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HANNAH FURNITURE CO. v. WORKBENCH

May 5, 1983

HANNAH FURNITURE COMPANY
v.
WORKBENCH, INC.



The opinion of the court was delivered by: WEBER

 On March 18, 1983, defendant mailed to plaintiff a letter of termination of the franchise agreement by reason of default on the part of plaintiff.

 On March 24, 1983, plaintiff filed a Complaint for Preliminary Injunction together with a Motion for Temporary Restraining Order, with notice to opposing counsel. On March 25, 1983, the court heard counsel and entered a temporary restraining order maintaining the status quo until a hearing could be held April 5, 1983 on the preliminary injunction.

 After conference with counsel, the hearing set for April 5, 1983 was continued until on or after April 25, 1983 and the temporary restraining order was continued with the consent of the defendant until such hearing.

 Defendant, on April 14, 1983, filed a Motion for a Stay of Proceedings Pending Arbitration and plaintiff on April 25, 1983 filed a Motion for Temporary Restraining Order Against Arbitration. It is with these motions that we are presently dealing. We have omitted from our recital the side skirmishes that have arisen.

 Upon receipt of the defendant's motion we fixed argument on the arbitration question for April 22, 1983, and postponed the evidentiary hearing on injunctive relief until it was resolved, keeping the temporary restraining order in effect. We have heard the argument of counsel, read their briefs and now face the issue.

 The United States Arbitration Act, 9 U.S.C. § 3 provides that in any suit in the United States Courts on any issue that is referable to arbitration under a written agreement to arbitrate the court shall stay the trial of the action until such arbitration has been had.

 The franchise agreement between the parties here, which precipitated this lawsuit by its cancellation, contains the following provisions concerning arbitration:

 
All complaints, disputes or grievances between the parties involving questions of interpretation of any of the provisions of this Agreement shall be submitted to arbitration by either party before an arbitrator . . . in the City of New York designated by the American Arbitration Association, in accordance with its rules. . . .
 
* * *
 
This Agreement shall be the sole and exclusive basis for the determination of any and all complaints, disputes and grievances hereunder.

 Plaintiff resists the demand for arbitration on the grounds that no part of the instant lawsuit is subject to the arbitration clause of the contract because the lawsuit asks for injunctive relief with respect to the wrongful termination of or interference with a franchise relationship, damages for an interference with a franchise relationship, damages for franchisor's breach of fiduciary duty arising out of the relationship, and damages for fraud on the part of the franchisor in the inducement of the relationship.

 The arbitration clause in this contract varies from the language of the arbitration provision recommended by the American Arbitration Association, which has often been cited as the broad arbitration clause. It provides that "any controversy or claim arising out of or relating to ...


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