Dreamstyle Remodeling, Inc. v. Renewal By Andersen LLC
| Decision Date | 18 January 2023 |
| Docket Number | Civ. 22-127 KK/JFR |
| Parties | DREAMSTYLE REMODELING, INC., et al., Plaintiffs, v. RENEWAL BY ANDERSEN, LLC, et al., Defendants. |
| Court | U.S. District Court — District of New Mexico |
THIS MATTER is before the Court on: (1) Defendants' Motion to Dismiss Claims for Declaratory Relief or Stay Pending Arbitration (Doc. 4) (“First Motion to Dismiss or Stay”), filed March 14, 2022; (2) Defendants' Motion to Confirm Arbitration Award (Doc. 5) (“Motion to Confirm”), filed March 14, 2022; and, (3) Defendants' Motion to Dismiss Claims for Declaratory Relief in Amended Complaint or Stay Pending Arbitration (Doc 26) (“Second Motion to Dismiss or Stay”), filed May 13, 2022. Having reviewed the parties' submissions the record, and the relevant law, and being otherwise sufficiently advised, the Court FINDS that: (1) Defendants' First Motion to Dismiss or Stay should be DENIED AS MOOT; (2) Defendants' Motion to Confirm should be GRANTED, and the Final Award in the underlying arbitration should be CONFIRMED without a monetary judgment; and, (3) Defendants' Second Motion to Dismiss or Stay should be GRANTED, and proceedings on the declaratory judgment claims in Plaintiffs' amended complaint should be STAYED pending another arbitration.
This action concerns an arbitration proceeding that concluded in February 2022. (Doc. 23.) The arbitration arose out of five Retailer Agreements, pursuant to which Plaintiffs sold and installed window and door products manufactured by Defendants. (Doc. 23-2 at 11.) Plaintiffs- Dreamstyle Remodeling, Inc., Dreamstyle Remodeling LLC, Dreamstyle Remodeling of San Diego, Inc., Dreamstyle Remodeling of California LLC, and Dreamstyle Remodeling of Idaho, LLC-share the same past and present owners.[1] (Doc. 23 at 2-3 ¶¶ 3-5.) Defendant Andersen Corporation is the sole member of Defendant Renewal by Andersen LLC. (Id. at 3 ¶ 6.)
In their First Amended Complaint to Confirm Arbitration Award (“FAC”), Plaintiffs allege the following. On November 11, 2020, Plaintiffs initiated an arbitration proceeding against Defendants.[2] (Id. at 5 ¶ 17.) Under the parties' Agreement to Arbitrate, the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) and the Federal Arbitration Act (“FAA”) governed the arbitration. (Id. at 5 ¶ 18; see also Doc. 23-1 at 2 ¶ 10.) The dispute underlying the arbitration concerned five Retailer Agreements in which Defendants granted Plaintiffs the right to market, sell, and install certain window and door products manufactured by Defendants. (Doc. 23 at 5-6 ¶ 21.) Plaintiffs claimed that Defendants wrongfully terminated the Retailer Agreements, and Defendants counterclaimed that Plaintiffs had breached and were breaching various provisions in them, including a provision requiring Plaintiffs to reimburse Defendants for service and repair work Defendants performed as a result of Plaintiffs' installation of Defendants' products. (Id. at 6 ¶¶ 21, 22; see also Doc. 27-1 at 2 ¶ 24.)
The arbitration hearing took place via Zoom videoconferencing from November 8 to November 19, 2021. (Doc. 23 at 6 ¶ 23.) On January 3, 2022, the panel of arbitrators issued an Interim Award, awarding $6,942,226 to Plaintiffs on their wrongful termination claims, and $587,662 to Defendants on their service reimbursement counterclaim. (Id. at 6 ¶ 24; Doc. 23-2 at 8-28.) The panel reserved ruling on the allocation of pre- and post-judgment interest, attorney's fees, costs, expenses, and fees paid to the AAA and the panel. (Doc. 23 at 6 ¶ 25.)
On January 28, 2022, Defendants paid Plaintiffs $4,000,000 in partial satisfaction of the Interim Award. (Id. at 8 n.7.) The panel declared the arbitration hearing closed on February 8, 2022. (Id. at 7 ¶ 26.) However, on February 18, 2022, Defendants demanded additional damages of at least $250,000 pursuant to the Retailer Agreements' service reimbursement provision, and indicated that they intended to file another arbitration seeking the claimed additional damages. (Id. at 7 ¶¶ 27, 28; see also Doc. 11-3.)
The panel issued its Final Award on February 21, 2022. (Doc. 23 at 7 ¶ 29; Doc. 23-2.) Among other things, the Final Award: (a) incorporated the Interim Award; (b) awarded Plaintiffs $3,123,426 in damages plus interest of $855.73 per day from January 29, 2022 until paid, taking into account the $4,000,000 Defendants had already paid; (c) ruled that the AAA's and the panel's fees, expenses, and costs would be “borne as incurred,” and that, except for an award of $44,841 to Plaintiffs for costs associated with an expert witness, each party would bear its own attorney fees and costs; and, (d) denied and dismissed with prejudice all claims and counterclaims made in the arbitration, except as provided in the Interim and Final Awards. (Doc. 23 at 7-9 ¶ 30; Doc. 232 at 2-3.)
