DCK NORTH AMERICA, LLC v. BURNS AND ROE SERVICES CORPORATION
Filing
25
OPINION. Signed by Judge Mark R. Hornak on 10/31/16. (bdb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
DCK NORTH AMERICA, LLC,
Plaintiff,
)
)
)
)
)
)
)
v.
BURNS AND ROE SERVICES CORP.,
Defendant.
Civil Action No. 2:16-cv-00994
Judge Mark R. Hornak
OPINION
Mark R. Hornak, United States District Judge
This is an arbitration dispute in which the parties are currently litigating the question of
where they should be litigating-in court or in arbitration. The parties agreed in writing to
arbitrate certain disputes. DCK now takes the position that the parties' arbitration provision does
not apply to the claims in this case. For the following reasons, Burns and Roe's Motion to
Dismiss or Stay Pending Arbitration or Mediation (ECF No. 5) will be granted, this case will be
stayed pending arbitration, and the parties will be ordered to arbitration in the manner they have
agreed.
I.
BACKGROUND
Plaintiff DCK North America, LLC ("DCK") filed this action alleging, among other
things, that Defendant Burns and Roe Services Corporation ("Burns and Roe") breached its
contractual obligation to compensate DCK for over eight million dollars ($8,000,000) of unpaid
costs incurred during joint construction projects in Guantanamo Bay, Cuba. ECF No. 1-2. Burns
and Roe timely removed the case to this Court from the Court of Common Pleas of Allegheny
County, Pennsylvania on the basis of diversity jurisdiction. ECF No. 1. Before the Court is Burns
and Roe's Motion to Dismiss or Stay Pending Arbitration or Mediation. ECF No. 5. The parties
fully briefed the issues and the Court heard oral argument on September 6, 2016. ECF Nos. 5, 6,
12, 13, 14, 20, 21, 22, 23.
The basic facts are undisputed. Eight years ago, DCK and Bums and Roe entered into a
Joint Venture Agreement ("Agreement") to bid on construction project contracts for the United
States Navy at Guantanamo Bay, Cuba, and to perform such contracts should they be awarded
the bids. 1 ECF No. 1-2 at 4, 25. The Agreement essentially provides that DCK and Bums and
Roe would front capital for the construction projects in equal amounts, with each holding a fifty
percent interest, and likewise split any losses, costs, and liabilities down the middle. Id. If, for
example, one joint venturer contributed capital or incurred losses in excess of fifty percent, the
other joint venturer would then contribute additional capital to maintain the equal division of
interests. Id.
DCK now alleges Bums and Roe shorted it over eight million dollars. Id. The shortfall,
according to DCK, is based upon the parties' respective monetary contributions for labor,
manpower, and equipment. Id. DCK filed suit, and Bums and Roe subsequently filed its Motion
to Compel Arbitration (ECF No. 5).
The parties' Agreement contains the following arbitration provision:
Any controversy or claim arising out of or relating to this Agreement or the
breach thereof which cannot be resolved in accordance with the foregoing
processes while in the course of performance of the Contract(s) shall be settled by
arbitration in accordance with the Construction Industry Arbitration Rules of the
American Arbitration Association and any award tendered shall be final and
binding upon the parties hereto, and judgment on the award rendered by the
Arbitrator or Arbitrators may be entered in any Court having jurisdiction thereof.
Any controversy or claim arising after the completion of the Construction
Contract has been performed shall be resolved in a court of law.
1 DCK Worldwide, LLC originally entered the Agreement before assigning it to the Plaintiff in this suit, DCK. ECF
No. 1-2 at 25-26. Neither party disputes the validity of the assignment.
2
ECF No. 1-2 at 23-24. Neither party disputes the validity or the binding nature, generally
speaking, of the arbitration provision.
