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American Contractors Indemnity Company v. ReflecTech, Inc.

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

August 27, 2019

AMERICAN CONTRACTORS INDEMNITY COMPANY PLAINTIFF/COUNTER DEFENDANT
v.
REFLECTECH, INC.; J & L PROPERTIES, LLC; LARRY R. WILLIAMSON; JANICE C. WILLIAMSON DEFENDANTS/COUNTER CLAIMANTS/THIRD-PARTY PLAINTIFFS/COUNTER DEFENDANTS
v.
CENTURY CONSTRUCTION & REALTY, INC. THIRD-PARTY DEFENDANT/COUNTER CLAIMANT

          ORDER GRANTING CENTURY CONSTRUCTION & REALTY, INC.'S UNOPPPOSED MOTION [29] TO COMPEL ARBITRATION AND STAY PROCEEDINGS

          HALIL SULEYMAN OZERDEN, UNITED STATES DISTRICT JUDGE

         BEFORE THE COURT is Third-Party Defendant/Counter Claimant Century Construction & Realty Inc.'s (“Century”) Motion [29] to Compel Arbitration and Stay Proceedings of all third-party and counter claims by and between it and Third-Party Plaintiffs/Counter Defendants[1] ReflecTech, Inc., J & L Properties, LLC, Larry R. Williamson, and Janice C. Williamson. Third-Party Plaintiffs/Counter Defendants have not filed a response to Century's Motion [29] and the time for doing so has passed. As such and because the Court finds that there is a valid and binding arbitration agreement between the parties, the Court will grant Century's Motion [29] to Compel Arbitration and will stay proceedings between the abovementioned parties. The claims between Third-Party Plaintiffs/Counter Defendants and Century will be referred to arbitration. The remainder of the case will proceed.

         I. BACKGROUND

         On September 10, 2018, Plaintiff American Contractor Indemnity Company (“ACIC”) filed a Complaint in this Court against Defendants ReflecTech, Inc., J & L Properties, LLC, Larry R. Williamson, and Janice C. Williamson (collectively “Third-Party Plaintiffs”) on the basis of diversity jurisdiction under 28 U.S.C. § 1332. Compl. [1]. According to the Complaint [1], ACIC entered into a General Indemnity Agreement for the issuance of performance bonds to ReflecTech, Inc. (“ReflecTech”), [2] which were intended to guarantee payment to ReflecTech's suppliers and subcontractors. Id. ReflecTech allegedly defaulted on a Subcontract [29-1] it entered into with Century Construction & Realty, Inc. (“Century”). Century terminated the Subcontract and demanded payment on the performance bonds from ACIC. Id. ACIC paid the bonds and now seeks indemnification from Third-Party Plaintiffs for the claims it paid and any associated costs it incurred as a result of ReflecTech's default. Id.

         On February 13, 2019, Third-Party Plaintiffs ReflecTech, Inc., J & L Properties, LLC, Larry R. Williamson, and Janice C. Williamson filed an Amended Answer [19], in which they assert third-party claims against Century and counterclaims against ACIC. Am. Answer [19]. Third-Party Plaintiffs allege that ACIC breached the General Indemnity Contract between them and that ReflecTech did not default on its Subcontract with Century. Id. Third-Party Plaintiffs advance third-party claims against Century for: (1) breach of the Subcontract; (2) negligent supervision and inspection regarding others' work in relation to ReflecTech's work under the Subcontract; (3) negligent and fraudulent misrepresentation in asserting Century's claim on the ACIC bond; (4) breach of good faith and fair dealing owed to ReflecTech under the Subcontract; and (5) breach of constructive trust. Id.

         In response, Century filed the instant Motion [29] to Compel Arbitration and filed an Answer [31], in which Century asserted counterclaims against Third-Party Plaintiffs for enforcement of the arbitration agreement and breach of the Subcontract. Century Answer [31]; Subcontract [29-1] at 5. Century argues that Third-Party Plaintiffs' claims against it are subject to arbitration, pursuant to the written agreement to arbitrate contained in the Subcontract. Mot. [29]; Mem. in Support [30]. The Subcontract's arbitration clause reads:

If any question of fact shall arise under this subcontract, and there is no provision for settlement in the Contract Documents, then the Contractor, at its sole election, may demand an arbitration by reference to the Construction Industry Arbitration Rules as administered by the American Arbitration Association.

         Subcontract [29-1].[3] Century asks that the Court compel arbitration of all claims between Third-Party Plaintiffs and Century, and that the Court stay only those claims subject to arbitration. Mem. in Support [30] at 9-10. Neither Third-Party Plaintiffs nor ACIC have responded to Century's Motion [29], and the time for doing so has passed.

         II. DISCUSSION

         A. Third-Party Plaintiffs' failure to respond

Local Uniform Civil Rule 7(b)(3) provides that where a party fails to timely respond to any non-dispositive motion, “the Court may grant the motion as unopposed.” L.U. Civ. R. 7(b)(3); John v. Louisiana, 757 F.2d 698, 707-10 (5th Cir. 1985) (“[A]lthough we have endorsed the adoption of local rules that require parties to file responses to opposed motions, we have not approved the automatic grant, upon failure to comply with such rules, of motions that are dispositive of the litigation.”). Here, Century's Motion [29] to Compel Arbitration and Stay Proceedings is unopposed as Third-Party Plaintiffs have not responded within the time prescribed by Local Rule 7.

         Although the Fifth Circuit has not decided whether a motion to compel arbitration is dispositive or non-dispositive, other circuit courts and district courts in this Circuit to have considered the issue have held such a motion to be non-dispositive. Lee v. Plantation of La., L.L.C., 454 Fed.Appx. 258, 360 (5th Cir. 2011) (declining to decide); see Virgin Islands Water & Power Auth. v. Gen. Elec. Int'l Inc., 561 Fed.Appx. 131, 133-34 (3d Cir. 2014) (concluding that motions to compel arbitration are non-dispositive); PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10 (1st Cir. 2010) (concluding same); see also Adams v. Energy Transfer Partners, No. 2:16-CV-400, 2017 WL 2347425, at *1 (S.D. Tex. May 30, 2017) (collecting cases); Am. Gen. Life Ins. Co. v. Harper, 3:15cv605 (S.D.Miss. Apr. 20, 2016) (granting motion to compel arbitration on merits, but noting that Rule 79(b) allows Court to grant motion as unopposed). Resolving this question is unnecessary, however, as the Court finds that the Motion [29] should be granted on the merits.

         B. The merits of Century's Motion

         The Federal Arbitration Act (“FAA”) provides that a written provision in any contract “evidencing a transaction involving commerce to settle” a controversy that arises from the agreement by arbitration “shall be valid, irrevocable, and enforceable.” 9 U.S.C. § 2.[4] A court must grant a movant a stay where a party has commenced a suit “upon ...


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