United States District Court, W.D. Kentucky, Louisville
HAIER U.S. APPLIANCE SOLUTIONS, INC. d/b/a GE APPLIANCES, successor-in-interest to the appliance businesses unit of the GENERAL ELECTRIC COMPANY, PLAINTIFF
APPLIANCE RECYCLING CENTERS OF AMERICA, INC., DEFENDANT
MEMORANDUM OPINION AND ORDER
B. Russell, Senior Jodge United States District Court.
matter is before the Court on two motions filed by Defendant
Appliance Recycling Centers of America, Inc.
(“ARCA”). The first is a Motion to Dismiss for
Lack of Personal Jurisdiction pursuant to Federal Rule of
Civil Procedure 12(b)(2), [R. 7], and the second is a Motion
to Stay Litigation Pursuant to 9 U.S.C. § 3, [R. 8].
Plaintiff Haier U.S. Appliance Solutions, Inc. d/b/a GE
Appliances (“GEA”) responded to both motions. [R.
14; R. 15.] ARCA replied. [R. 16; R. 17.] Fully briefed, this
matter is now ripe for adjudication. For the reasons stated
herein, ARCA's Motion to Dismiss, [R. 7], is
DENIED WITH LEAVE TO REFILE and ARCA's
Motion to Stay Litigation, [R. 8], is
first portion of the factual allegations are as set out in
the Complaint. [R. 1 at 2.] On or about March 9, 2016, GEA
and ARCA entered into a Forbearance and Repayment Agreement
(“Forbearance Agreement”). [Id; R. 8-4
at 8 (Forbearance Agreement).] In this agreement, GEA
recalls, ARCA acknowledged that, under the preceding 2009
Appliance Sales and Recycling Agreement (“2009
Agreement”), ARCA still owed GEA a principal balance of
$621, 851.85, but GEA agreed to forbear from collecting that
balance on certain terms and conditions. [R. 1 at 2.] GEA
alleges that despite its performance of all obligations
required of it under the Forbearance Agreement, ARCA failed
to make payments and owes a balance, as of April 12, 2017, of
$528, 167.66, exclusive of attorneys' fees and costs.
[Id. at 3.] GEA claims that despite repeated demands
and communications with ARCA concerning the balance, ARCA has
failed to pay the money owed as required by the Forbearance
recounts this story in a drastically different
fashion. Mainly, ARCA claims that GEA fraudulently
induced it into signing the Forbearance Agreement through
promises GEA failed to keep. [R. 8-1 at 4 (Memorandum in
Support of Motion to Stay.] ARCA recalls that in October of
2015, ARCA could not afford to accept materials from GEA
during the holiday rush because of the low scrap price. [R.
8-2 at 2 (Tony Isaac Affidavit).] In order to help, GEA
allegedly promised to pay ARCA's transportation costs by
subsidizing ARCA's recycling activity. [Id.]
ARCA claims GEA did this by agreeing to pay a per unit price
to ARCA when the price of scrap fell below $275.00 per ton.
[Id.] After ARCA accumulated $300, 000 to $400, 000
in transportation costs over the holiday season, ARCA alleges
that GEA broke this promise and demanded payment of the
transportation costs from November to December of 2015.
[Id.] Thereafter, on March 9, 2016, the two parties
entered the Forbearance Agreement which set out a payment
plan in which ARCA could repay GEA these transportation
costs. [R. 1 at 2.]
claims that the only reason it entered the Forbearance
Agreement was because GEA promised in the Sixth Addendum to
the 2009 Agreement to continue to pay ARCA when the scrap
price dropped below $275.00. [R. 8-2 at 2, ¶ 5.] However,
in May 2016, ARCA alleges that GEA informed it that it would
no longer subsidize ARCA's cost of recycling, and the
parties immortalized this decision in the 2016 Appliance
Sales and Recycling Agreement. [Id. at 2-3, ¶
7.] In that agreement, ARCA did not pay for product and GEA
did not pay for recycling. [Id.; R. 7-6 at 5, ¶
2.1(e) (2016 Agreement).] However, ARCA was still responsible
for the transportation costs. [R. 8-2 at 3, ¶ 9; R. 8-6
at 4, ¶ 2.1(a).]
alleges that on October 4, 2016, it gave notice to GEA that
it was temporarily suspending service, but then gave notice
the next day that it would resume service. [R. 8-2 at 3-4,
¶ 11.] ARCA claims that GEA then refused to supply
product to ARCA, so ARCA demanded arbitration on November 15,
2016 on the grounds that GEA was in breach of their 2016
Agreement. [Id.] On April 18th, 2017, GEA
simultaneously filed an Answer and Counterclaim in
arbitration for a balance owed under the 2016 Agreement, [R.
