Sturtz Machinery, Inc. v. Dove's Industries, Inc. et al
Filing
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Memorandum Opinion and Order: Defendant's motion to compel arbitration and to stay all further proceedings in this action pending completion of the arbitration is granted. (Doc. No. 5 .) The case as it relates to Dove's Industries, Inc. is stayed until further order of the Court. The case as it relates to M&T Bank shall proceed. The parties are directed to advise the Court immediately upon completion of the arbitration. Judge Sara Lioi on 10/1/2013. (P,J)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
STURTZ MACHINERY, INC., etc.,
PLAINTIFF,
vs.
DOVE’S INDUSTRIES, INC., etc.,
DEFENDANTS.
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CASE NO. 5:13CV404
JUDGE SARA LIOI
MEMORANDUM OPINION
AND ORDER
Before the Court is the motion of defendant Dove’s Industries, Inc. to compel
arbitration and to stay the proceedings. (Doc. No. 5.) For the reasons set forth herein, the motion
is GRANTED.
I. BACKGROUND
This action was filed in Summit County Court of Common Pleas on January 10,
2013 by plaintiff Sturtz Machinery, Inc. (Sturtz) against defendants Dove’s Industries, Inc.
(Dove), M&T Bank (M&T), and Quaker City Auctioneers, Inc. (Auctioneers). It was removed
by M&T on February 25, 2013. M&T filed an answer, which it later amended, and a
counterclaim. The parties stipulated to the dismissal with prejudice of all claims against
Auctioneers. Dove filed the instant motion.
Plaintiff alleges that it entered into a contract with Dove under which Dove would
purchase from Sturtz a number of machines for the manufacture of vinyl windows. Sturtz alleges
that, as of the date of the complaint, Dove owed over half a million dollars, plus interest, on its
account, which plaintiff seeks to recover by way of this lawsuit. Plaintiff further alleges that,
notwithstanding its perfected security interest in the machines it sold to Dove, in November
2012, Dove’s lender, M&T, directed Auctioneers to sell the subject machines to a third party
without Sturtz’s consent. M&T has failed and refused to turn over the proceeds of the sale to
plaintiff to the extent of its security interest, despite demand, and has converted the proceeds to
M&T’s own use.
II. DISCUSSION
The contract between Sturtz and Dove is attached to the complaint and provides,
in relevant part:
Any dispute, controversy or claim arising out of or in connection with this
Agreement, or the breach, termination, or invalidity thereof, shall be submitted,
decided and resolved with finality by arbitration in accordance with the
Commercial Arbitration Rules, including the Supplementary Procedures for
International Commercial Arbitration, of the American Arbitration Association, as
amended and in effect, at the time of such dispute, controversy or claim. The
arbitration shall be conducted by three (3) arbitrators, one to be appointed by
Purchaser [Dove], one to be appointed by Sturtz and a third, neutral arbitrator
being nominated by the two arbitrators so selected, or if they cannot agree on
[the] third arbitrator, by the American Arbitration Association in accordance with
its rules.
(Doc. No. 1 at 34.)
The instant motion seeks an order from this Court compelling arbitration between
Sturtz and Dove and staying the proceedings as to M&T. Both parties admit that there is a strong
federal policy favoring arbitration. Alticor, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA,
411 F.3d 669, 672 (6th Cir. 2005) (citing Federal Arbitration Act, 9 U.S.C. § 1, et seq.) (“‘[A]ny
doubts concerning the scope of arbitrable issue should be resolved in favor of arbitration,
whether the problem at hand is the construction of the contract language itself or an allegation of
waiver, delay, or a like defense to arbitrability.’” Id. at 672-73 (quoting Moses H. Cone Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983))).
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Plaintiff, however, opposes the motion on the ground that Dove has never
disputed the amount of money it owes plaintiff, but merely asserts an inability to pay. Plaintiff
claims there is no dispute to arbitrate and points to case law from other circuits requiring a
dispute as a prerequisite to an order to compel arbitration. See e.g., Adkins v. Labor Ready, Inc.,
303 F.3d 496 (4th Cir. 2002) (“In the Fourth Circuit, a litigant can compel arbitration under the
FAA if he can demonstrate ‘(1) the existence of a dispute between the parties, (2) a written
agreement that includes an arbitration provision which purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by the agreement, to interstate or foreign
commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.’” Id. at
500-01 (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir.1991)).
Plaintiff has not pointed out any Sixth Circuit case with a similar holding and the
Court’s own research has found none. In the Sixth Circuit,
“[w]hen asked by a party to compel arbitration under a contract, a federal court
must determine whether the parties have agreed to arbitrate the dispute at issue.”
Stout [v. J.D. Byrider], 228 F.3d at 714. If the district court is satisfied that the
agreement to arbitrate is not “in issue,” it must compel arbitration. If the validity
of the agreement to arbitrate is “in issue,” the court must proceed to a trial to
resolve the question. 9 U.S.C. § 4. In order to show that the validity of the
agreement is “in issue,” the party opposing arbitration must show a genuine issue
of material fact as to the validity of the agreement to arbitrate.
Great Earth Companies., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). There is no dispute
as to the validity of the arbitration agreement here.
Therefore, the Court simply turns to the language of the agreement, which
provides, in relevant part, for the arbitration of “[a]ny dispute, controversy or claim arising out of
or in connection with this Agreement[.]” Here, plaintiff has a “claim” for payment that “arise[s]
out of” the agreement. This falls within the terms of the arbitration provision.
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III. CONCLUSION
For the reasons discussed herein, defendant’s motion to compel arbitration and to
stay all further proceedings in this action pending completion of the arbitration is GRANTED.
The case as it relates to Dove’s Industries, Inc. is STAYED until further order of the Court. The
case as it relates to M&T Bank shall proceed.
The parties are directed to advise the Court immediately upon completion of the
arbitration.
IT IS SO ORDERED.
Dated: October 1, 2013
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE
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