Amerigas U.S., LLC v. Standard Capital SA, Inc.
| Decision Date | 01 November 2021 |
| Docket Number | Civil Action 3:21-CV-0072-B |
| Parties | AMERIGAS USA, LLC, Plaintiff, v. STANDARD CAPITAL SA, INC., and DAVID STEPHAN INEZEDY Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court are Defendant Standard Capital SA, Inc. (“Standard”)'s Motion to Compel Arbitration or to Dismiss for Lack of Subject Matter Jurisdiction (Doc 21) and Defendant David Stephan Inezedy's Motion to Dismiss Case as Frivolous (Doc. 22). For the reasons that follow, the Court GRANTS Standard's Motion to Compel Arbitration, DENIES AS MOOT Standard's Motion to Dismiss, and DENIES AS MOOT Inezedy's Motion to Dismiss.
This is a case about fraud and breach of contract. In November 2019 Plaintiff Amerigas USA, LLC (“Amerigas”), wishing to engage in “spot-buying natural gas, ultra-low Sulphur diesel and other fuels in the European and U.S markets, ” initiated a “search for a lender able to provide a Stand By Letter of Credit (“SBLC”)” to facilitate the purchases. Doc. 1, Pl.'s Compl., 3. Learning of Amerigas's interest, Standard reached out to Amerigas, representing “that [it] had the expertise and experience to obtain and provide [the] SBLC” Amerigas needed. Id.
To establish the relationship, on January 9, 2020, Standard prepared a Letter of Understanding-Use of a Banking Instrument (“LOU”) and sent it to Amerigas for execution. Id. The LOU indicated that Standard and Amerigas had agreed to work with one another to execute the SBLC and required Amerigas to make a $632, 470 escrow payment to Standard. Doc. 23-2, LOU, ¶ 5. The LOU was signed by both parties on January 10, 2020, and Amerigas made the escrow payment on January 14, 2020. Id. at 5; Doc. 1, Pl.'s Compl., 4. The LOU did not contain an arbitration clause. See Doc. 23-2, LOU.
Standard and Amerigas then negotiated a Private Agreement for the Use of a Bank Instrument (“PA”) outlining the details of the SBLC transaction. Doc. 1, Pl.'s Compl., 4. The PA included the following arbitration clause:
This Agreement contains the entire agreement and understanding concerning the subject matter hereof and supersedes and replaces all prior negotiations and proposed agreements, written or oral .... This Agreement shall be interpreted, construed, and governed by the laws of England and Wales .... In the event of failure to an amicable settlement, the Parties agree to submit any irreconcilable controversy or claim arising out of or in reference to this Agreement, or breach thereof, which is not able to be settled between the Parties themselves, shall be settled by arbitration in accordance to the laws of England and Wales with hearing to take place in London at a mutually agreed upon time and location.
Doc. 21-1, PA, ¶ 5.17. Amerigas signed the finalized PA on January 30, 2020, and delivered it to Standard. Doc. 1, Pl.'s Compl., 5. The next day, Standard signed the PA on January 31, 2020, but did not notify Amerigas of its signature. Id.; Doc. 21-1, PA, 10.
Quickly, the relationship soured. While Standard had assured Amerigas that Standard would issue the SBLC upon the PA's execution and “that Amerigas would receive the SWIFT confirmation of the SBLC from the Royal Bank of Scotland into Hillcrest Bank by January 24, 2020, ” the SBLC never arrived. Doc. 1, Pl.'s Compl., 4-5. As days passed, Amerigas grew increasingly anxious about the transaction, yet Standard repeatedly assured Amerigas that the SBLC would soon be delivered. Id. at 5-6. A week later, Amerigas “demanded [Standard] return the escrowed money, ” because the SBLC had still not been delivered, but “[Standard] refused.” Id. at 5. Amerigas further requested return of the escrowed funds and expressed its intention to repudiate the PA on February 7, 2020; May 22, 2020; and May 28, 2020. Id. at 5, 7. The escrowed funds were never returned, nor was the SBLC ever delivered. Id. at 8.
