F.3d 382, 391 (6th Cir. 2000), Kentucky has
the “most significant contacts” with the transaction at issue. Saleba v. Schrand,
300 S.W.3d 177, 180-81 (Ky. 2009). The purchase agreement and the COA
describe the management and stud of Ready’s Image as occurring in Lexington,
Kentucky. Also, the defendants are citizens of Kentucky. The court finds these
contacts with the forum state to be sufficient and not overridden by any
overwhelming New Jersey interest to the contrary. Wallace Hardware, 223 F.3d at
391 (internal citations omitted).
b. Arbitration vs. Mediation
The defendants move to dismiss for the purpose of compelling both
arbitration and mediation. The distinction between binding arbitration provisions
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and binding mediation provisions, however, is important. The Federal Arbitration
Act (“FAA”) governs and enforces “agreement[s] in writing to submit to
arbitration.” 9 U.S.C. § 2. Mediation, however, “is not within the FAA’s scope”
because “the mediation process does not purport to adjudicate or resolve a case in
any way.” Advanced Bodycare Solutions, LLC. v. Thione Intnat’l, Inc., 524 F.3d
1235, 1240 (11th Cir. 2008). For that reason, the “FAA remedies, including
mandatory stays and motions to compel, are not appropriately invoked to compel
mediation.” Id. In fact, “[t]he explicit terms of 9 U.S.C. § 3 refer to ‘arbitration’
as opposed to the broader term ‘dispute resolutions procedure.’” Gate Precast Co.
v. Kenwood Towne Place, LLC, et al., 2009 U.S. Dist. LEXIS 100579 (S.D. Ohio,
2009). For these reasons, mediation and arbitration are not treated similarly under
the FAA, despite some authority to the contrary. See, e.g., Developers Sur. and
Indem. Co. v. Resurrection Baptist Church, 759 F. Supp. 2d 665 (D. Md. 2010).
Finding that the mediation provisions at issue do not fall within the scope of the
court’s authority to compel arbitration under the FAA, the court will analyze the
defendants’ motion to dismiss only as it pertains to any valid arbitration provisions
found within the agreements in dispute.
c. Arbitrable Claims
The FAA provides that “an agreement in writing to submit to arbitration an
existing controversy arising out of . . .” “a contract evidencing a transaction
involving commerce . . . “ “shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 9
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U.S.C. § 2. In deciding whether to compel parties to arbitrate under the FAA, the
court must undertake a four-prong analysis:
“first, it must determine whether the parties agreed to arbitrate;
second, it must determine the scope of that agreement; third, if the
federal statutory claims are asserted, it must consider whether
Congress intended those claims to be nonarbitrable; and fourth, if the
court concludes that some, but not all, of the claims in the action are
subject to arbitration, it must determine whether to stay the remainder
of the proceedings pending arbitration.”
Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000).
Kentucky contract law “governs in determining whether the arbitration clause itself
was validly obtained,” Doctor’s Assocs. V. Casarotto, 517 U.S. 681, 686-87; see
also Inland Bulk Transfer Co. v. Cummins Engine Co., 332 F.3d 1007, 1014 (6th
Cir. 2003), but in making determinations on the scope of arbitrable issues, “any
doubts regarding arbitrability should be resolved in favor of arbitration.” Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
Only one agreement between the parties contains an arbitration provision.
The COA of October 24, 2008, states that “any one of the disputants [meaning
the co-owners or stallion manager] may require the other parties to submit the
Dispute to arbitration if good faith negotiations among the parties do not resolve
the Dispute.” R. 4-9, p. 12. The COA was signed by the co-owners of Ready’s
Image at that time, including the defendant, Walmac Stud Management, LLC,
through its authorized agent, John T.L. Jones, III, and the plaintiff, James T.
Scatuorchio, LLC, by its members James Scatuorchio, Kevin Scatuorchio, and
Courtney Sullivan. Despite the defendants’ arguments that the COA arbitration
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provision applies to other agreements between the parties, all disputes related to
the purchase agreement, installment agreement, southern hemisphere agreements,
and mare agreement and not falling under the scope of the COA are nonarbitrable.
