Opinion
Civil No. 1:01 CV 01100
May 22, 2002
MEMORANDUM OPINION
This matter is before the court on Defendant's motion to stay Plaintiff's action pending arbitration and to compel Plaintiff to submit to arbitration. For the following reasons, the court will grant Defendant's motion.
FACTS
Plaintiff Carolina Home Oxygen and Medical Supply, Inc. ("Plaintiff") is a corporation organized under the laws of the State of North Carolina that, prior to the sale of its assets, operated a home health care business servicing North Carolina patients. Defendant American HomePatient, Inc. ("Defendant") is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business in Tennessee. Defendant provides home health care in several states.
On or about November 14, 1997, Plaintiff and Defendant entered into an asset purchase agreement ("Agreement") whereby Defendant purchased certain assets owned by Plaintiff. Incident to the Agreement, Defendant executed a purchase price note ("Note") in favor of Plaintiff in the amount of $400,000, bearing interest at a rate of seven per cent (7%) per annum.
Section 2 of the Note identifies certain events, the occurrence of which constitutes a default. The "failure of [Defendant] to pay when due any principal of or interest on this Note" is one such event that constitutes a default. (Note, Section 2, Def.'s Mot. to Stay Action Pending Arbitration and to Compel P1. to Submit to Arbitration, Ex. B at 1.) Section 2 of the Note states that, upon a default by Defendant, Plaintiff "may, at its option, declare the amounts due under this Note immediately due and payable, and exercise any or all rights and remedies available to it hereunder and under applicable laws." (a.) In addition, the Note contains an arbitration clause ("Arbitration Clause") which states: "Any dispute arising with respect to this Note will be settled by arbitration in Nashville, Tennessee in accordance with the rules and procedures of the American Arbitration Association." (Note, Section 5(f), Def.'s Mot. to Stay Action Pending Arbitration and to Compel P1. to Submit to Arbitration, Ex. B at 3.)
Plaintiff contends that the amount of the Note is past due and has been since November 14, 1998. Plaintiff further contends that Defendant owes Plaintiff $400,000 with interest as set out in the Note. On November 13, 2001, Plaintiff filed the present action in the North Carolina General Court of Justice, Superior Court Division, Cabarrus County, seeking to recover the allegedly unpaid $400,000 balance and the additional interest. Plaintiff amended its Complaint on November 29, 2001. Defendant removed Plaintiff's action to this court on December 12, 2001.
Plaintiff's Amended Complaint alleges that Defendant
has failed and refused to pay the principal balance of $400,000.00 which was due on November 14, 1998 and is now past due. . . . [Defendant's] refusal to pay the balance of the purchase price and the principal due on the [N]ote constitutes a breach of the Agreement and a default under the terms of the Note.
(Am. Compl. at ¶¶ 9-10.) Plaintiff seeks to recover from Defendant the allegedly unpaid $400,000 balance and additional interest accruing at seven per cent (7%) per annum under the Note.
DISCUSSION
Section 2 of the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA") makes valid and enforceable all written agreements to arbitrate "involving commerce." 9 U.S.C. § 2. The Supreme Court has interpreted the "involving commerce" language such that the FAA provides for the enforcement of arbitration clauses within the full reach of the Commerce Clause, U.S. Const. Art. I, Sec. 8, cl. 3. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115 (2001) (citing Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277 (1995)).
Under the FAA, a court must stay "any suit or proceeding" pending arbitration of "any issue referable to arbitration under an agreement in writing for such arbitration." 9 U.S.C. § 3. The FAA establishes that "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
Plaintiff does not dispute the validity of the Agreement or the Note incident thereto. Plaintiff does not dispute that the Agreement and Note involve commerce, that is, that they fall within the broad scope of the FAA. Plaintiff argues simply that the Arbitration Clause does not include within its scope Plaintiff's claim in this case. An analysis of Plaintiff's Amended Complaint and the Note reveals that Plaintiff is incorrect.
Plaintiff's Amended Complaint avers that Defendant committed a default as defined in the Note, and Plaintiff seeks to recover the allegedly past due $400,000 balance and accompanying interest due under the Note. Certainly Defendant's alleged default and Plaintiff's contentions resulting therefrom that it is owed the balance and interest outlined in the Note are "dispute[s] arising with respect to this Note" such that they are subject to "arbitration in Nashville, Tennessee in accordance with the rules and procedures of the American Arbitration Association." (Note, Section 5(f), Def.'s Mot. to Stay Action Pending Arbitration and to Compel P1. to Submit to Arbitration, Ex. B at 3.) Furthermore, the Arbitration Clause uses the word "any" to modify the types of "dispute[s] arising with respect to this Note" that are subject to arbitration. (Id.) The use of "any" as a modifier provides no limits on the type of disputes arising with respect to the Note that are arbitrable. See Webster's Third New International Dictionary 97 (1981) (defining any, as an adjective describing "one indifferently out of more than two: one or some indiscriminately of whatever kind") (emphasis added). Thus, the language of the Note itself coupled with the directive that "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration," Moses H. Cone, 460 U.S. at 24-25, necessitate a finding that the dispute in the present case is arbitrable. Accordingly, a stay of the proceedings pending binding arbitration is proper.
CONCLUSION
For the foregoing reasons, the court will grant Defendant's motion to stay Plaintiff's action pending arbitration and to compel Plaintiff to submit to arbitration.
An order in accordance with this memorandum opinion shall be entered contemporaneously herewith.