Kindig v. Whole Foods Mkt. Grp., Inc.

• Decision Date: 20 September 2011
• Docket Number: Civil Action No. 10–1919 (ESH).
• Parties: Marion KINDIG, Plaintiff, v. WHOLE FOODS MARKET GROUP, INC., Defendant.Whole Foods Market Group, Inc., Defendant/Third–Party Plaintiff, v. USA Parking, LLC, et al., Third–Party Defendants.
• Court: U.S. District Court — District of Columbia

811 F.Supp.2d 410

Marion KINDIG, Plaintiff,

v.WHOLE FOODS MARKET GROUP, INC., Defendant.Whole Foods Market Group, Inc., Defendant/Third–Party Plaintiff,

v.USA Parking, LLC, et al., Third–Party Defendants.

Civil Action No. 10–1919 (ESH).

United States District Court, District of Columbia.

Sept. 20, 2011.

Marion Kindig, Bethesda, MD, pro se.

Stephen Bennett Caplis, J. Christopher Nosher, Justin M. Cuniff, Setliff Turner & Holland, PC, Annapolis, MD, for Defendant/Third–Party Plaintiff.

John F.X. Costello, Costello & Edwards, LLC, Camp Springs, MD, for Third Party Defendants.

MEMORANDUM OPINION

ELLEN SEGAL HUVELLE, District Judge.

Before this Court are motions to dismiss filed by third-party defendants USA Parking, LLC, (“USA Parking”) and Solomon Arega (“Arega”) in response to the third-party complaint filed by Whole Foods Market Group, Inc. (“WFM”). For the reasons explained herein, the Court will grant Arega's motion, grant USA Parking's motion in part, and hold the third-party claims in abeyance pending arbitration.

BACKGROUND

Plaintiff Marion Kindig initially filed this suit in the Superior Court of the District of Columbia, alleging that she slipped and fell as a result of WFM's negligence and seeking compensation for the injuries that she sustained in the parking lot of the WMF Georgetown store. WFM removed the instant action to federal district court pursuant to 28 U.S.C. §§ 1332(a), 1441(a). ¹ Some months later, WFM filed a third-party complaint against U.S.A. Parking and Arega seeking indemnification and/or contribution. Third-party defendants filed motions to dismiss for lack of jurisdiction ² based on the existence of an arbitration agreement between USA Parking and WFM. Arega additionally disputes liability in his individual capacity.

ANALYSIS

I. STANDARD OF REVIEW

When reviewing a motion to dismiss pursuant to Rule 12(b)(1), a court must accept as true all factual allegations contained in the complaint and afford the plaintiff the benefit of all favorable inferences that can be drawn from the alleged facts. Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993). However, “plaintiff's factual allegations in the complaint ... will bear closer scrutiny in resolving a 12(b)(1) motion' than in resolving a 12(b)(6) motion for failure to state a claim.” Grand Lodge Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13–14 (D.D.C.2001) (internal quotation omitted); see also Citizens for Responsibility & Ethics in Washington v. Cheney, 593 F.Supp.2d 194, 209–10 (D.D.C.2009). A court may consider materials outside the pleadings to determine whether it has jurisdiction. Jerome Stevens Pharms., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 (D.C.Cir.2005); Amons v. District of Columbia, 231 F.Supp.2d 109, 113 & n. 5 (D.D.C.2002) (noting that “the court may take judicial notice of matters of a general public nature, such as court records, without converting the motion to dismiss into one for summary judgment”) (citation omitted).

“When considering a motion to stay proceedings and/or compel arbitration, the appropriate standard of review for the district court is the same standard used in resolving summary judgment motions” pursuant to Federal Rule of Civil Procedure 56(a). Sheet Metal Workers' Int'l Ass'n v. United Transp. Union, 767 F.Supp.2d 161, 167–68 (D.D.C.2011) (internal quotation marks omitted) (citing Brown v. Dorsey & Whitney, LLP, 267 F.Supp.2d 61, 67 (D.D.C.2003)). It is therefore appropriate to grant a motion to stay proceedings or compel arbitration when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In this situation, the movant (the party seeking summary judgment or arbitration) bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Sheet Metal Workers' Int'l Ass'n, 767 F.Supp.2d at 161.

II. APPLICABLE LAW

When a cause of action in federal court is based on state law, as where a court sits in diversity, the court must apply the law of the forum state. See Van Gemert v. Boeing Co., 553 F.2d 812, 813 (2d Cir.1977) (“It is the source of the right, not the basis of federal jurisdiction, which determines the controlling law.”); see also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). As this case is before the Court pursuant to diversity jurisdiction, the law of the District of Columbia shall govern all substantive issues. See A.I. Trade Fin., Inc. v. Petra Int'l Banking Corp., 62 F.3d 1454, 1458 (D.C.Cir.1995); see also Schleier v. Kaiser Found. Health Plan of the Mid–Atl. States, Inc., 876 F.2d 174, 180 (D.C.Cir.1989) (“Although the Rules of Decision Act, and hence Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), do not strictly apply with respect to D.C. law, we apply D.C.'s substantive law analogously for reasons of uniformity and respect for the D.C. Court of Appeals.”). However, non-forum law will be applied where otherwise specified by contractual agreement. Norris v. Norris, 419 A.2d 982, 984 (D.C.1980) (applying Florida law per the parties' contractual specification).

