Opinion
No. 1:00CV133-D-D
August 16, 2000
OPINION
Presently before the court is the Defendants' motion to dismiss or, in the alternative, to compel arbitration of the Plaintiff's claims and stay these proceedings. Upon due consideration, the court finds that the motion should be granted. In accordance with the parties' contract, the Plaintiff's claims shall be submitted to arbitration in Orange County, California, and this cause shall be dismissed without prejudice.
A. Factual Background
The Defendant Holmes Narver Constructors, Inc. (Holmes) is the prime contractor on a federal construction project involving the replacement of several family housing units at Columbus Air Force Base in Columbus, Mississippi (the Project). On August 31, 1999, Holmes entered into a contract with the Plaintiff, Hanna Contracting, Inc. (Hanna), whereby Hanna became the subcontractor for the sewer and water systems work.
Hanna worked on the Project between September of 1999 and February of 2000. During that time, disputes arose between Hanna and Holmes concerning the quality of Hanna's work. Finally, in February of 2000, Holmes notified Hanna that part of the contract price would be withheld, in accordance with the contract's terms, due to alleged deficiencies in Hanna's work.
On April 14, 2000, Hanna filed the current suit contending that it is owed an additional $254,668.23 for its work on the Project. On June 2, 2000, Holmes filed a motion seeking to compel arbitration of this claim according to the terms of the contract between the parties, and to have these proceedings dismissed or stayed.
B. Discussion 1. The Arbitration Clause
The Federal Arbitration Act, 9 U.S.C. § 1 — 16 (1999), provides that, in a contract evidencing a transaction involving commerce, a written provision to settle by arbitration a controversy arising out of such contract is valid, irrevocable, and enforceable. 9 U.S.C. § 2 (1999). The Fifth Circuit has directed that courts are to perform a two-step inquiry to determine whether parties should be compelled to arbitrate a dispute. R.M. Perez Assocs., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir. 1992). First, the court must determine whether the parties agreed to arbitrate the dispute. Once the court finds that the parties agreed to arbitrate, it must consider whether any federal statute or policy renders the claims nonarbitrable. R.M. Perez, 960 F.2d at 538. A party seeking to avoid arbitration must allege and prove that the arbitration clause itself was a product of fraud, coercion, or another ground allowing contract revocation that exists at law or in equity. Reisfeld Son Import Co. v. S.A. Eteco, 530 F.2d 679, 680-81 (5th Cir. 1976).
The parties are in agreement that their contract contains the following mandatory arbitration and forum-selection clauses:
All claims and disputes between CONTRACTOR and SUBCONTRACTOR not originating with acts or omissions of CONTRACTOR'S prime contract customer and not settled by mutual agreement shall be decided by arbitration conducted in accordance with California Code of Civil Procedure Title 9 (excluding Section 1283.05). The arbitration proceedings shall be conducted in Orange County, California by a single arbitrator agreed upon by the parties or appointed pursuant to California Code of Civil Procedure Section 1281.6. The agreement to arbitrate shall be specifically enforceable under prevailing arbitration law.
Contract — General Terms and Conditions, ¶ 20(d), p. E-8.
As for the first step in the court's analysis, it is clear that the parties agreed to arbitrate this dispute. The arbitration clause is unambiguous, sufficiently broad to cover the current dispute, and susceptible to only one interpretation — that the parties intended to settle their disputes, all of their disputes, through arbitration. Hanna, in fact, does not argue that its claim arising from Holmes' alleged breach of contract falls outside the scope of the clause. Rather, Hanna's argument goes to the second prong of the court's analysis. Hanna asserts that, because one of its claims arise under the Miller Act, 40 U.S.C. § 270a — 270f (1986 and Supp. 2000), and because the contract did not specifically waive Hanna's Miller Act remedy (instead using the term "all claims and disputes"), its claims are rendered nonarbitrable.
It is well-established, however, that statutory claims, such as those arising under the Miller Act, may be the subject of an enforceable arbitration agreement. See Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987) (court's duty to "rigorously enforce arbitration agreements . . . is not diminished when a party bound by an agreement raises a claim founded on statutory rights."); United States ex rel. Portland Constr. Co. v. Weiss Pollution Control Corp., 532 F.2d 1009, 1011 (5th Cir. 1976) (noting that "the Miller Act does not prohibit arbitration before resort to the courts if the subcontractor and contractor had previously agreed to arbitrate disputes."). As such, Hanna's argument that its Miller Act claim is not arbitrable under the Federal Arbitration Act is without merit and the court finds that Hanna's claims, including its Miller Act claim, are covered by the arbitration clause contained in the contract and that all of Hanna's claims are arbitrable. All of Hanna's claims, therefore, shall be submitted to arbitration in accordance with the terms of the parties' contract.
2. The Forum Selection Clause
Hanna also argues that, even if its claims are arbitrable, the court should disregard the contract's agreed-upon forum selection clause and should order that the arbitration take place in Mississippi instead of Orange County, California. It is well-established in the Fifth Circuit, however, that district courts in Mississippi are empowered to compel arbitration outside this district. See Dupuy-Busching Gen. Agency, Inc. v. Ambassador Ins. Co., 524 F.2d 1275, 1278 (5th Cir. 1975) (holding that Mississippi district court properly ordered parties to arbitrate in New Jersey in accordance with the terms of their contract); National Iranian Oil Co. v. Ashland Oil, Inc., 817 F.2d 326, 331 (5th Cir. 1987) (recognizing that Dupuy-Busching empowers district courts to compel arbitration outside district where court sits); Municipal Energy Agency of Mississippi v. Big Rivers Elec. Corp., 804 F.2d 338, 344-45 (5th Cir. 1986) (same).
Here, the parties agreed to submit all their claims and disputes to arbitration in Orange County, California. Hanna has not argued that this forum-selection clause is ambiguous nor that any fraud or coercion took place surrounding the signing of the contract. As such, the court finds that the forum-selection clause is valid and enforceable and that the parties are to submit this case to arbitration in Orange County, California.
3. Dismissal of Hanna's Claims
Finally, the court finds that this cause should be dismissed without prejudice. Section 3 of the Federal Arbitration Act provides that, upon a showing that the issues involved in an action are properly referable to arbitration, the court "shall . . . stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3 (1999). The Fifth Circuit has ruled, however, that this Section was not intended to limit dismissal of a case in the proper circumstances and that if all of the issues raised in the district court are arbitrable, dismissal of the case is proper. See Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992) (holding that retaining jurisdiction and staying an action "serve[s] no purpose" when all issues are arbitrable); Fedmet Corp. v. M/V Buyalyk, 194 F.3d 674, 678 (5th Cir. 1999) (same). As was the case in Alford, all of the claims in this case are arbitrable. As such, Hanna's claims shall be dismissed without prejudice.
A separate order in accordance with this opinion shall issue this day.
ORDER
Pursuant to an opinion issued this day, it is hereby ORDERED that
(1) the Defendants' motion to dismiss or, in the alternative, to compel arbitration of the Plaintiff's claims and stay these proceedings (docket entries 8 and 12) is GRANTED;
(2) the parties shall submit this case, in accordance with their contract, to arbitration in Orange County, California; and
(3) this case is DISMISSED WITHOUT PREJUDICE.