Indian Harbor Insurance Company v. Build Group, Inc.

Filing 19

OPINION AND ORDER re: 3 MOTION to Compel Arbitration . filed by Indian Harbor Insurance Company. For the foregoing reasons, Petitioner Indian Harbor's Petition is GRANTED, and Respondent Build Group's Countermotion to Dismiss is DENIED. Indian Harbor's request for this Court to enjoin Build Group from litigating the parties' dispute under the Policy in any venue other than before an arbitration panel sitting in New York is DENIED. Effective immedi ately, the Court imposes a stay of this litigation in its entirety, pending receipt of a letter from the parties advising the Court that a complete panel of arbitrators has been formally constituted. The Clerk of the Court is respectfully directed to close docket number 3. SO ORDERED. Case Stay Lifted. (Signed by Judge Loretta A. Preska on 3/11/2025) (tg)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
INDIAN HARBOR INSURANCE COMPANY
Petitioner,

No. 24-CV-4887 (LAP)

-against-

OPINION AND ORDER

BUILD GROUP, INC.,
Respondent.

LORETTA A. PRESKA, Senior United States District Judge:
Petitioner Indian Harbor Insurance Company (“Indian Harbor”)
brought this action to compel Respondent Build Group, Inc. (“Build
Group”) to participate in arbitration. (See Petition to Compel
Arbitration (“Petition” or “Pet.”), dated June 27, 2024 [dkt. no.
1].) 1

In response, Build Group filed an opposition brief seeking

a stay of these proceedings and, in the alternative, dismissal
under Federal Rules of Civil Procedure 12(b)(2), (b)(3), and
(b)(6).

(See

Respondent

Build

Group,

Inc.’s

Opposition

to

Petitioner Indian Harbor Insurance Company’s Petition to Compel
Arbitration and Respondent Build Group, Inc.’s Motion to Stay or

(See also Notice of Petition to Compel Arbitration, dated June
27, 2024 [dkt. no. 3]; Memorandum of Law in Support of Petitioner
Indian Harbor Insurance Company’s Petition to Compel Arbitration
(“Pet. Brief”), dated June 27, 2024 [dkt. no. 6]; Declaration of
Amy J. Kallal in Support of Petitioner Indian Harbor Insurance
Company’s Petition to Compel Arbitration (“Kallal Decl.”), dated
June 27, 2024 [dkt. no. 4]; Memorandum of Law in Support of
Petitioner Indian Harbor Insurance Company’s Petition to Compel
Arbitration and, to the Extent Necessary, Opposition to Build
Group’s “Motion” to Stay or Dismiss (“Pet. Reply”), dated August
23, 2024 [dkt. no. 17].)
1

1

Dismiss the Petition (“Opposition” or “Opp’n”), dated August 2,
2024 [dkt. no. 14].) 2
For the reasons set forth below, Indian Harbor’s Petition is
GRANTED, and Build Group’s Motion to Stay or Dismiss is DENIED.
I.

Background 3
A. Factual Background
1.

The Insurance Policy

Indian Harbor is a Delaware corporation with its principal
place of business in Connecticut.

(See Pet. ¶ 4.)

Build Group is

a California corporation with its principal place of business in
California.

(See id. ¶ 5.)

On August 15, 2016, Indian Harbor

issued a Subcontractor Default Insurance policy (the “Policy”) to
Build Group to insure against additional costs incurred in the
event a subcontractor or supplier defaulted on a construction
project.

(See id. ¶ 10; Ex. 1 to the Kallal Decl. (“Ex. 1”) [dkt.

no. 4-1] at 16.)
The Policy included a provision titled “Dispute Resolution,”
setting forth the parties’ obligations in the event of “[a]ny
dispute or other matter in question . . . arising under, out of,
(See also Declaration of Miles C. Holden in Support of Respondent
Build Group, Inc.’s Opposition to Petitioner Indian Harbor
Insurance Company’s Petition to Compel Arbitration and Respondent
Build Group Inc.’s Motion to Stay or Dismiss (“Holden Decl.”),
dated August 2, 2024 [dkt. no. 14-1].)
3 The facts in this opinion are drawn primarily from the Petition
and documents integral to the Petition of which this Court takes
judicial notice. (See infra Part II(A)(1) (outlining summary
judgment standard for motion to compel arbitration).)
2

2

in connection with or in relation to this Policy.”

(Ex. 1 at 20.)

Pursuant to the Dispute Resolution provision, Indian Harbor and
Build Group agreed that any such dispute “shall be submitted to
mediation” by a mediator acceptable to both parties.

(Id.)

As most relevant here, the provision goes on to state:
[i]n the event that such mediation does not successfully
resolve such dispute, the dispute will be submitted to
arbitration within thirty (30) days of a request by either
party to the other for such arbitration. The parties hereby
agree to pursue such arbitration though the American
Arbitration Association (AAA) in accordance with its then
existing Commercial Arbitration Rules.
(Id.)

