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Fairhope Piggly Wiggly, Inc.

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

July 5, 2017

FAIRHOPE PIGGLY WIGGLY-INC., and THOMAS EUGENE CAIN, Plaintiffs,
v.
PS 2 LED, INC., a Texas corporation, and PINNACLE LED SOLUTIONS, LLC, Defendants.

          ORDER

          KRISTI K. DuBOSE CHIEF UNITED STATES DISTRICT JUDGE

         This matter is before the Court for a non-jury trial[1] on the request for Declaratory Judgment wherein Plaintiffs seek a declaration that they are not bound to arbitrate their dispute with Defendants.

         I. Findings of Fact

         This case concerns a dispute regarding an LED lighting project at Plaintiffs' Fairhope grocery store. (Doc. 22). That dispute is secondary to the dispute over whether the parties are contractually bound to resolve their dispute in arbitration -- the basis for Plaintiffs' declaratory judgment claim (First Cause of Action). (Doc. 22 at 4 at ¶¶20-24).

         In the relevant time period, 2014-1016, Thomas Eugene Cain (Cain) owned several businesses including T. Cain Grocery, Inc., Piggly Wiggly Spanish Fort, Inc. (P.W. Spanish Fort), Piggly Wiggly-Loxley, Inc. (P.W. Loxley), Piggly Wiggly-Fairhope, Inc. (P.W. Fairhope) and Piggly Wiggly-Foley Inc. (P.W. Foley). The first contact Cain had with Defendant PS 2 LED, Inc. (Pinnacle) was in relation to P.W. Fairhope. Cain wanted to put new lights in the P.W. Fairhope store and selected Pinnacle for the project. Pinnacle conducted an audit of the P.W. Fairhope store in November 2014 to assess the lighting needs and then submitted a proposal for the installation of LED lighting to Cain on June 11, 2015. (Def's Tr. Ex. L). Also during this time period, Pinnacle assisted Cain in applying for a grant from the United States Department of Agriculture (USDA) to help fund the transition to LED lighting in the P.W. Fairhope location, as well as other locations.

         Sometime in June 2015, Cain asked that the P.W. Fairhope project be put on hold and that Pinnacle install LED lighting in the new Spanish Fort location - the P.W. Spanish Fort. For the P.W. Spanish Fort project, a thirteen page “Turnkey Agreement for Piggly Wiggly Spanish Fort” (Turnkey Agreement) was signed in November 2015. (Def's Tr. Ex. A). The Agreement was executed among Pinnacle Solutions, Bay Shore Electric, and Piggly Wiggly Spanish Fort, Inc. (“Buyer”) and is signed by Cain for Piggly Wiggly Spanish Fort, Inc. (Id. at 1). The Turnkey Agreement is the standard agreement Pinnacle uses for all of its projects, with the exception of an added provision found at 2.10 concerning “additional worksites.” (Id. at 2 at ¶2.10). Provision 2.10 provides:

2.10 Worksite or Site: “Worksite” or “Site” means the physical addresses where Products are to be shipped and Services to be performed: 315 Spanish Fort Blvd., Spanish Fort, Alabama 36527. Buyer may add additional Worksites by issuing an Order to Pinnacle for Products. All such additional Orders and Worksites shall be subject to this Agreement…..

(Id.) The Turnkey Agreement defines Order as “such purchase order or paper or electronic records as Buyer may send to Pinnacle for the purpose of ordering Products hereunder at a particular Site of Buyer, including but not limited to Letters of Intent.” (Id. at 1 at ¶2.5). The Turnkey Agreement also contains Pinnacle's standard arbitration provision: “…[a]ny dispute, controversy, or claim relating to this Agreement or breach thereof, shall be submitted to arbitration….[t]his arbitration provision is intended to be construed as broadly as permitted by law.” (Id. at 4 at ¶5.2).

         At trial Bill Lane (Lane), Vice President of Business Development for Pinnacle, testified that provision 2.10 of the Turnkey Agreement was added to make it easier for Cain to request that LED lighting be installed in his other grocery store locations. However, Lane did not discuss this provision with Cain, and Lane was not aware of whether any other employee of Pinnacle discussed this provision with Cain. For Cain's part, he admitted at trial that he may not have read provision 2.10 and certainly did not pay any attention to it if he did read it.

         After the P.W. Spanish Fort project was completed, on March 24, 2016, Cain signed a one page Letter of Acceptance for LED lighting to be installed at the P.W. Fairhope. (Def's Tr. Ex. B). The Letter of Acceptance was an acceptance of an offer by Pinnacle to install LED lighting for a certain price and under certain terms. The Letter of Acceptance, which was drafted by Pinnacle, was executed between “Pinnacle Solutions” and “Cain's Grocery[2].” (Id.) Lane testified that the Letter of Intent was only one page because it was Pinnacle's intent for the 2015 Turnkey Agreement to govern the installation of the LED lighting in P.W. Fairhope. However, nothing in the Letter of Acceptance indicates this intent. Lane also testified that Pinnacle did not know that for each of Cain's grocery store locations, a separate legal entity operates each business.

         After the installation of LED lighting in P.W. Fairhope, Pinnacle invoiced P.W. Fairhope by sending an August 17, 2016 invoice for $148, 031.79 to the bank financing the P.W. Fairhope project. (Def's Tr. Ex. D). P.W. Fairhope had previously designated the bank as its agent for the payment of invoices on this particular project.[3] The invoice included a statement providing that by accepting delivery of the products, P.W. Fairhope agreed to the terms of Pinnacle's Purchase Agreement. (Def's Tr. Ex. D). The Purchase Agreement referenced in the invoice included the same arbitration provision found in the 2015 Turnkey Agreement.

         After the invoice was sent, a dispute developed about the total and final amount owed by P.W. Fairhope. P.W. Fairhope made a partial payment on the invoice to Pinnacle (paying $136, 231.02, leaving a balance of $11, 800.77).

         On November 22, 2016, Pinnacle filed an arbitration demand against P.W. Fairhope before the American Arbitration Association (AAA) for breach of contract and unjust enrichment. An arbitrator was appointed and the parties were scheduled to have a preliminary hearing conference with the arbitrator, but Plaintiffs disputed the matter is subject to arbitration and raised an objection to the proceeding.

         On December 15, 2016, Plaintiffs filed a five (5) count complaint against “Defendant PS2 LED, Inc. d/b/a Pinnacle LED Solutions, LLC” in the Baldwin County Circuit Court, Alabama (05-CV-2016-901424.00), seeking declaratory and equitable relief and damages for breach of contract and fraud stemming from its performance with ...


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