CLEAN EARTH, INC. et al v. ENDURANCE AMERICAN INSURANCE COMPANY

Filing 29

OPINION filed. Signed by Judge Freda L. Wolfson on 9/28/2016. (mmh)

**NOT FOR PUBLICATION**
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CLEAN EARTH, INC. and CLEAN
EARTH DREDGING TECH. LLC,
Plaintiffs,
vs.
ENDURANCE AMERICAN INS.,
Defendant.

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Civil Action No. 15-6111(FLW)
OPINION

WOLFSON, United States District Judge:
This action arises from a contractual dispute between proposed intervenor J.T.
Cleary, a general contractor (“Proposed Intervenor” or “Cleary”), and Plaintiff Clean Earth
Dredging Technologies, LLC, Cleary’s former subcontractor, (“Clean Earth” or
“Plaintiff”) concerning a federally-funded project known as “Maintenance Dredging of
Sandy Hook Bay at Leonardo, Federal Navigation Project, New Jersey” (the “Project”). In
connection with the Project, Defendant Endurance American Insurance (“Endurance”),
acting as the surety, issued the payment bond on Cleary’s behalf. In this suit, Plaintiff
accuses Cleary of failing to remit over $1 million of unpaid invoices for work performed.
But, instead of also naming Cleary as a defendant in this case, Plaintiff asserts its Miller
Act contract-based claims only against Endurance, the surety. In the present matter, Cleary
seeks to intervene pursuant to Rules 24(a)(2) or 24(b)(2) of the Federal Rule of Civil
Procedure, and moves to compel arbitration. In response, Plaintiff opposes Cleary’s
motion and cross-moves for partial summary judgment of its claims on the merits, which
motion is directed against Endurance. Endurance has opposed that cross-motion. For the

reasons set forth herein, Cleary’s motion to intervene is GRANTED, and the parties are
directed to arbitrate this matter. Pending arbitration, this action is STAYED, and therefore,
Plaintiff’s motion for partial summary judgment is DENIED.
BACKGROUND
The Court will only recount facts necessary for the disposition of the current
motions. In November 2014, Cleary was awarded a contract from the United States Army
Corp of Engineers for a federal public works project that involved maintenance dredging
in Sandy Hook Bay at Leonardo, New Jersey. Amended Complaint (“Compl.”), ¶ 6. As a
requirement of the Project, Cleary obtained a payment bond, naming Endurance as the
surety. Id. In addition, Cleary also executed a General Agreement of Indemnity in which
Cleary agreed to indemnify Endurance. Cleary, the general contractor on the Project,
entered into a subcontract with Plaintiff “for performance of processing and disposal of
certain material dredged or removed by Cleary as part of the work under” the Project (the
“Subcontract”). Id. at ¶ 10.
According to Cleary, in September 2014, prior to entering into the Subcontract,
Cleary and Clean Earth were involved in a series of negotiations, and the parties ultimately
entered into an agreement for the purposes of preparing the bid for the Project. 1 Cleary’s
Proposed Answer (“Ans.”), ¶ 40, 44. Cleary alleges that Plaintiff was well aware that the
Project had set forth a short timeline for the completion of all dredging by December 31,
2014. Id. at ¶ 42. Cleary further alleges that, based on that understanding, Plaintiff assured

