United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
M. Hood Senior U.S. District Judge.
FCCI Insurance Company has moved for injunctive relief in the
form of a temporary restraining order and preliminary
injunction to prevent arbitration proceedings in this action
until the Court has opportunity to consider the pending
motion to dismiss for lack of jurisdiction or, in the
alternative, motion to compel arbitration. [DE 20]. Defendant
Nicholas County Library opposes the motion for injunctive
relief. [DE 25]. An expedited hearing was held on this matter
where both parties, through counsel, presented their
arguments on the matter. After reviewing the briefing and
considering the oral arguments presented by the parties,
FCCI's motion for a temporary restraining order and
preliminary injunction [DE 20] is DENIED
because FCCI has failed to meet its burden demonstrate that
injunctive relief is necessary to preserve the status quo
until the Court rules on the pending motion to dismiss or to
Factual and Procedural Background
Nicholas County Library entered into a construction contract
with Crace & Co., Inc., related to the construction of an
addition to the Nicholas County Library. FCCI issued payment
and performance bonds for the project, naming Crace as
principal and Nicholas County Library as obligee.
construction contract between Crace and the Library states:
For any claim subject to, but not resolved by, mediation
pursuant to Section 21.3, the method of binding dispute
resolution shall be as follows:
[X] Arbitration pursuant to Section 21.4 of this Agreement.
11-2 at 6, Pg ID 56]. Additionally, the contract provides
that “[i]f the parties have selected arbitration as the
method for binding dispute resolution in the Agreement, any
claim, subject to, but not resolved by, mediation shall be
subject to arbitration.” [Id. at 8, Pg ID 58].
was not a party to the construction contract between Crace
and the Library. Still, the FCCI performance bond appears to
incorporate the construction contract, stating:
The Condition Of This Obligation is such that whereas, the
Principal entered into a certain contract with the Owner,
dated the 18th day of October, 2016, a copy of which is
hereto attached and made part hereof for the construction of:
Nicholas Co. Library, New Two Story Addition, Carlisle, KY.
[DE 1-1 at 1, Pg ID 6].
the special conditions in the performance bond was that Crace
install rebar to reinforce the walls of the library addition.
After investigation, FCCI claims that they determined that
this condition was not met. As a result, FCCI terminated
Crace under the performance bond. At the same time, Nicholas
County Library made a claim on the FCCI performance bond.
FCCI filed this action seeking a declaratory judgment on the
alleged default and overpayment. [DE 1]. The Library moved to
dismiss for lack of jurisdiction or, in the alternative, to
compel arbitration. [DE 11]. Additionally, if FCCI was not
compelled to arbitrate, the Library has asked the Court to
stay this case until Crace and the Library can submit their
dispute to arbitration. [Id.].
the Court could rule on that motion, the parties agreed to
stay the case and mediate the dispute. [DE 13]. Recently, the
parties notified the Court that they had failed to resolve
the dispute through mediation and asked that the stay be
lifted and that a briefing schedule be implemented for the
pending motion to dismiss or compel arbitration. [DE 17; DE
18]. FCCI responded to the motion to dismiss or compel on
February 20, 2019. [DE 19]. A demand for arbitration from the
Library, dated January 25, 2019, is attached to the
FCCI's response in opposition to the motion to dismiss.
[DE 19-1]. Based on the Court's briefing schedule [DE