First, the COA arbitration provision is not incorporated into the purchase
agreement because it is pre-empted by a conflicting provision in the purchase
agreement stating that “any dispute hereunder shall be resolved by exclusive
jurisdiction of a court of competent jurisdiction in the Commonwealth of
Kentucky.” R.1-13, p.5. The purchase agreement attaches as an exhibit and makes
a part of its agreement the COA, but both documents state that in the event of a
conflict between the two agreements related to the purchase or ownership of
Ready’s Image, “the terms of the Purchase Agreement shall prevail.” R.1-13, p.5;
R.4-9, p.12. The arbitration provision of the COA and the litigation provision of the
purchase agreement conflict; therefore, the purchase agreement litigation provision
prevails, and any claims arising out of the purchase agreement will not be
submitted to arbitration.
Second, the installment agreement also incorporates the COA but is not
controlled by its arbitration provision. The installment agreement includes a
mediation and litigation provision that supersedes the COA arbitration provision
because the COA is incorporated into the installment agreement “subject . . . to the
additional terms and provisions contained in this [installment] [a]greement.” R.1-4,
p.2. The mediation and litigation provision constitutes an additional provision of
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the installment agreement. Consequently, the parties to the installment agreement
are not bound to arbitrate claims arising from the installment agreement.
The southern hemisphere COA also fails to establish an agreement to
arbitrate. It incorporates the original COA, but it also contains a mediation and
litigation provision. No language in the agreement specifies whether the original
COA or the southern hemisphere COA controls in the event of a conflict; the
southern hemisphere COA states that it incorporates and is “subject” to the original
COA, but it also provides that the southern hemisphere COA “constitutes the entire
agreement between the parties . . . and supersedes all other prior agreements and
understandings.” No provision explicitly declares what happens in the event of a
conflict. Based upon these conflicting provisions, the parties to the southern
hemisphere COA have no clear agreement to arbitrate; therefore, any claims arising
out of this agreement will not be submitted to arbitration.
Lastly, the southern hemisphere lease agreement and the mare agreement do
not contain arbitration provisions. The southern hemisphere lease agreement
contains a mediation and litigation provision and does not mention or incorporate
the COA. The parties agree that the mare agreement does not contain an
arbitration provision. Consequently, claims arising out of the southern hemisphere
lease agreement and the mare agreement will not be submitted to arbitration.
In summary, only the original COA contains an arbitration provision. This
provision, however, is in dispute. The plaintiffs argue that no valid agreement to
arbitrate exists between the parties to the COA because the provision is one-sided,
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ambiguous, and unspecific, and thus unenforceable. The applicable terms of the
arbitration provision are as follows:
“. . . (b) the arbitration shall be held before a panel of three arbitrators,
one designated by the Stallion Manager, one designated by a majority
of the Co-Owners, and one selected by the first two arbitrators so
designated; (c) the costs and fees of the arbitration, including
attorneys’ fees of the parties, shall be allocated by the arbitrators . . .”
R.4-9, p.12-13.
The plaintiffs claim that these terms are one-sided in favor of the defendants
because the way the agreement defines “co-owners” would enable the defendant
Walmac Stud to pick two of the arbitrators who could then allocate the costs and
fees of arbitration to the plaintiffs. The plaintiffs also contest the provision of the
COA which states that “[n]o dispute shall be submitted to the arbitration and no
action for the breach of any provision of this Agreement or in connection with
Ready’s Image or the operation hereof may be commenced more than two years
after the event giving rise to such cause of action shall have occurred.” R. 4-9,
p.13. They argue that this provision unreasonably limits the time in which claims
can be brought, thus making the arbitration provision unconscionable. None of
these arguments will prevail.
“[A]bsent fraud in the inducement, a written agreement duly executed by the
party to be held, who had an opportunity to read it, will be enforced according to
its terms.” Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335, 341 (Ky.
Ct. App. 2001) (citations omitted). An exception to this “fundamental rule” is the
“doctrine of unconscionability,” which is a narrow exception “directed against onesided, oppressive and unfairly surprising contracts.” Id. Even though the
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arbitration provision here may provide an advantage to a particular party, it is not
unfairly one-sided, oppressive or unfairly surprising. Id. The plaintiffs were
represented by counsel during the execution of the agreements and do not claim
that they were confused by the provisions in dispute at the time of execution or
that the provisions were hidden. “An unconscionable contract . . . [is] ‘one which
no man in his sense, not under delusion, would make.’” Id at 342 (internal citations
omitted). These facts do not rise to that level of unconscionability.