The plain language of the Agreement appears to draw a line between disputes referable to
arbitration and disputes that should be settled in court: Those disputes arising during
performance of the Contract(s) shall be settled by arbitration and those arising after completion
of performance of the Construction Contract shall be settled in court. But at oral argument on
Burns and Roe's motion, it became quite clear that the parties have logical and reasonable
positions in support of their differing views as to whether performance on the Contract(s) or the
Construction Contract is complete. The parties agree that physical construction of the projectsthe labor-is complete. The parties also agree, though, that they have not submitted a certificate
of completion to the Navy, nor has the Navy approved all of their construction work. Thus, it
would appear that the arbitrability of the parties' dispute thus turns on a mixed question of fact
and contractual interpretation: whether performance of the Contract(s) and/or the Construction
Contract was 'complete' when this dispute arose.
Upon closer scrutiny of the parties' Agreement, the line of demarcation as to contract
completion is anything but sharp. The Agreement defines the term "Contract(s)" to include
several of the Navy contracts the parties bid on as part of their joint venture. ECF No. 1-2 at 10.
It does not, however, provide a definition for what the parties refer to as "the Construction
Contract." Nor does it make clear what goalpost the parties contemplated for completion of
performance on the Construction Contract such that arbitration would no longer be appropriate.
The parties might, for example, have contemplated Contract completion as having occurred once
the physical labor had been performed. They might have contemplated completion when the
Navy approved the final buildouts. They might have contemplated completion when all
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outstanding payments had been received. Or the parties might not have contemplated this
question at all, at least in terms of providing any definitional language in the Contract
documents.
At the Court's request, the parties submitted supplemental briefing addressing who must
decide the question of when "after completion of the Construction Contract has been performed"
occurs. ECF Nos. 22, 23. The parties also addressed whether a reference in the parties'
arbitration provision to the Construction Industry Arbitration Rules of the American Arbitration
Association (hereinafter "AAA Rules" or "Rules") incorporates those Rules into the provision,
and, if so, whether such incorporation requires that the dispute be arbitrated in and of itself. Id.
DCK contends this Court must decide the question presented here and argues (seemingly as a
matter of law) that the parties' dispute is not arbitrable under the Agreement. ECF No. 23. Burns
and Roe contends an arbitrator must determine the issue of Contract completion and, beyond
that, the dispute in any event falls within the arbitration provision. ECF No. 22.
II.
LEGALSTANDARD
The United States Court of Appeals for the Third Circuit recently clarified the standards
to be applied to motions to compel arbitration, identifying the circumstances under which district
courts should apply the standard for a motion to dismiss, as provided by Rule 12(b)(6) of the
Federal Rules of Civil Procedure, and those under which they should apply the summary
judgment standard found in Rule 56. See Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716
F.3d 764, 773-76 (3d Cir. 2013). With respect to the Rule 12(b)(6) standard, the court held:
Where the affirmative defense of arbitrability of claims is apparent on the face of
a complaint (or documents relied upon in the complaint), the FAA would favor
resolving a motion to compel arbitration under a motion to dismiss standard
without the inherent delay of discovery. That approach appropriately fosters the
[Federal Arbitration Act]'s interest in speedy dispute resolution. In those
circumstances, the question to be answered becomes whether the assertions of the
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complaint, given the required broad sweep, would permit adduction of proofs that
would provide a recognized legal basis for rejecting the affirmative defense.
Id. at 773-74 (internal citations and quotations omitted). With respect to the Rule 56 standard, the
court held:
[A] Rule l 2(b)( 6) standard is inappropriate when either the motion to compel
arbitration does not have as its predicate a complaint with the requisite clarity to
establish on its face that the parties agreed to arbitrate, or the opposing party has
come forth with reliable evidence that is more than a naked assertion that it did
not intend to be bound by the arbitration agreement, even though on the face of
the pleadings it appears that it did. Under the first scenario, arbitrability not being
apparent on the face of the complaint, the motion to compel arbitration must be
denied pending further development of the factual record. The second scenario
will come into play when the complaint and incorporated documents facially
establish arbitrability but the non-movant has come forward with enough evidence
in response to the motion to compel arbitration to place the question in issue. At
that point, the Rule 12(b)(6) standard is no longer appropriate, and the issue
should be judged under the Rule 56 standard. Under either of those scenarios, a
restricted inquiry into factual issues will be necessary to properly evaluate
whether there was a meeting of the minds on the agreement to arbitrate, and the
non-movant must be given the opportunity to conduct limited discovery on the
narrow issue concerning the validity of the arbitration agreement. In such
circumstances, Rule 56 furnishes the correct standard for ensuring that arbitration
is awarded only if there is an express, unequivocal agreement to that effect.
