United States District Court, S.D. Ohio, Eastern Division
Elizabeth Preston Deavers Magistrate Judge
OPINION AND ORDER
D. MORRISON UNITED STATES DISTRICT JUDGE
matter is before the Court on the Defendants' Motion to
Dismiss or Stay Pending Arbitration. (ECF No. 9). Plaintiff
filed a Memorandum Contra to the Motion (ECF No. 19) and the
Defendants have replied (ECF No. 20). The matter is now ripe
BJ's Electric, Inc. initiated this action on October 9,
2018, in the Court of Common Pleas in Ross County, Ohio. (ECF
No. 4). Defendants timely removed the action to this Court
pursuant to 28 U.S.C. §§ 1332(a) and 1441, et
seq., because the matter in controversy exceeds $75,
000.00, exclusive of interest and costs, and the matter in
controversy is between citizens of different states. (ECF No.
to the Complaint, Defendant Cherokee 8A Group, Inc. was the
successful bidder on a construction contract with the
Chillicothe Veterans Administration to repair Building 31 as
the prime contractor. (¶ 4, ECF No. 4). Defendant
Cherokee subcontracted with Plaintiff to perform Division D,
the electric portion, of the construction contract.
(Id. ¶ 5). Plaintiff asserts that all work was
performed under the contract, but that Defendant Cherokee
materially breached the contract. (Id. ¶¶
6-14). Plaintiff brings claims against Defendant Cherokee for
declaratory judgment, breach of contract, violation of New
Jersey's Prompt Payment statute, and bad faith.
further alleges that Defendant Liberty Mutual Surety is a
business unit of the Liberty Mutual Group that provides
services to the Liberty Mutual Group's member companies,
including Liberty Mutual Insurance Company. (Id.
¶ 3). Plaintiff alleges that the Liberty Mutual
Defendants, collectively, were the surety on the construction
contract. Plaintiff alleges that it filed a surety claim but
that its claim was rejected by the Liberty Mutual Defendants.
(Id. ¶¶ 26- 28). Plaintiff brings claims
against the Liberty Mutual Defendants on the surety, under
New Jersey's Prompt Payment statute, and for bad faith.
removing the action, Defendants collectively moved to dismiss
the action or to stay all claims pending arbitration. (ECF
STANDARD OF REVIEW
standard for ruling on Defendants' Motion is dictated by
the Federal Arbitration Act (“FAA”), 9 U.S.C.
§ 1, et seq., which provides that “[a]
party aggrieved by the alleged failure, neglect, or refusal
of another to arbitrate under a written agreement for
arbitration may petition” for an order compelling
arbitration. 9 U.S.C. § 4. “[U]pon being satisfied
that the issue involved in such suit or proceeding is
referable to arbitration[, ]” a court “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.” Id. § 3.
manifests “a liberal federal policy favoring
arbitration agreements.” Moses H. Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983);
see also 9 U.S.C. §§ 1-16;
Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220,
226, (1987); Stachurski v. DirecTV, Inc., 642
F.Supp.2d 758, 764 (N.D. Ohio 2009). The Act sets up “a
presumption in favor of arbitration, ” Marchetto v.
DeKalb Genetics Corp., 711 F.Supp. 936, 938 (N.D. Ill.
1989) (citing Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, 473 U.S. 614, 625 (1985) and
Moses H. Cone Memorial Hospital v. Mercury Construction
Corp., 460 U.S. 1, 24-25 (1983)), and requires that
courts “rigorously enforce agreements to
arbitrate.” Dean Witter Reynolds, Inc. v.
Byrd, 470 U.S. 213, 221 (1985).
enforce this dictate, [the FAA] provides for a stay of
proceedings when an issue is referable to arbitration . . .
.” Javitch v. First Union Sec., Inc., 315 F.3d
619, 624 (6th Cir. 2003) (citing 9 U.S.C. §§ 3-4).
In cases where all claims are referred to arbitration, the
litigation may be dismissed rather than merely stayed.
Hensel v. Cargill, Inc., No. 99-3199, 198 F.3d 245
(table), 1999 WL 993775, at *4 (6th Cir. Oct. 19, 1999);
Alford v. Dean Witter Reynolds Inc., 975 F.2d 1161,
1164 (5th Cir. 1992) (holding that dismissal is proper where
all claims must be submitted to arbitration).
validity of an arbitration agreement is “in issue,
” the court must hold a trial to resolve the question.
9 U.S.C. § 4. “In order to show that the validity
of the agreement is ‘in issue,' the party opposing
arbitration must show a genuine issue of material fact as to
the validity of the agreement to arbitrate.” Great
Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir.
2002). “The required showing mirrors that required to
withstand summary judgment in a civil suit.”
Id. A district court, therefore, must view all facts
and inferences in the light most favorable to the party
opposing arbitration and determine “whether the
evidence presented is such that a reasonable finder of fact
could conclude that no valid agreement to arbitrate
Sixth Circuit applies a four-pronged test to evaluate a
motion to dismiss or stay the ...