Integrated Sec. Services v. Skidata, Inc.

• Citation: 609 F.Supp.2d 1323
• Decision Date: 23 April 2009
• Docket Number: No. 08-23301-CIV.,08-23301-CIV.
• Parties: INTEGRATED SECURITY SERVICES, Plaintiff, v. SKIDATA, INC., Defendant.
• Court: U.S. District Court — Southern District of Florida

609 F.Supp.2d 1323

INTEGRATED SECURITY SERVICES, Plaintiff, v. SKIDATA, INC., Defendant.

No. 08-23301-CIV.

United States District Court, S.D. Florida, Miami Division.

April 23, 2009.

Barry Adam Postman, Cole Scott & Kissane, Michael W. Shiver, Jr., Cole Scott & Kissane, West Palm Beach, Counsel for Plaintiff.

Jose Guillermo Sepulveda, Stearns Weaver Miller Weissler Alhadeff & Sitterson, Miami, FL, Gavin Handwerker, Nissenbaum Law Group, LLC., Union, NJ, Counsel for Defendant.

FINAL ORDER OF DISMISSAL

JAMES LAWRENCE KING, District Judge.

THIS CAUSE comes before the Court upon the Defendants' Motion to Compel Arbitration or in the Alternative Motion to Dismiss and Supporting Memorandum of Law (D.E.# 7), filed January 6, 2009. On January 28, 2009, the Plaintiff filed its Response (D.E.# 14). On February 6, 2009, the Defendants filed its Reply (D.E.# 15).

I. BACKGROUND

The Plaintiff initially filed this action in state court for tortious interference with a contractual relationship and defamation per se. See D.E. # 1, Amended Compl. The Plaintiff alleges that it entered into a Purchase and Distribution Agreement ("Agreement") with the Defendant and gained the non-exclusive right to distribute the Defendant's parking-and-revenue-collection equipment in South Florida. See id. at ¶¶ 8, 9. Furthermore, the Plaintiff alleges that the Defendant terminated the Agreement, which prevented the Plaintiff from meeting its obligations under a separate contract that it had with The Port of Miami. See id. at ¶¶ 12, 16. The Defendant allegedly began subsequent negotiations with The Port of Miami to obtain the contract for its parking-and-revenue-collection needs that were no longer being met by the Plaintiff. See id. at ¶ 14. Finally, the Plaintiff alleges that the Defendant made (or caused to be made) untrue written and oral communications to the Port of Miami with regard to (1) the Plaintiffs ability to properly exercise its lawful business and trade and (2) the Plaintiffs ability to satisfy the terms of the Agreement. See id. at ¶¶ 32, 33. On November 26, 2008, the Defendant removed the action to this Court. See D.E. # 1, Notice of Removal. Subsequently, the Defendant filed the instant Motion. See D.E. # 7.

II. LEGAL STANDARD

Under the Federal Arbitration Act, a district court must grant a motion to compel arbitration if it is satisfied that the parties agreed to arbitrate the underlying issue. See 9 U.S.C. § 3. This is an effort to implement "the strong federal policy in favor of enforcing arbitration agreements." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). In reviewing a motion to compel arbitration, a district court must consider three factors: (1) whether a valid written agreement to arbitrate exists, (2) whether an arbitrable issue exists, and (3) whether the right to arbitrate was waived.¹ See, e.g., Sims v. Clarendon Nat'l Ins. Co., 336 F.Supp.2d 1311, 1326 (S.D.Fla.2004).

III. DISCUSSION

The Plaintiff first asserts that no valid written agreement to arbitrate exists because the Agreement—which contains, inter alia, the arbitration clause—is allegedly invalid as unconscionable. However, the undersigned concludes that the Plaintiff's assertion fails to remove the dispute from the realm of arbitration. In Buckeye Check Cashing v. Cardegna, 546 U.S. 440, 449, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006), the United States Supreme Court held that "a challenge to the validity of a contract as a whole, and not specifically to the arbitration clause, must go the arbitrator." The High Court reasoned that "unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance" because "as a matter of substantive federal arbitration law, an arbitration provision is severable² from the remainder of the contract." Id. at 445-46, 126 S.Ct. 1204. In its Response, the Plaintiff does not assert that the arbitration clause is invalid due to some defect particular to that clause but, instead, that the entire Agreement is invalid because it is unconscionable. This is precisely the type of issue that—according to the High Court in Cardegna—should be decided by an arbitrator in the first instance.