Id. at 774-75 (internal citations and quotations omitted).
The Guidotti court went on to explain that where the complaint and attached documents
"establish on their face that [a plaintiff] agreed to be bound by the terms of ... [a] provision for
arbitration," that would "trigger[] a Rule 12(b)(6) standard." Id. at 776.
Here, DCK attached a copy of the parties' Agreement to its Complaint, and it critically
relied upon that Agreement-which contains the arbitration provision-to state its claim. ECF
No. 1-2 at 4-5, 23-24. Neither party-in pleadings, motions, responses, replies, supplemental
briefings, or at oral argument-has disputed the validity or enforceability, generally speaking, of
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the Agreement's arbitration provision. The Court therefore concludes that under Guidotti, a
motion to dismiss standard is appropriate. 2
Under the familiar Rule 12(b)(6) standard, Plaintiffs Complaint must allege facts
"sufficient to show that the plaintiff has a 'plausible claim for relief.' " Fowler v. UP MC
Shadyside, 578 F.3d 203, 211 (3d Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009)). Courts must accept all "well-pleaded facts as true" and disregard any legal conclusions.
Fowler, 578 F.3d at 210-11 (citing Iqbal, 556 U.S. at 677).
III.
ANALYSIS
The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., governs written agreements to
arbitrate in contracts involving interstate commerce. 3 9 U.S.C. §§ 1 et seq.; see also Prima Paint
Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 400-01 (1967). The FAA gave rise to a
framework of federal substantive law governing courts' duty to honor agreements to arbitrate.
Century Indemnity Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 522 (3d Cir.
2009). Once a court determines a valid arbitration agreement exists, as is the case here, questions
involving "[w]hether a suit or proceeding is referable to arbitration under an agreement to
arbitrate ... [and the] interpretation and construction of such arbitration agreements are ...
determined by reference to federal law." Becker Autoradio, 585 F.2d at 43 (internal citations and
In addition or in the alternative, for the reasons set forth in this Opinion, the Court finds it unnecessary to proceed
with discovery on any underlying factual questions. In light of the inextricably intertwined issues in this contract
interpretation dispute-which, as noted below, federal law dictates must be resolved in favor of arbitrationaddressing such factual questions here would not aid in the resolution of Bums and Roe's Motion.
2
3 The Court applies the FAA based on the fact that the parties' Agreement involves funding from business in diverse
states for construction contracts to be completed in Cuba. Neither party disputes the FAA's applicability, nor do the
parties urge the Court to apply the law of any particular state. See Harris v. Green Tree Financial Corp., 183 F.3d
173, 178 (3d Cir. 1999) (applying the FAA because the parties do not dispute the contracts at issue involve
commerce); Becker Autoradio U.S.A., Inc. v. Becker Autoradiowek GmbH, 585 F.2d 39, 43, n.9 (3d Cir. 1978)
(applying federal law where the parties do not dispute the FAA's applicability).