1

As part of its motion to intervene, Cleary submitted a Proposed Answer and
Counterclaim to Plaintiff’s Amended Complaint pursuant to Fed. R. Civ. P. 24(c).
According to that Rule, the Court is instructed to consider Cleary’s pleadings on its motion
to intervene. See Fed. R. Civ. P. 24(c).
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Cleary that it could furnish all necessary submittals and permits on a week’s notice. Id. at
¶ 43. Relying on Plaintiff’s representations in that regard, Cleary submitted its bid for the
Project. Id. at ¶ 44.
On September 25, 2014, Cleary received notice that it was the apparent low bidder
for the Project and was advised to furnish the required submittals in order to be awarded
the Project. Id. at ¶ 45. A day later, Cleary and Plaintiff revised their previous agreement
to include certain provisions that set forth Plaintiff’s obligations to provide Cleary with “all
information required to assist J.T. Cleary in obtaining timely approvals and permits” for
certain sites of the Project. Id. at ¶ 48. Cleary alleges that from October 3, 2014 to
November 18, 2014, Cleary repeatedly requested that Plaintiff provide Cleary with the
approved AUD (Acceptable Use Determination) at the DuPont Grasselli Point site, so that
the Project could be formally awarded and dredging could commence. Id. at ¶ 50.
According to Cleary, “[i]nstead of promptly providing J.T. Cleary with a proper AUD for
the DuPont Grasselli site . . . Clear Earth LLC spent months seeking regulatory approval
for a different disposal site, one never agreed to by J.T. Cleary, in an effort to obtain a
windfall profit in connection with the Project.” Id. at ¶ 51. It was allegedly not until
November 19, 2014, that the AUD was submitted and approved. Id. at ¶ 52. Cleary claims
that because of the delay on the part of Clean Earth, the Project was not formally awarded
to Cleary until November 20, 2014, approximately one month prior to the deadline for the
completion of the Project. 2
Cleary avers that because Plaintiff delayed the permit process throughout the entire
2

Cleary submits that it was compelled to entered into the Subcontract with Clean
Earth despite Clean Earth’s alleged delays and bad faith, because Plaintiff was the party
that submitted and obtained the AUD permits.
3

month of October and into late November 2014, Cleary was “forced to accelerate its work
at significant impact and expense in order to meet the deadline to complete the original
Project deadline of December 31, 2014.” Id. at ¶ 56. Cleary further avers that Plaintiff’s
delay pushed the majority of the Project work “deeper into the winter season, causing other
impacts and inefficiencies” that resulted in significant costs that were not contemplated
when the original bid was submitted for the Project. Id. at ¶ 57. Cleary also accuses
Plaintiff of failing to perform certain work under the Subcontract, resulting in further costs,
expenses and damages. Id. at ¶ 61. According to Cleary, the Project was not timely
completed, and an extension had to be obtained. Id. Based on these allegations, Cleary
asserts two counterclaims against Plaintiff: (1) breach of contract; and (2) breach of the
covenant good faith and fair dealing.
To the contrary, Plaintiff alleges that it has performed all of the work under the
Subcontract, totaling the sum of $2,289,905.68. Compl., ¶¶ 11, 13. In that regard, Plaintiff
maintains that approximately $1.9 million “remains unpaid and portion due from at least
January 11, 2015.” Id. at ¶¶ 13, 18. Clean Earth alleges that because Cleary failed to remit
payment for the unpaid invoices, Plaintiff filed a claim on the payment bond with
Endurance; Endurance, however, “neglected to make the required payment under the []
Bond.” Id. at ¶ 16. This suit followed.
Presently, Cleary moves to intervene as of right, or in the alternative, for permissive
intervention. Further, in the event the Court grants its motion to intervene, Cleary seeks to
compel arbitration of Plaintiff’s claims and Cleary’s counterclaims.

In addition to

opposing Cleary’s motion, Clean Earth also moves for partial summary judgment on its
breach of contract claim against Endurance. While Endurance opposes Plaintiff’s motion,
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Endurance does not oppose Cleary’s motion to intervene, and in that respect, Endurance
represents that “in the event the Court grants J.T. Cleary’s Motion, Endurance agrees to
participate in and be bound by the arbitration between J.T. Cleary and Clean Earth.”
Endurance’s Opp. Br., p. 40.
Because I find that Cleary is entitled to intervene and that arbitration is appropriate,
my decisions in this Opinion are confined to resolving Cleary’s motions.
DISCUSSION
I.

Motion to Intervene
A.

