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Holtec International v. Pandjiris, Inc.

United States District Court, W.D. Pennsylvania

November 3, 2017

HOLTEC INTERNATIONAL and HOL TEC MANUFACTURING DIVISION, INC., Plaintiffs,
v.
PANDJIRIS, INC., ARC MACHINES, INC., and JOHN DOES 1-10, Defendants.

          OPINION RE: ECF NO. 52 AND 55

          Maureen P. Kelly Chief Magistrate Judge

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On January 20, 2017, Plaintiff Holtec International and Holtec Manufacturing Division, Inc. ("Holtec") initiated this civil action in the United States District Court for the District of New Jersey against Defendants Pandjiris, Inc. ("Pandjiris"), Arc Machines, Inc. ("AMI") and John Does 1-10, by the filing of a Civil Action Complaint. ECF No. 1. On April 4, 2017, an order was issued directing the transfer of this case to the United States District Court for the Western District of Pennsylvania. ECF No. 22.

         On August 11, 2017, Holtec filed an Amended Complaint asserting three claims: Count I - breach of contract/quasi-contract/unjust enrichment/promissory estoppel against all Defendants; Count II - third party beneficiary against AMI; and Count III - U.C.C. against all Defendants. ECF No. 51. The claims asserted in the Amended Complaint arise from the sale by Pandjiris to Holtec of two welding manipulator systems. Pandjiris ordered certain equipment and/or component parts from AMI, a subcontractor. Id. ¶ 11. In January 2013, the manipulators were shipped by Pandjiris and installed at Holtec's facility in Turtle Creek, Pennsylvania, under the supervision of and with the technical assistance of Pandjiris and AMI. Id. ¶ 16. Thereafter, Holtec alleges that it experienced continuous problems with the welding manipulators. Id. ¶ 17. Holtec further alleges that the machines never operated properly and ultimately had to be replaced. Id. ¶¶ 18-29.

         Presently before the Court is Defendant Pandjiris, Inc.'s Motion to Dismiss Plaintiffs' First Amended Complaint or, in the Alternative, to Stay. ECF No. 52. Pandjiris also filed a Memorandum in Support. ECF No. 53. Pandjiris asserts that the contract that Holtec relies upon to support their claims contains a binding arbitration provision that applies to all disputes relating to or arising out of the sale and purchase of the products at issue. As such, Pandjiris seeks to have this Court order that Holtec's claims fall under the parameters of the arbitration provision, and requests that the Court dismiss or stay all claims so that the parties arbitrate the claims in Ohio, the agreed forum, with the American Arbitration Association. Id. at 1.

         In addition, Defendant AMI filed a Motion to Dismiss Plaintiffs' Amended Complaint and Memorandum of Law in Support. ECF Nos. 55 and 56. AMI argues that the Amended Complaint should be dismissed in its entirety pursuant to Fed.R.Civ.P. 12(b)(6) because Holtec has failed to plead the requisite elements of its claims. ECF No. 55 at 1.

         In response, Holtec filed an Omnibus Response in Opposition to Defendants' Second Motions to Dismiss and Memorandum of Law. ECF Nos. 60 and 61. The Court takes particular note that, in the Omnibus Response in Opposition, Holtec notifies the Court that it will stipulate that the arbitration provision the Pandjiris, Inc. Terms and Conditions of Sale (the "Terms and Conditions") is controlling. As such, Holtec has respectfully requested that this federal action be stayed and that all claims be globally transferred to arbitration. ECF No. 61 at 4.

         For the reasons that follow, Pandjiris' Motion to Dismiss and/or Stay will be granted and all claims between Holtec and Pandjiris are to be arbitrated in Ohio. As to AMI, it will not be compelled to arbitration. The instant federal action will be stayed pending conclusion of the arbitration between Holtec and Pandjiris in Ohio. As such, the AMI Motion to Dismiss is denied without prejudice to refile once the stay of this action is lifted.

         II. ARBITRATION PROVISION

         As set forth in the Amended Complaint, between May and July 2012, Holtec and Pandjiris exchanged several communications regarding the terms of their agreement for the purchase of the two welding manipulator systems. ECF No. 51. Many of the communications became part of and were attached to the Holtec Purchase Order. ECF No. 51-1 at 1-5. Attached to the Purchase Order was the Pandjiris Terms and Conditions. Id. at 18 - 26. The Terms and Conditions of Sale set forth an explicit arbitration provision, as follows:

220. Agreement to Arbitrate Customer agrees that all disputes between the Seller and customer (and their respective affiliates) relating in any way or arising in any way out of Seller's Quotation(s) and/or Purchaser's Purchase Order(s), whether pleaded in contract or tort, at law or in equity, and whether for damages or equitable relief, shall be settled by arbitration administered by the American Arbitration Association ("AAA") in accordance with the AAA's Commercial Arbitration Rules, except to the extent that such rules conflict with any express provision of this Agreement and judgment entered on an award by the arbitrator(s) may be entered by any court having jurisdiction thereof. Customer agrees that the location of any arbitration as provided for in this paragraph shall be conducted in Ohio, and Customer waives any right to contest or object to the location of the arbitration in Ohio. Any such arbitration shall be conducted by a panel of three (3) arbitrators. The costs of any arbitration shall be borne equally by the parties, unless a majority of the panel concludes that either party has acted in bad faith. The decision of the majority of the panel shall be final, conclusive and binding upon the parties to the maximum extent permitted by law.

Id. at 26.

         III. STANDARD OF REVIEW

         "Because ' [a]rbitration is a matter of contract between the parties, ' a judicial mandate to arbitrate must be predicated upon the parties' consent." Guidotti v. Legal Helpers DebtResolution. L.L.C.. 716 F.3d 764, 771 (3d Cir. 2013), quoting Par-Knit Mills. Inc. v. Stockbridge Fabrics Co.. Ltd.. 636 F.2d 51, 54 (3d Cir. 1980). Thus, although the Federal Arbitration Act (the "FAA"), 9 U.S.C. § 1, et seq., permits the enforcement of a contract to arbitrate, it requires that a court first satisfy itself that the making of the agreement to arbitrate is not in issue. Id., citing 9 U.S.C. ยง 4. In determining whether an agreement to arbitrate was actually reached, the United States Court of Appeals for the Third Circuit has found that the appropriate ...


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