Cara's Notions, Inc. v. Hallmark Cards, Inc.

966 F. Supp. 404, 1997 U.S. Dist. LEXIS 8347, 1997 WL 324418
CourtDistrict Court, W.D. North Carolina
DecidedApril 21, 1997
DocketNo. 3:97cv18-P
StatusPublished

This text of 966 F. Supp. 404 (Cara's Notions, Inc. v. Hallmark Cards, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cara's Notions, Inc. v. Hallmark Cards, Inc., 966 F. Supp. 404, 1997 U.S. Dist. LEXIS 8347, 1997 WL 324418 (W.D.N.C. 1997).

Opinion

ORDER

ROBERT D. POTTER, Senior District Judge.

THIS MATTER is before the Court on the Defendants’ Motion to Compel Arbitration and Motion to Dismiss or in the Alternative to Stay Proceeding Pending Arbitration (“Motion to Compel Arbitration”) [document nos. 2-1, 3-1, and 3-2 filed on January 22, 1997] and the Plaintiffs Request for Hearing [document no. 9-1, filed on March 7, 1997]. Plaintiff filed, a response on Februaxy 10, 1997 (“Response”) [document no. 6-1], to which the Defendants replied (“Reply”) [document no. 8-1, filed on February 28, 1996]. Because the contracts at issue do not require the parties to arbitrate this dispute, the Court will deny the Defendant’s Motion to Compel Arbitration. In addition, because the parties sufficiently presented the issues to the Court in their pleadings, a hearing is not required; therefore, the Court will deny the Plaintiffs Request for Hearing.

BACKGROUND

In 1984, Roberta Gibson applied to Hallmark Cards, Inc. and Hallmark Marketing Corporation (collectively “Hallmark”) to become a Hallmark retailer. Hallmark granted Roberta Gibson’s application. In November 1984, Roberta Gibson opened Cara’s Hallmark Shop — Hallmark Retailer account number 010825 — at Town Center Shopping Center, 8528 University City Boulevard & Highway 49, Charlotte, North Carolina (“Store I”).

In 1990, Betty Gibson and husband Jerald Gibson (the “Gibsons”) bought Store I from Roberta Gibson. Hallmark approved the Gibsons as the new owners of Store I, and the parties entered into a contract (“Contract I”).

In 1994, the Gibsons desired to purchase a second Hallmark shop in Concord, North Carolina which was operating as Carol’s Hallmark Store (“Store II”). Hallmark required the Gibsons to undergo a completely new application process prior to purchasing Store II. No one from Hallmark mentioned that the new account application forms had anything to do with Store I. (Gibson Aff. [406]*406¶¶ 8, 9.) Hallmark approved the purchase and the Gibsons continue to own Store II.1 The Gibsons entered into the contract for Store II (“Contract II”).

Thereafter, Cara’s Notions, Inc., owned by the Gibsons, operated both Store I and Store II. At all relevant times, the two shops had separate: Hallmark Retañer account numbers, employees, banking accounts, books and records, and reporting procedures to Hallmark.

In early 1995, the landlord at Town Center notified the Gibsons that the Gibsons would have to relocate Store I because a Harris Teeter grocery store intended to expand into Store I’s space. The Gibsons advised Hallmark of the required relocation, and Hallmark expressed that it would assist them in finding a new location for Store I.

At Hallmark’s request, the Gibsons informed Hallmark of a suitable location at a new shopping center called “The Village at University Place.” Hallmark representatives inspected the center and indicated it was a favorable location. Hallmark then acted as the Gibsons’ agent to acquire a lease at the new location.

However, Hallmark did not provide a lease or written lease approval to the Gibsons. Instead, in the Spring of 1996, Betty Gibson learned that Hallmark leased an 8,000 square foot space at The Village University Place for itself and would be opening a company-owned store in the fall of 1996.

In December 1996, Cara’s Hallmark filed this action in state court against Hallmark regarding the relocation of Store I for alleged breach of duty of good faith and fair dealing, unfair and deceptive trade practices, usurpation of opportunity of the principal and misrepresentation, and sought actual and punitive damages. (Complaint.) On January 14, 1997, Hallmark removed the case to federal court. Hallmark then filed its Motion to Compel Arbitration.

In its Motion to Compel, Defendant Hallmark argues that an arbitration clause in Contract II dealing with Store II applies to Store I, and, therefore, this Court should compel arbitration of this matter concerning Store I. In contrast, Plaintiff contends that Contract I contains all of the conditions for Store I. Because Contract I does not contain an arbitration clause, this matter regarding Store I is not subject to arbitration. Moreover, Plaintiff asserts that absent an express provision to the contrary, the arbitration clause in' Contract II cannot apply to Store I.

DISCUSSION

The question for decision is whether the arbitration clause in Contract II applies to matters regarding Contract I. The general rule is that the issue of arbitrability is “a matter to be determined by the courts on the basis of the contract entered into by the parties.” Nursing Home & Hosp. Union v. Sky Vue Terrace, 759 F.2d 1094, 1097 (3rd Cir.1985), quoted in Cigna Securities, Inc. v. Calby, 1993 WL 812680 (W.D.N.C.1993). Moreover, when parties to a contract collectively express their preference for arbitral, rather than a judicial, interpretation of their obligations, there is a strong presumption favoring arbitrability. Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery Workers Union, AFL-CIO, 430 U.S. 243, 251-52, 253-56, 97 S.Ct. 1067, 1072, 1073-74, 51 L.Ed.2d 300 (1977). The rationale is the legislature’s policy in favor of settlement of disputes. The Fourth Circuit is in accord. Cumberland Typographical Union No. 244 v. The Times & Alleganian Co., 943 F.2d 401 (4th Cir.1991) (holding that, under the Labor Management Relations Act, employer was required to arbitrate dispute arising under the collective bargaining agreement even though the dispute arose after the collective bargaining agreement terminated) (citing Nolde Bros.). This strong policy in favor of settling disputes is equally applicable to arbitration clauses outside the labor relations area like the matter at hand. See e.g., Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (federal court required to compel arbitration under section 4 of the Federal Arbitration Act notwithstanding pending state court action).

[407]*407However, despite the strong presumption of arbitrability, a court may not require that a party “submit to arbitration any dispute which he has not agreed to submit.” AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 648, 648, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986) (citations omitted). In determining whether the parties agreed to arbitrate a particular dispute, courts “should apply ordinary state-law principles that govern the formation of contracts.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995) (citations omitted). Therefore, “as with any other contract, the parties’ intentions control.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614

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966 F. Supp. 404, 1997 U.S. Dist. LEXIS 8347, 1997 WL 324418, Counsel Stack Legal Research, https://law.counselstack.com/opinion/caras-notions-inc-v-hallmark-cards-inc-ncwd-1997.