Rule 24(a) Intervention

Federal Rule of Civil Procedure 24 provides in pertinent part: “(a) Intervention of
Right. Upon timely application anyone shall be permitted to intervene in an action . . . (2)
when the applicant claims an interest relating to the property or transaction which is the
subject of the action and the applicant is so situated that the disposition of the action may
as a practical matter impair or impede the applicant's ability to protect that interest, unless
the applicant's interest is adequately represented by existing parties.” Fed. R. Civ. P.
24(a)(2).
It is well-settled that Rule 24(a)(2) requires the following four elements to be met
from the applicant seeking intervention as of right: (1) a timely application for leave to
intervene; (2) a sufficient interest in the litigation; (3) a threat that the interest will be
impaired or affected, as a practical matter, by the disposition of the action; and (4)
inadequate representation of the prospective intervenor's interest by existing parties to the
litigation. Kleissler v. U.S. Forest Service, 157 F.3d 964, 969 (3d Cir. 1998); Mountain
Top Condo. Ass'n. v. Dave Stabbert Master Builder, Inc., 72 F.3d 361, 365-66 (3d Cir.
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1995); Development Fin. Corp. v. Alpha Hous. & Health Care, Inc., 54 F.3d 156, 161-62
(3d Cir. 1995). As a paramount matter, to justify intervention as of right, the applicant
must have an interest “relating to the property or transaction which is the subject of the
action” that is “significantly protectable” and must be “a legal interest as distinguished
from interests of a general and indefinite character.” Mountain Top Condo. Ass'n, 72 F.3d
at 366 (internal quotation marks and citation omitted).
In that connection, however, the Third Circuit has recognized that no “‘precise and
authoritative definition’ of the interest that satisfies Rule 24(a) (2)” exists. Kleissler, 157
F.3d at 969 (citation omitted). Indeed, there is no “pattern that will easily support or defeat
intervention in all circumstances.” Id. at 970. Instead, in determining motions to intervene
“courts should adhere to the 'elasticity that Rule 24 contemplates’” and “may examine
pragmatic considerations.” Imable-Mayorga v. Labrie, Civ. No. 09-3567, 2010 U.S. Dist.
LEXIS 84230, at *2 (D.N.J. Aug. 17, 2010) (quoting Kleissler, 157 F.3d at 970).
"Nonetheless, the polestar for evaluating a claim for intervention is always whether the
proposed intervenor's interest is direct or remote. Due regard for efficient conduct of the
litigation requires that intervenors should have an interest that is specific to them, is capable
of definition, and will be directly affected in a substantially concrete fashion by the relief
sought. The interest may not be remote or attenuated . . . .” Kleissler, 157 F.3d at 972.
Before I analyze the elements, I will review Plaintiff’s position to Cleary’s request
to intervene. In its brief, Plaintiff devotes only three pages to opposing Cleary’s motion.
Instead, much of Plaintiff’s brief concerns its cross-motion for summary judgment against
Endurance. As to intervention, Plaintiff argues that because, pursuant to the Bond, Cleary
and Endurance are “jointly and severally” liable to make payment, Cleary’s presence as a
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party is not required in this case. In that regard, Plaintiff cites the general legal proposition
that a subcontractor-plaintiff may pursue a claim against the surety alone without joining
the general contractor or vice versa. That argument, however, is misplaced. Cleary is not
seeking to dismiss this action based upon a failure to join a necessary party; rather, Cleary
seeks to join it. To do so, the Proposed Intervenor must satisfy the elements of Rule
24(a)(2) (intervene as of right) or Rule 24(b) (permissive intervention). Plaintiff has not
advanced any arguments relevant to the elements under those Rules. Nevertheless, this
Court has the obligation to perform the appropriate analysis under Rule 24 to determine
whether Cleary should be entitled to intervene.
A.