The

parties

further

agreed

that

“from

the

list

of

arbitrators provided by the AAA a panel of three (3) neutral
arbitrators shall be agreed upon.
to

the

panel

or

any

member

In the event of disagreement as

thereof,

the

selection

of

arbitrator or those arbitrators shall rest with the AAA.”

that
(Id.)

With respect to the arbitrators’ judgment, the Policy states that
“[a] decision in writing signed by a majority of the arbitrators,
when served upon both parties, shall be binding upon both and
judgment thereon may be entered in any court having jurisdiction
thereof.” (Id.)

Indian Harbor and Build Group agreed to “share

equally in the payment of the fees of the arbitrators” with the
“remaining costs of the arbitration [to] be paid, as the award
shall direct.”
With

(Id.)

respect

to

forum,

the

Dispute

Resolution

provision

states that “[a]ny arbitration shall take place in New York unless
3

otherwise

agreed.”

(Id.)

Regarding

choice

of

law,

“[t]he

arbitrators shall not be required or obliged to follow judicial
formalities or the rules of evidence except to the extent required
by governing law which is agreed between the parties to be the
state law of the situs of the arbitration as herein agreed.”

(Id.)

As to a party’s failure to agree to arbitration, the Policy
provides:
[f]ailure by the party receiving the request for arbitration
to agree to such arbitration or state their reasons for not
being prepared to submit to such process within the thirty
(30) days following the receipt of the request for
arbitration, shall be adjudged an acceptance of the other
party’s position and the terms associated therewith and an
agreement to take such action as would be consistent with
such acceptance.
(Id.)
Finally, Indian Harbor and Build Group agreed that they had
“entered into this agreement by virtue of [the Dispute Resolution]
clause to provide for a means of quickly settling disputes without
resorting to litigation” and “unless and until an award has been
rendered by such panel of arbitrators, no other action or legal
proceeding shall be commenced in respect of any claim hereunder
except with regard to resort to judicial intervention to enforce
the terms of this Dispute Resolution clause.”
2.

(Id.)

The Coverage Dispute

At some point following Indian Harbor’s issuance of insurance
to Build Group, Build Group tendered notice of a claim for coverage
4

under the Policy.

(Pet. ¶ 13.)

A dispute then arose between the

parties with respect to the claim.

(Id. ¶ 14.)

On or around

August 17, 2022, the parties unsuccessfully attempted to mediate
the dispute.

(Id. ¶¶ 15-16.)

On May 7, 2024, Build Group filed a complaint against Indian
Harbor in the Northern District of California, seeking declaratory
relief and damages based on Indian Harbor’s alleged failure to
comply with its contractual obligations under the Policy.

(See

Id. ¶ 17; Ex. 2 to the Kallal Decl. (“Ex. 2”) [dkt. no. 4-2] at
16-21.)

In response, on June 27, 2024, Indian Harbor sent Build

Group a formal demand to arbitrate the dispute.

(Pet. ¶ 19; Ex.

3 to the Kallal Decl. (“Ex. 3”) [dkt. no. 4-3].)

Also on June 27,

2024, Indian Harbor filed the instant Petition, requesting this
Court 1) issue an order compelling arbitration under 9 U.S.C. § 4;
2) retain jurisdiction over this case until a complete panel of
arbitrators is formally constituted; and 3) enjoin Build Group
from litigating the parties’ dispute under the Policy in any venue
other than before an arbitration panel sitting in New York.
Pet. at 7.)
of

this

(See

Build Group opposed the Petition by requesting a stay

action

pending

resolution

of

the

proceedings

in

the

Northern District of California and, in the alternative, seeking
dismissal under Federal Rules of Civil Procedure 12(b)(2), (b)(3),

5

and (b)(6).

(See Opp’n at 1.) 4

Indian Harbor replied. (See Pet.

Reply.)
On August 28, 2024, the United States District Court for the
Northern District of California (the “California District Court”)
granted Indian Harbor’s motion to stay pending resolution of the
Petition in this action.

See Build Group, Inc. v. Indian Harbor

Insurance Co., 24-CV-02726 (N.D. Cal. Aug. 28, 2024).

In so

holding, the California District Court explained that “Indian
Harbor

and

Build

Group

have

an

arbitration

agreement

that

incorporates the AAA’s Commercial Arbitration Rules which delegate
the question of arbitrability to the arbitrator.”

Id.

Because

Build Group had argued in the California action that the entire
arbitration agreement was unconscionable under California law,
neglecting

to

challenge

the

specific

provision

delegating

arbitrability, the California District Court determined it was
unable to consider Build Group’s arguments.

See id.

Indian Harbor argues that Build Group’s motion is improper
because a petition to compel arbitration is a motion, rather than
a pleading, such that Rule 12(b) does not apply. (Pet. Reply at
1 n.2.) The Court construes Build Group’s submission as both a
brief in opposition to the Petition and a countermotion to stay or
dismiss. See Nat’l Union Fire Ins. Co. of Pittsburgh. v. Wynn Las
Vegas, LLC, 509 F. Supp. 3d 38, 44 (S.D.N.Y. 2020) (construing
response to petition to compel arbitration which included a request
for dismissal as a countermotion to dismiss under Rule 12(b)).
Regardless of whether the Court were to evaluate Build Group’s
arguments for dismissal pursuant to the standard for a motion to
compel or a motion to dismiss, the Court’s conclusion would remain
the same based on the clear language of the Dispute Resolution
provision, as explained infra Parts II(A)-(C).
4

6

The Petition is fully briefed and ripe for adjudication.
II.