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quotations omitted). 4 And once a court is satisfied that the parties' dispute is arbitrable, it must
stay a pending lawsuit on application of one of the parties until such arbitration is concluded and
order the parties to proceed to arbitration consistent with their agreement. See 9 U.S.C. §§ 3-4;
Puleo v. Chase Bank USA, NA., 605 F .3d 172, 181-82 (3d Cir. 201 O); Lloyd v. Hovensa, L.L. C.,
369 F.3d 263, 269 (3d Cir. 2004).
Under the FAA framework, "arbitration is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed so to submit." Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002). When a party makes a motion to compel
arbitration, a court must therefore resolve two issues: (1) whether the parties are bound by a
given arbitration clause, and (2) whether an arbitration clause in a concededly binding contract
applies to the parties' dispute. See, BG Group P.L.C. v. Republic of Argentina, 134 S . Ct. 1198,
1206-07 (2014); Granite Rock Co. v. International Borth. Of Teamsters, 561 U.S. 287, 296
(2010); Howsam, 537 U.S. at 83; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 626 (1985); Medtronic AVE, Inc. v. Advanced Cardiovascular Systems, Inc., 247 F.3d
44, 54-55 (3d Cir. 2001). In other words, where, as here, the parties "disagree whether a
particular dispute is arbitrable," a court must assist them by "determining whether the parties
have submitted a particular dispute to arbitration." Opalinski v. Robert Half Intern., Inc., 761
F.3d 326, 331 (3d Cir. 2014) (citing Howsam, 537 U.S. at 83).
The parties' Agreement is, on its face, silent about who should decide questions of
arbitrability. ECF No. 1-2 at 23-24. The question whether the parties have submitted a particular
dispute to arbitration is presumptively for judicial determination unless the parties agreed to
See also Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25, n.32 (1983) (finding federal law
governs agreements to arbitrate that fall within the FAA's scope even where a federal court is sitting in diversity);
Century Indemnity Co., 584 F.3d at 524 (finding federal law governs agreements to arbitrate once a court determines
there exists a valid agreement to arbitrate).
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arbitrate it. Gay v. Creditlnform, 511 F.3d 369, 387 (3d Cir. 2007) (citing Howsam, 537 U.S. at
83-84). The presumption in favor judicial determination is quite strong: the parties must have
"clearly and unmistakably provide[d] otherwise" in order to overcome it. Id. Silence or
ambiguity on the question of who should decide arbitrability is typically construed in favor of
judicial determination. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-46 (1995).
Because not all questions are for judicial resolution, however, a court also looks to certain
presumptions regarding who decides arbitrability when the parties' agreement is silent. BG
Group, 134 S. Ct. at 1206-07. Courts presume the parties intended courts, not arbitrators, to
decide questions such as whether the parties are bound by a given arbitration clause and whether
an arbitration clause in a concededly binding contract applies to the parties' dispute. Id.; see also
Granite Rock, 561 U.S. at 296; Howsam, 537 U.S. at 83; Mitsubishi Motors, 473 U.S. at 626;
Opalinski, 761 F.3d at 331; Medtronic, 247 F.3d at 54-55. On the other hand, courts presume the
parties intended an arbitrator to decide the meaning and application of procedural preconditions
to arbitration. BG Group, 134 S. Ct. at 1206-07. Procedural preconditions to arbitration include
issues such as waiver, delay, notice, laches, estoppel, and prerequisites such as time limits. Id. at
1207.
In support of its motion to compel, Bums and Roe asserts that an arbitrator should decide
the question of arbitrability for two reasons. ECF No. 22 at 2. First, Bums and Roe argues the
underlying factual question-whether the parties' dispute arose during contract performanceamounts to a procedural precondition to arbitration. ECF No. 22 at 4-5. Bums and Roe asserts
the question here is of the time-limit variety, and thus, under BG Group, the arbitrator should
resolve it. ECF No. 22 at 4-5. The cases dealing with time limit preconditions to arbitration,
however, are distinguishable. In BG Group, for example, the provision at issue was a time
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limitation on the parties' ability to request arbitration: it stated that a dispute "shall be submitted
to international arbitration" on request of a party as long as "a period of eighteen months ha[ d]
elapsed" since the dispute was submitted to a local tribunal. 134 S. Ct. at 1207. The Supreme
Court held such a provision was "purely procedural" because it "governs when the arbitration
may begin, but not whether it may occur." Id. (emphasis added). The Court went on to analogize
the provision in BG Group to procedural issues such as whether a party filed a notice of
arbitration within the time limit provided by the arbitrator's rules. Id. at 1207-08. Such
provisions, the Court concluded, would normally be interpreted by an arbitrator. Id. at 1208.
