Charleston Advancement Acad. High Sch. v. Acceleration Acads., LLC0
| Decision Date | 16 July 2020 |
| Docket Number | No. 2:20-cv-01676-DCN,2:20-cv-01676-DCN |
| Parties | CHARLESTON ADVANCEMENT ACADEMY HIGH SCHOOL, Plaintiff, v. ACCELERATION ACADEMIES, LLC and ACCELERATION EDUCATION, INC., Defendants. |
| Court | U.S. District Court — District of South Carolina |
The following matter is before the court on defendant Acceleration Academies, LLC's ("Accel Academy") motions to dismiss, or, in the alternative, to transfer venue, or, in the alternative, to compel arbitration, ECF Nos. 4, 11, and plaintiff Charleston Advancement Academy's ("CAA") motion to remand and motion to stay Accel Academy's motion to dismiss, or, in the alternative, to transfer venue, or, in the alternative, to compel arbitration, ECF No. 9. For the reasons set forth below, the court denies CAA's motion to remand, finds as moot CAA's motion to stay, finds as moot Accel Academy's motion to dismiss, ECF No. 4, grants in part and denies in part Accel Academy's motion to dismiss, ECF No. 11, and grants Accel Academy's motion to transfer the case to the Western District of North Carolina to compel arbitration.
CAA is a nonprofit corporation and a public charter school organized under the laws of the State of South Carolina, including the South Carolina Charter Schools Act of 1996, as amended (the "Act"), and the South Carolina Nonprofit Act of 1994, as amended (the "Nonprofit Act"). ECF No. 8 at 1. CAA submitted a charter application to the South Carolina Public Charter School District ("SCPCSD") to serve as its sponsor, as defined in the Act. ECF No. 8-1. As part of its charter application, CAA stated it intended to contract with Accel Academy to serve as its charter management organization because of Accel Academy's "proven track record" of serving its target student demographic. Id. at 71. As part of its contract with CAA, the charter application stated that Accel Academy would provide administrative, management, and educational services as required by the Act. Id. at 36, 41, 51
On or around May 20, 2017, the SCPCSD approved CAA's charter application. ECF No. 8-2 at 1. On April 11, 2018, CAA and SCPCSD signed a contract, which incorporated the charter application, governing the responsibilities between the two parties in running the school, pursuant to the Act ("Charter"). Id. One of the requirements of the Charter was that if CAA contracted with a charter management organization to provide the school services, that charter management organization must be approved by SCPCSD in advance, and that such a contract "must provide that termination be made in a manner that is least disruptive to students." Id. at 7-8. The Charter also mandated that any agreement between CAA and a charter management organization contain a termination clause that required no more than 180 days' notice "except where the health and safety of students is a concern." Id. at 8.
On April 2, 2018, CAA and Accel Academy entered into an agreement for Accel Academy to serve as the charter management organization for CAA. ECF No. 8-3. The agreement between CAA and Accel Academy governed the obligations between the parties that were necessary for CAA to comply with the Charter. ECF No. 8-3. The agreement between CAA and Accel Academy contained a termination clause thatallowed termination with 180 days' notice by either party, or for immediate termination at CAA's sole discretion "[i]n the event that a danger to student health, safety or welfare exists." Id. at 6. The agreement between CAA and Accel Academy required the termination to be "in a manner that is least disruptive to students." Id. at 3. The agreement between CAA and Accel Academy contained an arbitration clause that stated, in part:
In the event of a dispute between the Parties[,] [CAA] and Accel[ ] Academ[y] agree to enter into negotiation to attempt to resolve any dispute . . . . If negotiations are unsuccessful, and upon the request of either Party, the Parties shall enter into alternative dispute resolution consisting of arbitration. . . . If an AAA filing site cannot be agreed upon, the filing site shall be Charlotte, North Carolina.
CAA opened on July 1, 2018 and regularly paid invoices submitted to the school by Accel Academy until September 2019. ECF No. 8-11 at 2. In September 2019, CAA failed to pay Accel Academy's invoice until a dispute between the parties involving Accel Academy's failure to secure funds on CAA's behalf and the auditing clause of the agreement was resolved. Id. On October 23, 2019, Accel Academy triggered the 180-day notification period to terminate the agreement with CAA. On November 1, 2019, the CAA board unilaterally determined that Accel Academy's management of the school raised "public health and safety concerns" and immediately terminated the agreement with Accel Academy. Id. On November 4, 2019, Accel Academy filed for arbitration in Charlotte, North Carolina pursuant to the agreement between CAA and Accel Academy. ECF No. 8-4. On November 11, 2019, CAA submitted a charter amendment request ("Charter Amendment Request') to the SCPCSD which included removing Accel Academy from the Charter. ECF No. 8 at 7.
