871 F. Supp. 2d 475
D. Md.2012Background
- PCC and Travelers seek a court order to compel arbitration under the FAA for disputes arising from a City construction project.
- The contract contains a Dispute Resolution Clause with a stepped process leading to binding arbitration for Contractor-initiated claims against the Owner (the City).
- The City, OBG, and CDG are involved in a state-court action over design, engineering, and construction Performance at a Waste Water Treatment Plant upgrade.
- OBG and CDG are non-signatories to the arbitration clause, while PCC is a signatory; the contract links to a performance bond issued by Travelers.
- The court must decide whether the arbitration provision applies to the City’s claims and whether it binds non-signatories to arbitrate.
- The court denies the Petition to Compel Arbitration, treating the motion as one under Rule 12(b)(6)/(summary judgment) and concluding the Contract’s Dispute Resolution Clause is not broad enough to cover all disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the arbitration clause cover the City’s claims? | PCC argues § 4.7.1 requires arbitration of all PCC-initiated claims against the Owner. | City contends § 4.7.1 covers only Contractor-initiated claims against the Owner. | Arbitration not required for City’s claims. |
| Are non-signatories OBG and CDG bound to arbitrate under equitable estoppel? | Non-signatories may be bound if they benefit from the contract containing the arbitration clause. | Arbitration clause is narrow and applies only to PCC’s claims; estoppel does not apply here. | Non-signatories not compelled to arbitrate. |
| What governs the interpretation of the arbitration clause and its breadth? | Clause broadly binds all disputes arising from the Contract. | Clause is asymmetrical and limited to Contractor vs. Owner disputes. | Clause interpreted narrowly; binds PCC against the City only. |
Key Cases Cited
- Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th Cir. 2002) (FAA motion to compel arbitration requires four-part demonstration)
- Whiteside v. Teltech Corp., 940 F.2d 99 (4th Cir. 1991) (detailing arbitration scope considerations)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court, 1983) (federal policy favoring arbitration)
- Shaffer v. ACS Gov’t Servs., Inc., 321 F.Supp.2d 682 (D. Md. 2004) (arbitration as a nexus between dismissal and summary judgment)
- Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (4th Cir. 2000) (non-signatories may be bound by arbitration through equitable estoppel)
- United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (Supreme Court, 1960) (arbitration is a matter of contract; parties must agree to arbitrate)