Great American Insurance Company v. Nelson, Inc. et al, No. 2:2016cv02283 - Document 130 (W.D. Tenn. 2018)
Court Description: ORDER Denying 106 Defendant's Motion to Dismiss Geodesy's First Amended Intervening Complaint. Signed by Judge Thomas L. Parker on 11/16/18. (jgb)
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tract until October 30, 2017, when for the first time, Nelson denied Geodesy’s invoices submitted as part of the claims process arising out of the 5 settlement between Nelson and [USACE].” (ECF No. 114 at PageID 1338.); Iqbal, 566 U.S. at 678 (2009). Alternatively, Geodesy sufficiently pleaded that it was a named beneficiary in a September 18, 2017, joint stipulation agreement between Nelson and GAIC and that this entire action is based on that agreement. (ECF No. 80 at PageID 911.) Geodesy’s claims for either theory fall comfortably within the three-year or six-year limitation periods. See Tenn. Code Ann. § 28-3-109; Tenn. Code Ann. § 28-3-105; McGhee, 2012 WL 2087188, at *3; Estate of Lyons, 2018 WL 3578525, at *4; Metro. Gov’t of Nashville & Davidson Cty., 195 S.W.3d at 28; Am. Fid. Fire Ins. Co., 671 S.W.2d at 841. The Court, therefore, declines to dismiss any of Geodesy’s claims on grounds that the alleged claims fall outside their respective statutes of limitation. II. Geodesy’s Claims Arising from the Stone Dike Project are not Subject to a Binding Arbitration Agreement. Nelson asserts that Geodesy’s claims arising from work performed on the Stone Dike Project must be dismissed because the Parties’ contract contains an enforceable and binding arbitration clause. (ECF No. 106 at PageID 1305.) The Parties signed a “Standard Form of Agreement Between Contractor and Subcontractor,” that covered each Parties’ obligations to the other for the Stone Dike Project. (ECF No. 105-1 at PageID 1277.) Section 6.1.1 states in part that the Parties “shall be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party.” (Id. at PageID 1282.) Section 6.2.1 provides that any “claim arising out of or related to this Subcontract . . . shall be subject to arbitration. Prior to arbitration, the Parties shall endeavor to resolve disputes by mediation in accordance with the provisions of Section 6.1.” (Id.) “An arbitration agreement may be invalidated for the same reasons for which any contract may be invalidated, including forgery, unconscionability, and lack of consideration.” 6 Fazio v. Lehman Bros., 340 F.3d 386, 394 (6th Cir. 2003). “If the language used by the parties is plain, complete, and unambiguous, the intention of the parties must be gathered from that language, and from that language alone.” Empress Health & Beauty Spa, Inc. v. Turner, 503 S.W.2d 188, 190 (Tenn. 1973). “Waiver is the voluntary relinquishment or renunciation of some right, the foregoing or giving up of some benefit or advantage, which, but for such waiver, the party would have enjoyed.” Wilson v. Americare Sys., Inc., No. M200800419COAR3CV, 2009 WL 890870, at *5 (Tenn. Ct. App. Mar. 31, 2009). “It may be proved by . . . acts and declarations manifesting an intent and purpose not to claim the supposed advantage; or by so neglecting and failing to act as to induce a belief that it was the party’s intention and purpose to waive the benefit or advantage.” Id. Geodesy first asserts that the arbitration clause is ambiguous because section 6.1 appears to allow for an election between either “arbitration or the institution of legal or equitable proceedings,” while section 6.2 states that all claims “shall be subject to arbitration.” (ECF No. 114 at PageID 1343); (ECF No. 105-1 at PageID 1282.) Read with section 6.2, though, section 6.1 merely contemplates “the institution of legal or equitable proceedings” in circumstances “provided in [s]ection 4.1.5,” which concerns work performed by the subcontractor which the contractor or architect later rejects as non-conforming. (ECF No. 105-1 at PageID 1280, 1282.) Indeed, other courts have no trouble interpreting similar standard form contracts as unambiguous. See S. Elec. Servs., Inc. v. Cornerstone Det. Prod., Inc., No. 7:10CV00076, 2010 WL 2233664, at *3 (W.D. Va. June 3, 2010); Spartan Drywall Builders, Inc. v. Post Goldtex, L.P., No. 1182 EDA 2015, 2016 WL 490034, at *2 (Pa. Super. Ct. Feb. 5, 2016). 