The plaintiffs also assert that they were fraudulently induced to enter into an
agreement to arbitrate with the defendants, but they have not met their burden of
setting forth a prima facie claim of fraud under Kentucky law by establishing the
“six elements of fraud by clear and convincing evidence.” Bassett v. NCAA, 428
F.Supp. 2d 675, 682 (E.D. Ky. 2006) (citing Kentucky law). The plaintiffs argue
that provisions in the purchase agreement, which provide that disputes will be
litigated and that the purchase agreement will control in the event of a conflict
between the purchase agreement and COA, fraudulently induced them to sign the
COA. However, they were aware of an arbitration provision in the COA and had an
opportunity to read and examine both of these agreements before they executed
the COA. No statements other than the contractual language of the purchase
agreement are offered as evidence to support a claim of fraud. In the absence of a
false material representation by the defendants, there is not “enough evidence to
support a claim of fraudulent misrepresentation,” see Rivermont Inn, Inc. v. Bass
Hotels & Resorts, Inc., 113 S.W.3d 636, 640 (Ky. Ct. App. 2003), and the
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plaintiffs are held to the terms of the agreements that they executed, which include
an agreement to arbitrate.
Finding that a valid agreement to arbitrate was executed between the parties
to the COA, the court must next determine the scope of the arbitration agreement.
Whether the plaintiffs’ claims fall within the scope of the arbitration agreement is
determined by asking whether “an action [for each claim] could be maintained
without reference to the contract or relationship at issue.” Fazio v. Lehman Bros.,
Inc., 340 F.3d 386, 395 (6th Cir. 2003). If so, the claims are outside the scope of
the agreement. Id. “Even real torts can be covered by arbitration clauses ‘if the
allegations underlying the claims touch matters covered by the [agreement].’” Id.
(internal citations omitted). The arbitration provision at issue is broadly inclusive,
stating as follows:
“If a disagreement exists among the Co-Owners or between one or
more of the Co-Owners and the Stallion Manager concerning Ready’s
Image or relating to the relationships, rights, duties, or obligations
hereunder (a “Dispute”), any one of the disputants may require the
other parties to submit the Dispute to arbitration if good faith
negotiations among the parties do not resolve the Dispute.”
R.4-9, p.12
The plaintiffs bring fourteen claims against the defendants in their second amended
verified complaint. Considering the expansive arbitration provision as well as the
policy favoring arbitration as to doubts regarding the scope of an arbitration
provision, all of the plaintiff’s claims except counts 3, 6, and parts of 8 and 14 will
be submitted to arbitration. Id. at 396 (referencing Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).
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Counts 1 and 4 specifically refer to breaches of the COA; thus, they are
arbitrable claims. Counts 3 and 6 refer to breaches of duties owed under the mare
agreement, which contains no arbitration provision or provision incorporating the
COA. The parties agree that the mare agreement claims are not arbitrable;
therefore, counts 3 and 6 will not be submitted to arbitration.
Counts 2, 5, 7, 9
through 13, and part of 8 and 14 are arbitrable because those claims could not be
brought without reference to the COA or without discussing matters covered by
the COA.
Specifically, counts 2 and 5 allege breaches of duties under only the
southern hemisphere agreements, but the southern hemisphere COA incorporates
the terms of the original COA. The southern hemisphere co-owners agreed “to
own, hold and operate their rights and interests under the Ready’s Image 1/3
Purchase Agreement” subject to the COA, and the COA was made part of the
southern hemisphere COA, “establish[ing] the relationships of the co-owners of
interests in Ready’s Image.” R.4-11, p.1. Because an alleged breach of duty under
the southern hemisphere agreements could involve a duty listed under the
incorporated COA, counts 2 and 5 are under the scope of the COA arbitration
provision and are thus arbitrable.
Count 7 alleges breach of fiduciary duties by Walmac Stud and the southern
hemisphere defendants as “purported co-owners of Ready’s Image.” The COA set
forth the duties and responsibilities of the stallion manager, Walmac Stud; therefore
count 7 could not be brought without reference to the prescribed relationships
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under the COA. In count 8, the plaintiffs allege fraudulent inducement by Walmac
Stud and Walmac Farm1 of the plaintiffs’ purchase of an ownership interest in
Ready’s Image. Specifically, the plaintiffs claim that Walmac Stud represented that
disputes would be litigated under the purchase agreement, “regardless of any
conflicting provisions in the as-of-then unseen COA,” and that Walmac Stud and
Walmac Farm made misrepresentations and omissions that the plaintiffs relied on in
entering “into all of the agreements, including the agreement in the COA not to
litigate disputes in New Jersey.” R.20, p.22. The references to the COA bring
count 8 under the scope of the COA arbitration provision. But, to the extent that
this claim goes to the existence or enforceability of an agreement to arbitrate, it is
a question for the court to decide and will not be submitted to arbitration; see
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967); see also
Granite Rock v. Int’l Brotherhood of Teamsters, 130 S. Ct. 2847 (2010); in fact,
these issues have been addressed in the present opinion.
