Lacheney v. ProfitKey Intern., Inc., Civ. A. No. 3:93CV173.
Decision Date | 22 April 1993 |
Docket Number | Civ. A. No. 3:93CV173. |
Citation | 818 F. Supp. 922 |
Parties | Thomas E. LACHENEY, Plaintiff, v. PROFITKEY INTERNATIONAL, INC., Defendant. |
Court | U.S. District Court — Eastern District of Virginia |
Thomas E. Lacheney, Richmond, VA, pro se.
Michael John Farley, Warren Eugene Zirkle, McGuire, Woods, Battle and Boothe, Richmond, VA, David S. Godkin, Carl E. Metzger, Testa, Hurwitz & Thibeault, Boston, MA, for defendant.
This matter is before the Court on defendant ProfitKey International, Inc.'s Motion to Stay This Action Pending Compulsory Arbitration. Plaintiff Thomas E. Lacheney is proceeding pro se.
For the reasons set forth below, as well as those stated from the bench at the hearing held on defendant's motion on April 14, 1993, defendant's motion will be GRANTED.
On April 17, 1991, defendant ProfitKey entered into a contract with Software Enterprises, Inc. (SEI), permitting SEI to market ProfitKey computer software within the state of Virginia under certain terms and conditions. Plaintiff Lacheney brings this lawsuit as the alleged assignee of SEI's rights under that contract. While Mr. Lacheney was not expressly made a party to the contract, he was actively involved in the negotiations between ProfitKey and SEI.
ProfitKey is a Delaware corporation with its principal place of business in Salem, New Hampshire. Plaintiff Lacheney is a Virginia resident; SEI is a Virginia corporation.
The contract between ProfitKey and SEI includes, inter alia, the following provision:
11.1 ARBITRATION PROCEDURE. All claims, disputes, controversies, and other matters in question between the parties to this Agreement arising out of or relating to this Agreement or one or more Products shall be submitted to binding arbitration. Such arbitration shall be conducted in the State of Massachusetts by the Commercial Arbitration Rules of the American Arbitration Association by a single arbitrator appointed by the American Arbitration Association and agreed upon by both parties. Insofar as possible such arbitrator shall be required to have substantial experience in the field of computer application software sales, marketing and support. In no event shall both parties have the right to recover from each other any indirect, special, incidental, or consequential damages (including lost profits). The decision of the arbitrator shall be final and binding on both the Marketing Associate and ProfitKey and may be entered and enforced in any court of competent jurisdiction by any party to this Agreement.
In his Complaint plaintiff Lacheney, notwithstanding the arbitration provision, seeks rescission of the contract between ProfitKey and SEI and restitution for the value of services performed on behalf of ProfitKey.
9 U.S.C. § 2. If a suit nevertheless is brought in federal court upon any issue referable to arbitration under such an agreement, the court in which the suit is brought must, upon application of one of the parties, stay the trial of the action until arbitration has been completed. 9 U.S.C. § 3. Accordingly, unless this case fits within an exception to the FAA's requirements, defendant's motion to stay must be granted.
The diversity of the parties, plaintiff asserts, was the only "interstate" aspect of the contract. As plaintiff notes, "the mere circumstance of diversity of citizenship between the parties is not sufficient to command application of the Federal Act." Maxum Foundations, Inc. v. Salus Corp., 779 F.2d 974, 978 n. 4 (4th Cir.1985). When, however, "the transaction between the parties evidences other connections to interstate commerce," the FAA is applicable.
The applicability of the FAA to a personal services contract not involving any interstate shipment of goods was considered in Burke County Public Schools Board of Education v. Shaver Partnership, 303 N.C. 408, 279 S.E.2d 816 (1981), which stated:
It is clear ... that a contract need not contemplate the interstate shipment of goods in order to evidence a transaction involving commerce.... A personal service contract which contemplates substantial interstate activity is a contract evidencing a transaction involving commerce within the meaning of the Act.
Id., 279 S.E.2d at 821. The proper test, the North Carolina court determined, was that set forth by Judge Lumbard in his concurring opinion in Metro Industrial Painting Corp. v. Terminal Construction Co., 287 F.2d 382 (2d Cir.1961), cert. denied, 368 U.S. 817, 82 S.Ct. 31, 7 L.Ed.2d 24 (1961):
This Court likewise adopts the reasoning of Judge Lumbard. Applying that test in the present case, the contract clearly appears to have contemplated "substantial interstate activity." Most importantly, the principal goal of the contract was to provide for the sales of products of ProfitKey, a New Hampshire corporation, to customers in Virginia. In addition, the contract contains several specific provisions for interstate activity:
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