United States District Court, M.D. Alabama, Northern Division
REPORT AND RECOMMENDATION
A. BAKER, UNITED STATES MAGISTRATE JUDGE.
Premier Paint & Drywall, Inc. (“Premier”),
sued Defendant, Designed to Build, LLC, (“DTB”)
in state court in a single-count complaint for breach of
contract. (Doc. 1-1). DTB removed the case to this court.
(Doc. 1). Premier alleges the parties contracted for Premier,
acting as subcontractor, to source, provide, and install
drywall for a project known as the “clubhouse”
contract. (Doc. 1-1, ¶ 5). Premier sued to recover the
“retainage, ” i.e. the amount of funds
held back by DTB until completion of the project.
Id., ¶ 6. Before the court is Defendant's
Motion to Dismiss or Stay Proceedings and Compel Arbitration.
(Doc. 6). Premier did not respond to the motion, but filed a
Partial Objection to Removal. (Doc. 11). A hearing on the
matter was held on May 22, 2018. It is the recommendation of
the undersigned Magistrate Judge that the motion to stay the
case and compel arbitration be granted and
the motion to dismiss be denied.
court has diversity of citizenship subject matter
jurisdiction pursuant to 28 U.S.C. § 1332(a) as to
Plaintiff's cause of action. The parties do not contest
personal jurisdiction or venue, and the court finds
sufficient information of record to support both.
See 28 U.S.C. § 1391. On April 19, 2018, the
above-styled matter was referred to the undersigned for
recommendation on all pretrial matters by United States
District Judge Myron H. Thompson. (Doc. 13) See 28
U.S.C. § 636(b); Rule 72, Fed. R. Civ. P.; United
States v. Raddatz, 447 U.S. 667 (1980); Jeffrey S.
v. State Bd. of Educ. of State of Ga., 896 F.2d 507
(11th Cir. 1990).
is a matter of contract, ” United Steelworkers of
Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582
(1960), and “arbitrators derive their authority to
resolve disputes only because the parties have agreed in
advance to submit their grievances to arbitration.”
AT & T Tech., Inc. v. Commc'ns Workers of
Am., 475 U.S. 643, 648-49 (1986).
Eleventh Circuit applies a two-step inquiry when determining
the propriety of a motion to compel arbitration pursuant to
Section 4 of the Federal Arbitration Act (FAA). Klay v.
All Defendants, 389 F.3d 1191, 1200 (11th Cir. 2004).
The first step considers whether the parties agreed to
arbitrate. Id. (citing Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626
(1985)). The second step involves deciding whether
“legal constraints external to the parties'
agreement foreclosed arbitration.” Id.
(quoting Mitsubishi Motors Corp., 473 U.S. at 628).
Federal law favors arbitration. See Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24-25 (U.S. 1983). Cases in this circuit and others have
recognized that an agreement's incorporation by reference
of the American Arbitration Association (“AAA”)
rules “provide[s] clear and unmistakable evidence that
the parties agreed to arbitrate arbitrability.”
Terminix Int'l Co., LP v. Palmer Ranch Ltd.
P'ship, 432 F.3d 1327, 1332-33 (11th Cir. 2005)
STATEMENT OF FACTS AND ARBITRATION CLAUSE
served as the general contractor for a construction project
known as Wildwood of Baton Rouge located in Baton Rouge,
Louisiana. As part of the construction project, Premier, as a
subcontractor, entered into two contracts with DTB.
See (Docs. 6-1, 6-2). The first contract (“the
Drywall Contract”) consisted of a scope of work for
drywall installation and the second contract consisted of a
scope of work for painting (“the Painting
Contract”). Id. The Drywall Contract is the
subject of Premier's Complaint here.
Drywall Contract contains a mandatory arbitration provision
invoking the AAA rules:
Notwithstanding any dispute clause contained in the General
Conditions or the Contract with the Owner, SUBCONTRACTOR
agrees that, in the event of any dispute between the
SUBCONTRACTOR and GENERAL CONTRACTOR, such dispute will be
submitted to arbitration. Such arbitration shall be held in
Athens, Georgia. The parties irrevocably (i) submit to the
exclusive jurisdiction of the State of Georgia over any
action or proceeding arising out of the Agreement, (ii) agree
that all claims in respect of such action or proceeding may
be heard and determined in arbitration, (iii) waive, to the
fullest extent they may effectively do so, the defense of an
inconvenient or inappropriate forum to the maintenance of
such action or proceeding, and (iv) waive any defense based
on lack of personal jurisdiction of any such purpose.
Arbitration shall be held in accordance with the Construction
Industry Arbitration Rules of the American Arbitration
Association which are in effect at the time the demand for
arbitration is filed. Demand for arbitration shall be filed
in writing with the other party to this Agreement and with
the American Arbitration Association, and a copy shall be
filed with the ARCHITECT and with the OWNER.
A demand for arbitration shall be made within a reasonable
time after the claim has arisen, and in no event shall it be
made after the date when institution of legal or equitable
proceedings based on such claim would be barred by the
applicable statute of limitations. The party on notice of
demand for arbitration must assert in the demand all claims
then known to that party on which arbitration is permitted to
Should either party refuse or neglect to appear or
participate in properly instituted arbitration proceedings,
the arbitrator are empowered to decide the controversy in
accordance with whatever evidence is presented. The
arbitrators are authorized to award any party or parties such
sums as such arbitrator shall ...