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Vantage Technologies Knowledge Assessment, LLC v. College Entrance Examination Board

December 18, 2008

VANTAGE TECHNOLOGIES KNOWLEDGE ASSESSMENT, LLC
v.
COLLEGE ENTRANCE EXAMINATION BOARD



The opinion of the court was delivered by: Bartle, C.J.

MEMORANDUM

Plaintiff, Vantage Technologies Knowledge Assessment, LLC ("Vantage"), initiated this contract and tort action in the Court of Common Pleas of Bucks County against defendant College Entrance Examination Board ("College Board"), a not-for-profit corporation. College Board timely removed the action to this court in October, 2008.

Before us is the motion of College Board to stay the instant proceedings pursuant to § 3 of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., pending arbitration of this dispute.

I.

The following facts are undisputed unless otherwise noted. On May 8, 1998, Vantage and College Board entered into a written contract under which Vantage would oversee the online administration of "WritePlacer," College Board's proprietary writing assessment tool. The contract contained an agreement to arbitrate disputes arising out of or relating to the contract.

That agreement expired on June 30, 1999. On May 16, 2001, Vantage and College Board retroactively renewed the 1998 contract by entering into a new written agreement containing an identical arbitration clause. The contract also stated that "[t]his agreement may be supplemented, amended, or revised only in writing by agreement of the parties."

With the 2001 WritePlacer Agreement set to expire on June 30, 2002, the parties attempted to renew their written contract once more. Vantage sent to College Board a draft agreement which contained the same arbitration clause that the parties had included in their previous contracts. This time College Board rejected the draft. Nonetheless, the parties continued to do business without a written contract.

On July 1, 2002, Vantage sent a letter (the "2002 letter") to College Board in which it stated its intention to continue providing services for College Board only on a day-today basis with respect to the WritePlacer product. The 2002 letter contained a limited number of specific provisions, including that: (1) from July 1, 2002 onward, Vantage would bill College Board "$6.50 per human test" and "$2.95 for each IntelliMetric score rendered"; and (2) "termination and jurisdiction of this arrangement will be at Vantage's sole discretion." Vantage also stated in the letter that "[t]here are no further understandings."

College Board contends that it never received the 2002 letter and was unaware of it until the instant litigation commenced. It notes that Vantage provided services for several months after July 1, 2002, at lower pricing terms than those listed in the letter. In response Vantage has provided an affidavit from Peter Murphy, Chief Executive Officer of Vantage. Murphy states that the 2002 letter was both hand delivered and sent via U.S. Mail to a College Board executive, Sandra Holst, at the New York office of College Board in July, 2002.*fn1

In any event, from July 1, 2002 until July 1, 2008, Vantage continued to provide the WritePlacer services without a formal contract signed by both parties. In 2005, Vantage prepared a second draft WritePlacer contract which, among other things, provided for arbitration in language identical to the original WritePlacer agreement. College Board again rejected the draft. On July 1, 2008, College Board and Vantage entered into a new written WritePlacer contract without an arbitration clause.

College Board initiated arbitration in August, 2008, seeking a declaratory judgment concerning unpaid sums claimed by Vantage under the 2002 letter agreement. In September, 2008, Vantage filed the instant law suit in state court. The complaint includes claims for unjust enrichment, breach of contract, fraud in the inducement, negligent misrepresentation, and false prosecution of an arbitration claim.

II.

Any arbitration provision in an agreement affecting interstate commerce is subject to the Federal Arbitration Act. Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983); 9 U.S.C. § 2. Federal substantive law governs arbitrability determinations under the FAA, although state contract law principles, including defenses, may be applicable. Harris v. Green Tree Fin. Corp., 183 F.3d 173, 179 (3d Cir. 1999). On a motion to stay pending arbitration, the role of the court is to determine whether the parties have agreed to submit the dispute to arbitration and not to rule on the merits of the dispute. See Medtronic AVE, Inc. v. Advanced Cardiovascular Sys., Inc., 247 F.3d 44, 55 (3d Cir. 2001).

The dispute in question arose between the parties at a time after the expiration of their written contract containing an arbitration clause and before the commencement of their 2008 written contract which did not include an arbitration provision. The question before us is whether the parties continued to be bound by the arbitration clause of an expired ...


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