Likewise, in Howsam, the Supreme Court considered another time-limit provision which
dealt with when, but not whether, arbitration may occur. The provision stated that no dispute
"shall be eligible for submission to arbitration . . . where six (6) years have elapsed from the
occurrence or event giving rise to the ... dispute." 537 U.S. at 82. The Supreme Court concluded
the time limit provision raised a procedural issue which was presumptively for the arbitrator to
decide. Id. at 85. It reasoned that the rule operated similar to issues of waiver or delay. Id. The
time limit provision, moreover, was one put in place by the arbitrator-not by the parties to the
agreement-and so, the Court found, the arbitrator was the better presumptive adjudicator. Id. at
85-86.
Here, the question underling the parties' dispute-whether DCK's claim arose during
performance of the contracts or after performance-is not an issue governing when arbitration
may begin, as in BG Group, nor is it an arbitrator's rule or mechanism for raising a procedural
question, as in Howsam. The question is also not one of waiver or delay, questions typically
decided by the arbitrator. 5 DCK's claim is, the Court finds, more akin to those questions of
arbitrability that courts presumptively decide, such as whether the parties are bound by a given
5
Bums and Roe does not contend, for example, that DCK brought its claim too late.
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arbitration clause or whether an arbitration clause covers the parties' dispute. See, e.g., BG
Group, 134 S. Ct. at 1206-07; Granite Rock, 561 U.S. at 296; Howsam, 537 U.S. at 83;
Opalinski, 761 F.3d at 331; Medtronic, 247 F.3d at 54-55.
Burns and Roe next contends an arbitrator should decide the question of arbitrability
because the parties' made reference in their arbitration provision to the AAA Rules. Under the
parties' arbitration provision, disputes which arise during performance of the contracts shall be
settled by arbitration in accordance with the Rules, while those that arise after performance shall
be settled in a court oflaw. ECF No. 1-2 at 23.
The Third Circuit has not explicitly decided the issue whether incorporation of the AAA
Rules is sufficient to establish a clear and unmistakable intent of parties in a bilateral dispute to
delegate to the arbitrator the question of arbitrability. Virtually every other circuit to have
considered that issue, however, has concluded that incorporation of the Rules is sufficient to
establish clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. See
Chesapeake Appalachia, L.L.C. v. Scout Petroleum, L.L.C., 809 F.3d 746, 763-64 (3d Cir. 2016);
see also Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1074 (9th Cir. 2013); Petrofac,
Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012); Fallo v.
High-Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d
1366, 1373 (Fed. Cir. 2006); Terminix Int'/ Co. v. Palmer Ranch LP, 432 F.3d 1327, 1332 (I Ith
Cir. 2005); Contee Corp.· v. Remote Solution Co., 398 F.3d 205, 208 (2d Cir. 2005). And
although relatively few district courts in this Circuit have addressed the question, those that have
addressed it seem to follow the same reasoning. See Insurance Newsnet. com, Inc. v. Pardine, No.
11-cv-286, 2011 WL 3423081, *3 (M.D. Pa. August 4, 2011) ("The prevailing rule across
jurisdictions is that incorporation by reference of rules granting the arbitrator the authority to
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decide questions of arbitrability-especially the [RJules-is clear and unmistakable evidence
that the parties agreed to submit arbitrability questions to the arbitrators."); Way Services, Inc. v.
Adecco North America, L.L.C., No. 06-cv-2109, 2007 WL 1775393, *4 (E.D. Pa. June 18, 2007)
(noting the same). Burns and Roe urges this Court to follow suit. ECF No. 22 at 7.
Here, however-even assuming the parties successfully incorporated the AAA Rules into
their arbitration provision6-the generally-accepted rule outlined above would not be dispositive.