Timeliness
Timeliness of a motion to intervene is “‘determined from all the circumstances’ and,

in the first instance, ‘by the [trial] court in the exercise of it sound discretion.’” In re Fine
Paper Antitrust Litigation, 695 F.2d 494, 500 (3d Cir.1982) (citing NAACP v. New York,
413 U.S. 345, 366 (1973)). To determine whether an intervention motion is timely, the
Third Circuit has listed three factors for courts to consider: (1) the stage of the proceedings;
(2) the prejudice that delay may cause the parties; and (3) the reason for the delay. In re
Fine Paper Antitrust Litigation, 695 F.2d at 500. Here, according to Cleary, Cleary and
Clean Earth participated in an unsuccessful, non-binding mediation, which caused Cleary
to file its motion to intervene later than anticipated. In any event, Cleary’s motion was
filed on February 11, 2016, less than three months after the initial conference with the
Magistrate Judge, which was held on November 24, 2015. At that time, the Magistrate
Judge issued a scheduling order that directed any motion to add additional parties to be
filed by February 11, 2016 — the date on which Cleary filed its motion. Tellingly, based
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on the scheduling order, the parties contemplated the addition of new parties. Moreover,
to the extent any discovery has commenced, discovery, and indeed, this case itself, is in its
infancy. Therefore, I find that little, if any, prejudice will result in permitting Cleary to
intervene. The Proposed Intervenor has satisfied the first prong of Rule 24(a)(2).
B.

Sufficient Interest in the Litigation
The second prong under Rule 24(a) requires the prospective intervenor to have an

interest “relating to the property or transaction which is the subject of the action” that is
“significantly protectable” and must be “a legal interest as distinguished from interests of
a general and indefinite character.” Mountain Top Condo. Ass'n, 72 F.3d at 366 (internal
quotation marks and citation omitted). Generally speaking, “a mere economic interest in
the outcome of the litigation is insufficient to support a motion to intervene.” Id. at 366
(citing Alcan Aluminum, 25 F.3d at 1185 ("Some courts have stated that a purely economic
interest is insufficient to support a motion to intervene.”); New Orleans Public Service, Inc.
v. United Gas Pipe Line Co., 732 F.2d at 464 (en banc) ("It is plain that something more
than an economic interest is necessary.”). “Thus, the mere fact that a lawsuit may impede
a third party's ability to recover in a separate suit ordinarily does not give the third party a
right to intervene.” Id.
Here, I find that Cleary has a tangible stake in the subject matter of this litigation.
The Third Circuit has held that, as a general matter, a surety bond “presents the kind of
specific fund that can ground a legitimate interest for Rule 24(a)(2).” Mountain Top, 72
F.3d at 366. Indeed, Cleary, as the principal on the payment bond, has a clear legal and
legitimate interest in this litigation because if a judgment is entered against the surety,
Endurance is likely to seek indemnification from Cleary, pursuant to their agreement.
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Intervention allows Cleary to protect its interest in that regard. See United States ex rel.
Frank M. Sheesley Co. v. St. Paul Fire and Marine Ins. Co., 239 F.R.D. 404, 412 (W.D.
Pa. 2006); United States ex rel. Jackson Thermo HVAC & Drilling, LLC v. Western Surety
Co., No. 14-7871(FLW), 2016 U.S. Dist. LEXIS 33363, at *5 (D.N.J. Mar. 15, 2016);
United States ex rel. MPA Constr., Inc. v. XL Specialty Ins. Co., 349 F. Supp. 2d 934, 937
(D. Md. 2004) (holding that a petitioner seeking to intervene in a suit between its
subcontractor and surety “clearly has a ‘direct and substantial interest’ in the transaction
because [the surety], if held liable, will turn to [the petitioner] for indemnification”); Atl.
Refinishing & Restoration, Inc. v. Travelers Cas. & Sur. Co. of America, 272 F.R.D. 26,
29 (D.D.C. 2010)(same).
C.

