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LLC v. Lowe's Home Centers, LLC

United States District Court, E.D. Kentucky, Central Division, Lexington

July 24, 2019

I3 TRIPLE CROWN HOLDINGS, LLC, Plaintiff,
v.
LOWE'S HOME CENTERS, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Joseph M. Hood Senior U.S. District Judge.

         This matter is before the Court on the Defendant Lowe's Home Centers, LLC's (“Lowe's”) motion to dismiss or to compel arbitration. [DE 4]. The instant action is a contractual dispute between Plaintiff, I3 Triple Crown Holdings, LLC (“Triple Crown”) and Lowe's relating to service contracts whereby Lowe's would provide repair, demolition, and replacement services to Triple Crown on two Triple Crown-owned apartment properties in Fayette County, Kentucky. [DE 1-1].

         However, Lowe's claims that the subject contracts provided that any disputes between Lowe's and Triple Crown be resolved by binding arbitration. [DE 4]. Accordingly, Lowe's now moves to dismiss or to compel arbitration or otherwise stay these proceedings pending the resolution of arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16. [Id.]. Triple Crown has responded in opposition to the motion to dismiss [DE 5], and Lowes has replied in support of its motion. [DE 7]. As a result, this matter is ripe for review and consideration. For the reasons that follow, Lowes's motion [DE 4] is GRANTED.

         I. Procedural and Factual Background

         Triple Crown owns two apartment complex properties located at 3501 (“3501 location”) and 3550 (“3550 location”) Pimlico Parkway, Lexington, Kentucky. [DE 1-1 at 2, PageID #7, ¶¶ 5-6]. Between November 2016 and August 2017, Triple Crown entered into at least four Services Solutions Installed Sales Contracts (“the contracts”) with Lowe's for the repair of ninety apartment balconies at the 3501 location and the demolition and replacement of sixty-seven apartment balconies at the 3550 location, respectively. [Id. at 3, PageID #8, ¶¶ 8-9; Id. at 16-7, PageID #19-22].

         Triple Crown attached the first page of these contracts to its Complaint. [DE 1-1 at 16-7, PageID #19-22]. Those contracts are form-printed and numbered as follows: 1057679, 0939030, 0939017, 0939017. [Id.]. Although Triple Crown only attached the first page of the contracts to the complaint, each is, in fact, three pages long. [DE 4-2 at 17-9, PageID #56-8; DE 4-3 at 2-4, PageID #60-2; DE 4-3 at 5-7, PageID #63-5; DE at 4-3 at 8-10, PageID #66-8].

         However, the first page of each of the subject contracts provides a binding arbitration provision. [DE 1-1 at 16-7, PageID #19-22]. The arbitration provision, which is two paragraphs above the signature line states:

This Contract provides that all claims by Customer or Lowe's will be resolved by BINDING ARBITRATION. Customer and Lowe's GIVE UP THE RIGHT TO GO TO COURT to enforce this Contract (EXCEPT for matters that may be taken to SMALL CLAIMS COURT). Lowe's and Customer's rights will be determined by a NEUTRAL ARBITRATOR and NOT a judge or jury. Lowe's and Customer are entitled to a FAIR HEARING. But the arbitration procedures are SIMPLER and MORE LIMITED THAN RULES APPLICABLE IN COURT. Arbitrator decisions are as enforceable as any court order and are subject to VERY LIMITED REVIEW BY A COURT...

[DE 1-1 at 15-7, PageID #20-2].

         The arbitration provision goes on to provide “...FOR MORE DETAILS: Review the section titled ARBITRATION AGREEMENT, WAIVER OF JURY TRIAL AND WAIVER OF CLASS ACTION ADJUDICATION found in the Terms and Conditions of this Contract.” [Id.].

         The referenced section, titled “ARBITRATION AGREEMENT, WAIVER OF JURY TRIAL AND WAIVER OF CLASS ACTION ADJUDICATION found in the Terms and Conditions of this Contract” is located on page 3 of the subject contracts. [DE 4-2 at 19, PageID #58; DE 4-3 at 4, PageID #62; DE 4-3 at 7, PageID #65; DE at 4-3 at 10, PageID #68]. Notably, immediately below the arbitration provision but above the signature line on page 1, the contract also provides:

DO NOT SIGN THIS CONTRACT UNTIL COMPLETE AND YOU HAVE READ THE TERMS AND CONDITIONS CONTAINED ON ALL PAGES OF THIS CONTRACT. BY SIGNING BELOW, YOU ARE ACKNOWLEDGING THAT YOU HAVE READ, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS SET FORTH ON ALL PAGES OF THIS CONTRACT. YOU ARE ENTITLED TO A COPY OF THIS CONTRACT AT THE TIME OF SIGNATURE.

