Opinion
Case No. 3:02CV7179
May 20, 2002
Christopher S. Williams, Peter J. Comodeca, William J. Michael, Calfee, Halter Griswold, Cleveland, OH., Counsel for Plaintiff, Bay Shore Power Co.
David C. Olson, Jeffrey S. Rosenstiel, Scott D. Phillips, Frost Brown Todd LLC, Cincinnati, OH., Counsel for Defendant, Foster Wheeler Energy Corporation.
ORDER
This is a suit between the owners of an electric power generating plant and a contractor with which the plaintiff had contracted for construction work at the plant. Plaintiff originally filed suit in the Lucas County, Ohio, Court of Common Pleas. Defendant removed the suit to this court.
Disputes have arisen between the parties about the amount due to the contractor for its work. Pursuant to an arbitration clause in the parties' contract, the defendant demanded arbitration. The arbitration hearing is to be held during the first quarter of 2003.
The defendant has also filed a mechanic's lien. Plaintiff claims that the lien is not enforceable due to a procedural defect. Plaintiff has, however, also served the defendant with a notice to commence suit on the lien. Defendant has done so in state court. In addition, defendant has informed the court and plaintiff that it will file another lien, and cure any defect in its original filing. Thereon, plaintiff will, I assume, serve another notice to commence suit with regard to the second lien.
Plaintiff has entered into an agreement to sell its power plant. Plaintiff asserts that the defendant's lien, which is a cloud on its title, was maliciously and wrongly filed in an effort to secure a tactical advantage in its dispute with the plaintiff in light of plaintiff's desire to sell the property. To try to relieve itself of that encumbrance, the plaintiff initiated this suit, asserting a claim for slander of title.
Plaintiff asks this court to lift the lien. It also asks this court to facilitate discovery related to the pending arbitration proceedings. Defendant opposes plaintiff's requests, and has filed a motion to stay these proceedings and for an order compelling arbitration of plaintiff's claims in this case along with the other claims before the arbitrators. Defendant also asks that any injunctive relief encompass a stay of any action to enforce, strike, or otherwise remove its mechanic's lien.
Defendant has not, according to plaintiff, undertaken to arbitrate any matters in dispute with regard to its mechanic's lien.
The arbitration clause in the parties' contract states: "[a]ll claims, disputes or other controversies arising out of, or relating to this Agreement" are to be arbitrated. This language has been described as "generic,". Nagle v. Nadelhoffer, Nagle, Kuhn, Mitchell, Moss and Saloga, P.C., 244 Ill. App.3d 920, 613 N.E.2d 331, 334, 184 Ill.Dec. 304, 307 (1993), and "broad," Vemco, Inc. v. Flakt, Inc., 1996 WL 506495, *1 (6th Cir.(Mich.), Sep 05, 1996) (Unpublished disposition), and as having its origin in "the American Arbitration Association's standard arbitration clause which provides, `Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration.'" Id.
The issue here is whether the plaintiff's slander of title claim, which was provoked by defendant's filing of its mechanic's lien against plaintiff's property, is a claim "arising out of, or relating to" the parties' contract.
Ambiguities in the arbitration provision or doubts about to the parties' intentions are to be resolved in favor of arbitration. Stout v. J.D. Byrider, 228 F.3d 709, 214 (6th Cir.(Ohio), Sep 08, 2000) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346 (1985)) (Unpublished disposition). A demand for arbitration "should not be denied unless the Court may say with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. RE/MAX Intern., Inc. v. Zames, 995 F. Supp. 781, 786 (N.D.Ohio. 1998). Courts should resolve doubts in favor of coverage. Id.
In light of these general principles and the broad language of the arbitration agreement, I conclude that the plaintiff's slander of title claim is a "claim . . . arising out of, or relating to" the parties' contract. Other courts have so held in construing similarly broad clauses. New Pueblo Constructors, Inc. v. Lake Patagonia Recreation Ass'n, 12 Ariz.App. 13, 467 P.2d 88, 91 (1970) ("`All questions or controversies which may arise between the Contractor and Owner, Under or in reference to this contract, shall be subject to'" arbitration); Presley v. Szerdi, 708 So.2d 335 (Fla.App. 1998) ("slander of title and fraudulent lien claims were `[c]laims, disputes or other matters in question' that arose out of or `related to' the written contract between the parties.'") (per curiam).
I would not hesitate to apply these principles and precedents, and grant the motion to compel arbitration, except for the fact that the defendant, apparently, intends to institute suit on its lien in state court, rather than joining it in the arbitration proceeding. It has not suggested that there is some legal or other impediment to bring its lien-based claim into the arbitration proceedings.
All matters in dispute should, in my view, be before the arbitrators, including defendant's action on its lien. If defendant cannot or will not bring that matter before the arbitrators, I am less inclined to order arbitration of plaintiff's slander of title claim. Sauce for the goose, sauce for the gander.
Plaintiff's other complaint about being compelled to arbitrate its slander of title claim is that its ability to conduct essential discovery, especially of third parties, may be limited, if not non-existent before the arbitrators. The parties appear to agree that there is considerable uncertainty on this issue, at least with regard to third party discovery.
Plaintiff's explanation for its desire to conduct third party discovery is persuasive: it wants to do so to determine what work may have been performed off-site, and thus would not be subject to defendant's mechanic's lien. Defendant offers to help procure such discovery, but plaintiff alleges that defendant has resisted providing even the discovery that plaintiff has requested of it.
Plaintiff complains about the delay that will occur if it must await the arbitrator's decision before it can know whether its contentions about the invalidity of the lien are merited. In the meantime, it will have to spend substantial sums obtaining a bond to indemnify the purchaser of its power plant. Defendant points out that plaintiff would likely have to post an equally substantial bond if it obtained, as it seeks, an injunction against maintenance of the lien. In any event, I'm not persuaded that such ancillary considerations should matter in the determination of whether to compel arbitration, despite the very substantial expense that plaintiff might
Plaintiff's implicit anticipation that, if it were to allowed to proceed with its action in this court, it would somehow gain a speedier resolution of the dispute about how much it owes, and elimination of the mechanic's lien, is not particularly well founded. The lien is for over $79 million; plaintiff has a counterclaim of $25 million. Given the magnitude of the amounts in dispute (and, I assume, the size and complexity of the underlying project and the parties' overall agreement and working relationship), it is highly unlikely, if not simply impossible, that final disposition of this case could be reached before me any more promptly than before the arbitrators.
I am, therefore, inclined to grant the motion to stay. Before I do, however, I want to be certain that doing so would not prejudice the plaintiff by leaving it still to fight a two-front war, and that the discovery it needs will in fact be forthcoming. In any event, I would consider, even if arbitration were compelled, keeping this case open to enable the parties to use it as a means of obtaining necessary discovery and for prompt resolution of any discovery disputes that might arise.
In light of the foregoing, it is hereby
ORDERED THAT the Clerk shall set a telephone pretrial conference forthwith to discuss, inter alia, defendant's intentions re. referring its suit on its lien for arbitration, how discovery re. all matters in dispute can be facilitated to avoid unnecessary delay and expense, and such other matters as the parties may desire to discuss in light of the discussion herein of my initial, and tentative views on the pending motion to compel arbitration.