218 F. Supp. 3d 465
W.D. Pa.2016Background
- DCK and Burns & Roe formed an equal‑interest joint venture to bid on and perform U.S. Navy construction contracts at Guantanamo Bay; they agreed to share costs, losses, and profits 50/50.
- DCK sued alleging Burns & Roe failed to reimburse over $8,000,000 in project costs; Burns & Roe removed to federal court and moved to compel arbitration.
- The Joint Venture Agreement contains an arbitration clause: disputes "while in the course of performance of the Contract(s)" go to arbitration under the AAA Construction Industry Arbitration Rules; disputes "arising after the completion of the Construction Contract has been performed" are to be resolved in court.
- The parties agree physical construction is complete but have not submitted (or received) a certificate of completion or final Navy approval; they dispute whether the claim arose during performance (arbitrable) or after completion (non‑arbitrable).
- The agreement references the AAA Rules; the parties disagree whether that reference clearly and unmistakably delegates the arbitrability question to an arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides whether the dispute is arbitrable (court or arbitrator)? | The court must decide; clause excludes post‑completion disputes from arbitration so this dispute is non‑arbitrable. | An arbitrator should decide because the AAA Rules were incorporated and the timing issue is a procedural precondition for arbitration. | Court decides; parties did not clearly and unmistakably delegate arbitrability to an arbitrator. |
| Does incorporation of the AAA Rules delegate arbitrability to an arbitrator? | Even if Rules are incorporated, the clause expressly limits arbitration to disputes during performance, so delegation is unclear. | Incorporation of AAA Rules is clear and unmistakable evidence of delegation to arbitrators. | Incorporation alone (here) is not dispositive: because clause carves out post‑completion disputes, delegation is ambiguous; court retains decision. |
| Is the dispute arbitrable given the Agreement's ambiguity about when performance is "complete"? | The dispute is not arbitrable because completion had occurred. | The arbitration clause should be read in favor of arbitration; the ambiguity favors arbitration. | Ambiguity about the contractual goalpost for "completion" triggers the strong presumption in favor of arbitration; dispute is arbitrable. |
| Remedy sought (stay/compel)? | Opposes arbitration and wants court resolution. | Seeks dismissal or stay and order to arbitrate. | Motion granted: case stayed and parties ordered to proceed to arbitration per their agreement. |
Key Cases Cited
- Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir.) (standards for district court review of motions to compel arbitration under Rule 12(b)(6) vs. Rule 56)
- BG Group P.L.C. v. Republic of Argentina, 134 S. Ct. 1198 (U.S.) (distinguishes procedural preconditions to arbitration that arbitrators presumptively decide)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S.) (procedural issues like time limits are for arbitrators)
- AT&T Tech., Inc. v. Communications Workers of America, 475 U.S. 643 (U.S.) (arbitration clauses should be interpreted broadly; denial only when clause clearly does not cover dispute)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S.) (presumption that courts decide arbitrability unless parties clearly and unmistakably delegate to arbitrator)
- Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH, 585 F.2d 39 (3d Cir.) (ambiguities about arbitrability resolved in favor of arbitration)
- Granite Rock Co. v. International Broth. of Teamsters, 561 U.S. 287 (U.S.) (courts determine whether a dispute is within arbitration agreement)
- Medtronic Ave, Inc. v. Advanced Cardiovascular Systems, Inc., 247 F.3d 44 (3d Cir.) (federal law governs questions of arbitrability and contract interpretation)