Impairment of Interest
Next, the Court considers whether allowing this action to proceed without Cleary

would impair its ability to protect its interest. In determining whether a movant’s interests
will be impaired by an action, courts consider the “pragmatic considerations” or the
“practical consequences” of denying intervention. See Kleissler, 157 F.3d at 970. On this
element, I find that if Cleary were not permitted to intervene, it could be forced to
indemnify Endurance for the debt claimed by Plaintiff without an opportunity to legally
dispute its liability. This is so because Plaintiff’s claims against Endurance sound in breach
of contract with Cleary as the alleged breaching party, and therefore, an adverse decision
on the merits could arguably impair Cleary’s ability to advance its own legal defenses and
arguments in a subsequent proceeding. Thus, the practical consequence of denying
intervention would be to deprive Cleary of an opportunity to raise arguments and defenses
before the adjudication of its own liability to Plaintiff. Jackson Geothermal, 2016 U.S.
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Dist. LEXIS 33363 at *5-6 (holding that “[the principal’s] interest in the litigation may, as
a practical matter, be impaired by the disposition of [the plaintiff’s] claims against [the
surety] because if [the principal] is not allowed to intervene, it could nonetheless be forced
to indemnify [the surety] for the debt claimed by [the plaintiff] without having the
opportunity to legally dispute its liability.”); Harris v. Pernsley, 820 F.2d 592, 601 (3d Cir.
1987)(finding that legal interest is impaired when in assessing “the practical consequences
of the litigation” there is “a tangible threat” to proposed intervenor's legal interest). This
type of consequence cannot be cured simply because Cleary has an opportunity to defend
against an indemnification claim by Endurance. See, e.g., Atlantic Refinishing, 272 F.R.D.
at 30 (observing that “[i]t is also insufficient that the petitioner may have additional
recourse in the future if it were to defend against an indemnification claim by the
defendant.”); Schoenborn v. Wash. Metro. Area Transit Auth., 247 F.R.D. 5, 7 (D.D.C.
2007)(observing that intervention was not improper solely because the petitioner had the
opportunity to later challenge the award in a suit for breach of fiduciary duty); Am. Horse
Prot. Ass'n, Inc. v. Veneman, 200 F.R.D. 153, 158 (D.D.C. 2001). Accordingly, I find that
Cleary’s ability to protect its interest would be impeded without intervention.
D.

Adequacy of Endurance’s Representation
Finally, Cleary must demonstrate the inadequacy of Endurance’s representation in

order to intervene as of right. “The burden of establishing inadequacy of representation by
existing parties varies with each case.” Kleissler, 157 F.3d at 972. Nevertheless, the burden
always rests with “the applicant for intervention” who must “show that [its] interests are
not adequately represented by the existing parties.” Brody v. Spang, 957 F.2d 1108, 1123
(3d Cir. 1992) (quoting Hoots v. Pennsylvania, 672 F.2d 1133, 1135 (3d cir. 1982) (internal
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quotation marks omitted)). However, the Supreme Court has stated that, “[t]he requirement
of the Rule is satisfied if the applicant shows that representation of his interest ‘may be’
inadequate; and the burden of making that showing should be treated as minimal.”
Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10 (1972) (citation omitted);
Jackson Geothermal, 2016 U.S. Dist. LEXIS at *6.
Where the applicant and the existing party have the same ultimate objective,
intervention as of right may not be appropriate as a presumption arises that the applicant's
interests are adequately represented. In re Cmty. Bank of N. Va. Guar. Nat'l Bank of
Tallahassee Second Mortgage Loan Litig., 418 F.3d 277, 315 (3d Cir. 2005) (citing
Virginia v. Westinghouse Elec. Corp., 542 F.2d 214, 216 (4th Cir. 1976)). In particular,
courts generally presume that the principal, in circumstances like in this case, is adequately
represented by its surety because they both have the “same ultimate objective,” i.e., to
avoid liability on the payment bond. See 6 Fed. Prac. 3 § 24.03 (noting that a presumption
of adequate representative exists if both the movant and the existing party have the same
ultimate objective); XL Specialty Ins. Co., 349 F. Supp. 2d at 937 (observing that a per se
right for principals "appears to conflict with Rule 24(a)(2)" because the surety is required
to provide a good faith defense for the principal).