Discussion
A.

Indian Harbor’s Petition to Compel Arbitration 5
1. Legal Standard

The

Federal

Arbitration

Act

(“FAA”)

provides

that

an

arbitration provision in “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.”

Section 4 of

9 U.S.C. § 2. 6

the FAA requires courts to compel arbitration in accordance with
the terms of the arbitration agreement upon the motion of either
party to the agreement, provided there is no issue regarding the
making of the agreement.

AT&T Mobility LLC v. Concepcion, 563

U.S. 333, 344 (2011) (citing 9 U.S.C. § 4).
“[P]arties may agree to have an arbitrator decide not only
the merits of a particular dispute but also ‘gateway’ questions of
‘arbitrability,’
arbitrate

or

such

whether

as

whether

their

the

parties

agreement

covers

have
a

agreed

to

particular

Given the Court’s conclusion that it has personal jurisdiction
over Build Group for purposes of these proceedings pursuant to the
Dispute Resolution provision, see infra Part II(C), it addresses
the Petition, premised on the Dispute Resolution provision, before
Build Group’s jurisdictional argument. See Wynn Las Vegas, 509
F.3d Supp. at 44-49 (considering motion to compel arbitration
before jurisdictional issue).
6 An insurance contract between corporations from different states
gives rise to a finding of interstate commerce such that the FAA
applies.
See Chartis Seguros Mex., S.A. de C.V. v. HLI Rail &
Rigging, LLC, 967 F. Supp. 2d 756, 762 (S.D.N.Y. 2013).
5

7

controversy.”

Henry Schein, Inc. v. Archer & White Sales, Inc.,

586 U.S. 63, 67-68 (2019) (citation and internal quotation marks
omitted).

However, the gateway question of “whether the parties

have agreed to arbitrate, i.e., the ‘question of arbitrability,’
is an issue for judicial determination unless the parties clearly
and unmistakably provide otherwise.”

Nicosia v. Amazon.com, Inc.,

834 F.3d 220, 229 (2d Cir. 2016) (quoting Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79, 83 (2002)); see also Henry Schein,
586 U.S. at 69 (“This Court has consistently held that parties may
delegate threshold arbitrability questions to the arbitrator, so
long as the parties’ agreement does so by ‘clear and unmistakable’
evidence.” (citation omitted)).

This “threshold question . . .

is determined by state contract law principles.”

Nicosia, 834

F.3d at 229. 7

The Policy provides that the law of the situs of arbitration
applies and mandates that arbitration take place in New York unless
otherwise agreed. (Ex. 1 at 20.) Build Group disputes that New
York law applies to the Policy but provides no argument as to what
law the Court should consider in evaluating the arbitration
agreement, asserting only that California public policy provides
an insured with certain substantive rights that New York law does
not. (Opp’n at 3 n.1, 12.) “New York law . . . follows the same
standard as federal law with respect to who determines
arbitrability: generally, it is a question for the court unless
there is a clear and unmistakable agreement to arbitrate
arbitrability.” Contec Corp. v. Remote Sol., Co., 398 F.3d 205,
208 n.1 (2d Cir. 2005) (citation omitted). Given California law
generally follows the same standard, see Kramer v. Toyota Motor
Corp., 705 F.3d 1122, 1127 (9th Cir. 2013), there is no conflict
between the purported competing jurisdictions, and the Court will
apply New York law in interpreting the Dispute Resolution (cont’d)
7

8

Arbitration is a “matter of consent,” Loc. Union 97, Int’l
Bhd. of Elec. Workers, AFL-CIO v. Niagara Mohawk Power Corp., 67
F.4th 107, 113 (2d Cir. 2023), and may be compelled “only where
the court is satisfied that neither the formation of the parties’
arbitration agreement nor (absent a valid provision specifically
committing such disputes to an arbitrator) its enforceability or
applicability to the dispute is in issue.”

Granite Rock Co. v.

Int’l Bhd. of Teamsters, 561 U.S. 287, 299 (2010).
parties’

contract

delegates

the

arbitrability

“When the

question

to

an

arbitrator, the courts must [ ] respect the parties’ decision as
embodied in the contract.”

DDK Hotels, LLC v. Williams-Sonoma,

Inc., 6 F.4th 308, 316-17 (2d Cir. 2021) (citation omitted).
In deciding petitions to compel, “court[s] apply a standard
similar to that applicable for a motion for summary judgment.”
Bensadoun v. Jobe–Riat, 316 F.3d 171, 175 (2d Cir. 2003).

“The

summary

judgment

relevant,

standard

admissible

requires

evidence

a

court

submitted

by

to

consider

all

the

parties

and

contained in pleadings, depositions, answers to interrogatories,
and admissions on file, together with . . . affidavits.

