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J. Caldarera & Company, Inc. v. Complex Management, Inc.

United States District Court, S.D. Mississippi, Northern Division

April 13, 2018

J. CALDARERA & COMPANY, INC. PLAINTIFF
v.
COMPLEX MANAGEMENT, INC. AND CROSBY SHELTERS, LTD. DEFENDANTS

          ORDER

          DANIEL P. JORDAN III CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff J. Caldarera & Company, Inc. (“JCC”) filed this lawsuit to compel Defendants Complex Management, Inc. (“CMI”) and Crosby Shelters, Ltd. (“CSL”) to arbitrate JCC's breach-of-contract and related claims. Defendants resist arbitration and have asked the Court to preliminarily enjoin the arbitration JCC has already initiated. For the reasons that follow, JCC's Motions to Stay and Compel Arbitration [3, 4, 11] are granted, and Defendants' Motion to Preliminarily Enjoin Arbitration [18] is denied.

         I. Background

         Defendant CSL owns, and Defendant CMI manages, the Crosby Shelters Apartments in Crosby, Mississippi. In August 2016, the apartments sustained flood and wind damage, so in January 2017, Andrew Ivison, the then-president of both CSL and CMI, signed two contracts with JCC to repair the property. He did so on behalf of CMI. Both contracts contained arbitration provisions, which JCC now invokes to recover an alleged debt of over $1.5 million from CMI and CSL.

         II. Analysis

         JCC has invoked section 4 of the Federal Arbitration Act, which permits “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. “Arbitration is a matter of contract between the parties, and a court cannot compel a party to arbitrate unless the court determines the parties agreed to arbitrate the dispute in question.” Pennzoil Expl. & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1064 (5th Cir. 1998).

         “Enforcement of an arbitration agreement involves two analytical steps. The first is contract formation-whether the parties entered into any arbitration agreement at all. The second involves contract interpretation to determine whether this claim is covered by the arbitration agreement.” Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016) (citations omitted).

         Here, the parties focus on two issues. First, they dispute the first prong of the arbitration test-whether a valid agreement to arbitrate existed. Second, Defendants alternatively say JCC waived any right to arbitrate.

         A. Whether the Parties Agreed to Arbitrate

         Whether the parties entered a valid agreement to arbitrate is decided under state contract law. May v. Higbee Co., 372 F.3d 757, 764 (5th Cir. 2004) (citing Wash. Mut. Fin. Grp., LLC v. Bailey, 364 F.3d 260, 264 (5th Cir. 2004)). And that question is not subject to the federal policy favoring arbitration. Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202, 215 (5th Cir. 2012) (citations omitted). Because this analysis differs for the claims against CMI and CSL, the Court will consider them separately.

         1. CMI

         It is beyond dispute that the two contracts for repairs to the Crosby Shelters Apartments were “BETWEEN” CMI and JCC. See First Contract [1-1]; Second Contract [1-2]. Both contracts contained arbitration agreements, and there is no legitimate argument that Andrew Ivison-CMI's president-lacked the capacity to bind CMI.

         CMI nevertheless says the contracts lacked mutual assent. Defs.' Mem. [14] at 6. Mutual assent is a necessary element of contract formation. See Rotenberry v. Hooker, 864 So.2d 266, 270 (Miss. 2003). And ordinarily, the parties' signatures are sufficient to prove it. Byrd v. Simmons, 5 So.3d 384, 389 (Miss. 2009) (“The object of a signature is to show mutuality of assent.” (Citation and quotation marks omitted)). Here, both parties signed the two CMI/JCC contracts.

         Despite these signatures, Defendants offer two reasons why mutual assent was lacking: (1) both contracts misidentified CMI as the complex's “Owner” rather than the agent or manager, and (2) there is testimony suggesting that Andrew Ivison informed JCC that CSL would ultimately be responsible for payment. From this, Defendants say ...


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