Typically, “[t]o overcome the

presumption of adequate representation, the proposed intervenor must ordinarily
demonstrate adversity of interest, collusion, or nonfeasance on the part of a party to the
suit.” In re Comty Bank, 418 F.3d at 315.
Here, to establish divergent interests, Cleary presents the arbitration agreement
between Clean Earth and itself, and argues that it has a substantial interest in arbitrating
the claims and issues brought by Plaintiff. That interest, Cleary maintains, has not been
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adequately represented by Endurance. Indeed, nowhere in Endurance’s Answer or filing
did Endurance indicate that it would seek to arbitrate this matter on Cleary’s behalf. 3
Moreover, Cleary has asserted separate counterclaims against Clean Earth, which
Endurance did not raise. Therefore, I find that Endurance and Cleary have adverse interests,
and that Cleary “should not be forced to rely on [Endurance] to raise defenses in a case
where its own liability is at stake.” Atl. Refinishing, 272 F.R.D. at 30 (finding that a
principal’s interest in arbitration sufficient to show adverse interest since the surety has not
raised it as a defense). Based on these circumstances, under the Supreme Court’s “minimal
burden” standard, I find that Cleary would not be adequately represented by Endurance.
Having satisfied all four elements necessary for intervention under Rule 24(a)(2),
Cleary is granted the right to intervene as of right. 4

3

Plaintiff does not argue that Endurance cannot, pursuant to the Subcontract,
independently move to arbitrate Plaintiff’s claims. However, whether Endurance has the
right to seek arbitration under the Subcontract is of no moment — Endurance has not
sought to do so even if it has that right. In that regard, Cleary would effectively lose its
right to arbitration should the merits of Plaintiff’s claims ultimately be litigated in this case.
4

Although I need not reach this issue, I find that Cleary is also permitted to intervene
under Rule 24(b). According to Rule 24(b)(1)(B), “[o]n timely motion, the court may
permit anyone to intervene who: has a claim or defense that shares with the main action a
common question of law or fact.” Rule 24(b)(3) further provides that “[i]n exercising its
discretion, the court must consider whether the intervention will unduly delay or prejudice
the adjudication of the original parties' rights.” Fed. R. Civ. P. 24(b)(3); PA Prison Soc. v.
Cortes, 622 F.3d 215, 232 (3d Cir. 2010). Here, there is little doubt that Cleary’s proposed
defenses and claims share common questions of both law and fact with Plaintiff’s suit
against Endurance, such as whether Clean Earth completed its work on the Project to the
satisfaction of the Subcontract; and whether Cleary owes any outstanding payment under
that agreement. As to prejudice or delay, I have no basis to find that permitting Cleary to
intervene would result in unduly delay or unfairly prejudice the adjudication of Plaintiff’s
rights. Rather, it would serve the interest of judicial economy to resolve the parties’ claims
in one action. Accordingly, even if Cleary would not be entitled to intervene as of right,
Cleary would be permitted under Rule 24(b) to intervene.
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II.

Motion to Compel Arbitration and to Stay Proceedings 5
The Federal Arbitration Act's (“FAA”) purpose is “‘to reverse the longstanding

