Carothers Construction, Inc. v. Midwest Mechanical Contractors, Inc., No. 3:94CV95-B-D (N.D. Miss. 9/ 1994)
| Decision Date | 01 September 1994 |
| Docket Number | No. 3:94CV95-B-D.,3:94CV95-B-D. |
| Parties | CAROTHERS CONSTRUCTION, INC., Plaintiff, v. MIDWEST MECHANICAL CONTRACTORS, INC., Defendant. |
| Court | U.S. District Court — Northern District of Mississippi |
This case comes before the court upon the motion of the plaintiff for preliminary injunctive relief. Plaintiff Carothers Construction, Inc. (hereinafter "Carothers"), a resident of this judicial district, seeks to enjoin arbitration sought by defendant Midwest Mechanical Contractors, Inc. (hereinafter "Midwest"), a Missouri corporation. The court having heard oral argument on August 24, 1994, and upon consideration of the parties' memoranda, now rules.
This controversy arises out of the construction of a psychiatric facility in Texas. In July of 1991, Carothers entered into a subcontract with Midwest whereby the defendant agreed to perform certain portions of the work on the project. The facility was substantially completed on or about October 31, 1993. In November of 1993, Midwest submitted a series of claims to the plaintiff, the effect of which sought additional compensation for work previously done on the project by Midwest. On March 7th, 1994, the plaintiff notified Midwest that it would not recognize its claims, and on that same date Midwest filed a Demand for Arbitration against Carothers with the American Arbitration Association in New Orleans seeking to arbitrate the same. The plaintiff promptly filed this suit on June 28, 1994, seeking to enjoin arbitration as well as a judicial declaration that the defendant has no right under the parties' agreement to place its claims before arbitration because of Midwest's failure to satisfy certain contractual obligations which it contends constitute conditions precedent to the right to arbitrate. Federal jurisdiction is predicated upon 28 U.S.C. § 1332. Venue is allegedly proper in this court "pursuant to 28 U.S.C. § 1391 and Article 26, entitled DISPUTES, of the parties Subcontract" ("Complaint For Declaratory Judgment and Permanent Injunction" at p.2).1
Prior to the hearing on the plaintiff's motion, it came to the court's attention that the paragraph that incorporated the forum selection clause which placed venue in this court had been deleted by a subsequent addendum to the subcontract. There being a question raised in the court's mind as to whether or not venue was proper in view of the parties' respective residencies and, if not, whether the defendant nonetheless intended to waive improper venue, the court requested the parties to further brief the venue issue at the conclusion of oral argument on the motion. See Lipofsky v. New York State Workers Compensation Bd., 861 F.2d 1257 (11th Cir. 1988) (); Costlow v. Weeks, 790 F.2d 1486 (9th Cir. 1986). The court also requested further briefing on the plaintiff's claim of irreparable injury. These issues now having been fully briefed, the court concludes that although a substantial question lingers as to whether or not Midwest is subject to personal jurisdiction in this district,2 rather than decide that issue at this time instead finds that the plaintiff has failed to sustain its burden of showing its entitlement to the extraordinary relief requested and accordingly will deny the motion.
To prevail on a motion for preliminary injunction requires Carothers to persuade the court that it has met the following prerequisites:
(1) a substantial likelihood of prevailing on the merits; (2) a substantial threat of irreparable injury if the injunction is not granted; (3) the threatened injury outweighs any harm to the defendant that may result from the injunction; and (4) the granting of the preliminary injunction will not disserve the public interest.
Roho, Inc. v. Marquis, 902 F.2d 356, 358 (5th Cir. 1990) (citing Mississippi Power & Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985)). As an extraordinary remedy, this Circuit requires the movant to carry the burden of proof on each factor, and his failure to produce sufficient evidence on any one factor may prove fatal to his cause. Libertarian Party of Texas v. Fainter, 741 F.2d 728 (5th Cir. 1984). As the plaintiff points out, "to show irreparable injury...it is not necessary to demonstrate that harm is inevitable and irreparable" but only that the plaintiff faces a "significant threat of injury...and that money damages would not fully repair the harm," Humana, Inc. v. Jacobson, 804 F.2d 1390, 1394 (5th Cir. 1986), it is likewise the law that, in and of itself, the attendant expense of proceeding with "inappropriate arbitration...do[es] not constitute irreparable harm." City of Meridian v. Algernon Blair, Inc., 721 F.2d 525, 529 (5th Cir. 1983). See also Tai Ping Ins. Co. v. M/V Warschau, 731 F.2d 1141, 1146 (5th Cir. 1984).