8-10 at 6-9], and the Complaint for breach of contract of the
Forbearance Agreement, which is the subject of this lawsuit,
[R. 1]. On May 26, 2017, ARCA filed an Amended Notice of
Defense to Counterclaim in arbitration, in which ARCA alleges
that GEA promised not to charge transportation costs in
November 2015 and fraudulently induced ARCA to endorse the
Forbearance Agreement through promising in the Sixth Addendum
to pay for product when the scrap price dropped. [R. 8-11 at
6-7 (Arbitration Amended Notice of Defense to Counterclaim).]
response to GEA's Complaint for Breach of Contract, ARCA
filed both a Motion to Dismiss, [R. 7], and a Motion to Stay
Ligation, [R. 8].
Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,
“embodies [a] national policy favoring arbitration and
places arbitration agreements on equal footing with all other
contracts.” Richmond Health Facilities v.
Nichols, 811 F.3d 192, 195 (6th Cir. 2016) (quoting
Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d
967, 972 (6th Cir. 2007)). Under the Act, a written agreement
to arbitrate disputes arising out of a contract or
transaction “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.
§ 2. There are “two parallel devices for enforcing
an arbitration agreement: a stay of litigation in any case
raising a dispute referable to arbitration, 9 U.S.C. §
3, and an affirmative order to engage in arbitration, §
4.” Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 22 (1983).
granting a stay under 9 U.S.C. § 3, the Court
“must engage in a limited review to determine whether
the dispute is arbitrable, ” meaning “ that a
valid agreement to arbitrate exists between the parties and
 that the specific dispute falls within the substantive
scope of the agreement.” Richmond Health
Facilities, 811 F.3d at 195 (quoting Javitch v.
First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir.
2003)); see also Masco Corp. v. Zurich Am. Ins. Co.,
382 F.3d 624, 627 (6th Cir. 2004). In performing its task,
the Court approaches factual questions as it would at the
summary judgment stage. See Great Earth Cos. v.
Simons, 288 F.3d 878, 889 (6th Cir. 2002); Yaroma v.
Cashcall, Inc., 130 F.Supp.3d 1055, 1062 (E.D. Ky.
2015). This means the Court may consider materials cited in
the record, such as documents and affidavits. Fed. Civ. R.
Proc. 56(c)(1)(a). If the Court is satisfied that the parties
formed a valid agreement to arbitrate, it must stay
litigation involving such a dispute until the parties resolve
it in the contracted-for manner. See 9 U.S.C. §
3. If there are disputed questions of fact concerning the
formation of such an agreement, then the Court should hold an
evidentiary hearing to resolve the question. See Todd v.
Oppenheimer & Co., 78 F.R.D. 415, 425 (S.D.N.Y.
1978); Marshall v. Green Giant Co., No. 4-83-578,
1985 WL 2458, at *2-3 (D. Minn. Aug. 7, 1985); cf.
Commerce Park at DFW Freeport v. Mardian Constr. Co.,
729 F.2d 334, 340 (5th Cir. 1984) (holding no evidentiary
hearing to be necessary in the absence of “disputed
factual questions going to the legal issue of
offers many arguments in support of its Motion to Stay.
First, ARCA states that the issue of whether GEA offered the
Sixth Addendum in order to fraudulently induce ARCA to sign
off on the Forbearance Agreement is referable to arbitration
under the 2009 Agreement. [R. 8-1 at 10-11.] Secondly, ARCA
claims that it defaulted on the balance due under the
Forbearance Agreement due to GEA's breach of the 2016
Agreement. [R. 8-1 at 12.] Therefore, ARCA reasons that this
Court should not decide the current claim concerning the
Forbearance Agreement until the arbitrator has decided
whether GEA breached the 2016 Agreement. [Id.]
Third, ARCA argues that both this Court and the arbitrator
would be required to decide the validity of the Forbearance
Agreement in parallel, causing a duplication of effort and
possibly inconsistent rulings. [Id. at 13-14.]
also moves to dismiss this action due to lack of personal
jurisdiction. However, ARCA argues that the determination of
personal jurisdiction should be stayed until the completion
of the pending ...