United States District Court, W.D. North Carolina, Asheville Division
MEMORANDUM OF DECISION AND ORDER
REIDINGER UNITED STATES JUDGE
MATTER is before the Court on the Plaintiff's
Motion for Partial Summary Judgment [Doc. 35] and the
Defendant's Renewed Motion to Compel Arbitration and Stay
Proceedings. [Doc. 39].
Wright Enterprises, Inc. (the “Plaintiff”) and
Avadim Health, Inc. (the “Defendant”) entered
into a distribution agreement in March 2014. [Doc. 14 at 6].
The distribution agreement gave the Plaintiff the right to
market and sell the Defendant's products in a certain
market. [Doc. 1 at ¶ 13].
2015, the Defendant acquired the Plaintiff's business.
[Id. at ¶ 15]. The parties documented the
acquisition by signing a written “Agreement of Purchase
and Sale” (the “Agreement”). [Id.
at ¶ 15]. The Agreement stated that the Defendant would
acquire substantially all of the Plaintiff's assets,
including the distribution agreement, in exchange for (1) an
amount of the Defendant's stock and (2) a percentage of
receivables from the sales of some of the Defendant's
products. [Id. at 20-21]. The section of the
Agreement detailing the products for which the Plaintiff
would receive a royalty states that:
[The Defendant] agrees to pay [the Plaintiff] a portion of
payment received by [the Defendant] resulting from sales,
licensing, private labeling, and/or distribution of its
products specifically (1) intended for topical use and
(2) marketed for use by athletes or in connection with
athletics, sports, training, or exercise (the “Innergy
Products”) to customers in the U.S.A., its
territories and possessions, including the District of
Columbia . . . however, that products marketed
specifically (1) to hunters, campers, and fisherman, or (2)
for use in hunting, camping or fishing shall not be deemed to
be Innergy Pr
[Id. at 20-21 (emphasis added)].
Agreement also has a section detailing how the parties are to
resolve disputes regarding the royalty payments.
[Id. at 21]. According to that section, such a
shall be resolved by an accounting firm mutually agreed upon
by [the Plaintiff] and [the Defendant] or, failing such
agreement within thirty (30) days following notice of the
dispute by [the Plaintiff], then upon the written request of
either [the Plaintiff] or [the Defendant], such nationally
recognized independent accounting firm selected by the
International Institute for Conflict Prevention &
Resolution (“CPR”) in accordance with the CPR
Non-Administered Arbitration Rules (such identified
accounting firm, or if applicable, the other firm selected,
the “Accountant”). Such Accountant shall be
instructed to make a final determination of such payment . .
. [and] [s]uch determination shall be final and binding on
[Doc. 1 at 21-22].
October 11, 2018, the Plaintiff filed the present action
against the Defendant, asserting claims for breach of
contract, indemnification, declaratory judgment, specific
performance, accounting, and an award of attorneys' fees.
[Id. at ¶¶ 39-62]. The Plaintiff alleges
that the Defendant failed to pay the Plaintiff the
appropriate royalty for sales of products that were subject
to the royalty provision. [See id.].
November 21, 2018, the Defendant answered the Complaint,
claiming that no contract ever existed between the parties
because there was “no meeting of the minds”
regarding the products to be included within the royalty
provision of the Agreement. [Doc. 14 at 1-11]. The Defendant
also asserted a counterclaim against the Plaintiff for
“rescission of agreement of purchase and sale.”
[Id. at ¶¶ 1-11]. On December 11, 2018,
the Plaintiff answered the Defendant's counterclaim.
December 4, 2018, the Defendant filed a Motion to Compel
Arbitration and to Stay Proceedings. [Doc. 15]. On December
18, 2018, the Plaintiff filed a Response to the Motion to
Compel Arbitration and Stay Proceedings. [Doc. 18]. The Court
held a hearing on the Defendant's motion on May 8, 2019.
[Doc. 34]. On May 22, 2019, the Court denied the
Defendant's Motion to Compel Arbitration and to Stay
Proceedings pending resolution of the Defendant's
counterclaim for rescission. [Id. at 3].
Specifically, the Court ruled that it first needed to
ascertain whether a valid agreement exists between the
parties before determining whether arbitration should be
compelled. [Id.]. If there is no agreement, then
there is no agreement to arbitrate.
11, 2019, the Plaintiff filed a Motion for Partial Summary
Judgment on the Defendant's Counterclaim. [Doc. 35]. On
July 11, 2019, the Defendant filed a Motion to Dismiss its
Counterclaim without prejudice. [Doc. 38]. The Plaintiff
refused to consent to the Defendant's motion unless the
Defendant dismissed the counterclaim with prejudice. [Doc. 37
at 3]. On July 24, 2019, the Plaintiff filed a Response to
the Defendant's Motion to Dismiss its Counterclaim. [Doc.
42]. On July 24, 2019, the Defendant filed its Response to
the Plaintiff's Motion for Partial Summary Judgment