In doing

so, the court must draw all reasonable inferences in favor of the
non-moving party.”

Nicosia, 834 F.3d at 229 (quotation marks and

citations omitted).
(cont’d) provision. See Int’l Bus. Machs. Corp. v. Liberty Mut.
Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004).
9

“If there is an issue of fact as to the making of the agreement
for arbitration, then a trial is necessary.”

Bensadoun, 316 F.3d

at 175 (citing 9 U.S.C. § 4 (“If the making of the arbitration
agreement . . . be in issue, the court shall proceed summarily to
the trial thereof.”)).

“[B]ut where the undisputed facts in the

record require the matter of arbitrability to be decided against
one side or the other as a matter of law, [a court] may rule on
the basis of that legal issue and ‘avoid the need for further court
proceedings.’”

Wachovia

Bank,

Nat’l

Ass’n

v.

VCG

Special

Opportunities Master Fund, Ltd., 661 F.3d 164, 172 (2d Cir. 2011)
(quoting Bensadoun, 316 F.3d at 175).
2. Analysis
Indian

Harbor

seeks

to

compel

Build

Group

to

submit

to

arbitration, arguing the Policy’s Dispute Resolution provision
mandates that the arbitrator determine the arbitrability question—
in other words, whether the parties agreed to arbitrate.

(Pet.

Br. at 6.) Build Group objects, arguing the provision is ambiguous
and does not explicitly delegate the issue of arbitrability. (Opp’n
at 17-18.)

The Court concludes there is clear and unmistakable

evidence that Indian Harbor and Build Group agreed to commit the
issue of arbitrability to the arbitrator rather than the courts.
As an initial matter, it is undisputed that Indian Harbor and
Build Group entered into the Policy and that the Policy contains
the

Dispute

Resolution

provision.
10

The

Dispute

Resolution

provision states that in the event mediation fails to resolve
“[a]ny dispute or other matter in question . . . arising under,
out of, in connection with or in relation to this Policy,” the
parties agree to “pursue such arbitration though the American
Arbitration Association (AAA) in accordance with its then existing
Commercial Arbitration Rules.”

(Ex. 1 at 20.)

Rule 7 of the

American Arbitration Association (“AAA”) Commercial Arbitration
Rules in turn states that “[t]he arbitrator shall have the power
to rule on his or her own jurisdiction, including any objections
with respect to the existence, scope or validity of the arbitration
agreement or to the arbitrability of any claim or counterclaim.”
AAA Comm. Arb. R-7(a).
The Court of Appeals has repeatedly determined that this
arrangement—whereby

the

arbitration

agreement

explicitly

incorporates rules which delegate the issue of arbitrability to
the arbitrator—is clear and unmistakable evidence of the parties’
intent to commit that issue to the arbitrator.

See Contec Corp.,

398 F.3d at 208 (2d Cir. 2005) (parties’ incorporation of AAA Rules
evinced their intent to delegate arbitrability to the arbitrator
based on Rule 7); Shaw Group Inc. v. Triplefine Int’l Corp., 322
F.3d 115, 122 (2d Cir. 2003) (agreement incorporated international
arbitration

rules

which

delegated

question

of

arbitrability);

PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1202 (2d Cir. 1996)

11

(National Association of Securities Dealers Code committed issue
of arbitrability to arbitrator).
The broad language of the Dispute Resolution provision also
counsels

in

favor

of

compelling

arbitration.

The

Dispute

Resolution provision applies to “[a]ny dispute or other matter in
question . . . arising under, out of, in connection with or in
relation to this Policy[.]”

(Ex. 1 at 20.)

This wording, read in

conjunction with the parties’ agreement that such disputes “will
be submitted to arbitration within thirty (30) days of a request
by either party to the other for such arbitration” (id.), is
undoubtedly broad.

See Cont’l Petroleum Corp. v. Corp. Funding

Partners, LLC, No. 11 CIV. 7801 PAE, 2012 WL 1231775, at *8 n.5
(S.D.N.Y. Apr. 12, 2012) (recognizing that “it is hard to imagine
a more broadly worded arbitration clause than” a clause—similar to
the one at issue here—which stated “‘all disputes arising out of
or

in

connection

with

the

present

contract’

are

subject

to

arbitration”). Where, as here, “the arbitration agreement is broad
and expresses the intent to arbitrate all aspects of all disputes”
and is “coupled with incorporation of rules that expressly empower
an arbitrator to decide issues of arbitrability,” the Court of
Appeals has found “clear and unmistakable evidence of the parties’
intent

to

arbitrator.”

delegate

the

question

of

arbitrability

DDK Hotels, 6 F.4th at 318-19.

12

to

the

Build Group protests that there is no clear delegation clause
in the Dispute Resolution provision because it requires each party
to “agree” to arbitrate as a condition necessary to arbitration.
(Opp’n

at

17-18.)

Specifically,

the

language

mandates

that

disputes “will be submitted to arbitration within thirty (30) days
of a request by either party to the other for such arbitration.
The parties hereby agree to pursue such arbitration through the
[AAA] in accordance with its then existing Commercial Arbitration
Rules.”

