Signature Tech. Solutions v. Incapsulate, LLC

• Decision Date: 17 July 2014
• Docket Number: Miscellaneous Action No. 13–0661 RBW
• Citation: 58 F.Supp.3d 72
• Parties: Signature Technology Solutions, and Gary Goodman, Individually, Petitioners, v. Incapsulate, LLC, Respondent.
• Court: U.S. District Court — District of Columbia

58 F.Supp.3d 72

Signature Technology Solutions, and Gary Goodman, Individually, Petitioners

v.Incapsulate, LLC, Respondent.

Miscellaneous Action No. 13–0661 RBW

United States District Court, District of Columbia.

Signed July 17, 2014

Roxan Althea Kerr, Washington, DC, for Petitioners.

Matthew J. Focht, Gleason, Flynn, Emig & Fogleman Chtd., Rockville, MD, for Respondent.

MEMORANDUM OPINION

REGGIE B. WALTON, United States District Judge

Petitioners Signature Technology Solutions, LLC (“Signature”) and Signature's President, Gary Goodman, move to stay the arbitration initiated by respondent Incapsulate, LLC (“Incapsulate”). Motion to Stay Arbitration at 1. Upon careful consideration of the parties' submissions, the Court grants in part and denies in part the petitioners' motion.

I. BACKGROUND

The following facts are undisputed unless otherwise noted. On March 13, 2009, Signature and Incapsulate executed an agreement for Incapsulate to provide certain services to Signature in support of Signature's contract with the District of Columbia Public Schools Office of Special Education (“2009 Agreement”). Memorandum of Points and Authorities in Support of Motion to Stay Arbitration (“Mem.”) ¶ 35; Incapsulate, LLC's Opposition to Petitioners' Motion to Stay Arbitration (“Opp'n”) at 2. The 2009 Agreement expired on December 31, 2009, but provided that “the term of [the] Agreement may be extended for up to two (2) option years by the parties in writing if the Prime Contract is extended in the same manner.” Mem., Exhibit (“Ex.”) 1, Ex. A (2009 Agreement) § 2.0. The 2009 Agreement also stated that it “shall be governed and construed in accordance with the laws of the Commonwealth of Virginia,” id. § 20.0, and contained the following provision regarding the resolution of disputes:

If any matter hereunder is subject to a dispute between the parties which cannot be resolved to their mutual satisfaction, either party, by a written request for arbitration delivered to the other, shall require that the matter be arbitrated in Northern Virginia, pursuant to the commercial arbitration rules of the American Arbitration Association (“AAA”) then in effect. The arbitration decision and award shall be binding on the parties, and judgment thereon may be entered in any court of competent jurisdiction.

Id. § 13.0. Ajay Batish, the CEO of Incapsulate, and Gary L. Goodman, the CEO of Signature, signed the 2009 Agreement on behalf of their respective companies. Id. at 6.

The parties' positions as to what occurred after the 2009 Agreement was signed diverge considerably. Signature contends that “the parties had serious issues regarding contract management and billing” while the 2009 Agreement was in effect, Mem. ¶ 37, and that after its expiration, Signature and Incapsulate “continued to operate with no agreement in place while they negotiated a new contract,” id. ¶¶ 38–40. According to Signature, “[o]n or about June 15, 2010, ... Incapsulate sent an email to Mr. Goodman stating that it needed a [Signature] contract for immigration purposes” because “Incapsulate needed to provide a contract and letter signed by [Signature] to its immigration lawyer to assist one of Incapsulate's employees, Abhinav Duda, with a H1B [visa] application.” Id. ¶¶ 44–45. Signature alleges that “[t]he email also made clear that Incapsulate only changed the dates on the 2009 Agreement as well as the Statement of Work and requested that [Signature] sign the agreement to assist with the immigration issue.” Id. ¶ 47. “[I]n response to Incapsulate's request,” on June 21, 2010, Goodman executed the agreement sent by Incapsulate (“2010 Agreement”). Id. ¶ 48. Signature asserts that “[i]t was clear to both parties that they did not intend to be bound by the 2010 Agreement with the terms included therein” and that Incapsulate never returned an executed copy of the agreement to Signature. Id. ¶ 49. Signature contends that “[i]n fact, on [June]^{[ 1 ]} 16, 2010, [it] sent an email to Incapsulate stating that it had questions about the 2010 Agreement.” Id. ¶ 50. Thereafter on June 24, 2010, Signature “sent another email to Incapsulate confirming that it no longer had questions regarding the 2010 Agreement because Incapsulate did not intend to execute the 2010 Agreement as it was attempting to become the prime contractor on the contracts and was currently looking for office space in the District” and that “Incapsulate agreed to ‘hold off on the agreement and revisit the terms.’ ” Id. ¶¶ 51–52. According to Signature, “the parties continued to work together with no agreement in place,” id. ¶ 53, and then, “[i]n early 2011, the parties began negotiating a master subcontracting agreement to govern their relationship in all instances,” id. ¶ 55. Signature contends that

once again, the parties were unable to agree on certain terms including, but not limited to[:] (1) [the] percentage share to be paid to each party; (2) whether the current arrangement between the parties would allow [Signature] to become compliant with District law; (3) the amount to be paid to legal counsel to bring the contract into compliance with District law; and (4) jurisdiction and venue in the event of legal disputes between the parties.

