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Gw Van Keppel Co. v. Dobbs Imports, LLC

United States District Court, D. Kansas

October 15, 2014

THE G.W. VAN KEPPEL CO., Plaintiff,


JULIE A. ROBINSON, District Judge.

Plaintiff The G. W.Van Keppel Co. ("Van Keppel") originally filed this action against Defendant Dobbs Imports, LLC, d/b/a Heli Americas ("Heli Americas"), in Wyandotte County, Kansas, District Court. Defendant removed the case to this Court on May 20, 2014. Plaintiff alleges breach of contract and violations of the Kansas Outdoor Power Equipment Act, [1] the Missouri Dealer Buy-Back Statute, [2] and the Illinois Equipment Fair Dealership Law.[3]

Pending before the Court is Defendant's Motion to Stay Action and Compel Arbitration (Doc. 9). The motion is fully briefed and the Court is prepared to rule. For the reasons stated in detail below, the Court grants Defendant's motion and stays this case pending arbitration.

I. Background

Defendant presents the following facts in its motion to compel arbitration. Defendant, a Tennessee-based company, owns the exclusive right to sell and market certain products (the "Products") in particular areas of the United States. On or about May 25, 2011, Defendant and Plaintiff entered into a dealer agreement giving Plaintiff a non-exclusive right to sell and market the Products in Kansas, Missouri, and Illinois. The dealer agreement provides for arbitration of disputes in the following two paragraphs:

19. Arbitration. Where the parties are unable to settle a controversy, claim or dispute arising out of, relating to or pertaining to this Agreement by mutual agreement, either Dobbs [Heli Americas] or Dealer [Van Keppel] may submit the controversy, claim or dispute to an arbitrator in Shelby County, Tennessee for prompt determination under the Commercial Arbitration Rules as defined by the American Arbitration Association.

In addition, Section 25(b) of the dealer agreement contains the following forum-selection clause:

Each party agrees that any suit, action or proceeding with respect to or relating in any way to this agreement shall be brought solely in the courts of the State of Tennessee in Shelby County, or in the United States District Court for the Western District of Tennessee. Accordingly, each party submits irrevocably to the non-exclusive jurisdiction of each such court for the purpose of any such suit, action or proceeding and waives irrevocably any defense which it may have to the enforcement of this provision, whether based on the inconvenience of the forum or otherwise.

Plaintiff alleges that the dealer agreement terminated no later than March 11, 2014. On and after that date, Plaintiff demanded that Defendant repurchase equipment and parts pursuant to its alleged obligations under the dealer agreement, the Kansas Outdoor Power Equipment Dealer Act, and similar acts passed in Missouri and Illinois. Defendant refused. Plaintiff then filed suit in Wyandotte County, Kansas, District Court, asserting four counts against Defendant: one for breach of the dealer agreement and one each for violations of the Kansas, Missouri, and Illinois statutes. Defendant removed this action and now seeks to enforce the arbitration provisions included in the dealer agreement.

II. Legal Standards

While the interpretation of contracts-including arbitration agreements-is generally a matter of state law, the Federal Arbitration Act ("FAA") imposes certain rules beyond those normally found in state contract law.[4] The FAA applies to written arbitration agreements in any contract "evidencing a transaction involving commerce."[5] Congress designed the FAA "to overrule the judiciary's longstanding refusal to enforce agreements to arbitrate"[6] and, by enacting the FAA, created "a liberal federal policy favoring arbitration agreements."[7] Under the FAA, a court should compel arbitration if it finds that (1) a valid arbitration agreement exists between the parties, and (2) the dispute before it falls within the scope of the agreement.[8] When determining the scope of an arbitration agreement, "[d]oubts should be resolved in favor of coverage."[9]

But despite its liberal policy, the FAA does not require a party "to submit to arbitration any dispute which he has not agreed so to submit."[10] Instead, it requires that courts enforce "agreements to arbitrate, like other contracts, in accordance with their terms."[11] So if a generally applicable state contract defense invalidates an arbitration agreement, or if grounds exist at law or equity that would call for the revocation of any contract, courts must not compel arbitration under the agreement.[12] Enforcing the agreement according to its terms "is fully consistent with the goals of the FAA, even if the result is that the arbitration is stayed where the Act would otherwise permit it to go forward" because by rigorously ...

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