(Ex. 1 at 20.)

Build Group’s reading strains the language

beyond any reasonable interpretation.

Build Group agreed to

arbitrate its disputes with Indian Harbor by entering into the
Policy.
Build Group also argues that the portion of the provision
stating the “[f]ailure by the party receiving the request for
arbitration to agree . . . shall be adjudged an acceptance of the
other

party’s

arbitration.

position”

indicates

each

party

may

opt

(Opp’n at 17-18 (citing Ex. 1 at 20).)

out

of

Similarly,

this tortured interpretation of the plain language is unavailing.
Rather than suggesting a party may opt out of arbitration, the
provision sets forth the default consequences of a party’s failure
to agree to arbitration.
Other

language

within

the

Dispute

Resolution

provision

reinforces the Court’s conclusion that arbitration is mandatory,
for

example

the

parties’

explicit
13

agreement

to

the

Dispute

Resolution clause for purposes of “provid[ing] for a means of
quickly settling disputes without resorting to litigation.”
1 at 20.)

(Ex.

The parties’ agreement that unless and until an

arbitration award has been rendered, “no other action or legal
proceeding shall be commenced in respect of any claim hereunder
except with regard to resort to judicial intervention to enforce
the terms of this Dispute Resolution clause,” also makes their
intent to arbitrate clear.

(Id.)

Ultimately, the unquestionably broad language of the Dispute
Resolution provision, coupled with the provision’s incorporation
of the AAA rules, is clear and unmistakable evidence of the
parties’ intent to delegate the issue of arbitrability to the
arbitrator.
B.

Build Group’s Request for a Stay
1. Legal Standard

The “first-filed rule states that, in determining the proper
venue, [w]here there are two competing lawsuits, the first suit
should have priority.”

New York Marine & Gen. Ins. Co. v. Lafarge

N. Am., Inc., 599 F.3d 102, 112 (2d Cir. 2010) (internal quotation
marks

omitted).

adhering

to

the

The

rule

inherently

“avoids
fair

duplicative

concept

that

litigation

by

the

who

party

commenced the first suit should generally be the party to attain
its choice of venue.”

Ontel Products, Inc. v. Project Strategies

Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995).
14

“In determining

if the first-filed rule applies, the court must carefully consider
whether in fact the suits are duplicative.”

Fit & Fun Playscapes,

LLC v. Sensory Path, Inc., No. 19 Civ. 11697, 2022 WL 118257, at
*3 (S.D.N.Y. Jan. 12, 2022) (citation omitted).

“Application of

the rule requires that both cases have identical or substantially
similar parties and claims.”

Id. (citing In re Cuyahoga Equipment

Corp., 980 F.2d 110, 116–17 (2d Cir. 1992)).
However, the first-filed rule is not “an invariable mandate”
but rather a “presumption that may be rebutted by proof of the
desirability
action.”

of

proceeding

in

the

forum

of

the

second-filed

Emp’rs Ins. of Wausau v. Fox Entm’t Grp., Inc., 522 F.3d

271, 275 (2d Cir. 2008) (internal quotation marks omitted).

The

Court of Appeals “has recognized two exceptions to the first-filed
rule: (1) where the ‘balance of convenience’ favors the secondfiled action, and (2) where there are ‘special circumstances,’
such

as

where

the

first-filing

plaintiff

files

an

‘improper

anticipatory action’ in an apparent effort to win the race to the
courthouse, or ‘where forum shopping alone motivated the choice of
situs for the first suit.’”

Fit & Fun Playscapes, 2022 WL 118257,

at *3 (quoting Emp’rs Ins. of Wausau, 522 F.3d at 275-76)).
2. Analysis
Even assuming that there is substantial overlap between the
parties and claims in this action and the lawsuit in California

15

District Court, 8 several circumstances justify departure from the
first-filed rule. First, the California District Court has already
stayed that action pending resolution of the instant Petition,
determining it was unable to weigh in on Build Group’s arguments
due to the delegation clause in the parties’ arbitration agreement.
See Build Group, Inc. v. Indian Harbor Insurance Co., 24-CV-02726
(N.D. Cal. Aug. 28, 2024).

It would therefore be both illogical

and a waste of judicial resources for the Court to stay this action
which seeks to compel arbitration, pending resolution of the action
in California.
Second, as the California District Court recognized, the
Policy’s Dispute Resolution provision mandates that the parties
submit to arbitration, in the event mediation does not successfully
resolve a dispute between them arising out of the policy.
id.; Ex. 1 at 20.)

(See

As discussed supra Part II(A), as part of their

agreement, Build Group and Indian Harbor promised not to commence
any action or legal proceeding unless and until the arbitrators
With respect to the parties, the California action involves the
same parties as the instant Petition. (See Ex. 2.) Regarding the
claims, Build Group initiated the California action to seek
declaratory relief and damages (see Ex. 2) and Indian Harbor
commenced this action to compel arbitration. However, the court
in Raytheon determined the first-filed rule applied in similar
circumstances where both actions involved the application of an
arbitration clause, before ultimately determining circumstances
justified departure from the rule. Raytheon Co. v. Nat’l Union
Fire Ins. Co. of Pittsburgh, PA, 306 F. Supp. 2d 346, 353-60
(S.D.N.Y. 2004).
8

16

rendered an award, “except with regard to resort to judicial
intervention to enforce the terms of this Dispute Resolution
clause.”

