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Roe v. Nano Gas Technologies, Inc.

United States District Court, Eastern District of Michigan, Southern Division

April 29, 2015

CLIFFTON ROE, Plaintiff/Counter-Defendant,
v.
NANO GAS TECHNOLOGIES, INC., Defendant/Counter-Plaintiff.

OPINION AND ORDER (1) DENYING DEFENDANT’S MOTION FOR A TEMPORARY RESTRAINING ORDER, A PRELIMINARY INJUNCTION, AND AN ORDER FOR POSSESSION PENDING FINAL JUDGMENT (CLAIM AND DELIVERY) (Dkt. 3); (2) GRANTING DEFENDANT’S MOTION TO DISMISS (Dkt. 12); (3) DENYING DEFENDANT’S MOTION TO STRIKE PLAINTIFF’S SUPPLEMENTAL BRIEF (Dkt. 46); (4) DENYING DEFENDANT’S MOTION TO HOLD PLAINTIFF IN CIVIL CONTEMPT OF COURT (Dkt. 59); (5) DENYING DEFENDANT’S MOTION FOR A DISCOVERY CONFERENCE AND TO COMMENCE DISCOVERY (Dkt. 61) AS MOOT; AND (6) DISMISSING CASE WITHOUT PREJUDICE

MARK A. GOLDSMITH, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

In this breach-of-contract case based on the Court’s diversity jurisdiction, Plaintiff Cliffton Roe alleges that Defendant Nano Gas Technologies, Inc. materially breached a Collaboration and Non-Compete Agreement (“Agreement”), for which Plaintiff is seeking injunctive relief. Defendant has filed a counterclaim against Plaintiff, alleging that Plaintiff breached the Agreement, as well as raising other numerous claims.

This matter is presently before the Court on Defendant’s motion for a temporary restraining order (“TRO”), a preliminary injunction, and an order for possession pending final judgment (claim and delivery) (Dkt. 3) (hereinafter “motion for injunctive relief”), as well as Defendant’s motions to dismiss (Dkt. 12), to strike Plaintiff’s supplemental brief (Dkt. 46), to hold Plaintiff in civil contempt of court (Dkt. 59), and to conduct a discovery conference and commence discovery (Dkt. 61).

For the reasons explained fully below, the Court finds that the mediation and arbitration clause in the Agreement covers the parties’ dispute, and neither party is entitled to pursue injunctive relief pursuant to the express terms of the arbitration clause. Therefore, the Court denies Defendant’s motion for injunctive relief, grants Defendant’s motion to dismiss, denies Defendant’s motion to strike, denies Defendant’s motion to hold Plaintiff in civil contempt of court, and denies, as moot, Defendant’s motion for a discovery conference. Having determined that all the claims in this case should to be submitted to arbitration, the Court dismisses this case without prejudice.

II. BACKGROUND

On March 21, 2013, Plaintiff and Defendant entered into a Collaboration and Non-Compete Agreement. Compl. ¶ 6 (Dkt. 1); Agreement at 11-14 (cm/ecf pages) (Dkt. 1). Alleging numerous material breaches of the Agreement, Plaintiff filed suit against Defendant on October 1, 2014, seeking to enjoin Defendant from “using, disseminating, or making application for a patent to the United States Patent and Trademark Office” regarding “a new technology that dissolves or disperses gasses into liquids which stay dissolved or dispersed at standard temperature and pressure which would modify Henry’s Law.” Compl. ¶¶ 1, 6, 8, 19, 21, 23, 28, 35, 39(a)-(b). According to Plaintiff, he invented this technology prior to the effective date of the Agreement. Id. ¶¶ 1, 9.

On October 10, 2014, Defendant filed a counterclaim against Plaintiff (Dkt. 5), alleging that, sometime between August 29, 2014 and September 15, 2014, Plaintiff entered Defendant’s facilities in Michigan and “appropriated, converted, and sequestered” Defendant’s property. Counterclaim ¶ 19. Defendant brought claims against Plaintiff for breach of contract, as well as common-law and statutory conversion, breach of fiduciary duty, misappropriation of trade secrets, and the intentional interference with Defendant’s existing and prospective economic relationships. Id. ¶¶ 27-54, 63-77. Defendant also sought claim and delivery, as well as injunctive relief. Id. ¶¶ 55-62, 78-83. In addition to filing its counterclaim on October 10, 2014, Defendant also filed a motion for a TRO, a preliminary injunction, and an order for possession pending final judgment (claim and delivery) (Dkt. 3), and a motion to dismiss (Dkt. 12).

That same day, the parties entered into a stipulated TRO, whereby the parties agreed to refrain “from damaging, destroying, concealing, disposing of, or using so as to substantially impair the value of the property of Nano . . ., including the property Nano . . . alleged is the property of Nano . . . in the pleadings and in Nano[’s] motion and brief in support of a temporary restraining order.” 10/10/2014 Stip. Order at 1 (cm/ecf page) (Dkt. 16). The parties agreed that this stipulated order would remain in effect until the Court resolves Defendant’s motion for injunctive relief. Id.