Count 9 falls under the scope of the COA arbitration provision because it
alleges failure to perform accountings under the “relevant agreements,” including
“all but the Mare Agreements;” therefore, the claim touches on matters discussed
in the COA. Similarly, counts 10 and 11, fraud and conversion, are arbitrable
claims because duties and rights implicated under the COA are implied in the
claims. Count 10 states that the defendants breached their duties to provide
1
The plaintiffs bring counts 8, 10, 11, and 12 against “the Walmacs.” Finding no defendant named
“the Walmacs” and no individual defendant(s) with the last name Walmac, the court assumes based
upon an examination of the record that the plaintiffs are referring to both Walmac Stud
Management, LLC, and Walmac Farm, LLC, when they use that designation.
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accurate statements of information required under contractual and common law,
which would include the record-keeping and reporting duties required under the
COA. Count 11 alleges that Walmac Stud, Walmac Farm, and Lincoln-Walmac
deprived the plaintiffs of “their right to possess the books and records, and their
rightful share of moneys and assets relating to and generated by Ready’s Image,”
which are rights provided to the plaintiffs under the COA.
Counts 12 and 13 are statutory claims brought under New Jersey’s
Consumer Fraud Act and New Jersey RICO laws. Count 12 alleges that the
defendants violated the Consumer Fraud Act “in connection with the sale,
purchase, marketing and management of Ready’s Image.” R.20, p.25. Because the
COA sets forth a marketing and management plan for Ready’s Image, count 12
falls under the scope of the arbitration provision because an action for this claim
could not be maintained without reference to the COA or relationships thereunder.
Also, count 13 alleges that the defendant Jones “executed a scheme to defraud
plaintiffs by depriving plaintiffs of the financial benefits of their ownership interests
in Ready’s Image” through statements, representations, or promises. The COA
sets forth the relationship between the plaintiffs and Walmac Stud, the stallion
manager, including the allocation and distribution of monies. R.4-9, p. 4. Even
though count 13 does not specifically refer to the COA, the COA is inherently a
part of the alleged scheme described by the plaintiffs; therefore, count 13 falls
under the scope of the COA arbitration provision.
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Lastly, count 14 seeks rescission or reformation of the arbitration provision
in the COA on grounds of unconscionability and illegality as well as rescission of
the COA and southern hemisphere agreements. The portion of the claim disputing
the existence or enforceability of an agreement to arbitrate is a question for the
court to decide – and has been decided in the present opinion – and will not be
submitted to arbitration; see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U.S. 395 (1967); see also Granite Rock v. Int’l Brotherhood of Teamsters, 130 S.
Ct. 2847 (2010). However, to the extent that count 14 addresses the rescission
of the COA and southern hemisphere agreements in their entirety, that portion of
the claim will be submitted to arbitration because it refers to the COA and therefore
falls under the scope of the COA arbitration provision.
In summary, all counts except counts 3, 6, and part of 8 and 14 fall under
the scope of the COA arbitration provision. But only two parties, the plaintiff
James T. Scatuorchio, LLC, through its members James Scatuorchio, Kevin
Scatuorchio, and Courtney Sullivan, and the defendant Walmac Stud Management,
LLC, through its authorized agent John T.L. Jones, III, are signatories to the COA.
The plaintiffs argue that because the other parties are not signatories to the COA,
they cannot be bound by its arbitration provision. The court agrees only in part.
A non-signatory may be bound to an arbitration provision under one of five
theories: incorporation by reference, assumption, agency, veil-piercing or alter ego,
and estoppel. Javitch v. First Union Sec., Inc., 315 F.3d 619, 629 (6th Cir. 2003);
see also Olshan Foundation Repair and Waterproofing v. Otto, 276 S.W.3d 827,
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831 (Ky. App. 2009). The defendants argue that the theory of estoppel applies
here because the non-signatory parties undertook burdens and received benefits
pursuant to their relationship with Ready’s Image under the COA, which would
place them within the scope of the COA provisions, including the arbitration
provision, by estoppel. For the individuals or agents who signed on behalf of the
signatory plaintiff and defendant, including John T.L. Jones, III, James Scatuorchio,
Kevin Scatuorchio, and Courtney Sullivan, the estoppel theory does apply because
they received benefits and undertook burdens under the provisions of the COA as
agents or members of the signatory parties. Also, if the plaintiffs "can avoid the
practical consequences of an agreement to arbitrate by naming nonsignatory
parties as [defendants] in [the] complaint, or signatory parties in their individual
capacities only, the effect of the rule requiring arbitration would, in effect, be
nullified." Arnold, 920 F.2d at 1281 (internal citations omitted).