(Ex.

1

at

20.)

In

contravention

of

the

Dispute

Resolution provision, Build Group initiated a lawsuit again Indian
Harbor in the Northern District of California for its alleged
failure to comply with its contractual obligations under the
Policy.

Under these circumstances, “[i]t would contravene the

policies embodied in the FAA to penalize the party seeking to
compel arbitration in accordance with the terms of an arbitration
agreement.”

Raytheon, 306 F. Supp. 2d at 355.

Finally, the Policy requires that arbitration occur in New
York unless otherwise agreed and provides that the law of the situs
of arbitration governs.

(Ex. 1 at 20.)

These components of the

parties’ agreement also indicate this Court, rather than the
California

court,

should

consider

the

arbitrability

of

the

dispute.
Given “[t]he first-filed rule is a technical rule relating to
the conservation and efficient allocation of judicial resources,”
the Court concludes “[t]here is no basis [ ] to mechanically apply
the rule in direct contravention of the overriding policy favoring
the

speedy

resolution

of

disputes

Raytheon, 306 F. Supp. 2d at 355.

17

regarding

arbitrability.”

C.

Build Group’s Motion to Dismiss
1. Motion to Dismiss Under Rule 12(b)(2)
a. Legal Standard

“A

plaintiff

bears

the

burden

of

demonstrating

personal

jurisdiction over a person or entity against whom it seeks to bring
suit.”

Troma Entm’t, Inc. v. Centennial Pictures Inc., 729 F.3d

215, 217 (2d Cir. 2013).
defeat

a

defendant’s

“[T]he showing a plaintiff must make to
claim

that

the

court

lacks

personal

jurisdiction over it ‘varies depending on the procedural posture
of the litigation.’”

Dorchester Fin. Secs., Inc. v. Banco BRJ,

S.A., 722 F.3d 81, 84 (2d Cir. 2013).

“Prior to discovery, a

plaintiff challenged by a jurisdiction testing motion may defeat
the

motion

by

pleading

in

allegations of jurisdiction.

good

faith,

legally

sufficient

At that preliminary stage, the

plaintiff’s prima facie showing may be established solely by
allegations.”

Id. at 85-86 (quoting Ball v. Metallurgie Hoboken–

Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990).
“In evaluating whether the requisite showing has been made,”
the Court must “construe the pleadings and any supporting materials
in the light most favorable to the plaintiffs.”

Licci ex rel.

Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir.
2013).

“[C]ourts

may

rely

on

.

.

.

materials

outside

the

pleading[s] when ruling on 12(b)(2) motions.” Mount Whitney Invs.,

18

LLLP v. Goldman Morgenstern & Partners Consulting, LLC, No. 15
Civ. 4479 (ER), 2017 WL 1102669, at *3 (S.D.N.Y. Mar. 23, 2017).
Personal jurisdiction is analyzed under a two-step inquiry.
First, the Court must determine whether the exercise of personal
jurisdiction is proper under the laws of the forum state—here, New
York.

Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2d Cir.

2007).

If so, the Court must then determine “whether the exercise

of personal jurisdiction over the defendant comports with the Due
Process Clause of the United States Constitution.”

Sonera Holding

B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224 (2d Cir. 2014).
It is well established that “[p]arties can consent to personal
jurisdiction

through

forum-selection

clauses

in

contractual

agreements.”

D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 103 (2d

Cir. 2006); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462,
472 n.14 (1985) (“because the personal jurisdiction requirement is
a waivable right, there are a variety of legal arrangements by
which a litigant may give express or implied consent to the
personal jurisdiction of the court,” including by “stipulat[ing]
in advance to submit their controversies for resolution within a
particular jurisdiction”) (internal quotation marks and citations
omitted).

“Where an agreement contains a valid and enforceable

forum selection clause, . . . it is not necessary to analyze
jurisdiction

under

New

York’s

long-arm

constitutional requirements of due process.”
19

statute

or

federal

Gordian Grp., LLC v.

Syringa Expl., Inc., 168 F. Supp. 3d 575, 581 (S.D.N.Y. 2016)
(citation omitted).

Instead, “[a]n enforceable forum selection

clause amounts to consent to personal jurisdiction.” Id. (citation
omitted).
To determine whether a forum selection clause is valid and
enforceable, a court considers:
(1) whether the clause was reasonably communicated to the
party resisting enforcement; (2) whether the clause is
mandatory or permissive, i.e., . . . whether the parties are
required to bring any [ ] dispute to the designated forum or
simply permitted to do so; and (3) whether the claims and
parties involved in the suit are subject to the forum
selection clause.
NuMSP, LLC v. St. Etienne, 462 F. Supp. 3d 330, 343 (S.D.N.Y. 2020)
(quoting Martinez v. Bloomberg LP, 740 F.3d 211, 217 (2d Cir.
2014)).