[DE 1-1 at 15-7, PageID #20-2] (emphasis in original).

         Despite this statement, Triple Crown's representative, Yufang Pang, claims “...at no time was [she] provided nor had any knowledge of, or received any section or provision of those contracts entitled ‘Arbitration Agreement, Waiver of Jury Trial, and Waiver of Class Action Adjudication' nor Terms and Conditions beyond the first page of each such contract... .” [DE 5 at 7-8, PageID #76-7]. Regardless, there is no question that Ms. Pang executed the contracts. [Id.; see also DE 4-2 at 17, PageID #56; DE 4-3 at 2, PageID #60; DE 4-3 at 5, PageID #63; DE at 4-3 at 8, PageID #66].

         Later, Triple Crown became dissatisfied with the performance of the contracts, stating they were “not performed in accordance with the inducements, promises, and representations of Lowe's and under ‘start-to-finish' project management, completed in a timely fashion, in a good and workmanlike manner, and in accordance with engineering plans, work permits, and all other applicable national, state, and local building codes and laws.” [Id. at 4, PageID #9, ¶¶ 14-5].

         On January 29, 2019, Triple Crown filed the instant action in Fayette Circuit Court, alleging Lowe's breached the subject contracts. [Id. at 5-6, PageID #10-1, ¶¶ 19-24]. Triple Crown further alleges that Lowe's breached its express warranties on the subject contracts, was negligent in its performance of its contractual obligations, and that Lowe's made false and deceptive advertisements that induced Triple Crown to enter into the contracts. [Id. at 6-9, PageID #11-4, ¶¶ 25-44]. Finally, Triple Crown alleges that Lowe's made negligent misrepresentations to Triple Crown relating to the contracts, [Id. at 9-10, PageID #14-5, ¶¶ 45-8], and that Lowe's actions and conduct caused property damage and losses to both properties. [Id. at 10, PageID #15, ¶¶ 49-52].

         Lowe's removed the action to this Court, [DE 1], and later filed the instant motion to dismiss to compel arbitration. [DE 4]. Triple Crown responded in opposition to the motion to dismiss or to compel arbitration, claiming the arbitration provisions are procedurally unconscionable and unenforceable. [DE 5].

         II. Legal Standard

         A. Appropriate Standard of Review For Motion to Dismiss or to Compel Arbitration.

         Recently, this Court engaged in a detailed discussion about the appropriate standard of review when considering a motion to dismiss or to compel arbitration. See FCCI Ins. Co. v. Nicholas Cty. Library, No. 5:18-cv-038-JMH, 2019 WL 1234319, at *2-5 (E.D. Ky. Mar. 15, 2019). The Court explained that motions to dismiss or to compel arbitration are most appropriately construed as motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). Id. at 5.

         However, as this Court noted in FCCI, the analysis does not end where, as here, the parties have submitted matters outside the pleadings in their briefing on the pending motion to dismiss. Id. at 5; see also, [DE 4-5, 7]. As a result, the motion to dismiss under Rule 12(b)(6) must be treated as a motion for summary judgment under Rule 56. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) . . . matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.”). This result is supported by analogous cases in this Court. FCCI Ins. Co., 2019 WL 1234319, at *2-5 (internal citations omitted). As a result, Lowe's motion to dismiss must be considered as a motion for summary judgment under Fed.R.Civ.P. 56.

         B. Summary Judgment Standard and Applicable Law

         Summary judgment is appropriate only when no genuine dispute exists as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A material fact is one “that might affect the outcome of the suit under governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party has the burden to show that “there is an absence of evidence to support the nonmoving party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). “A dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Smith v. Perkins Bd. of Educ., 708 F.3d 821, 825 (6th Cir. 2013) (internal quotations omitted). The Court construes the facts in the light most favorable to the ...


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