With regard to the second factor, the Plaintiff asserts that its tortious-interference-with-a-contractual-relationship and defamation-per-se claims are not arbitrable issues. The Plaintiff alleges that the two claims are wholly unrelated to the contractual relationship and, even assuming that there was an agreement to arbitrate, that agreement does not extend to these two claims. The undersigned has considered the recent decision in Hemispherx Biopharma, Inc. v. Johannesburg Consolidated Investments, 553 F.3d 1351 (11th Cir.2008), in which the Eleventh Circuit held that the test to determine whether the claims alleged in the complaint were covered by the underlying arbitration agreement was based upon foreseeability. See id. at 1366. Simply put, "if the defendant could have been engaged in the allegedly tortious actions even if it had no contractual relationship with the plaintiff, then the dispute is not an immediate, foreseeable result of the performance of the contractual duties" and, thus, the claims are not arbitrable. Id. However, this test does not apply to the instant action because the Agreement uses broader language³ than that language which existed in the underlying agreement in Hemispherx.⁴ The Eleventh Circuit even recognized that this test would not apply to language as broad as that which exists in the Agreement in the instant action:

"This discussion takes place in the context of a class of arbitration agreements that use similar language, such as `arising from,' arising under,' `pursuant to,' and `arising during' the contract in question. The clause at issue in this case uses `arising out of or pursuant to.' We do not believe there is a significant difference between these slightly different formulations, but do recognize that substantially broader language in the arbitration clause would alter the result of the analysis. See, e.g., Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1221 (11th Cir.2000) (discussing arbitration clause covering `any dispute between them or claim by either [party to the contract] against the other')."

Id. at 1366 n. 16 (emphasis added). Here, the substantially broader language utilized in the Agreement evidences that the parties contemplated that claims such as those alleged by the Plaintiff in the instant action would be subject to the arbitration clause. Moreover, even assuming that this foreseeability test applies to the instant action, the tort claims of the Amended Complaint seemingly arise out of the Agreement and, therefore, were foreseeable at the time the Agreement was entered into and are within the scope of the arbitration clause. For example, in the allegations asserted under the defamation-per-se claim, the Plaintiff alleges that "the Defendant made or caused to be made written and oral communications to Miami-Dade County—Port of Miami with regard to the Plaintiff, the Plaintiffs ability to properly exercise its lawful business and trade, and the Plaintiff's ability to satisfy the terms of the Agreement." D.E. # 1, Amended Compl., ¶ 32 (emphasis added). Therefore, the undersigned concludes that this case should be dismissed and should proceed to arbitration as outlined in the Agreement and its arbitration clause.⁵⁶⁷

IV. CONCLUSION

Accordingly, the Court being otherwise fully advised, it is ORDERED, ADJUDGED, and DECREED that the Defendant's Motion to Compel Arbitration or in the Alternative Motion to Dismiss and Supporting Memorandum of Law (D.E.# 7) be, and the same is hereby, GRANTED. The Plaintiff is hereby DIRECTED to proceed to arbitrate this dispute in New Jersey as mandated by the Agreement. The instant action is hereby DISMISSED. The Clerk shall CLOSE this case.

1. This third factor regarding whether the right to arbitrate was waived is not at issue between the parties and, therefore, is not further discussed.

2. This is consistent with the express terms of the Agreement in the instant action: "To the Extent that a provision of this Agreement is deemed unenforceable, the balance of it shall remain in full force and effect." D.E. # 8, Exhibit "A," pg. 18.

3. See D.E. # 8, Exhibit "A," pg. 14 ("A party to this Agreement may not institute a suit at law or equity regarding any dispute, whether directly or indirectly related or Collateral to this Agreement. All such claims or disputes, whether between or among the parties, shall be submitted to arbitration administered by an arbitrator." (emphasis added)).

4. See Hemispherx, 553 F.3d at 1354-55 ("Any dispute at any time between the parties hereto arising out of or pursuant to this Agreement or its interpretation, rectification, breach or termination shall be submitted to and be decided by arbitration." (emphasis added)).

5. The undersigned notes that the termination of the Agreement has no bearing on the right to arbitrate. The Plaintiff relies heavily upon Foster Wheeler Passaic, Inc. v. County of Passaic, 266 N.J.Super. 429, 630 A.2d 280 (1993), to assert the opposite. However, as the Defendant correctly asserts, Foster is factually distinguishable from the instant action and, therefore, not persuasive. In Foster, the underlying agreement set forth certain rights and obligations that survived a termination of the agreement; however, survival of the arbitration clause was excluded. See id. at 284-85. Based solely upon this exclusion, that court "reverse[d] the order directing that plaintiff's claim for preconstruction costs be submitted to arbitration." Id. at 285. Unlike the agreement in Foster, the Agreement here just generally states that it may be terminated "[w]ithout waiving any other rights previously accrued." D.E. # 8, Exhibit "A," pg. 16. The undersigned concludes that the facts of the...