United States District Court, S.D. New York
For Edese Doret Industrial Design, Inc., Plaintiff: Barry J. Yellen, Barry J Yellen, Esq, New York, NY.
For AVN Solutions, Inc., AVN Solutions, L.L.C., Francis Michael Hopkins, Defendant: Brian Alexander Smith, LEAD ATTORNEY, Humes & Wagner, LLP, Locust Valley, NY.
MEMORANDUM AND ORDER
ANALISA TORRES, United States District Judge.
Plaintiff, Edese Doret Industrial Design, Inc., brings this action alleging that Defendants, AVN Solutions, Inc. (" AVN"), AVN Solutions LLC (" AVN LLC"), and Francis Michael Hopkins, breached a contract and fraudulently solicited funds from Plaintiff. Defendants move to dismiss the complaint pursuant to Rules 12(b)(2), 12(b)(3), 12(b)(5), and 12(b)(6) of the Federal Rules of Civil Procedure and request, in the alternative, an order compelling arbitration pursuant to an arbitration agreement between the parties. For the following reasons, this action is stayed pending the outcome of arbitration in accordance with the terms of the parties' agreement.
Plaintiff is a corporation organized under the laws of New York with a principal place of business in New York, New York. Yellen Aff. Ex. B (" Compl.") ¶ 1, ECF No. 21-2. AVN and AVN LLC are businesses organized under the laws of Delaware with a principal place of business in Wilmington, Delaware. Id. ¶ ¶ 2-3, 6. Hopkins, the sole shareholder of AVN and sole member of AVN LLC, is a citizen and resident of Delaware. Id. ¶ 5.
Pursuant to a contract dated October 2013, Defendants agreed to perform electrical work on an aircraft located in Saudi Arabia, id. ¶ 10, and Plaintiff advanced funds in the amount of $533, 552.00 to AVN, id. ¶ 10. Defendants have submitted a copy of the contract and an addendum signed by both parties (collectively, the " Agreement"). Hopkins Decl. Ex A, ECF No. 20. The Agreement contains a mandatory mediation and arbitration clause for any " dispute, claim or controversy arising out of or relating to the workscope." Id. The parties agreed that arbitration would take place in " the jurisdiction or the state and/or federal courts of the state of the [AVN] facility which services the aircraft, " and the addendum, signed by Plaintiff, clarifies that arbitration is to take place in Delaware if the parties are unable to resolve a dispute. Id.
Plaintiff alleges that Defendants breached the Agreement by failing to perform the agreed-upon work despite receiving payment in full from Plaintiff. Compl. ¶ ¶ 11, 14-15. Plaintiff also alleges that Defendants fraudulently solicited money from Plaintiff and were " wanton and willful" in taking Plaintiff's money without the intention of performing their obligations under the Agreement. Id. ¶ ¶ 19-21.
I. Defendants' Request for an Order Directing Arbitration
The Federal Arbitration Act (" FAA") reflects a " liberal federal policy favoring arbitration." Laumann v. Nat'l Hockey League, 989 F.Supp.2d 329, 335 (S.D.N.Y. 2013). " [A]rbitration is a matter of contract, and therefore a party cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit." Ragone v. Atlantic Video at Manhattan Ctr., 595 F.3d 115, 126 (2d Cir. 2010) (quotation marks and citations omitted). The FAA " leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985).
Whether a dispute is arbitrable under the FAA depends on two questions: " (1) whether there exists a valid agreement to arbitrate at all under the contract in question . . . and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement." Hartford Acc. & Indemn. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001) (quoting National Union Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d 129, 135 (2d Cir. 1996)). " [U]nder the FAA, '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.'" JLM Indus., Inc. v. Stolt--Nielsen SA, 387 F.3d 163, 171 (2d Cir. 2004) (citation omitted).
The Agreement's arbitration provision is broad:
In the event resolution by senior management is unsuccessful, the parties agree that any and all claims and disputes which may arise between the parties in regard to the aircraft shall be decided by arbitration in accordance with the rules of the American Arbitration Association, except as otherwise provided herein or otherwise mutually agreed to by the parties in writing. ...