The SCPCSD Board found that CAA's unilateral termination of Accel Academy without a plan to replace the services of Accel Academy was a breach of the Charter. ECF No. 8-7 at 4. As a result of this breach, the SCPCSD Board sanctioned CAA. Id. at 8. These sanctions included ordering CAA to rescind all actions taken since November 14, 2019, to reinstitute Accel Academy as the charter management organization, and to maintain the "status quo" prior to the termination of Accel Academy. Id. In a letter sent to CAA on December 5, 2019, the SCPCSD explicitly told CAA the following regarding its Charter Amendment Request:
Finally, I want to be exceedingly clear on this point. There is no guarantee at all that the SCPCSD will approve the new plan that the CAA Board submits. The SCPCSD Board has never approved the CAA Board to locally manage the school without a management organization, and it is the CAA Board's burden to prove to the SCPCSD Board that it should be entrusted to do so. Many questions remain about the program CAA's Board is proposing to implement. The SCPCSD Board will carefully consider that program prior to allowing an amendment to implement a program that might be materially different than what was originally approved.
Id. at 4-6 (emphasis added).
On January 6, 2020, the arbitrator for the parties ordered a preliminary injunction mandating that operations between CAA and Accel Academy remain "status quo ante as of October 23, 2019" and requiring that all services provided by Accel Academy to CAA continue. ECF No. 8-8. The arbitration hearing between the parties was held on February 20-21, 2020. ECF No. 8-11 at 2; ECF No. 11-1. The arbitrator found that CAA's termination of Accel Academy did not comply with the terms of the agreement because there was no credible threat to the health, welfare, or safety of the students and the contract was not terminated in a manner that was least disruptive to students. ECFNo. 8-11 at 3. On March 16, 2020, the arbitrator awarded Accel Academy $859,142.41 in damages and ordered Accel Academy to remain at CAA through April 22, 2020.
Amid the arbitration between CAA and Accel Academy, Acceleration Education, Inc. ("Accel Education") submitted a Letter of Intent to form a charter school in South Carolina. ECF No. 8-13. Accel Education listed Accel Academy as its charter management organization in its Letter of Intent. Id. at 2. In December 2019, CAA alleges that Accel Academy attempted to solicit CAA's employees to work for Accel Academy. ECF No. 8-15. On or around February 11, 2020, Accel Education submitted its charter application for sponsorship by the SCPCSD. ECF No. 8-14. At the arbitration hearing between the parties on February 20-21, 2020, CAA questioned Accel Academy about the recruitment of CAA's employees to work for the new charter school Accel Academy was forming in South Carolina and alleged that this could jeopardize CAA's Charter Amendment Request. ECF No. 11-1 at 42, 306, 381-86, 414, 425, 445. On March 31, 2020, Accel Academy terminated the provision of certain software educational services which were necessary for CAA to operate due to the COVID-19 restrictions. ECF No. 8-12. On or around the same date, CAA alleges that Accel Academy attempted to solicit CAA employees in an effort to influence those employees to breach their employment contracts with CAA. ECF No. 8 at 15. On April 6, 2020, CAA filed a Motion for a Temporary Restraining Order and Preliminary Injunction in the Charleston County Court of Common Pleas ("State court") requesting that the State court order Accel Academy to reactivate and enable all software educational services through April 22, 2020. ECF No. 1-4 at 15. On April 9, 2020, and the State court granted CAA's motion for a Temporary Restraining Order and Preliminary Injunction and ordered AccelAcademy to restore the disabled services. ECF No. 1-12. On April 6, 2020, CAA filed a claim against Accel Academy in State court alleging tortious interference with contract ("State court claim"). ECF No. 1-4 at 14. On April 17, 2020, the SCPCSD approved Accel Education's charter application. At the April 17, 2020 hearing, CAA alleged that Accel Education made intentional misrepresentations about the operation of CAA and alleged that CAA intended to move locations without informing the SCPCSD Board. ECF No. 8 at 17. At that time, the SCPCSD Board had still not approved CAA's Charter Amendment Request. ECF No. 21 at 5
On April 29, 2020, Accel Academy properly removed the State court claim to this court. ECF No 1. On May 6, 2020, Accel Academy filed a motion to dismiss for failure to state a claim, or, in the alternative, to transfer venue, or, in the alternative, to compel arbitration. ECF No. 4. On May 19, 2020, CAA amended its complaint. ECF No. 8. In the amended complaint, CAA added Accel...
To continue reading
Request your trial