Amerigas filed suit against Standard on January 12, 2021, alleging fraud and breach of contract. Id. On June 23, 2021, Standard filed a motion to compel arbitration under the Federal Arbitration Act, 9 U.S.C. §§ 3-4, because the PA contained an arbitration clause. Doc. 21, Def.'s Mot. Standard also filed, alternatively, a motion to dismiss for lack of subject matter jurisdiction. Id. In response to Standard's motion to compel arbitration, Amerigas alleges that the two parties never entered into the PA because Standard did not sign or deliver the fully executed PA to Amerigas, and, thus, the arbitration clause is unenforceable. Doc. 23, Pl.'s Resp., ¶¶ 27-28. Amerigas also opposes dismissal of claims against Standard and Inezedy. Id. at 1. The Court considers each motion below.
A. Motion to Compel Arbitration Standard
In enacting the Federal Arbitration Act (FAA), “Congress . . . expressed a strong policy favoring arbitration before litigation.” J.S. & H. Constr. Co. v. Richmond Cnty. Hosp. Auth., 473 F.2d 212, 214-15 (5th Cir. 1973). Under the FAA, “[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The Fifth Circuit follows a two-step process to decide whether to compel arbitration: (1) “determine whether the parties agreed to arbitrate the dispute in question, ” and (2) determine whether any external legal constraints preclude arbitration of the dispute. Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996) (per curiam). A party seeking to compel arbitration must prove the existence of an agreement by a preponderance of the evidence. Grant v. Houser, 469 Fed.Appx. 310, 315 (5th Cir. 2012) (per curiam).
Moreover, to determine if evidence in support of a motion to compel arbitration is admissible, courts apply a similar standard as that applied to a motion for summary judgment. Galitski v. Samsung Telecomm. Am., LLC, 2013 WL 6330645, at *1 n.1 (N.D. Tex. Dec. 5, 2013). That is, the evidence must comply with the Federal Rules of Evidence and be based on personal knowledge. Id. B. Federal Rule of Civil Procedure 12(b)(1)
“Federal courts are courts of limited jurisdiction.” Stockman v. Fed. Election Comm'n, 138 F.3d 144, 151 (5th Cir. 1998). For that reason, they can adjudicate claims only when subject-matter jurisdiction “is expressly conferred by the Constitution and federal statute.” Armstrong v. Tygart, 886 F.Supp.2d 572, 584 (W.D. Tex. 2012) (citations omitted). “Federal Rule of Civil Procedure 12(b)(1) provides the vehicle through which” a party may challenge federal jurisdiction. Id. (citations omitted).
C. Federal Rule of Civil Procedure 12(b)(6)
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) authorizes a court to dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In considering a Rule 12(b)(6) motion to dismiss, “[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). To survive a motion to dismiss under 12(b)(6), a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Standard moves the Court to stay the proceedings and compel arbitration because the PA is a valid and enforceable contract between the parties and contains an arbitration clause. Doc. 21, Def.'s Mot., 1. Amerigas claims that the PA is not a valid contract between the parties because it revoked its offer before Standard had delivered a signed copy of the PA to Amerigas. Doc. 23, Pl.'s Resp., ¶ 4. Below, the Court considers whether the PA is an agreement to arbitrate this claim. Concluding that it is, the Court grants Standard's motion to compel arbitration and dismisses as moot Standard's and Inezedy's motions to dismiss.
First, the Court must determine whether (1) the parties have a valid agreement to arbitrate and (2) whether the dispute at issue falls within the scope of the agreement. Webb, 89 F.3d at 258. If the answer to both of those questions is yes, then the Court must consider whether any external legal constraints foreclose arbitration. Id. Here, neither party contends that the dispute falls outside the scope of the alleged arbitration agreement, nor that external legal constraints foreclose arbitration. So, the sole issue is whether there is a valid arbitration agreement between them.
To compel arbitration, a party must prove the existence of an arbitration agreement by a preponderance of the evidence. Grant, 469 Fed.Appx. at 315. And “[i]n determining the contractual validity of an arbitration agreement, courts apply ordinary state-law principles that govern the formation of contracts.” Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 301 (5th Cir. 2004) (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). Under Texas law, there is “no presumption in favor of arbitration when determining whether a valid arbitration agreement exists.” Huckaba v. Ref-Chem, L.P., 892 F.3d 686, 688 (5th Cir. 2018). Rather, the party seeking to compel arbitration must establish that the alleged agreement satisfies the requisite elements of a binding contract. Id. And “because the validity of the agreement is a...
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