ClickSoftware, Inc. v. Honeywell International Inc.

Filing 23

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER For the forgoing reasons,1) the motion by plaintiff Clicksoftware, Inc. to compel arbitration and dismiss or, alternatively, stay (Docket No. 14) is ALLOWED and2 ) the motion by defendant Honeywell International Inc. to compel arbitration and dismiss or, alternatively, stay (Docket No. 16) is DENIED.Because there are no remaining substantive issues before the Court, this case is DISMISSED. So ordered.(Caruso, Stephanie)

United States District Court
District of Massachusetts

Clicksoftware, Inc.,
Plaintiff,
v.
Honeywell International Inc.,
Defendant.

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Civil Action No.
16-12522-NMG

MEMORANDUM & ORDER
GORTON, J.
This case arises out of a contract dispute over two
separate but related agreements, each containing a different
arbitration provision, between plaintiff, Clicksoftware, Inc.
(“plaintiff” or “Clicksoftware”), and defendant Honeywell
International Inc. (“defendant” or “Honeywell”).
Pending before the Court is plaintiff’s motion to compel
arbitration of disputes regarding the second agreement in
Massachusetts and defendant’s motion to compel arbitration of
disputes regarding both agreements in New York.

Each party

requests dismissal, or, alternatively, a stay of litigation
pending the outcome of arbitration.

For the reasons that

follow, plaintiff’s motion will be allowed and defendant’s
motion will be denied.

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I.

Background
A.

Factual Background

In or about 2015, Honeywell and Clicksoftware discussed a
joint project whereby Clicksoftware would provide Honeywell with
a “Service Management System” for Honeywell’s Business Solutions
Division.

Honeywell wanted that system to improve the

efficiency of their technicians by, inter alia, use of real-time
status updates and easier access to data on mobile devices.

The

information relied upon by the technicians would be accessed
from a “cloud-based” service operated by Clicksoftware.
In December, 2015, the project was memorialized in two
separate agreements:

the Master Services Agreement (“the Master

Agreement”) and the Cloud Services Master Agreement (“the Cloud
Agreement”).
The Master Agreement, which is dated December 20, 2015 and
printed on Honeywell letterhead, sets forth general terms and
conditions applicable to the project as a whole.

The Master

Agreement does not incorporate or refer to the Cloud Agreement.
With respect to arbitration, the Master Agreement contains
the following provision:
22. Dispute Resolution, Arbitration
Without limiting any of the parties rights to seek
injunctive relief in any court of competent
jurisdiction, any controversy or claim arising out of
or relating to this Agreement or the breach of this
Agreement, or the respective rights and
responsibilities of the parties hereunder shall be

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settled by binding arbitration . . . . The
arbitration shall be held and the award made in New
York, New York.
The Master Agreement also contains a choice of law
provision providing that the agreement is governed by New York
law.
The Cloud Agreement, which was signed on December 31, 2015
and printed on Clicksoftware letterhead, sets forth terms and
conditions regarding the cloud-based system that Clicksoftware
agreed to maintain.

The Cloud Agreement does incorporate or

refer to the Master Agreement.
The Cloud Agreement also contains an arbitration clause:
15.5 Binding Arbitration: Without limiting any of the
parties rights to seek injunctive relief in any court
of competent jurisdiction, any controversy or claim
arising out of or relating to this Agreement or the
breach of this Agreement, or the respective rights and
responsibilities of the parties hereunder shall be
settled by binding arbitration . . . . The
arbitration shall be held and the award made in the
Commonwealth of Massachusetts.
Moreover, the Cloud Agreement contains a choice of law
provision stating that it will be governed by the substantive
laws of Massachusetts.
B.

Procedural History

In November, 2016, Clicksoftware filed a five-count
complaint in Middelsex County Superior Court, alleging various
contract-related claims.

Defendant removed the case to this

Court in December, 2016 and filed a motion to compel arbitration

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in New York.

That motion was denied as moot when plaintiff

filed an amended complaint.
In January, 2017, Clicksoftware amended its complaint,
removing all of the underlying substantive claims and retaining
only the issue of arbitration venue before this Court.
Subsequently, it filed a motion to compel arbitration of the
Cloud Agreement in Massachusetts.

Honeywell responded with its

own motion to compel arbitration in New York.

Those motions are

the subjects of this memorandum.
II.

The Parties’ Cross-Motions to Compel
A.

Legal Standard

Arbitration is a matter of contract and a party cannot be
required to submit to arbitration any kind of dispute not
specifically covered by the contract. AT&T Techs., Inc. v.
Commc’ns Workers of Am., 475 U.S. 643, 648 (1986).

Section 2 of

the Federal Arbitration Act (“FAA”) mandates that written
arbitration agreements are valid, irrevocable and enforceable.
9 U.S.C. § 2.

