United States District Court, Eastern District of Michigan, Southern Division
AMERICON GROUP, INC., et al. Plaintiffs,
MARCO CONTRACTORS, INC., et al. Defendants. And MARCO CONTRACTORS, INC., Third-Party Plaintiff,
GMRI, INC. Third-Party Defendant.
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART THIRD-PARTY DEFENDANT’S MOTION TO DISMISS THE THIRDPARTY COMPLAINT AND COMPEL ARBITRATION (ECF #44)
MATTHEW F. LEITMAN UNITED STATES DISTRICT JUDGE
GMRI, Inc. (“GMRI”) owns and operates Red Lobster restaurants. In 2013, GMRI hired Marco Contractors, Inc. (“Marco”) to serve as general cntractor on renovation work to be performed on two Red Lobsters in Michigan. Marco then entered into subcontracts with Americon Group, Inc. (“Americon”), Garr Electric Co., Inc. (“Garr”), and Detroit Spectrum Painters, Inc. (“Spectrum”) to perform some of the work. In this action, Americon, Garr, and Spectrum (collectively, “Plaintiffs”) allege that Marco failed to pay amounts owing under their subcontracts. (See the “Second Amended Complaint, ” ECF #30.) Marco has filed a “Third-Party Complaint” against GMRI in which Marco alleges that GMRI breached the general contract. (See the “Third-Party Complaint, ” ECF #36.) GMRI has now moved to (1) dismiss the Third-Party Complaint and (2) compel Marco to arbitrate its dispute with GMRI in Florida. (See the “Motion, ” ECF #44.) For the reasons discussed below, the Court GRANTS GMRI’s request to dismiss the Third-Party Complaint and DENIES GMRI’s request to compel arbitration in Florida.
THE PARTIES’ FACTUAL ALLEGATIONS AND THE PROCEDURAL HISTORY OF THIS ACTION
GMRI, a Florida corporation with its principal place of business in Florida, owns and operates Red Lobster restaurants throughout the United States. (See Mot. at 1, Pg. ID 786.) On or about June 5, 2013, GMRI entered into agreements with Marco, a general contractor based in Pennsylvania, to remodel Red Lobster restaurants located at 101 W. 12 Mile Road, Madison Heights, Michigan and at 5774 N. Wayne Road, Westland, Michigan (the “Restaurants”). (See the “General Contracts, ” ECF ##29-2 and 29-3.)
The General Contracts contained the following arbitration provision:
[GMRI] and [Marco] shall settle by arbitration any controversy or claim, including any claim of misrepresentation, arising out of or related to this Contract or the Contract Documents, or to any agreement or contract entered into between [GMRI] and [Marco], or any equipment or service [Marco] furnishes to [GMRI].
(The “Arbitration Clause, ” General Contracts at ¶12.1.) The General Contracts further provided that “[t]he arbitration shall be held and the award shall be deemed to be made in Orlando, Florida unless [GMRI] requests another hearing locale.” (The “Forum Selection Clause, ” id. at ¶12.1.) In addition, GMRI and Marco agreed that the General Contracts would be “construed, interpreted and enforced in accordance with the Laws of the State of Florida….” (Id. at ¶9.1.)
One week after executing the General Contracts, Marco entered into subcontracts with Plaintiffs to perform work on the Restaurants. (See the “Subcontracts, ” ECF ##30-2, 30-3, 30-4, 30-15, and 30-16.) The Subcontracts established a schedule for Marco to make payments to the Plaintiffs. (See Id. at ¶5.) However, each Subcontract provided that
[t]his payment schedule shall be expressly conditioned upon [Marco] first receiving payments from [GMRI], with the release to [Plaintiff] of [Plaintiff’s] proportional share within seven to ten (7-10) working days of receipt of payment from [GMRI]…. [Plaintiff] expressly acknowledges, understands and agrees that [Marco] shall have no obligation whatsoever to pay [Plaintiff] for any work performed under this Subcontract until and unless [Marco] has been paid by [GMRI], which payment shall be a condition precedent to any obligations of [Marco] to pay for any work hereunder….
On February 20, 2014, Plaintiffs filed the instant action against Marco. In their Second Amended Complaint, Plaintiffs alleged that Marco breached the Subcontracts by failing to pay Plaintiffs in full for work they performed on the Restaurants. (See Sec. Am. Compl.)
Marco then filed the Third-Party Complaint against GMRI. Marco alleges that GMRI breached the General Contracts by refusing to pay Marco for the work it completed on the Restaurants. (See Third-Party Compl. at ¶¶14-15.) Marco also brings claims against GMRI for unjust enrichment and injunctive relief. (Id. at 16-27.)
GMRI has now moved to dismiss the Third-Party Complaint on the ground that the claims are subject to mandatory arbitration under the Arbitration Clause. (See Mot. at ¶8.) In addition, GMRI asks this Court to enter an order compelling Marco to arbitrate its dispute with GMRI in Florida, under Florida law. (See id.) Marco opposes GMRI’s requested relief on the grounds that (1) the Arbitration Clause is unenforceable, and (2) GMRI is a necessary and indispensable party to Plaintiffs’ underlying action against Marco pursuant to Fed.R.Civ.P. 19(b). (See the “Response Brief, ” ECF #49.)
The Court heard oral argument on GMRI’s Motion on January 27, 2015. For the reasons discussed below, the Court GRANTS GMRI’s request to dismiss the Third-Party Complaint and ...