Id. ¶ 56.

Incapsulate recounts an entirely different series of events. According to Incapsulate, “[o]n or about January 21, 2010, the parties extended their contractual relationship for the period ending December 31, 2010” and that the contract was signed by Goodman and a representative of Incapsulate, Brianna Burnell,² on June 21, 2010.

Opp'n at 2. Incapsulate contends that it “intended to be bound to the terms of the June 21, 2010 contract and any modifications thereto,” and “[a]t no time did [it] agree to ‘hold off’ on the agreement signed by Mr. Goodman and Ms. [Burnell] on or about June 21, 2010.” Id. at 2–3. Incapsulate further asserts that the contract between Signature and the District of Columbia Public Schools “was subsequently extended into 2011 through a series of quarterly memorandum agreements which incorporated the terms of the 2010 agreement” and that “[i]n response, Incapsulate and [Signature] continued the course of their relationship in 2011 as if their 2010 subcontract was still in place.” Id. at 3.

The purported 2010 Agreement is dated January 21, 2010. Mem., Ex. 1, Ex. B (2010 Agreement) at 1; Opp'n, Ex. 2, Ex. A (2010 Agreement) at 1.³ The purported 2010 Agreement states that it expires on December 31, 2010, but provides that “[t]he term of this Agreement may be extended for up to two (2) option years by the parties in writing if the Prime Contract is extended in the same manner.” Mem., Ex. 1, Ex. B (2010 Agreement) § 2.0. It contains the same arbitration and choice-of-law provisions as the 2009 Agreement. See id. §§ 13.0, 20.0. The copy of the purported 2010 Agreement attached to the Statement of Claim before the AAA is signed only by Goodman, with his signature dated June 21, 2010. Id. at 6. On the other hand, Incapsulate has submitted with its opposition to the Motion to Stay Arbitration a copy of the purported 2010 Agreement which also contains the signature of Brianna Burnell, dated June 21, 2010. Opp'n, Ex. 2, Ex. A (2010 Agreement) at 6. In response to Incapsulate's production of this document, the petitioners allege that Burnell either recently signed the agreement or that she never sent the executed copy to Signature. Mem. ¶ 76 n.1. Incapsulate also submitted with its opposition an affidavit from Burnell, in which she states that she executed the contract on June 21, 2010 and that she “ha[s] no reason to believe that [the] [p]etitioners did not receive a copy of the contract [she] signed on or about June 21, 2010.” Opp'n, Ex. 3 (Affidavit of Brianna Burnell (“Burnell Aff.”)) ¶¶ 3, 10. Moreover, Burnell states that “[i]t would be [her] habit and custom to send a copy of the executed agreement to the other party as soon as it had been signed.” Id. ¶ 10.

Signature and Incapsulate ended their relationship in late 2011. Mem. ¶ 58; Opp'n at 3. Incapsulate subsequently initiated arbitration proceedings against Signature and Goodman before the AAA seeking payment for work allegedly performed in 2010 and 2011. Mem. ¶ 59; Opp'n, Ex. 1 (Statement of Claim) at 1, ¶¶ 30–76. Signature and Goodman informed Incapsulate and the AAA “that [they] did not intend to participate in arbitration and stat[ed] unequivocally that they would seek the [C]ourt's opinion on the question of whether there is an agreement to arbitrate.” Mem. ¶ 70. Their motion seeking to stay the arbitration proceedings initiated by Incapsulate followed.

II. LEGAL STANDARD

A motion to compel arbitration pursuant to § 4 of the Federal Arbitration Act (“FAA”),⁴ 9 U.S.C. §§ 1 –16 (2012), is determined in accordance with the summary judgment standard of Federal Rule of Civil Procedure 56, “as if it were a request for ‘summary disposition of the issue of whether or not there had been a meeting of the minds on the agreement to arbitrate.’ ” Aliron Int'l, Inc. v. Cherokee Nation Indus., Inc., 531 F.3d 863, 865 (D.C.Cir.2008) (citations omitted). While motions to stay arbitration proceedings are not contemplated by § 4, the analysis of a claim for such relief is essentially the same as when analyzing a motion to compel arbitration because the argument that “no agreement to arbitrate was entered ... effectively raises the issue whether there was a meeting of the minds on the agreement to arbitrate.” Booker v. Robert Half Int'l, Inc., 315 F.Supp.2d 94, 99 (D.D.C.2004), aff'd, 413 F.3d 77 (D.C.Cir.2005). Thus, “the summary judgment standard is appropriate in cases where the District Court is required to determine arbitrability, regardless of whether the relief sought is an order to compel arbitration or to prevent arbitration.” Bensadoun v. Jobe–Riat, 316 F.3d 171, 175 (2d Cir.2003). Irrespective of how the filings before the Court are styled, both seek “summary disposition of the issue of whether or not there had been a...