ORDER
This matter comes before the Court on a Motion to Compel Arbitration and Stay This Litigation brought by Defendant Moroni Feed Company (Moroni). Plaintiff West Liberty Foods, L.L.C. (West Liberty) resists. A hearing on the motion was held on July 16, 2010. Attorney Stanley Preston represented Moroni, and attorney David Tank represented West Liberty. The matter is fully submitted and ready for disposition.
I. BACKGROUND
On May 1, 2006, West Liberty and Moroni entered into a marketing agreement whereby West Liberty became the exclusive marketing agent for Moroni’s products, which included turkeys, turkey products, and other poultry and meat products. 1 After operating under the marketing agreement for three-and-a-half years, Moroni notified West Liberty that it was electing to terminate the marketing agreement effective December 31, 2009, as allowed by terms found therein. After the marketing agreement’s termination, Moroni alleged that West Liberty had breached the terms of the marketing agreement in its handling of customer up-charges through a market accrual account. Moroni sought to mediate or arbitrate the dispute; however, West Liberty *884 refused, stating that it was not obligated to mediate or arbitrate because the marketing agreement had been terminated.
Following Moroni’s demand that West Liberty mediate or arbitrate, West Liberty filed this declaratory action, seeking a declaration that it did not breach the marketing agreement. Moroni followed by filing the instant pre-answer Motion to Compel Arbitration.
The marketing agreement included the following relevant provisions:
17. Arbitration; Costs and Attorney’s Fees. In the event that either party claims that the other party has breached this Agreement in any way and the parties cannot resolve the dispute through negotiations, they shall attempt to resolve the dispute through the assistance of a neutral third-party mediator.
If the dispute is not resolved by the use of a mediator, then any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The award in such arbitration shall be a reasoned award. The parties shall have the opportunity to pursue any discovery in the arbitration which they reasonably believe is necessary to arbitrate all of the claims and defenses in the arbitration.
If [West Liberty] brings a demand for arbitration, the arbitration shall be conducted in Salt Lake City, Utah. If Moroni brings a demand for arbitration, the arbitration shall be conducted in Des Moines, Iowa. The arbitrator(s) may award to the prevailing party any costs and expenses arising out of or caused by the arbitration, together with a reasonable attorney’s fee expended or incurred by it in such proceedings.
20. Term. ... Despite termination of this Agreement at any time for any reason pursuant to this Section, the provisions herein relating to delivery of goods (Section 2), transfer of title (Section 3), authorization to sell and marketing fees (Section 4), continuing food guarantee (Section 7), processing and quality assurance (Section 8), residues (Section 9), remedies (Section 16), and costs of litigation and attorney’s fees (Section 17), shall remain in full force and effect with respect to any Products packages in bags or boxes with Western Sales logos, labels, trademarks or trade names.
Def.’s App. Ex. A.
In addition to the above-quoted language of survival, section 20 also prohibits the parties from using or divulging trade secrets and proprietary information at any time after termination of the marketing agreement. Section 14, which covers confidentiality, less broadly prohibits the parties from divulging trade secrets or proprietary information for a specific period of five years after termination of the marketing agreement. Section 16, covering remedies, indicates that Moroni’s obligations to indemnify, defend, hold harmless, and bear all of West Liberty’s losses related to the marketing agreement survive termination of the marketing agreement.
II. DISCUSSION 2
A. Motion to Compel Arbitration
West Liberty argues that there is not a valid arbitration agreement. It *885 asserts that the survival clause did not preserve the arbitration clause. Moroni argues that the arbitration clause survived the termination of the marketing agreement and that this dispute is within the scope of the arbitration clause because the dispute arises from the marketing agreement.
The Federal Arbitration Act (FAA) directs that agreements to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exists at law or in equity for the revocation of any contract." 9 U.S.C. § 2. There is a "liberal federal policy favoring arbitration agreements."
Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp.,
The legal basis for West Liberty’s argument—that this motion to compel arbitration should fail due to the lack of a valid arbitration agreement—is misplaced. Legal inquiries into the existence of an arbitration agreement, whereby the presumption in favor of arbitration falls away, look at whether the parties agreed that an arbitration clause would ever go into effect in the first place.
See Koch v. Compucredit Corp.,
The issue in this case is not whether the parties agreed to arbitrate in the first place; rather, the issue is whether the parties agreed that the obligation to arbitrate would end upon termination of the marketing agreement. "Even if the underlying [marketing] agreement was terminated..., such a termination does not necessarily release the parties from their obligations under that agreement, including the obligation to arbitrate."