Plaintiffs filed their original Complaint to Confirm Arbitration Award (Doc. 1) (“Complaint”) on February 21, 2022, the same day the panel issued its Final Award. In the Complaint, Plaintiffs prayed for: (a) an order confirming the arbitration award; (b) entry of judgment on the award; (c) judgment in Plaintiffs' favor in the principal sum of $3,168,267 with interest of $855.73 per day from January 29, 2022, until paid; (d) a declaration that Defendants terminated the parties' five Retailer Agreements no later than May 8, 2018; and, (e) a declaration “that all future obligations of the parties, if any, [were] terminated in all respects effective February 21, 2022-the date of the Final Award.” (Id. at 7-8 ¶¶ A-E.) Plaintiffs attached the following documents to the Complaint: (1) the parties' Agreement to Arbitrate; (2) the panel's Final Award, with the Interim Award attached; (3) Plaintiffs' arbitration demand; and, (4) Defendants' arbitration answer and counterclaim. (Id. at 8; Docs. 1-1 to 1-4.)
Defendants filed their First Motion to Dismiss or Stay and their Motion to Confirm on March 14, 2022. (Docs. 4, 5.) In their First Motion to Dismiss or Stay, Defendants ask the Court to either dismiss the declaratory judgment claims in Plaintiffs' Complaint or stay judicial proceedings on these claims pending arbitration. (Doc. 4.) In their Motion to Confirm, Defendants ask the Court to confirm the panel's Final Award without providing for the entry of a monetary judgment. (Doc. 5.) On March 26, 2022, Plaintiffs responded in opposition to both motions, and on April 11, 2022, Defendants replied in support of them. (Docs. 10-12, 19-20.)
Meanwhile, on April 8, 2022, the Court issued an Order to Show Cause directing Plaintiffs to “either (1) file a written response in which they shall show cause why the Court should not dismiss this matter for lack of subject-matter jurisdiction or (2) file an amended complaint that alleges facts sufficient to sustain subject-matter jurisdiction.” (Doc. 18 at 3.) Plaintiffs filed their FAC on April 29, 2022. (Doc. 23.) In compliance with the Court's Order, the FAC includes new allegations regarding the parties' citizenship sufficient to show that the Court has diversity jurisdiction over this action. (Id. at 2-4 ¶¶ 3-10.) The FAC also includes new factual allegations unrelated to subject-matter jurisdiction and a new request for declaratory judgment on behalf of Plaintiffs' principals.[3] (Id. at 7, 9-10 ¶¶ 27, 28, 31-38.) However, the documents attached to the original Complaint are also attached to the FAC and the FAC's Prayer for Relief is identical to the Prayer for Relief in the original Complaint. (Doc. 1 at 7-8; Doc. 23 at 10-11.)
On May 13, 2022, Defendants filed their Second Motion to Dismiss or Stay, in which they ask the Court to either dismiss the declaratory judgment claims in the FAC or stay judicial proceedings on these claims pending arbitration.[4] (Doc. 26.) In this motion, Defendants incorporate the arguments and authorities in their First Motion to Dismiss or Stay regarding the original Complaint, asserting that they are “equally applicable” to the FAC. (Id. at 2.) In addition, Defendants argue that the FAC's request for declaratory judgment on behalf of Plaintiffs' principals is ineffective under Federal Rule of Civil Procedure 15(a). (Id.) Plaintiffs responded in opposition to Defendants' Second Motion to Dismiss or Stay on May 25, 2022, and Defendants replied in support of it on June 9, 2022. (Docs. 27, 28.)
Because the motions before the Court are based on the pleadings, the Court must accept the well-pleaded factual allegations in Plaintiffs' operative complaint as true. Riley Mfg Co., Inc. v. Anchor Glass Container Corp., 157 F.3d 775, 779 (10th Cir. 1998). As in the analogous context of a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the Court may consider not only the factual allegations in the complaint, “but also the attached exhibits and documents incorporated into the complaint by reference.” Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194, 1201 (10th Cir. 2011). Further, although a motion to dismiss should generally be converted to a motion for summary judgment if a party submits, and the Court considers, materials outside the pleadings, such conversion is unnecessary if the complaint refers to the document, the document is central to the plaintiff's claim, and the defendant submits an indisputably authentic copy. Prager v. LaFaver, 180 F.3d 1185, 1189 (10th Cir. 1999); Hill v. Vanderbilt Capital Advisors, LLC, 834 F.Supp.2d 1228, 1247 (D.N.M. 2011). Finally, the Court may take judicial notice of appropriate facts and records. Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006); Hill, 834...
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