First, the parties' arbitration provision is distinguishable from those in Insurance Newsnet.com,
Way Services, and those cases from other circuits where reference to Rules evidenced a clear and
unmistakable intent to arbitrate the question of arbitrability. In each of those cases, the parties'
arbitration provision was sweeping, referring all disputes-with few or no exceptions-to
arbitration. In this case, a fair reading of the parties' contract makes it clear the parties only
agreed to arbitrate under the Rules for disputes that arise during the course of performance of the
contracts. ECF No. 1-2 at 23-24. The provision goes on to state that any disputes "arising after
completion of the Construction Contract has been performed shall be resolved in a court of law."
Id. Thus, even if incorporation of the Rules were successful, we would, at most, be back to our
original question: what goalpost did the parties contemplate for completion of performance such
that arbitration is appropriate?
In addition and in the alternative, even if incorporation of the AAA Rules were sufficient
to subject all the parties' disputes to those Rules, the Court would then have to intuit, absent any
clear contractual provision, whether the parties intended to incorporate the version of the Rules
in circulation at the time of the Agreement or at some other time-such as at the time of the
dispute or of a court's ruling on the issue. The Court notes that what appears to be the current
The Court assumes for the purposes of argument-but does not decide-that the parties' reference to the AAA
Rules was sufficient to incorporate those Rules into the agreement under any applicable state law.
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version of the AAA Rules provides "[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." AAA Rule R-9, available at http://www.adr.org. But the parties have
provided no guidance on past versions of the Rules or their dates of adoption.
Because the parties' reference to the AAA Rules in their arbitration provision does not
necessarily bring those Rules into play in this dispute, and because it is further ambiguous which
version of the Rules the parties intended to reference and what those particular Rules reveal, the
parties cannot be said to have clearly and unmistakably provided for an arbitrator, rather than a
court, to decide the question of arbitrability. The Court must therefore decide the question. See
First Options, 514 U.S. at 944-47; Gay, 511 F.3d at 387.
When interpreting and applying contractual arbitration provisions, federal substantive law
reflects a strong presumption in favor of arbitration. Medtronic, 247 F.3d at 55. Federal courts
liberally construe arbitration clauses-so much so that "any doubts as to whether an arbitration
clause may be interpreted to cover the asserted dispute should be resolved in favor of
arbitration." Becker Autoradio, 585 F.2d at 44; see also AT&T Tech., Inc. v. Comm. Workers of
Am., 475 U.S. 643, 650 (1986); Medtronic, 247 F.3d at 55. Although the plain language of a
contract always controls, any ambiguities regarding the scope of arbitrable issues should be
resolved in favor of arbitration. See, e.g., CardioNet v. Cigna Health Corp., 751 F .3d 165, 17273 (3d Cir. 2014); see also Granite Rock 561 U.S. at 298. In other words, the strong presumption
in favor of arbitration applies "unless a court can state with positive assurance that [the] dispute
was not meant to be arbitrated." Becker Autoradio, 585 F.2d at 44 (internal quotations omitted).
The Supreme Court has held, therefore, that a motion to compel arbitration under a valid
arbitration clause "should not be denied unless it may be said with positive assurance that the
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arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT&T
Tech., 475 U.S. at 650.
In determining when the presumption in favor of arbitration applies, the Third Circuit has
added an additional layer of analysis. Where "the arbitration provision is narrowly crafted, we
cannot presume, as we might if it were drafted broadly, that the parties [] agreed to submit all
disputes to arbitration." Local 827, Intern. Broth. Of Elec. Workers, AFL-CIO v. Verizon New
Jersey, Inc., 458 F .3d 305, 310 (3d Cir. 2006). In those cases, the strong presumption in favor of
arbitrability does not apply. Trap Rock Industries, Inc. v. Local 825, Intern. Union of Operating
Engineers, AFL-CIO, 982 F.2d 884, 888, n.5 (3d Cir. 1992). Narrow arbitration provisions are
those that, for example, "expressly limit the range of arbitrable disputes to a single category or
function, such as limiting the arbitrator's power to modifying a penalty where only disciplinary
layoffs or discharges which violate the terms of [an agreement] are involved." Id. Broad
arbitration provisions, on the other hand, are those which apply to "any dispute" arising out of an
agreement. Id. Where the provision is broad, the presumption of arbitrability applies, and "only
the most forceful evidence of a purpose to exclude a particular grievance from arbitration can
prevail." Id. (citing AT&T Tech., 475 U.S. at 650).