Koch,
Under the federal common law of arbitrability, an arbitration provision in a contract is presumed to survive the expiration of that contract unless there is some express or implied evidence that the parties intend to override this presumption: In short, where the dispute is over a provision of the expired agreement, the presumptions favoring arbitrability must be negated expressly or by clear implication. Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery Workers Union,430 U.S. 243 , 255,97 S.Ct. 1067 ,51 L.Ed.2d 300 (1977). Thus, when a dispute arises under an expired contract that contained a broad arbitration provision, courts must presume that the parties intended to arbitrate their dispute. This is so even if the facts of the dispute occurred after the contract expired. See id. (holding that claims for severance pay by workers who were discharged after their collective bargaining agreement expired were subject to the continuing force of *887 the prior arbitration clause). The presumption in favor of continuing arbitrability, however, disappears in either of two situations: first, if the parties expressly or clearly imply an intent to repudiate post-expiration arbitrability, and second, if the dispute cannot be said to arise under the previous contract. See id. at 254-55,97 S.Ct. 1067 .
Riley,
Although it is created by contract, the duty to arbitrate does not necessarily end upon contract termination. Absent a clear intent to the contrary, the duty to arbitrate survives termination of the contract. It is presumed that parties intended that arbitration forum for dispute resolution provided in agreement will survive termination of agreement as to subsequent disputes arising thereunder, whether its cessation was result of expiration of its term, exercise of unilateral termination option, or breach. The termination of the contract prior to a demand for arbitration will generally have no effect on such demand, provided that the dispute in question either arose out of the terms of the contract or arose when a broad contractual arbitration clause was still in effect. However, the opposite is true where the parties have come to an express or implied agreement that the arbitration clause will not survive the termination of the contractual agreement.
(internal footnotes omitted).
Here, there is no express agreement between the parties regarding the post-termination efficacy of the arbitration clause. Thus, the Court must determine whether survival of the arbitration clause was negated by clear implication.
See Riley,
In support of its argument that the contract evinces an implied agreement that the arbitration clause would not survive the termination of the marketing agreement, West Liberty asserts that Moroni, as owner of Norbest, drafted the agreement and, thus, any ambiguities must be construed against Moroni. The record, however, does not support West Liberty’s assertion. Moroni and West Liberty were independently represented by legal counsel when entering into the marketing agreement. West Liberty’s outside counsel reviewed and suggested changes to the marketing agreement. The attorney for Norbest drafted the agreement, arguably in the interests of Norbest, at a time when Moroni held a controlling interest in Norbest but did not represent Moroni as Moroni was represented separately. On this record, the Court "decline[s] to apply the doctrine of
contra proferentum
to this case due to the relatively equal bargaining strengths of both parties and the fact that [West Liberty] was represented by sophisticated legal counsel during the formation of the [marketing] agreement."
Terra Int’l, Inc. v. Miss. Chem. Corp.,
West Liberty argues that principles of contract construction show that the arbitration agreement survived wholly intact
only
as to packed products with Western Sales markings, thus evincing a clearly implied agreement that the arbitration clause would otherwise terminate contemporaneously with the marketing agreement. West Liberty asserts that the maxim
expressio unius est exclusio alterius
is dispositive.
See Duke v. Graham,
A review of the plain language of the marketing agreement does not reveal a clear implication that the parties agreed that the entire arbitration clause would survive only as to packed products and otherwise expire after termination of the marketing agreement. The language of survival that purportedly applies to the entire arbitration clause is inconsistent with the actual language of the arbitration clause. To wit, the marketing agreement states that "costs of litigation and attorney’s fees (Section 17) shall remain in full force" despite termination of the marketing agreement, whereas the arbitration clause is titled, "17. Arbitration; Costs and Attorney’s Fees." Def.’s App. Ex. A. The language of survival does not mention arbitration despite a general reference to section 17. Furthermore, section 17 does not mention litigation even though the language of survival applying section 17 does. In the context of the entire agreement there is a strong inference that a drafting miscue occurred in the use of the term "litigation" in section 20; but, the Court ultimately cannot and need not reach that conclusion. Rather, on this record the Court finds that the plain language of these statements cannot be easily harmonized without rendering meaningless other statements in the marketing agreement. Accordingly, the Court must conclude that the marketing agreement is ambiguous *889 when attempting to determine the parties’ intent regarding post-termination survival of the arbitration clause.
If the language is found to be ambiguous, normally the Court would then look to other principles of contract construction to determine the parties’ intent. Here, however, the Court must find a clear implication of an agreement that the arbitration clause would expire with the termination of the marketing agreement.
