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Trident Atlanta, LLC v. Charlie Graingers Franchising, LLC

United States District Court, E.D. North Carolina, Southern Division

April 4, 2019




         This matter is before the Court on motions to compel arbitration filed by defendants Gregory Bruce George and Jason Matthew Nista. [DE 103, 112]. The motions are ripe for disposition. For the reasons that follow, defendants' motions to compel [DE 103, 112] are GRANTED. The individual plaintiffs-Ms. Marcie Bindes, Mr. Dale Atkinson and Mrs. Rose Atkinson, and Mr. Trent Moore-are directed to arbitrate their claims against all three individual defendants, George, Nista, and Louis Craig North. The action will be stayed pending arbitration as to Ms. Bindes, Mr. and Mrs. Atkinson, and Mr. Moore.


         The Court adopts, as if fully set forth herein, the factual and procedural background provided in its February 4, 2019 order. [DE 101]. At that time, the Court granted in part and denied in part the individual defendants' motions to dismiss. In particular, the Court found that plaintiffs had failed to state civil claims under the Racketeer Influenced and Corrupt Organizations Act upon which relief could be granted, and therefore dismissed Counts 7, 8, and 9 of the plaintiffs' amended complaint. The Court also found that plaintiffs had alleged sufficient facts to state claims against the individual defendants for fraud, negligent misrepresentation, breach of fiduciary duty, and violation of North Carolina's Unfair and Deceptive Trade Practices Act, and therefore did not dismiss Counts 2, 3, 5, and 6. Counts 1, 4, and 10 were brought only against the corporate defendants, as to whom the case is currently stayed. [DE 84]. As such, the Court expressed no opinion on those three causes of action.

         After the Court's February 4, 2019 order, the individual defendants filed their answers to plaintiffs' amended complaint. [DE 105, 110, 111]. A scheduling order was entered. [DE 116]. But defendants George and Nista filed motions to compel arbitration, arguing that the franchise, agreements signed by the individual plaintiffs contained binding arbitration provisions. [DE 103, 112]. Defendant North, now proceeding pro se, did not move to compel arbitration. Plaintiffs have responded in opposition to the motions to compel. [DE 117].


         The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., governs the resolution of private disputes through arbitration. Patten Grading & Paving, Inc. v. Skanska USA Bldg, Inc., 380 F.3d 200, 204 (4th Cir. 2004). Section 2 of the FAA provides that a "written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract. .. shall be valid, irrevocable, and enforceable." 9 U.S.C. § 2; see also Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 629-30 (2009) (construing 9 U.S.C. § 2 as making written arbitration agreements binding unless the underlying contract is otherwise void).

         The "question of arbitrability" is to be decided by the court unless the parties clearly and unmistakably provide otherwise. AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649 (1986). Courts have "no choice but to grant a motion to compel arbitration where a valid arbitration clause exists and the issues in a case fall within its purview." Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) (citation omitted). "[Q]uestions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983). Accordingly, disagreements related to the scope of arbitration are resolved in favor of arbitration. AT&T, 475 U.S. at 650; Moses H. Cone, 460 U.S. at 24-25 ("The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability."). Broad, general, and vague agreements will not meet the clear-and-unmistakable standard imposed on arbitration agreements. See AT&T, 475 U.S. at 645 (holding that the clause committing all "differences arising with respect to the interpretation of this contract or the performance of any obligation hereunder" did not permit the arbitrator to determine arbitrability issues).

         The franchise agreements that the individual plaintiffs signed between September 2015 and September 2016 contained the following provisions:

16.03 Arbitration. Except as specifically provided under this Agreement, any dispute or claim relating'to or arising out of this Agreement must be resolved exclusively by mandatory arbitration by and in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA") or another arbitration service agreed to by the parties. Arbitration will be conducted solely on an individual, not a class-wide, basis, ;1 unless all parties so agree. No. award in arbitration involving Franchisor will have any effect of preclusion or collateral estoppels in any other adjudication or arbitration. A single arbitrator shall be selected in accordance with standard AAA procedure, and the proceedings will be conducted at its Wilmington, North Carolina, office. Each party shall bear all of its own costs and attorneys' fees and one-half of the arbitrator's expenses. The decision of the arbitrator shall be final and binding.
16.04 Applicability. This dispute resolution section applies to claims by and against all parties and their successors, owners, managers, officers, directors, employees, agents, and representatives, as to claims arising out of or relating to this Agreement, except as stated above. This dispute resolution clause shall survive the termination or expiration of this Agreement.
16.05 Governing Arbitration Law. Notwithstanding any choice of law provision of this Agreement, all issues relating to arbitration or the enforcement of the agreement to arbitrate contained in this Agreement are governed by the U.S. Federal Arbitration Act (9 U.S.C. § 1 et seq.) and the U.S. federal common law of arbitration. This federal act preempts any state rules on arbitration, including those relating to the site of arbitration. Judgment on an arbitration award, or on any award for interim relief, may be entered in any court having jurisdiction, and will be binding.
16.06 Governing Law/Consent to Venue and Jurisdiction. Except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 er seq.) or other federal law, this Agreement shall be interpreted under the laws of the state of North Carolina and any dispute between the parties shall be governed by and determined in accordance with the substantive laws of the state of North Carolina, which laws shall prevail in the event of any conflict of law. Franchisee and Franchisor have negotiated regarding a forum in which to resolve any disputes, which may arise between them and have agreed to select a forum in order to promote stability in their relationship. Therefore, if a claim is asserted in any legal proceeding involving Franchisee, its officers, directors, managers or partners (collectively, "Franchisee Affiliates") and Franchisor, its parent, subsidiaries or affiliates and their respective officers, directors and sales employees (collectively, "Franchisor Affiliates") the parties agree that the exclusive venue for disputes between them shall be in the state and federal courts of North Carolina or the Wilmington, North Carolina office of the AAA and each party waives any objection they may have to the personal jurisdiction of or venue in the state and federal courts of North Carolina or the Wilmington, North Carolina office of the AAA. Franchisor, Franchisor Affiliates, Franchisee and Franchisee Affiliates each waive their rights to a trial by jury.
16.07 Limitations on Actions. Except for payments owed by one party to the other, and unless prohibited by applicable law, any legal action or arbitration proceeding brought or initiated with respect to any dispute arising from or related to this Agreement or with respect to any breach of the terms of this Agreement must be brought or instituted within a period of two (2) years from the date ...

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