The opinion of the court was delivered by: Buchwald, District Judge.
Plaintiff GMAC Commercial Credit, LLC ("plaintiff" or "GMAC")
filed suit against Springs Industries, Inc. ("defendant" or
"Springs") in the Supreme Court of the State of New York, County
of New York, on April 3, 2000, to recover moneys allegedly owed
it on several unpaid invoices. Defendant removed the action to
this Court on April 14, 2000, pursuant to 28 U.S.C. § 1441 and
1446. Defendant now moves pursuant to the Federal Arbitration
Act, 9 U.S.C. § 1 et seq. ("FAA") and Fed.R.P. 12(b)(1) and
12(b)(6) to stay or dismiss the action and to compel
arbitration. For the following reasons, defendant's motion is
granted, the complaint is dismissed and the parties are ordered
to proceed to arbitration in Charlotte, North Carolina under the
terms of the arbitration agreement.
Springs' relationship with Rugmakers began with its "Initial
Purchase Order", dated December 19, 1997. Attached to the
Initial Purchase Order and incorporated therein was a lengthy
"Standard Terms and Conditions of Purchase" prepared by Springs.
The "Standard Terms" included an arbitration provision that
"Arbitration: Seller agrees to submit any disputes
arising under this Order to binding arbitration in
accordance with the rules of the American Arbitration
Association. Seller and Springs agree that any
arbitration shall be held in the city of Charlotte,
Emerson Aff. Ex. A, Standard Terms and Conditions of Purchase, ¶
16. Springs placed a second purchase order (referred to in the
Complaint as "Purchase Order No. 1") on January 16, 1998.
Purchase Order No. 1 explicitly incorporated the same Standard
Terms and Conditions of Purchase sheet that was incorporated
into the Initial Purchase Order.
The remaining four purchase orders (referred to in the
Complaint as "Purchase Orders No. 2, 3, 4, and 5"), were
short-form computer-generated and computer-transmitted orders.
The front of each short-form order bore the caption: "WE HEREBY
ORDER THE MERCHANDISE SPECIFIED HEREIN ON ALL THE TERMS SET
FORTH ON THE FACE AND REVERSE SIDES HEREOF, INCLUDING
ARBITRATION." Geren Aff. Exs. D, E & F. Springs concedes, for
the purposes of this motion, that the backs of the short-form
orders were never transmitted.
Prior to any of the purchase orders with Springs, GMAC and
Rugmakers entered into a November 8, 1996, Revolving Credit,
Term Loan and Security Agreement pursuant to which, inter
alia, Rugmakers granted GMAC a security interest in all of its
present and future accounts receivable and assigned to GMAC all
accounts receivable generated by Rugmakers at any time. The
relevant terms of the assignment were as follows:
"[GMAC] shall not, whether by anything herein or in
any assignment or otherwise, assume any of
[Rugmaker's] obligations under any contract or
agreement assigned to [GMAC], and [GMAC] shall not be
responsible in any way for the performance by
[Rugmakers] of any of the terms and conditions
Murray Aff., Ex. A, ¶ 4.18. GMAC duly perfected its security
interest by filing U.C.C.-1 financing statements with the
appropriate authorities. However, neither GMAC nor Rugmakers
obtained Springs' consent to the assignment or gave Springs
GMAC has brought this suit against Springs, based on the
contracts assigned it by Rugmakers, seeking recovery of unpaid
sums on Purchase Orders No. 1-5. Springs contends that GMAC is
contractually bound to arbitrate its claims in Charlotte, North
Carolina and moves to compel arbitration.
I. A finance assignee suing on an assigned contract is
subject to the contract's arbitration clause.
The first issue is whether GMAC is exempt from any contractual
arbitration provisions by virtue of the fact that it allegedly
was a "finance assignee" (or "factor"), assigned ...