Koch,
B. Stay
The FAA provides:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
9 U.S.C. § 3 (emphasis added). The Court recognizes a split of authority on this issue as outlined in
Precision Press Inc. v. MLP U.S.A., Inc.,
There is a split in the federal courts of appeals on the issue of whether the dismissal of an action is permitted by the Federal Arbitration Act. Compare Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc.,252 F.3d 707 , 709-10 (4th Cir.2001) (Notwithstanding the terms of § 3, however, dismissal is a proper remedy when all of the issues presented in a lawsuit are arbitrable.), and Green v. Ameritech Corp.,200 F.3d 967 , 973 (6th Cir.2000) (The weight of authority clearly supports dismissal of the case when all of the issues raised in the district court must be submitted to arbitration.), and Alford v. Dean Witter Reynolds, Inc.,975 F.2d 1161 , 1164 (5th Cir.1992) (holding that section three of the FAA was not intended to limit dismissal of a case in the proper circumstances.), and Sparling v. Hoffman Const. Co., Inc.,864 F.2d 635 , 638 (9th Cir.1988) (holding that section three of the FAA does not limit a district court’s authority to grant a dismissal of a case), with Cont’l Cas. Co. v. Am. Nat. Ins. Co.,417 F.3d 727 , 732 n. 7 (7th Cir.2005) (We have noted that the proper course of action when a party seeks to invoke an arbitration clause is to stay the proceedings pending arbitration rather than to dismiss outright.) (citing Tice v. Am. Airlines, Inc.,288 F.3d 313 , 318 (7th Cir.2002)), and Lloyd v. HOVENSA, L.L.C.,369 F.3d 263 , 268-69 (3rd Cir. *890 2004) (holding that the plain language of § 3 affords a district court no discretion to dismiss a case where one of the parties applies for a stay pending arbitration.), and Adair Bus Sales, Inc. v. Blue Bird Corp.,25 F.3d 953 , 955 (10th Cir.1994) (holding that district court erred in dismissing case in which defendant moved for a stay pending arbitration under 9 U.S.C. § 3, and should have instead entered stay). The Eighth Circuit Court of Appeals has not yet weighed in on the issue.
While it is accurate to say "the Eighth Circuit Court of Appeals has not yet weighed in" on a precise dispute over the authority to dismiss rather than stay a case wherein all of the issues are subject to arbitration, that court has given repeated approval to the legal conclusion a stay is compelled by the statute.
3
See Madol v. Dan Nelson Auto. Group,
C. Attorney’s Fees
Moroni argues that the Court should award its attorney’s fees based on a contract provision and Utah’s bad faith statute. Neither argument is availing.
The contractual fee provision provides that “[t]he arbitrator(s) may award damages to the prevailing party any costs and expenses arising out of or caused by the arbitration, together with a reasonable attorney’s fee expended or incurred by it in such proceedings.” Def.’s App. Ex. A. The Court need not decide the scope of the surviving attorney’s fees provision because, under the terms of the provision, this Court may not award Moroni attorney’s fees because this Court is not an arbitrator.
Moroni is not entitled to statutory attorney’s fees. Utah’s bad faith statute provides that a prevailing party may recover attorney’s fees if an action against it is without merit and brought in bad faith. Utah Code § 78B-5-825. “To be a prevailing party a party ‘must obtain at least some relief on the merits’ of the party’s claim of claims.”
Ault v. Holden,
Accordingly, the Court will not award Moroni’s attorney’s fees because Moroni is not a prevailing party, and there is no evidence in the record before the Court to support a conclusion that this lawsuit was brought in bad faith.
III. CONCLUSION
Based on the foregoing, Defendant Moroni Feed Company’s Motion to Compel Arbitration and Stay This Litigation (Clerk’s No. 7) must be granted in part and denied in part. Moroni’s request that this matter be stayed while the case is referred to arbitration is granted; Moroni’s requests for attorney’s fees and costs must be denied. Upon completion of the arbitration proceedings, the parties shall promptly advise this Court if further proceedings are necessary herein or if the matter can then be dismissed.
IT IS SO ORDERED.
Notes
. The record indicates that the marketing agreement was drafted by counsel for Nor-best, Inc., and that at the time the agreement was drafted and signed, Moroni owned more than fifty percent of Norbest, Inc.
. The marketing agreement includes a choice of law provision providing that the marketing
*885
agreement "shall be construed in accordance with the law of the State of Utah." Def.’s App. Ex. A. Moroni asserts that the choice of law provision survives termination, and Utah law should apply. West Liberty argues that the choice of law provision does not apply and that all aspects of this dispute are governed by common law. Federal Courts apply the choice of law rules of the forum state.
John T. Jones Constr. Co. v. Hoot Gen. Constr. Co.,
Iowa courts apply the choice of law analysis based on the Restatement (Second) of Conflicts of Laws § 188.
Cole
v.
State Auto. & Cas. Underwriters,
. In fact, Judge Bennett reaches that result in
Precision Press Inc.,
. Likewise, there is no evidence that West Liberty’s lawsuit entitles Moroni to attorney’s fees under Iowa law.
See Markey v. Carney,