A hearing on Defendant’s motions was held on November 24 and 25, 2014. At the Court’s request, the parties submitted post-hearing supplemental briefs (Dkts. 42, 44). While Defendant timely filed its supplemental brief, Plaintiff’s supplemental brief was filed two days after the deadline set by the Court. Thereafter, Defendant filed a motion to strike Plaintiff’s supplemental brief as being untimely (Dkt. 46).

Since the hearing, Defendant has filed two more motions - one alleging that Plaintiff violated the stipulated TRO (Dkt. 59), and the other requesting a discovery conference and to commence discovery (Dkt. 61).

III. STANDARDS OF DECISION

The standard for a preliminary injunction is well known: “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Typically, no one factor is dispositive; rather they are to be considered as an integrative whole. Liberty Coins, L.L.C. v. Goodman, 748 F.3d 682, 690 (6th Cir. 2014) (“Each of these factors should be balanced against one another and should not be considered prerequisites to the grant of a preliminary injunction.” (quotation marks and brackets omitted)). “These same factors are utilized in evaluating whether to issue a temporary restraining order.” Coleman v. Ann Arbor Transp. Auth., 904 F.Supp.2d 670, 680 (E.D. Mich. 2012) (citing Ohio Republican Party v. Brunner, 543 F.3d 357, 361 (6th Cir. 2008)).

In evaluating a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), “[c]ourts must construe the complaint in the light most favorable to plaintiff, accept all well-pled factual allegations as true, and determine whether the complaint states a plausible claim for relief.” Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2010) (quotation marks, brackets, and citations omitted). To survive a motion to dismiss, a complaint must plead specific factual allegations, and not just legal conclusions, in support of each claim. Ashcroft v. Iqbal, 556 U.S. 662, 678–679 (2009). A complaint will be dismissed unless, when all well-pled factual allegations are accepted as true, the complaint states a “plausible claim for relief.” Id. at 679.

The Federal Arbitration Act “provides that arbitration clauses in commercial contracts ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’” Bishop v. Gosiger, Inc., 692 F.Supp.2d 762, 767 (E.D. Mich. 2010) (quoting 9 U.S.C. § 2). If an arbitration clause covers the cause of action, the court must stay the proceedings pending the completion of arbitration. Id.; 9 U.S.C. § 3. Furthermore, “even though a Court may not compel arbitration in a foreign jurisdiction, it may stay the litigation pending arbitration in the chosen forum.” Bishop, 692 F.Supp.2d at 767.[1] However, if all of the claims are arbitrable, the court may dismiss the action. Id. (citing Hensel v. Cargill, Inc., 198 F.3d 245 (6th Cir. 1999) (unpublished)); see also Green v. G. Reynolds Sims & Assoc., P.C., No. 12-12488, 2013 WL 1212775, at *4 (E.D. Mich. Mar. 25, 2013) (recognizing that, “when the court determines that all the claims in a cause of action are to be submitted to arbitration, it may dismiss, rather than stay the action because ‘staying the action will serve no purpose’” (quoting Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992))); Prude v. McBride Research Labs., Inc., No. 07-13472, 2008 WL 360636, at *7-8 (E.D. Mich. Feb. 8, 2008) (dismissing action without prejudice, where all claims were to be submitted to arbitration, and staying the action and retaining jurisdiction would serve no purpose).

IV. ANALYSIS

At the outset, the Court recognizes that there is a presumption of arbitrability when an agreement contains a broadly worded arbitration clause, such that “an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Litton Fin. Printing Div., a Div. of Litton Bus. Sys., Inc. v. N.L.R.B., 501 U.S. 190, 209 (1991) (brackets and quotation marks omitted); Huffman v. Hilltop Cos., LLC, 747 F.3d 391, 395 (6th Cir. 2014) (same). The Sixth Circuit has described an arbitration clause as being “broad” when the clause indicates that any claim or dispute “arising out of or relating to” that agreement will be submitted to arbitration. See Huffman, 747 F.3d at 395. The Huffman court further noted that, given the strong federal policy in favor of arbitration, any doubts as to the parties’ intentions or any contractual ambiguities should be resolved in favor of arbitration. Id.

In this case, section 15 of the Agreement contains a broadly worded arbitration clause. This section, which also addresses the limited circumstances in which injunctive relief may be sought from a court notwithstanding the arbitration clause, provides the following:

15. DISPUTE RESOLUTION. Any dispute arising out of or relating to this Agreement, including its formation (“Dispute”) shall be resolved by mediation and then arbitration in the following manner; provided, however, that injunctive relief may be sought in any court of competent jurisdiction with respect to Sections 2, 3, 8 and 9, which relief may be effective during the pendency of proceedings brought pursuant to this Section 12 [sic]. . . . The proceedings and decision of the arbitrator shall be final, non-appealable, binding and confidential, except as necessary for enforcement of the decision . . . which may include ...

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