Nat. City Golf v. Higher Ground Country Club, 06 Civ. 7784(GEL).
| Decision Date | 23 March 2009 |
| Docket Number | No. 06 Civ. 7784(GEL).,06 Civ. 7784(GEL). |
| Citation | 641 F.Supp.2d 196 |
| Parties | NATIONAL CITY GOLF FINANCE, Plaintiff, v. HIGHER GROUND COUNTRY CLUB MANAGEMENT COMPANY, LLC, Defendant—Third-Party Plaintiff, v. ProLink Solutions, LLC, Third-Party Defendant. |
| Court | U.S. District Court — Southern District of New York |
Frank Peretore, Peretore & Peretore, P.C., Staten Island, NY, for plaintiff.
Brian C. Wille, Kostelanetz & Fink, LLP, New York, NY, for defendant— third-party plaintiff.
Marc D. Leve, Silverberg, Stonehill, Goldsmith & Haber, P.C., New York, NY, Robert J. DuComb, Jr., Phoenix, AZ, for third-party defendant.
Defendant and third-party plaintiff Higher Ground Country Club Management Company, LLC ("Higher Ground") asserts claims under New York state law against third-party defendant ProLink Solutions, LLC ("ProLink") for breach of warranty and for indemnification and contribution for any losses Higher Ground may incur in connection with the claims brought against it by National City Golf Finance ("National City"). Pursuant to an arbitration clause in the Service Agreement provided by ProLink to Higher Ground, ProLink moves to dismiss the Third-Party Complaint or, in the alternative, to compel arbitration, to enforce the clause selecting Maricopa County, Arizona, as the forum for arbitration, and to stay the proceedings until the arbitration is completed. For the reasons stated below, ProLink's motion will be granted, and proceedings on the Third-Party Complaint will be stayed pending arbitration.
The facts of the underlying dispute are discussed more fully in this Court's opinion in National City Golf Finance v. Higher Ground Country Club Management Company, LLC, No. 06 Civ. 7784, 2008 WL 904728 (S.D.N.Y. Apr. 3, 2008). Higher Ground manages and operates the Silo Ridge Country Club ("Silo Ridge"), including the club's golf course. ProLink is a manufacturer of distance measurement and course management systems for golf courses. Greg Ward, a ProLink salesman, made a series of sales calls to Higher Ground to pitch ProLink's GPS systems in 2004 and 2005. According to Higher Ground, Ward demonstrated the most technologically advanced and fully featured of its GPS systems, the ProStar model, to Higher Ground's general manager Robert Caeners, who agreed to lease it on a "Pay-for-Play" basis. .)
On April 27, 2005, Ward delivered a Lease Agreement and a Service Agreement to Higher Ground. (Id. ¶¶ 13-15; Affidavit of Gregory Ward, dated July 10, 2008 ("Ward Aff.") ¶ 9.) The Lease Agreement committed Higher Ground to remit to National City Golf Finance all of the payments Higher Ground received from golfers using the GPS system. The Service Agreement laid out the terms for the installation, configuration and ongoing maintenance of the GPS units by ProLink for Higher Ground.
In June of 2005, ProLink installed GameStar GPS units on the golf carts at Silo Ridge. (Wille Aff., Ex. A ¶ 16.) The GameStar GPS system was an older model with fewer features than the ProStar model that Ward had demonstrated to Higher Ground and that Higher Ground claims it expected to receive.
Higher Ground was dissatisfied with the units installed. Although Higher Ground let golfers use the GPS system and remitted payments to National City (Wille Aff., Ex. A ¶¶ 18-21; Affidavit of Lawrence D. Bain, dated July 10, 2008 ("Bain Aff."), Ex. G.), it also repeatedly complained to ProLink about problems with the GPS equipment and requested regular servicing of it. (Wille Aff., Ex. A ¶¶ 18-21; Bain Aff., Ex. F.)
When Higher Ground leased new golf carts in early 2006, it refused to pay to have the GameStar units installed on the new carts. (Wille Aff., Ex. A ¶ 22.) ProLink repossessed the units in April of 2006.
The package of documents Ward presented to Caeners on April 27, 2005 included the Lease Agreement, a Payment Schedule, and a Certificate of Acceptance, all of which Caeners signed. (See Wille Aff., Ex. B.) Ward also gave Higher Ground a Service Agreement, governing the terms of ProLink's installation, service and removal of the GPS units for Higher Ground, which Ward alleges Caeners also signed. (Ward Aff. ¶¶ 9-10.)