7 Geodesy then argues that Nelson waived its right to arbitration because its “conduct in this litigation has served to unnecessarily protract the litigation in order to reduce, wear down and eliminate its creditor’s rightful claims to their funds . . . .” (ECF No. 114 at PageID 1343.) On September 18, 2017, Nelson entered into a joint stipulation with GAIC—in this lawsuit—agreeing to pay several parties, including Geodesy as soon as they received the funds in the SunTrust account. However, the stipulation noted that they had not agreed on the amount of the payment to Geodesy. (ECF No. 46.) In particular, the agreement provided “[a]fter depositing the Settlement Funds into the Trust Account, Nelson, Inc. shall immediately pay the specific amounts it has agreed to pay certain parties . . . .” (Id. at PageID 516.) Nelson was only supposed to collect “the balance of funds less amounts for Tetra Tech and Geodesy . . . .” (Id. at PageID 519.) USACE deposited the funds into the SunTrust Bank account on October 4, 2017. (ECF No. 92 at PageID 1125.) As of this filing, more than one year later, Nelson still has not paid Geodesy. (ECF No. 105 at PageID 1269.) First, by entering into the joint stipulation Nelson shows that it did not intend “to claim the supposed advantage” of arbitration. Wilson v. Americare Sys., Inc., 2009 WL 890870, at *5. At a minimum, the act of stipulating in court that it owed Geodesy money without reserving the right to take it to arbitration—even if the parties had not agreed on an amount— would have reasonably “induce[d] a belief that it was the party’s intention and purpose to waive the benefit or advantage [of the arbitration clause].” Id. Second, Nelson has had more than eight years to begin arbitration proceedings should it have so desired. See Great American Insurance Company v. Nelson, Inc. et al., 2:10-cv-02691-JPM-cgc, (W.D. Tenn., Sept. 22, 2010). This demonstrates a clear “fail[ure] to act . . . [so as] to waive the benefit or 8 advantage [of the arbitration clause].” Wilson v. Americare Sys., Inc., 2009 WL 890870, at *5. Even more, when one considers fairness it is not right or fair for Nelson to sign a stipulation and file it with this Court agreeing that it owes money to Geodesy only to then stonewall on the payment of that money for several months. And more than a year later, after Geodesy went to the trouble to intervene here, Nelson then tried to delay payment again by asserting that the arbitration clause governs this claim. This Court should not and will not reward this behavior. The Court finds that Nelson has waived its right to assert arbitration. III. Geodesy has Sufficiently Pleaded There was an Oral Contract for Expert Services. Geodesy alleges in its complaint that one of Nelson’s attorneys asked Geodesy to provide “expert witness and consulting services” to help Nelson in its lawsuit against USACE. (ECF No. 105 at PageID 1268.) Geodesy also attached to its complaint what it claims to be an invoice it sent Nelson. (ECF No. 105-3 at PageID 1296.) In Tennessee, an oral contract is valid where there is (1) “mutual assent” to the agreement; and (2) such terms are “sufficiently definite.” Castelli v. Lien, 910 S.W.2d 420, 427 (Tenn. Ct. App. 1995). As to the first element, Nelson acknowledges that “the plain language of the [invoice] provided by Geodesy establishes that it had some type of agreement with [Nelson’s attorney] for professional services.” (ECF No. 106 at PageID 1309.) Nelson claims, though, that because “experts are normally hired by lawyers and not clients,” Geodesy cannot establish mutual assent with Nelson. (Id.) Even so, Tennessee law is clear that a “lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation.” Tenn. Sup. Ct. R.8, RPC 1.2. Viewing the complaint in the light most favorable to Geodesy, the Court can and will infer that Nelson’s attorney was acting on behalf of Nelson when he 9 allegedly sought expert services from Geodesy. See Herhold, 608 F. App’x at 331. Geodesy has thus satisfied the ‘mutual assent’ element for purposes of a motion to dismiss. Though Nelson does not appear to contest the issue, the Court also finds that Geodesy has sufficiently pleaded that the alleged oral contract is definite enough. The invoice provides exact amounts charged for specific services allegedly rendered. (ECF No. 105-3 at PageID 1296.) For example, the invoice shows that on one occasion Geodesy provided eight hours of “[t]echnical/[p]rofessional [s]upport” in exchange for $1,000.00. (ECF No. 105-3 at PageID 1296.) The Court therefore finds that Geodesy has sufficiently alleged there was an oral contract for expert services between the two Parties. CONCLUSION For the reasons noted above, this Court finds that Plaintiff’s Complaint contains “sufficient factual matter” to “state a claim to relief that is plausible on its face,” for all claims alleged. Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see Engler, 862 F.3d at 575. As a result, this Court DENIES Defendant’s Motion to Dismiss. SO ORDERED, this 16th day of November, 2018. s/ Thomas L. Parker THOMAS L. PARKER UNITED STATES DISTRICT JUDGE 10
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