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Uretek, ICR Midatlantic, Inc. v. Adams Robinson Enterprises, Inc.

United States District Court, W.D. Virginia, Charlottesville Division

September 20, 2017

URETEK, ICR MID-ATLANTIC, INC., Plaintiff/Counterclaim Defendant,
v.
ADAMS ROBINSON ENTERPRISES, INC., Defendant/Counterclaim Plaintiff, LIBERTY MUTUAL INSURANCE COMPANY Defendant.

          MEMORANDUM OPINION

          Hon. Glen E. Conrad United States District Judge.

         Uretek, ICR Mid-Atlantic, Inc. ("Uretek") filed this action for breach of contract, quantum meruit, and payment under the terms of a payment bond in the Circuit Court for Albemarle County, Virginia against Adams Robinson Enterprises, Inc. ("Adams Robinson") and Liberty Mutual Insurance Company ("Liberty Mutual"). After the defendants removed the case to this court on the basis of diversity jurisdiction, the parties filed a joint motion to stay the proceedings pending arbitration, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 3, and the arbitration clause in the construction subcontract between Adams Robinson and Uretek ("Subcontract"). The arbitration proceeded in Dayton, Ohio, as specified in the Subcontract, and resulted in an. award favorable to Uretek. Adams Robinson moved to vacate the award in the United States District Court for the Southern District of Ohio, the district encompassing Dayton, and Uretek moved in this court to lift the stay and enter an order confirming the award.

         The matter is now before the court on Adams Robinson's motion to strike Uretek's motion to confirm the arbitration award, or alternatively, to transfer venue to the Southern District of Ohio and stay the proceedings in this court. The court held a hearing on the motion on September 1, 2017. For the reasons stated, Adams Robinson's motion will be denied.

         Background

         Adams Robinson, a Kentucky corporation with its principal place of business in Ohio, entered into the Subcontract with Uretek, a North Carolina corporation. Compl. ¶¶ 1, 13; Answer ¶¶ 2, 13. Pursuant to the Subcontract, Uretek agreed to perform certain excavation work for a construction project in Charlottesville, Virginia. Compl. ¶¶ 1, 8. The Subcontract contains the following provision requiring arbitration:

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then in force, and shall take place in Dayton, Ohio before three arbitrators, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In addition, the parties specifically agree that the [sic] consent to the jurisdiction of the state and federal courts located in Dayton, Ohio.

         Mot. to Confirm Arbitration Award, Ex. A ("Subcontract") ¶ 25(b).

         Adams Robinson also secured a payment bond ("the Payment Bond") from Liberty Mutual, a Massachusetts corporation, in accordance with Va. Code § 2.2-4337. Compl. ¶ 10. The Payment Bond purports to make Adams Robinson and Liberty Mutual jointly and severally liable for the cost of labor, materials, and equipment furnished for the construction project. Id., Ex.A ¶1.

         In December 2015, Uretek filed a complaint in the Circuit Court for Albemarle County, Virginia, asserting a claim for breach of contract, or alternatively, quantum meruit, against Adams Robinson and a claim for payment under the terms of the Payment Bond against Adams Robinson and Liberty Mutual. Adams Robinson removed the action to this court, where it filed an answer, which included the affirmative defense that the claims in the complaint were subject to the Subcontract's arbitration clause and a counterclaim for breach of contract. Liberty Mutual separately filed an answer.

         On February 11, 2016, Adams Robinson filed a demand for arbitration, and on February 29, 2016, the defendants filed a motion, with Uretek's consent, to stay the proceedings in this court pending arbitration. On March 4, 2016, the court granted the motion and stayed the action pending the conclusion of the arbitration.

         In December 2016, the parties filed a joint status report with the court, which stated that Adams Robinson and Uretek had proceeded with arbitration, that they had a hearing set for February 21, 2017 in Dayton, Ohio, and that the parties would update the court at the conclusion of the arbitration. Joint Status Report ¶¶ 2-3, ECF No. 14. During the hearing, the arbitration panel received evidence on whether either Adams Robinson or Uretek had breached the Subcontract and whether Adams Robinson had wrongfully terminated the Subcontract. See Mot to Confirm Arbitration Award, Ex. B at 5-9.

         On March 24, 2017, the arbitration panel issued a standard award in Uretek's favor. Id. The panel ruled that Adams Robinson had properly terminated the Subcontract, but had violated the implied covenant of good faith and fair dealing applicable to all contracts under Ohio law. Id. at 5-6.

         On May 18, 2017, Adams Robinson filed an action in the Southern District of Ohio, seeking an order vacating the arbitration award. Adams Robinson Enterprises, Inc. v. Uretek, ICR Mid-Atlantic, Inc.. No. 3:17-cv-00178 (S.D. Ohio, PACER No. 1). Liberty Mutual is not a party to that action.

         Before responding in the Southern District of Ohio, on June 14, 2017, Uretek moved in this court to lift the stay, confirm the arbitration award, and enter judgment against Adams Robinson and Liberty Mutual pursuant to the award and the Payment Bond. Relying on the forum selection clause contained in the Subcontract's arbitration provision and the first-to-file rule, Adams Robinson moved to strike Uretek's motion to confirm the arbitration award. Alternatively, Adams Robinson moved to transfer venue to the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a). On July 5, 2017, Uretek filed a brief in this court, which it labeled as a reply to Adams Robinson's motion to strike or to transfer. Adams Robinson has filed no response.

         After completing briefing in this court, Uretek moved to dismiss Adams Robinson's action in the Southern District of Ohio under the first-to-file rule, or alternatively, to transfer venue to this court pursuant to 28 U.S.C. § 1404(a). Adams Robinson. No. 3:14-cv-00178, PACER No. 6 at 4-12. On August 29, 2017, the parties completed briefing on Uretek's motion pending in the Southern District of Ohio. The parties have advised this court that the Southern District of Ohio will issue a ruling on the briefs without holding a hearing.

         On September 1, 2017, the parties appeared before this court for a hearing on Adams Robinson's motion to strike or to ...


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