The defendants have not shown, however, that the other non-signatory
parties – including Bryan Sullivan, Saybrook Advertising, LLC, Walmarc Farm, LLC,
Hengst Funding, LLC, Kerry T. Cauthen, Four Star Sales, LLC, and Lincoln-Walmac
Associated Farms, Pty. Ltd. – are bound by the arbitration provision of the COA.
Although such persons or entities have been so bound, see Olshan Foundation
Repair and Waterproofing, 276 S.W.3d at 831 (Ky. App. 2009), that occurred only
because those parties were “third party direct beneficiaries” to the contract
pursuant to warranty covenants. Id. Without a showing of direct benefits, such as
a warranty covenant, the theory of estoppel does not bind the remaining non15
signatories to the COA arbitration provision. Consequently, only James T.
Scatuorchio, LLC, Walmac Stud Management, LLC, John T.L. Jones, III, James
Scatuorchio, Kevin Scatuorchio, and Courtney Sullivan are bound to arbitrate the
claims brought against them which fall under the scope of the COA arbitration
provision.
No federal statutory claims have been filed by the plaintiffs in this action;
thus, the court need not consider whether Congress intended any of the plaintiffs’
claims to be nonarbitrable.
Even though not all of the claims asserted by the plaintiffs will be submitted
to arbitration, the court, in its discretion, see Stout, 228 F.3d at 714 (6th Cir.
2000), will not issue a stay on nonarbitrable claims. 9 U.S.C. § 3 does not require
a stay of proceedings as to claims that are not being arbitrated. Furthermore, “[i]f
nonarbitrable federal claims are stayed pending the arbitration of other federal or
state claims, plaintiffs . . . face the unhappy choice of either [forgoing] arbitrable
claims in order to obtain prompt consideration of the other claims or waiting . . .
before their nonarbitrable claims will be heard by a federal court.” Chang v. Lin,
824 F.2d 219, 222 (2nd Cir. 1987). Despite the overlap between the arbitrable
and nonarbitrable claims, “it is far from certain that the arbitration proceedings will
have any preclusive effect on the litigation of nonarbitrable federal claims,” Dean
Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 222 (1985), and the defendants have
not “ma[d]e out a clear case of hardship or inequity in being required to go
forward” with the nonarbitrable claims. Landis v. North American Co., 299 U.S.
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248, 255 (1936). Accordingly,
IT IS ORDERED that the defendants’ second renewed motion to dismiss in
favor of arbitration or mediation, R. 75, is DENIED.
IT IS FURTHER ORDERED that the defendant’s motion to stay any nonarbitrable claims pending completion of arbitration, R.76, is DENIED.
IT IS FURTHER ORDERED that the plaintiffs’ claims in counts 1, 2, 4, 5, 7, 9
through 13, and part of counts 8 and 14 of the second amended verified
complaint, as they pertain to the parties James T. Scatuorchio, LLC, Walmac Stud
Management, LLC, John T.L. Jones, III, James Scatuorchio, Kevin Scatuorchio, and
Courtney Sullivan, shall be submitted to arbitration in accordance with the
arbitration provision provided in the stallion co-ownership agreement.
IT IS FURTHER ORDERED that the remaining claims in this action, including
counts 3, 6, and part of counts 8 and 14 of the second amended verified complaint
as well as counts 1, 2, 4, 5, 7, 9 through 13, and part of counts 8 and 14 of the
second amended verified complaint, as they pertain to Bryan Sullivan, Saybrook
Advertising, LLC, Walmac Farm, LLC, Hengst Funding, LLC, Kerry T. Cauthen, Four
Star Sales, LLC, and Lincoln-Walmac Associated Farms, Pty. Ltd., shall proceed in
the ordinary course of litigation, as directed by further order of the court.
IT IS FURTHER ORDERED that the defendants’ renewed motion to dismiss in
favor or arbitration or mediation, R.31, is DENIED as moot.
IT IS FURTHER ORDERED that the parties shall file a joint written report as
to the status of arbitrable claims on December 15, 2012, or within 10 days of the
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conclusion of arbitration, whichever occurs earlier.
Signed on September 13, 2012
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