parallel litigation as well as the possibility of inconsistent
determinations. A party ought not be able to avoid arbitration by suing a
related party "with which it has no arbitration agreement in the hope
that the claim will be adjudicated first and have preclusive effect on
the arbitration." WorldCrisa, 129 F.3d at 76, quoting, IDS Life Ins. Co.
v. SunAmerica, Inc., 103 F.3d 524, 530 (7th Cir. 1996). Additionally,
where arbitrable and non-arbitrable claims arise out of the same set of
facts, the arbitration may decide the same facts at issue in the
litigation making a stay appropriate. See e.g., Aekyung Co., Ltd., v.
Intra & Co., Inc., 2000 WL 1521202 *2 (S.D.N.Y. October 13, 2000); O'Dean
v. Tropicana Cruises Internat'l, Inc., 1999 WL 335381 *3 (S.D.N.Y. May
Application of these principles here leads the court to conclude that a
stay of the entire matter is appropriate. The claims against Kabas arise
out of the same set of facts as those forming the Bank's claim against
the Mortgage Company Defendants. Factually, Kabas is tied into the
alleged wrongdoing by virtue of the fact that he acted as the closing
agent in connection with the loans detailed in the complaint. Litigation
of these claim in this forum would lead to duplication of effort and a
possibility of inconsistent determinations. Because of these facts and the
fact that the majority of the Bank's claims are made primarily against
the Mortgage Company Defendants, the court holds that it is prudent to
stay the judicial proceedings against Kabas pending the outcome of the
arbitration involving the Mortgage Company Defendants.
It appears that the Mortgage Company Defendants are eager to proceed to
arbitration and will do nothing to impede the progress of the
arbitration. If this does not prove to be the case, an application for
relief from the stay may be entertained. See WorldCrisa, 129 F.3d at 76
(party may move to vacate stay is other party impedes arbitration or if
arbitration does not conclude within a reasonable time).
VII. The Court Cannot Compel Arbitration
The court notes, and the parties agree, that the agreement to arbitrate
calls for arbitration in the State of Ohio. Under the FAA, this court is
not empowered to compel arbitration outside of this district and will
enter no such order. See 9 U.S.C. § 4.
The court recognizes, however, that the Mortgage Company Defendants,
rioting their presence in this state and the Bank's election to pursue
litigation here, have offered to arbitrate the dispute in New York. The
Bank, however, has not taken a position as to whether it will agree to a
New York arbitration. Instead, the Bank states only that the arbitration
may take place here "if Provident prefers." Whether or not the Bank
"prefers" a New York arbitration, however, is not stated. If Provident is
willing to agree to arbitrate this dispute in New York, it should make
that intent known to defendants and the parties may thereafter enter into
an appropriate stipulation. In the meantime, this court will not order
that any arbitration proceed. Instead, the court orders only that the
Clerk of the Court close this case subject to re-opening upon being
advised that the arbitration has come to a conclusion.
Defendants' motions are granted to the extent that this case is stayed
pursuant to the Federal Arbitration Act and the court's inherent power. No
opinion is expressed regarding the merits of the issues raised in
connection with any motion to dismiss at this time. The Clerk of the
Court is directed to terminate all motions
herein and to close this case subject to reopening upon being advised
that the arbitration has come to a conclusion.