Section 4 of the FAA allows a party aggrieved by

another party’s failure to arbitrate according to the terms of a
written arbitration agreement to petition for a court order
directing that the arbitration proceed. 9 U.S.C. § 4.

Whether

parties agreed to submit a particular dispute to arbitration is
an issue to be decided by the Court, not the arbitrator. Id.
Should the issue be referred to arbitration, the Court can issue

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a stay of the case pending resolution of the arbitration.
9 U.S.C. § 3.
In order to forego litigation and compel arbitration, the
moving party must show
that a valid agreement to arbitrate exists, that the
movant is entitled to invoke the arbitration clause,
that the other party is bound by that clause, and that
the claim asserted comes within the clause’s scope.
Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367,
375 (1st Cir. 2011).
B.

Application

Both parties acknowledge the existence of arbitration
provisions in the Master Agreement and Cloud Agreement covering
their disputes and both agree that the Master Agreement should
be arbitrated in New York.

Thus, the only remaining issue

before the Court is where arbitration of the Cloud Agreement
should take place.
1.

The Court’s Jurisdiction

As a threshold matter, defendant contends that the dispute
as to whether the Cloud Agreement should be arbitrated in New
York or Massachusetts is procedural, and, therefore, this Court
lacks jurisdiction to decide the issue.

This Court concludes

otherwise.
First, as other courts that have squarely addressed this
issue have concluded, determination of which of two or more

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conflicting arbitration provisions applies is a “gateway” issue
for the Court to decide. See GE Commercial Distrib. Fin. Corp.
v. Donwin, LLC, No. 11-cv-01154, 2011 WL 2518905, at *5 (D.
Colo. June 24, 2011).
Moreover, as the United States Supreme Court explained in
Howsam v. Dean Witter Reynolds, Inc., there are two kinds of
questions for the courts to decide:

“whether the parties are

bound by a given arbitration clause” and “whether an arbitration
clause in a concededly binding contract applies” to a certain
dispute. 537 U.S. 79, 84 (2002).
Although defendant construes the question as one of
“consolidation,” ultimately the issue is whether the parties are
bound by the arbitration clause in the Cloud Agreement.

Thus,

the Court has jurisdiction. See Granite Rock Co. v. Int’l Bhd.
of Teamsters, 561 U.S. 287, 297 (2010) (“[T]he court must
resolve any issue that calls into question the . . .
applicability of the specific arbitration clause that a party
seeks to have the court enforce.”).
2.

Venue for Arbitration of the Cloud Agreement

Next, the Court will determine whether plaintiff and
defendant are bound by the arbitration provision in the Cloud
Agreement and must arbitrate their dispute with respect to that
agreement in Massachusetts.

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Defendant maintains that the Master Agreement and Cloud
Agreement should be read together and because it filed for
arbitration first in New York, arbitration of both agreements
should occur there.

Clicksoftware generally contends that the

two agreements are separate and each arbitration provision
should be given full effect.
Although the two agreements apparently arose out of the
same set of negotiations, they are separate, independent
contracts.
Importantly, neither agreement incorporates or references
the other and each has its own integration clause.

For example,

the Cloud Agreement provides that it
together with its Annexes, constitute the entire
understanding between the parties . . . with respect
to the subject-matter of [the] Agreement.
With respect to the Cloud Agreement, the subject is cloudbased technology hosted and maintained by Clicksoftware and
licensed to Honeywell.

The Master Agreement, on the other hand,

sets out the parties’ obligations regarding “statements of work”
(“SOWs”) and purchase orders generally.

The Master Agreement

provides that SOWs are incorporated into the agreement but,
based upon the sample SOW form attached to the Master Agreement,
the Cloud Agreement is not a SOW.

Rather, the Cloud Agreement

is a stand-alone agreement. See Bowlby v. Carter Mfg. Corp., 138
F. Supp. 2d 182, 188 (D. Mass. 2001) (explaining that the

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integration clause “indicates the parties’ desire for the
[second] agreement to stand on its own”).
Because the Cloud Agreement is not a “supplement” to the
Master Agreement, the Court concludes that the parties are bound
by the arbitration clause providing that arbitration of disputes
involving the Cloud Agreement will occur in Massachusetts,
pursuant to Massachusetts law. See id. at 188-89 (declining to
compel arbitration of a dispute involving an employment
agreement as provided for in a related purchase agreement
because the two contracts were independent of each other).

ORDER
For the forgoing reasons,
1)

the motion by plaintiff Clicksoftware, Inc. to compel
arbitration and dismiss or, alternatively, stay
(Docket No. 14) is ALLOWED and

2)

the motion by defendant Honeywell International Inc.
to compel arbitration and dismiss or, alternatively,
stay (Docket No. 16) is DENIED.

Because there are no remaining substantive issues before
the Court, this case is DISMISSED.
So ordered.
/s/ Nathaniel M. Gorton
d
Nathaniel M. Gorton
United States District Judge
Dated June 30, 2017

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