III. LIABILITY OF SOLOMON AREGA

In its Amended Third–Party Complaint, WFM seeks to hold Arega liable as owner and operator of USA Parking. (Am. Third–Party Compl. at ¶¶ 21, 26.) Arega moved to dismiss suit against him because the agreement with WFM was made with USA Parking, which, he asserts, is a limited liability corporation. (Arega Mot. to Dismiss at 4–6.³)

“The general rule is that a corporation is regarded as an entity separate and distinct from its shareholders.” Lawlor v. District of Columbia, 758 A.2d 964, 975 (D.C.2000) (citation omitted); see also McWilliams Ballard, Inc. v. Broadway Mgmt. Co., 636 F.Supp.2d 1, 7–9 (D.D.C.2009) (applying the Lawlor rule to limited liability corporations). A party seeking to disregard the corporate entity must prove by affirmative evidence that there is unity of ownership and interest and use of the corporate form to perpetuate a fraud or wrong. Lawlor, 758 A.2d at 975 (“The inquiry ultimately turns on whether the corporation is, in reality, ‘an alter ego or business conduit of the person in control.’ ”) (citing Labadie Coal Co. v. Black, 672 F.2d 92, 97 (D.C.Cir.1982)).

Both WMF and Arega agree that USA Parking is a corporation.⁴ ( See WFM Mot. in Opp. (Dkt. No. 43) at 6; Arega Mot. to Dismiss at 1.) WMF has made no allegations suggesting that USA Parking is simply an “alter ego” of Arega or that it is being used to perpetuate a fraud or wrong. ( See generally Am. Third–Party Compl., WFM Mot. in Opp. (Dkt. No. 43)) Therefore, this Court finds no basis to disregard the corporate entity of USA Parking and will instead treat it as “an entity separate and distinct” from Arega. See Lawlor, 758 A.2d at 975. Because only USA Parking has entered into the agreement with WMF which forms the basis of WMF's claims against both USA Parking and Arega, this Court will dismiss the third-party complaint against Arega in his individual capacity.

IV. DISPOSITION OF DISPUTE BETWEEN WFM AND USA PARKING

At the center of the dispute between WFM and USA Parking is the Contractor Agreement (“Agreement”), in which USA Parking agrees to operate the parking facility at WFM' Georgetown store. The Agreement states, in relevant part:

10. Indemnification: Contractor shall indemnify, defend, save and hold harmless WFM from any and all claims made by third parties which are in any way, shape of [sic] form related to the products and/or services provided by or recommended by Contractor ... Contractor shall indemnify, defend, save and hold harmless WFM from any and all claims made by third parties which are in any way, shape of [sic] form related to the products and/or services made by third parties against WFM that arise from the breach of, or are inconsistent with, the warranties, representations, and/or agreements made by Contractor hereunder. Contractor shall indemnify, defend, save and hold harmless WFM from any and all claims made by third parties which are in any way, shape of [sic] form related to the products and/or services made by third parties against WFM that arise from the negligence and/or intentional acts of Contractor. Contractor's agreement to indemnify, defend, save, and hold WFM harmless shall include, but not be limited to, any and all attorney's fees WFM becomes obligated to pay in defense of the said claims (whether for its own defense of [sic] a third party claim, or to any third party who has expended attorney's fees to prosecute and [sic] action) and shall include appeals....

13. Arbitration: All disputes between Contractor [ ] and WFM [WFM] [ ] relating in any manner whatsoever to the relationship between the Parties, including without limitation, all disputes rising under this Agreement (“Arbitrable Claims”) shall be resolved by arbitration.

(Am. Third–Party Compl., Ex 2 (Agreement) at ¶¶ 10, 13.)

In this Agreement, the parties have explicitly agreed that the Federal Arbitration Act (“FAA”) “shall govern the interpretation and enforcement of the [arbitration provision].” ⁵ ( Id. at ¶ 13.) Under the FAA, a court presented with a motion to compel arbitration ⁶ must engage in a two-part analysis requiring it to it determine first the “enforceability of the agreement [to arbitrate] and then decide whether arbitration should be compelled.” Sheet Metal Workers' Int'l Ass'n, 767 F.Supp.2d at 167–68 (internal citation omitted); Nelson v. Insignia/Esg, Inc., 215 F.Supp.2d 143, 149 (D.D.C.2002). More specifically, a court must first decide whether the parties entered into a valid and enforceable arbitration agreement and, if so, whether the claims raised in the complaint fall within the scope of the arbitration agreement. Id.; Nur...