Although not addressed directly by the parties, it appears clear to the court that the subcontract at issue in this action involves interstate commence and is thus governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq. That established, the court initially must recognize the federal policy favoring arbitration agreements3 and the presumption of arbitrability that is raised by a valid arbitration clause. Torrence v. Murphy, 815 F. Supp. 965, 970-971 (S.D. Miss. 1993); Sedco v. Petroleos Mexicanos Mexican Nat'l Oil, 767 F.2d 1140, 1145 (5th Cir. 1985). Application of that presumption means that "as a matter of federal law, any doubts concerning the scope of arbitrable issues 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." Algernon Blair, Inc., 721 F.2d at 528 quoting Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S. Ct. 927, 941-42, 74 L. Ed. 2d 765 (1983). Stated another way, barring "positive assurance that an arbitration clause is not susceptible of an interpretation that would cover the dispute at issue," Wick v. Atlantic Marine, Inc., 605 F.2d 166, 168 (5th Cir. 1979), any doubt as to whether or not the claim is arbitrable must be resolved in favor of arbitration. Explo, Inc. v. Southern Natural Gas Co., 788 F. 2d 1096, 1098 (5th Cir. 1986).
The arbitration clause at issue in this cause, paragraph 26.1, provides as follows:
Unless otherwise prohibited by this Subcontract or barred by the Subcontractor's failure to adhere to terms and conditions of this Subcontract, all claims, disputes, matters in controversy or question between the contractor and the subcontractor arising out of or relating to this subcontract shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, except as specifically excluded below.4
The court sees no material difference between the plaintiff's request to enjoin and declare arbitration improper and the usual case before this court where a defendant requests a stay of litigation pending arbitration. Accordingly, deciding whether arbitration is improper, as the plaintiff urges, requires a determination of whether there is "'a written agreement to arbitrate'...then, `whether any of the issues raised are in the reach of that agreement.'" Complaint of Hornbeck Offshore (1984) Corp., 981 F.2d 752, 754 (5th Cir. 1993) quoting Midwest Mechanical Contractors, Inc. v. Commonwealth Constr. Co., 801 F.2d 748, 750 (5th Cir. 1986).
The court finds that the arbitration clause contained in the written agreement at issue in this cause is broad. See Commerce Park at DFW Freeport v. Mardian Constr. Co., 729 F.2d 334 (5th Cir. 1984) (). Neither party seriously maintains that the subcontract is ambiguous on this point and the court finds the defendant's claims for additional compensation "arise out of" or "relat[e] to" the subcontract. Ordinarily, judicial inquiry would be at an end at this point, see Algernon Blair, Inc., 721 F.2d at 529 (), but for the plaintiff's contention that, notwithstanding the broad reach of the clause, the claims sought to be arbitrated have been removed from arbitration by the terms of the contract itself, specifically the alleged condition precedents which the defendant has failed to fulfill. See Torrence, 815 F. Supp. at 971 (). Thus, the plaintiff's defense to arbitration is essentially the position that while "all claims" are arbitrable, there are no claims presently available because of the plaintiff's procedural defaults, an observation which, if correct, causes the court some hesitancy in proceeding any further. See Algernon Blair, Inc., 721 F.2d at 529 (). That aside, out of an abundance of caution, the court will nevertheless proceed to address the plaintiff's arguments for injunctive relief.
As grounds for seeking the injunction, the plaintiff urges that (1) by virtue of the subcontract provisions, the parties did not agree to arbitrate the claim for which the defendant seeks adjudication via arbitration in New Orleans; (2) it will suffer irreparable harm if the injunction does not issue because it would be denied "the benefit of bargained for contract protections," specifically the benefit...
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