judicial hostility to arbitration agreements . . . and to place arbitration agreements upon the
same footing as other contracts.’” Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir.
2010) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)). To
achieve this end, the FAA provides that a contract provision that contains an arbitration
clause “shall be binding, allows for the stay of federal court proceedings in any matter
referable to arbitration, and permits both federal and state courts to compel arbitration if
one party has failed to comply with an agreement to arbitrate.” 9 U.S.C. §§ 2, 3, 4.
Collectively, those provisions of the FAA manifest “‘liberal federal policy favoring
arbitration agreements.’” Khazin v. TD Ameritrade Holding Corp., 773 F.3d 488, 493 (3d
Cir. 2014) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983)). Therefore, “‘as a matter of federal law, any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration . . . .’” Maddy v. GE, 629 F.
App'x 437 (3d Cir. 2015) (quoting Moses H. Cone Mem'l Hosp., 460 U.S. at 24-25).
When a district court is presented with a motion to compel arbitration, it must
answer the following two questions: (1) whether the parties entered into a valid arbitration
agreement; and (2) whether the dispute at issue falls within the scope of the arbitration
agreement. Century Indem. Co. v. Certain Underwriters at Lloyd's, 584 F.3d 513, 525 (3d
Cir. 2009). When performing this inquiry, the court applies “ordinary state-law principles
that govern the formation of contracts.” Kirleis v. Dickie, McCamey & Chilcote, 560 F.3d

5

To reiterate, Endurance does not oppose arbitration, and it has agreed to be bound
by the decision of the arbitrator should arbitration proceed.
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156, 160 (3d Cir. 2009).
Here, the Subcontract contains the following arbitration clause:
§ 6.2 ARBITRATION
§ 6.2.1 Any claims arising out of or related to this Subcontract, except
claims as otherwise provided in Section 4.1.5 and except those waived in
this Subcontract, shall be subject to arbitration. Prior to arbitration, the
parties shall endeavor to resolve disputes by mediation in accordance with
the provisions of Section 6.1 [mediation provision].
Subcontract, § 6.2. 6
As to the first factor, I note that Plaintiff has not argued that the arbitration
agreement is invalid or that it did not agree to arbitrate voluntarily. Indeed, in this case,
Plaintiff seeks to enforce the Subcontract against Endurance. And, in that regard, nowhere
in the Complaint does Plaintiff challenge the validity of the Subcontract in any way. More
compellingly, Plaintiff participated in mediation consistent with § 6.2 of the arbitration
provision prior to filing this suit. Absent any basis to find invalidity, I conclude that Cleary
has satisfied the first factor – that the parties entered into a valid arbitration agreement.
Next, with respect to the scope of the arbitration agreement, the language of the
arbitration clause at issue is certainly broad, because the use of the phrases “arising out of”
or “related to.” Indeed, “when phrases such as ‘arising under’ and ‘arising out of’ appear
in arbitration provisions, they are normally given broad construction.”

Battaglia v.

McKendry, 233 F.3d 720, 727 (3d Cir. 2000). Clearly, the scope of the arbitration provision,
here, is sufficiently broad to encompass Plaintiff’s breach of contract claims and Cleary’s
counterclaims that are asserted under the same legal and factual bases. Those claims are
directly related to the Subcontract and its terms. Accordingly, I find that Cleary has

6

None of the exceptions set forth in the arbitration provision applies in this case.
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satisfied both factors to compel arbitration.
Finally, I note that Plaintiff has not taken a position as to whether arbitration is
appropriate. Rather, Plaintiff asks this Court to deny Cleary’s request to stay this case
against Endurance pending arbitration, while conceding that the Court has the discretion to
impose a stay in that context. Plaintiff reasons that it should be entitled to litigate this
matter against Endurance even if a separate arbitration proceeding is ongoing. I do not
agree. It would be a waste of the parties’ resources, and more importantly, it would not
promote judicial economy to permit both proceedings to occur at the same time,
particularly since the issues raised in both forums are substantially similar. Accordingly, I
will exercise my discretion to stay this matter pending arbitration.
CONCLUSION
For the foregoing reasons, the Proposed Intervenor’s motion to intervene and
motion to compel arbitration are GRANTED. Pending arbitration, this matter is STAYED.
Plaintiff’s motion for partial summary judgment is DENIED.

Dated: September 28, 2016

/s/
Freda L. Wolfson
Freda L. Wolfson, U.S.D.J.

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