Here, the parties' arbitration clause is broad rather than narrow. It provides that "[a]ny
controversy or claim arising out of or relating to this Agreement or the breach thereof which
cannot be resolved in accordance with the foregoing processes while in the course of
performance of the Contract(s) shall be settled by arbitration." ECF No. 1-2 at 23; E.M
Diagnostic Systems, Inc. v. Local 169, 812 F.2d 91, 92, 95 (3d Cir. 1987) (finding that an
arbitration clause containing "[a]ny dispute arising out of a claimed violation of' the agreement
was broad and entitled to the strong presumption of arbitrability); Luken Steel Co. v. US.
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Steelworkers ofAmerica, 989 F.2d 668, 673 (1993) (finding that an arbitration clause containing
"[s]hould any differences arise" was broad and entitled to the strong presumption of
arbitrability). Although the parties' arbitration clause in this case limits arbitrable disputes to
those that arise during performance, ECF No. 1-2 at 23-24, such limitation does not narrow the
scope of the arbitration clause so much that the arbitrator's role is relegated to resolving a single
discrete category or type of dispute. Cf Trap Rock, 982 F.2d at 888, n.5. In light of the
sophisticated nature of the parties in this case and the considerable ambiguity in the arbitration
limitation itself (due to the parties' failure to demarcate with any certainty their goalpost for the
end of performance), the Court is not persuaded that the clause is sufficiently narrow to avoid the
strong presumption in favor of arbitration.
Because the parties' arbitration provision is facially unclear regarding what goalpost the
parties' contemplated for completion of performance-whether it be once the physical labor had
been performed, once the Navy approved the final buildouts, once all outstanding payments have
been received, or some other benchmark-the provision is ambiguous. The court need not "strain
to find[] ambiguity," Regents of Mercersburg Coll. v. Republic Franklin Ins. Co., 458 F.3d 159,
172 (3d Cir. 2006), because the ambiguity present here is considerably more boisterous than a
"flicker of interpretive doubt." Cf Paine Webber, Inc. v. Hartmann, 921 F.2d 507, 513 (3d Cir.
1990). The presumption of arbitrability, therefore, applies.
Applying the presumption, the parties' arbitration prov1s1on meets the standard for
referral to arbitration: it is, without question, "susceptible of an interpretation that covers the
asserted dispute." AT&T Tech., 475 U.S. at 650. At oral argument, the parties conceded they
have not submitted a certificate of completion to the Navy for their contracts, nor has the Navy
approved all of the parties' construction work. Resolving all "doubts as to whether an arbitration
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clause may be interpreted to cover the asserted dispute ... in favor of arbitration," the Court
cannot, in light of the Agreement's ambiguity regarding the completion of contract performance,
"state with positive assurance that [the] dispute was not meant to be arbitrated." Becker
Autoradio, 585 F.2d at 44 (internal quotations omitted); see also AT&T Tech., 475 U.S. at 650.
IV.
CONCLUSION
For the reasons set forth above, Bums and Roe's Motion to Dismiss or Stay Pending
Arbitration or Mediation (ECF No. 5) will be granted. This case will be stayed and
administratively closed pending arbitration, and the parties will be ordered to proceed forthwith
to arbitration in the manner they have agreed. The stay may be lifted by this Court on its own
Motion or for good cause shown. An appropriate Order will issue.
Isl Mark R. Hornak- - - Mark R. Hornak
United States District Judge
Dated: October 31, 2016
cc:
All counsel of record
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