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Inc. v. CTI Industries Corp.

United States District Court, W.D. North Carolina, Charlotte Division

September 20, 2017

GOD'S LITTLE GIFT, INC., doing business as HELIUM & BALLOONS ACROSS AMERICA also known as “HABAA”, and GARY PAGE, Plaintiffs,
v.
CTI INDUSTRIES CORPORATION A/K/A CONTAINER TECHNOLOGIES INC. Defendant.

          ORDER

          Frank D. Whitney Chief United States District Judge

         THIS MATTER is before the Court on Defendant's Motion to Compel Arbitration and Stay Proceedings (Doc. No. 2). Plaintiffs filed a response (Doc. No. 5) stating that they do not oppose Defendant's Motion (Doc. No. 2). Having carefully considered the motion, supporting memorandum, and the record in this case, the Court GRANTS Defendant's Motion.

         BACKGROUND

         On July 26, 2017, Plaintiffs filed this action in the General Court of Justice, Mecklenburg County. (Doc. No. 1-1). Defendant removed the matter to this Court on September 12, 2017, based upon diversity jurisdiction. Id. This cause of action stems from Plaintiffs' business relationship with Defendant. Id. Plaintiffs' complaint alleges that this is a lawsuit for: (1) deceptive and unfair trade practices for CTI having stolen balloon business from HABAA; (2) breach of contract for certain commissions owed based upon a commissions contract for Balloons sold by CTI; and (3) deceptive and unfair trade practices and conversion for unlawfully taking and expropriating certain proprietary software developed by HABAA. Id. at 3.

         On September 15, 2017, Defendant filed its Motion to Compel Arbitration and Stay Proceedings, citing a “Master Representative Agreement” (“Master Agreement”) and “Assignment Agreement” signed by Plaintiff. (Doc. No. 2-1). Both agreements state that they are governed by Illinois substantive law. Id. at 4. The Master Agreement includes an arbitration clause that states, in pertinent part:

13. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the violation of any term hereof, shall be settled by arbitration in Chicago, Illinois, pursuant to rules of the American Arbitration Association then in effect. Any judgment upon the award rendered in such arbitration may be entered in any court of competent jurisdiction.

Id. This arbitration clause incorporates the relevant American Arbitration Association rules, which state the following:

R-7. Jurisdiction
(a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.
(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.
(c) A party must object to the jurisdiction of the arbitrator to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objecting. The arbitrator may rule on such objections as a preliminary matter or as part of the final award. American Arbitration Association Commercial Arbitration Rules (2013 ed.).

Id. Defendant and Plaintiffs agree the arbitration clause within the Master Agreement is enforceable under the Federal Arbitration Act (“FAA”). (Doc. No. 2-1, p. 4-6) (Doc. No. 5, p. 2).

         DISCUSSION

         The FAA mandates the enforcement of arbitration agreements where such agreements (1) are valid under general principles of contract law and (2) are part of a contract or transaction involving interstate commerce. See 9 U.S.C. § 2. Moreover, when an enforceable arbitration agreement exists, and the issues in the dispute fall within its scope, a federal district court must stay the proceedings on a party's motion to compel when the other has “failed, neglected, or refused to comply with an arbitration agreement.” Gilmer v. Interstate /Johnson Lane Corp., 500 U.S. 20, 25 (1991) (citing 9 U.S.C. §§ 3, 4); see also Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) ...


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