“If the forum clause was communicated to the resisting

party, has mandatory force[,] and covers the claims and parties
involved

in

the

dispute,

it

is

presumptively

enforceable.”

Martinez, 740 F.3d at 217 (quotation omitted).

“A party can

overcome this presumption only by [] ‘making a sufficiently strong
showing that enforcement would be unreasonable or unjust, or that
the clause was invalid for such reasons as fraud or overreaching.’”
Id.

(citation

omitted).

In

evaluating

this

showing,

courts

consider whether:
(1) [the forum selection clause’s] incorporation was the
result of fraud or overreaching; (2) the law to be applied in
the selected forum is fundamentally unfair; (3) enforcement
contravenes a strong public policy of the forum in which suit
20

is brought; or (4) trial in the selected forum will be so
difficult and inconvenient that the plaintiff effectively
will be deprived of his day in court.
Du Quenoy v. Am. Univ. of Beirut, 828 F. App’x 769, 771 (2d. Cir.
2020) (summary order) (quoting Martinez, 740 F.3d at 228).
With respect to agreements to arbitrate, the Court of Appeals
has explained that “[w]hen a party agrees to arbitrate in a state,
where

the

Federal

specifically

Arbitration

enforceable,

that

Act

party

makes

such

must

deemed

be

agreements
to

have

consented to the jurisdiction of the court that could compel the
arbitration proceeding in that state.

To hold otherwise would be

to render the arbitration clause a nullity.”
F.3d at 979.

Doctor’s Assocs., 85

However, a party’s agreement to arbitrate a dispute

in a particular state “does not indicate consent to engage in
regular litigation in that state of the otherwise arbitrable
dispute.

Rather any jurisdictional consent ‘goes no farther than

proceedings

relating

to

enforcement

of

the

arbitration

agreement.’”

Pharma Partners, LTD v. Liposeuticals Inc., No. 19-

CV-5735, 2020 WL 2836771, at *2 (S.D.N.Y. June 1, 2020) (citation
omitted).
b. Analysis
The

Petition

asserts

that

this

Court

has

personal

jurisdiction over Build Group by virtue of the Dispute Resolution
provision in the Policy.

(Pet. ¶ 7.)

In seeking to dismiss the

Petition, Build Group argues that it cannot be deemed to have
21

consented to the jurisdiction of this Court because the Dispute
Resolution provision is unenforceable.

(Opp’n at 6.)

The Court

concludes that it may exercise personal jurisdiction over Build
Group for these proceedings related to the enforcement of the
parties’ arbitration agreement.
As

discussed

supra

Part

II(B),

the

Dispute

Resolution

provision requires the parties to arbitrate all disputes arising
out of the Policy and mandates that “[a]ny arbitration shall take
place in New York unless otherwise agreed.”

(Ex. 1 at 20.)

Build

Group does not appear to deny that the forum selection clause was
“communicated to the resisting party, has mandatory force[,] and
covers the claims and parties involved in the dispute” such that
it is “presumptively enforceable.”
(quotation omitted).

Martinez, 740 F.3d at 217

Instead, Build Group attempts to overcome

this presumption by arguing that this matter should be resolved in
California based on the facts that give rise to the coverage
dispute.

(Opp’n at 7.)

Build Group also claims Build Group lacked

a meaningful choice as to the “restrictions and burdens in the
[Dispute

Resolution]

provision”

and

that

Resolution provision is unconscionable.

the

(Id.)

entire

Dispute

In support of its

unconscionability argument, Build Group asserts the provision is
procedurally unconscionable because the parties did not have equal
bargaining power and Build Group had limited options on the market
and

the

provision

is

substantively
22

unconscionable

because

it

requires travel to New York, eliminates appellate rights, and
mandates that Build Group pay half of three arbitrators’ fees.
(Id. at 14-17.) 9
None of Build Group’s arguments specifically challenge the
Dispute

Resolution’s

delegation

provision,

the

provision

incorporating the AAA rules which in turn empower the arbitrator
to “rule on his or her own jurisdiction, including any objections
with respect to the existence, scope or validity of the arbitration
agreement[.]”

AAA

Comm.

Arb.

Where

R-7(a). 10

an

agreement

delegates questions of enforceability or unconscionability to an
arbitrator, a court may only consider a party’s enforceability or
unconscionability

arguments

delegation provision.

where

they

are

specific

to

the

See Rent-A-Center, West, Inc. v. Jackson,

561 U.S. 63, 71-72 (2010) (determining that unconscionability
challenges to portions of an arbitration agreement other than the
delegation provision constituted challenges to the agreement as a
whole and should be left to the arbitrator); Billboard Media, LLC
v. Wray, No. 23 CIV. 7809, 2024 WL 4299048, at *2 (S.D.N.Y. Sept.
25,

2024)

delegation

(“the

party’s

provision’

to

argument
be

must

be

‘specific

to

the

considered,

and

it

only

be

will

According to Build Group, the Policy as a whole is generally
enforceable; only the Dispute Resolution provision is not. (Opp’n
at 14 n.6.)
10 Build Group baldly asserts that the delegation provision is
“unconscionable and unenforceable” (id. at 1), but offers no
explanation in support of this claim.
9

23

considered

as

applied

to

(citation omitted)).

the

delegation

provision

itself.”