The Service Agreement includes an arbitration clause, which provides that:
All disputes under this Agreement shall be submitted to binding arbitration in accordance with the procedures of the Commercial Rules of the American Arbitration Association and judgment of the arbitrator shall be binding as a final judgment and shall be entered by a court of competent jurisdiction. The procedures specified herein shall be the sole and exclusive procedure for resolution of disputes arising out of or relating to this Agreement except that [ProLink] may seek a preliminary injunction or other preliminary judicial relief necessary to protect its rights in, and avoid irreparable damage to, the ProLink System.
.) The Service Agreement also includes a forum selection clause which states that (Id. ¶ 12.9.)
The record includes an unsigned copy of the Service Agreement (Id., Ex. A), but ProLink has not produced a copy signed by Caeners. Caeners contends that he has "no recollection of ever signing" the Service Agreement and has "no reason to believe that such an agreement was ever signed." (Affidavit of Robert Caeners, dated July 1, 2008 ("Caeners Aff."), ¶ 5.)
Following ProLink's repossession of the units, National City sued Higher Ground for breach of the lease agreement. National City moved for summary judgment on the grounds that payment by Higher Ground was due under any circumstances and, that by refusing to continue to use the GameStar units, Higher Ground had breached its contract. Higher Ground also moved for summary judgment, contending that it had been swindled by ProLink's alleged bait and switch and owed National City nothing. In the alternative, Higher Ground sought permission to implead ProLink pursuant to Fed.R.Civ.P. 14(a). On April 3, 2008, this Court denied both summary judgment motions and allowed Higher Ground to implead ProLink. See National City Golf Finance, 2008 WL at *12-13.
In its Third-Party Complaint, Higher Ground alleges that it is entitled to damages because ProLink breached its warranty that it would (a) provide Higher Ground with the ProStar model and (b) that the model would operate as represented. (Third-Party Compl. ¶¶ 14-15.) Higher Ground also demands indemnification and contribution, arguing that, due to the alleged breach of warranty, ProLink is liable to Higher Ground for any damages Higher Ground may be found to owe to National City Golf. (Id. ¶¶ 7-8.)
Pursuant to the arbitration provision in the Service Agreement, ProLink now moves to dismiss the Third-Party Complaint or to stay the proceedings and compel arbitration in Maricopa County, Arizona. Higher Ground responds that its claims are unrelated to the Service Agreement and therefore fall outside the scope of the arbitration clause, and also that the Service Agreement was never signed and is thus unenforceable under the New York statute of frauds.
Pursuant to the Federal Arbitration Act ("FAA"), an arbitration clause within any "contract evidencing a transaction involving commerce ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Higher Ground is a limited liability company organized and existing under the laws of the State of New York, with a principal place of business in Amenia, New York. ProLink is a limited liability company organized and existing under the laws of the State of Delaware, with its headquarters in Chandler, Arizona. The manufacture and installation of the GPS units involved materials and labor in interstate commerce. As a result, the agreement between Higher Ground and ProLink is a "contract evidencing a transaction involving commerce" and is therefore governed by the FAA. 9 U.S.C. § 4; see also Garten v. Kurth, 265 F.3d 136, 142 (2d Cir.2001); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 401, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967).
Federal policy strongly favors arbitration as an alternative dispute resolution process. See, e.g., Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 19 (2d Cir.1995); David L. Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.2d 245, 248 (2d Cir.1991). The Second Circuit has noted that the FAA "requires the federal courts to enforce arbitration agreements, reflecting Congress' recognition that arbitration is to be encouraged as a means of reducing the costs and delays associated with litigation." Vera v. Saks & Co., 335 F.3d 109, 116 (2d Cir.2003).1
Section 3 of the FAA authorizes a stay of federal proceedings "where the court is satisfied that the issue before it is arbitrable under the agreement." Genesco, Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 844 (2d Cir.1987); see 9 U.S.C. § 3. Although Section 4 of the FAA allows a court to compel arbitration, "a federal court lacks authority pursuant to 9 U.S.C. § 4 to compel arbitration outside its district." Sea Spray Holdings, Ltd. v. Pali Fin. Group, Inc., 269 F.Supp.2d 356, 363 (S.D.N.Y.2003); see 9 U.S.C. § 4 (...
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