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Capps v. Harris

United States District Court, E.D. North Carolina

June 6, 2019

MONTY HARRIS; NEWMARK SOUTHERN REGION, LLC; and DOES 1-25, [1] Defendants. GREGORY KATZ, Plaintiff and Counter-Defendant,
TIMOTHY CAPPS, Defendant and Counter-Claimant, and KACIE HOPKINS VAN HINE, Defendant.




         This matter is before the court on defendants' motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 2-4 (“FAA”) (DE 66).[2] Also before the court is defendant Katz's and Harris's motion to strike the declaration of Pietro Deserio (DE 106), and plaintiff's motion for leave to supplement his motion to compel arbitration (DE 140).[3] The issues raised have been fully briefed, and in this posture are ripe for ruling. For the reasons that follow, defendants' motion to strike is denied, plaintiff's motion for leave to supplement is granted, and defendants' motion to compel arbitration is granted.


         Plaintiff Timothy Capps (“Capps”)[4] is a former real estate broker that worked with defendants to represent commercial tenants. For reasons disputed by the parties, the relationship between plaintiff and defendants deteriorated, ultimately resulting in plaintiff's termination from employment with defendant Newmark. On December 22, 2017, defendant Katz filed a lawsuit in the United States District Court for the Northern District of Georgia, seeking damages and declaratory judgment that no legal partnership existed between defendant Katz and plaintiff. The case was transferred to this court on March 22, 2019. One week later, plaintiff filed several counterclaims against defendant Katz, and initiated an additional lawsuit against defendant Harris and defendant Newmark. Plaintiff seeks to recover damages, including commissions he allegedly owed to him.

         Defendants Katz and Harris answered plaintiff's counterclaims and complaint respectively, while defendant Newmark filed a motion to dismiss the claims against it. Defendant Newmark also moved to stay discovery in the case, in part because it contended plaintiff's claims were subject to arbitration. The court entered case management order consolidating the two cases, setting a plan for discovery, and finding as moot defendant Newmark's motion to stay discovery.

         On November 26, 2018, the court granted in part and denied in part defendant Newmark's motion to dismiss. The court dismissed all claims against former defendant Newmark & Company Real Estate, Inc., and all claims except breach of contract by against defendant Newmark. In pertinent part, the court concluded that plaintiff stated a claim for breach of contract regarding defendant Newmark withholding commissions. Thereafter, defendant Newmark counterclaimed against plaintiff for breach of a promissory note.

         Over two months before the dispositive motion deadline in effect at the time, defendants Katz and Harris filed their first motion for partial summary judgment on February 21, 2019. The motion requested that the court grant defendant Katz's claim for declaratory relief, and dismiss all claims by plaintiff premised upon the existence of a legal partnership.

         On March 4, 2019, defendants Katz and Harris filed the instant motion to compel arbitration. Defendant Newmark joined the motion ten days later. In support of the motion, defendants rely upon plaintiff's deposition testimony and exhibits discussed therein (“Capps Dep.” (DE 67-1, 77-1)), plaintiff's service agreement with defendant Newmark (“Service Agreement” (DE 25-1)), the Newmark Grubb Knight Frank Broker Handbook (“Handbook” (DE 34-4)), plaintiff's responses to defendant Newmark's requests for production of documents (“Requests for Production” (DE 67-2)), and a letter from plaintiff's counsel refusing to engage in arbitration (“Letter” (DE 67-3)).

         Plaintiff responded in opposition to defendants' motion to compel arbitration on April 5, 2019, relying upon several pieces of email correspondence among plaintiff and different employees of defendant Newmark (“Email Correspondence” (DE 91-1-91-5, 91-7-91-12), deposition testimony from defendant Harris's (“Harris Dep.” (DE 91-6)) and Luis Alvarado (“Alvarado Dep. (DE 140-1)), [5] and plaintiff's initial disclosures (DE 91-13). Defendants Katz and Harris replied, relying upon email correspondence from plaintiff invoking arbitration (“Email Correspondence” (DE 105-1, 105-3)), plaintiff's arbitration position statement (“Position Statement” (DE 105-2)), and defendant Katz's deposition (“Katz Dep.” (DE 105-4)).

         Defendants Katz and Harris also filed the instant motion to strike plaintiff's declaration and accompanying email correspondence. Defendants argue that the email correspondence should not be considered by the court because it is not properly authenticated under the Federal Rules of Evidence. Plaintiff opposes the motion, asserting that attorneys may authenticate documents that the opposing party produces in discovery, or where the opposing parties do not challenge the authenticity of the documents.

         In the meantime, plaintiff filed motion for partial summary judgment on defendant Katz's claims.[6] Defendants Katz and Harris filed a second motion for partial summary judgment, seeking dismissal of the remainder of plaintiff's claims. Where discovery remained ongoing, defendant Newmark was granted an extension of the dispositive motions deadline, and the parties agreed to allow supplemental briefing on the pending motions for summary judgment.


         The undisputed facts may be summarized as follows. Plaintiff, as a key employee of TMC General Brokerage, LLC (“TMC”), entered into Service Agreement with defendant Newmark and TMC. (Service Agreement (DE 25-1)). As part of the Service Agreement, plaintiff's company agreed “to execute concurrently herewith and abide by the Dispute Resolution Agreement, which is incorporated as part of this Agreement.” (Service Agreement (DE 25-1) ¶ 2). Plaintiff executed the Dispute Resolution Agreement, which provides in the pertinent part “if your business maintains an internal dispute resolution policy or process governing certain disputes (for example, internal resolution of disputes regarding the allocation of commissions among team members), then that internal dispute resolution policy will govern adjudication of disputes covered by that policy.” (Capps Dep. (DE 67-1, 77-1) 305:15-22; Dispute Resolution Agreement (DE 67-1) at 8, 10).

         Plaintiff also signed an acknowledgment of receipt of the Handbook, which represents defendant Newmark's “general policies, procedures, and guidelines.” (Capps Dep. (DE 67-1) 301:10-23; Acknowledgment (DE 67-1) at 7). The acknowledgment further provides that “all claims and disputes arising from or related to my employment or services with the Company . . . are subject to the dispute resolution processes set forth in the Company's Dispute Resolution Policy and Agreement.” (Capps Dep. (DE 67-1) 301:10-23; Acknowledgment (DE 67-1) at 7). Section 15 of the Handbook specifically prescribes procedures for internal arbitration of commission disputes. (See Handbook (DE 34-4) at 16-17). Section 18 of the Handbook requires that commission disputes arising from transactions closed following a broker's termination also be submitted to arbitration under section 15. (Handbook (DE 34-4) at 18).

         In the fallout between plaintiff and defendants Katz and Harris, plaintiff attempted to invoke his right to arbitrate commission disputes. (See Email Correspondence (DE 91-2) at 8). According to plaintiff, defendant Newmark denied plaintiff access to counsel, refused to submit his claims to arbitration on the basis that such claims were untimely in the face of explanation by plaintiff, did not disqualify an impartial arbitrator, and prevented plaintiff from obtaining information necessary to arbitrate commission disputes. (See Alvarado Deposition (DE 140-1) 77:10-78:24, 108:23-109:14, 125:5-127:15, 132:15-134:20, 139:4-177:9; Harris Dep. (DE 91-6) 172:13-174:23, 180:3-12; Email Correspondence (DE 91-3) at 2-6; Email Correspondence (DE 91-4) at 1-3; Email ...

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