Because the Dispute Resolution clause’s

delegation clause unambiguously incorporates rules that designate
issues of enforceability and unconscionability to the arbitrator,
the Court may not consider Build Group’s arguments that the entire
Dispute Resolution provision is unenforceable or unconscionable.
See UBS Fin. Servs., Inc. v. W. Virginia Univ. Hosps., Inc., 660
F.3d 643, 655 (2d Cir. 2011) (recognizing that “the interpretation
of

forum

selection

clauses

in

arbitration

agreements

raise

presumptively arbitrable procedural questions”). 11
Even

assuming

unenforceability

the

and

Court

were

to

unconscionability

consider

Build

arguments,

the

Group’s
Court

concludes they are insufficient to make out a “sufficiently strong
showing that enforcement would be unreasonable or unjust, or that
the clause was invalid for such reasons as fraud or overreaching.”
Martinez, 740 F.3d at 217.

Build Group agreed to a Policy with an

Build Group’s motion to dismiss under 12(b)(6) is based on the
same
arguments—that
the
Dispute
Resolution
provision
is
unconscionable and unenforceable. (Opp’n at 13.) As explained,
none of Build Group’s assertions concern the Dispute Resolution’s
delegation provision.
Absent a specific challenge to the
delegation provision, the Court may not consider Build Group’s
arguments. See First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 943-47 (1995) (“[A] court must defer to an arbitrator’s
arbitrability decision when the parties submitted that matter to
arbitration” and only where the parties “did not clearly agree to
submit the question of arbitrability to arbitration” was the
dispute “subject to independent review by the courts”).
Build
Group’s motion to dismiss for failure to state a claim is denied.
11

24

unambiguous Dispute Resolution clause which required it to submit
to arbitration in New York, unless otherwise agreed. Build Group’s
contentions that it had limited options on the market, is based in
California, and the facts giving rise to the coverage dispute
occurred in California are together insufficient to overcome the
presumption
arbitration.

in

favor

of

the

forum-selection

clause

mandating

See Du Quenoy, 828 F. App’x at 771.

Furthermore, the Court’s exercise of jurisdiction over Build
Group in the instant action is limited to “proceedings relat[ed]
to enforcement of the arbitration agreement.”
2020 WL 2836771, at *2.

Pharma Partners,

Build Group’s motion to dismiss for lack

of personal jurisdiction is denied. 12
D.

Indian Harbor’s Request for a Stay

The Court of Appeals has determined that “the text, structure,
and underlying policy of the FAA mandate a stay of proceedings
when

all

of

the

claims

in

an

action

have

been

referred

to

arbitration and a stay requested.”

Katz v. Cellco Partnership,

794 F.3d 341, 347 (2d Cir. 2015).

Given the Court’s conclusion

that the Policy mandates Build Group submit to arbitration, see

Build Group makes the conclusory assertion that “venue is
improper” and purports to move to dismiss the Petition under Rule
12(b)(3) but makes no argument in support of this contention.
(Opp’n at 1, 5.) Regardless, “[a] party who agrees to arbitrate
in a particular jurisdiction consents not only to personal
jurisdiction but also to venue of the courts within that
jurisdiction.” Doctor’s Assocs., 85 F.3d at 983. Build Group’s
motion to dismiss for improper venue is denied.
12

25

supra Part II(A), and Indian Harbor’s request for this Court to
temporarily retain jurisdiction over this action (Pet. at 7), the
Court imposes a stay of this litigation in its entirety until a
complete panel of arbitrators is formally constituted. The parties
shall promptly submit a joint letter advising the Court at the
time a complete panel of arbitrators is formally constituted.
However,

because

the

Court’s

exercise

of

personal

jurisdiction over Build Group is limited, see supra Part II(C),
Indian Harbor’s request for this Court to enjoin Build Group from
litigating the parties’ dispute under the Policy in any venue other
than before an arbitration panel sitting in New York is denied.

26

III.

Conclusion
For

the

foregoing

reasons,

Petitioner

Indian

Harbor’s

Petition is GRANTED, and Respondent Build Group’s Countermotion to
Dismiss is DENIED.

Indian Harbor’s request for this Court to

enjoin Build Group from litigating the parties’ dispute under the
Policy in any venue other than before an arbitration panel sitting
in New York is DENIED.

Effective immediately, the Court imposes

a stay of this litigation in its entirety, pending receipt of a
letter from the parties advising the Court that a complete panel
of arbitrators has been formally constituted.
The Clerk of the Court is respectfully directed to close
docket number 3.
SO ORDERED.
Dated:

March 11, 2025
New York, New York

__________________________________
LORETTA A. PRESKA
Senior United States District Judge

27