INTERNATIONAL UNION & ALLIED TRADES v. ROBINSON PAINTING

2005 | Cited 0 times | D. Rhode Island | April 18, 2005

MEMORANDUM AND ORDER

These cases are before the Court on the motions to compelarbitration of the respective defendants, Royal Drywall &Construction Co, Inc. ("Royal Drywall") and Keith RobinsonPainting, Inc. ("Keith Robinson").1 Although the motionsare styled as motions to compel third party defendant O. Ahlborg & Sons, Inc. ("Ahlborg") to submit toarbitration, the relief that the defendants seek is both ageneral order compelling arbitration, as well as a more specificorder relieving them from arbitration before the AmericanArbitration Association ("AAA") and granting their request forarbitration before a mutually agreeable, non-AAA arbitrator.Ahlborg objects to these motions, asserting that the parties'arbitration agreements expressly provide for arbitration before aAAA arbitrator.

I. Background

Both actions share nearly identical factual backgrounds. Ineach, the plaintiffs filed suit for union contributions that thedefendants allegedly owe and failed to pay. The defendants, inturn, filed third party complaints against Ahlborg, in which theyassert that Ahlborg is responsible for any union contributionsthat the defendants owe to the plaintiffs.

Ahlborg then moved to dismiss or, in the alternative, stay thethird party complaints pending arbitration. Ahlborg argued thatan arbitration clause contained in the agreements between itselfand the defendants required the parties to submit to arbitration.Both agreements contain the same arbitration clause, whichstates: Any controversy or Claim arising out of or related to the Contract, or the breach thereof involving $250,000 or less, shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. . . . Claims or disputes in excess of $250,000 shall, at Owner's sole option, be decided by arbitration as set forth above or by litigation.(Ahlborg's Memoranda Supp. Obj. Mot. Compel Arb., Ex. A.) OnNovember 16, 2004, the Court denied Ahlborg's motions to dismiss,but granted its motions to stay the third party actions pending arbitration.

The defendants consequently filed the instant motions to compelarbitration. In their motions, the defendants ask the Court tocompel arbitration before a local, mutually agreeable arbitratorwho would apply the AAA Construction Industry Arbitration Rules,rather than before a AAA arbitrator, "[i]n the interest ofjustice and to promptly and fairly resolve the issues in disputebetween the parties. . . ." (Royal Drywall's Mem. Supp. Mot.Compel Arb. at 3; Keith Robinson's Mem. Supp. Mot. Compel Arb. at2.) The defendants ask that a non-AAA arbitrator be utilized dueto the $6,000 filing fee that each must pay in order to initiateits respective claim with the AAA. These fees, which thedefendants say they cannot afford because they both are in"severe financial straits[,]" would be lower according to thedefendants if the parties used a local arbitrator approved by theCourt. (Royal Drywall's Mem. Supp. Mot. Compel Arb. at 2; KeithRobinson's Mem. Supp. Mot. Compel Arb. at 2.) The defendants donot object to the use of the AAA Construction IndustryArbitration Rules, as required by the agreements.

Ahlborg objects to the defendants' motions, claiming that thearbitration clauses of the contracts, which refer to AAAConstruction Industry Arbitration Rules, require the employmentof a AAA arbitrator. Additionally, Ahlborg notes that RoyalDrywall's purported financial misfortune is an insufficientreason to deviate from the parties' agreements, as the AAAConstruction Industry Arbitration Rules provide for the reductionor deferral of administrative fees in cases of hardship.

II. Discussion The Federal Arbitration Act, 9 U.S.C. § 1-16 (2004), stronglyfavors the rigorous enforcement of arbitration agreements. KKWEnters., Inc. v. Gloria Jean's Gourmet Coffees FranchisingCorp., 184 F.3d 42, 49 (1st Cir. 1999) (citing Perry v.Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426(1987)). "When presented with a question of contractinterpretation, [the court's] `task is to ascertain theintentions of the parties, consistent with state law principlesand with due regard for the federal policy favoringarbitration.'" HIM Portland, LLC v. DeVito Builders, Inc.,317 F.3d 41, 43 (1st Cir. 2003) (quoting DiMercurio v. Sphere Drake,Ins. PLC, 202 F.3d 71, 74 (1st Cir. 2000)).

The parties do not dispute that the arbitration clausescontained in the agreements between Ahlborg and the defendantsrequire arbitration of the matters at issue here. What is indispute is the proper arbitral forum to hear these disputes.

The arbitration clauses provide that claims arising out of theagreements "shall be settled by arbitration in accordance withthe Construction Industry Arbitration Rules of the AmericanArbitration Association[.]" (Ahlborg's Memoranda Supp. Obj. Mot.Compel Arb., Ex. A.) In order to initiate an arbitration underthe AAA Construction Industry Arbitration Rules, a claimant must"file at any office of the AAA two copies of the demand and twocopies of the arbitration provisions of the contract, togetherwith the appropriate filing fee. . . ." American ArbitrationAssociation Construction Industry Arbitration Rules and MediationProcedures (Including Procedures for Large, Complex ConstructionDisputes) (Amended and Effective July 1, 2003), Rule R-4,available at http://www.adr.org/sp.asp?id=22004 (last visitedApril 15, 2005). Additionally, the rules state that "[w]henparties agree to arbitrate under these rules . . ., they therebyauthorize the AAA to administer the arbitration." Id. at RuleR-2. The AAA Construction Industry Arbitration Rules therefore clearly andunambiguously require that arbitrations administered pursuant tothese rules be conducted by the AAA. Consequently, it isAhlborg's right under its agreements with the defendants toinsist that any arbitration take place before the AAA.

III. Conclusion

For the reasons set forth above, Keith Robinson's Motion toCompel Arbitration and Royal Drywall's Motion to CompelArbitration are granted in part and denied in part. These motionsare granted to the extent that they seek a general ordercompelling the parties to enter arbitration. The motions aredenied to the extent that they seek a specific order relievingthe defendants from arbitration before the AAA.

SO ORDERED.

1. The defendants in both actions are represented by the samecounsel, who filed motions and accompanying memoranda that arealmost indistinguishable from one another. Similarly, theobjections and accompanying memoranda filed by Ahlborg's counselare remarkably alike.

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