Jacobs Field Servs. N. Am., Inc. v. Wacker Polysilicon N. Am., LLC

375 F. Supp. 3d 898
CourtDistrict Court, E.D. Tennessee
DecidedMarch 15, 2019
Docket1:17-CV-167
StatusPublished
Cited by6 cases

This text of 375 F. Supp. 3d 898 (Jacobs Field Servs. N. Am., Inc. v. Wacker Polysilicon N. Am., LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jacobs Field Servs. N. Am., Inc. v. Wacker Polysilicon N. Am., LLC, 375 F. Supp. 3d 898 (E.D. Tenn. 2019).

Opinion

CURTIS L. COLLIER, UNITED STATES DISTRICT JUDGE

*901Before the Court is a motion to remand for lack of subject matter jurisdiction, with a memorandum in support, by Plaintiff, Jacobs Field Services North America, Inc. (Docs. 11, 46.1 ) Plaintiff argues diversity jurisdiction does not exist because the amount in controversy does not exceed $ 75,000. Defendant, Wacker Polysilicon North America, LLC, responded in opposition to Plaintiff's motion. (Doc. 47.) Plaintiff replied. (Doc. 51.) Because the Court has subject matter jurisdiction under 28 U.S.C. § 1332, the Court will DENY the motion to remand.

Also before the Court is a motion to dismiss, with a memorandum in support, by Defendant. (Docs. 4, 44.) Defendant argues Plaintiff's claims against it should be dismissed under Rule 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure because the parties' contract requires them to arbitrate and gives the arbitrator authority to decide whether claims are within the scope of arbitration. Plaintiff responded in opposition. (Doc. 49.) Defendant replied (Doc. 52) and filed a notice of supplemental authority (Doc. 56). The Court will GRANT the motion to dismiss.

Plaintiff has also filed a motion for hearing. (Doc. 54.) Because a hearing is not necessary to resolve the motion to remand or the motion to dismiss, the Court will DENY the motion for hearing.

I. BACKGROUND 2

Pursuant to an Engineering Services Agreement (the "ESA" or the "Agreement"), Plaintiff provided design and engineering services for the construction of a manufacturing plant for Defendant that cost approximately two billion dollars. The ESA provides that it "shall be governed by the laws of the State of Tennessee, USA." (Doc. 43-1 at 37, § 17.6.)

The ESA requires that "[a]ny claims, [sic] brought under this Agreement shall be subject to the ADR Procedures set forth in Exhibit 9." (Id. § 17.1.) While the ESA does not appear to have an Exhibit 9, Exhibit 8 to the ESA is entitled "Dispute Resolution Procedures."3 (Id. at 178-80.) These procedures define a "Claim" as "any demand, assertion, request or other claim made with respect to any matter arising out of or related to the Agreement, the Contract Documents, or the Work." (Id. at 178, § 1.) Under these procedures, a "Party"-defined as Plaintiff or Defendant-must give written notice to the other Party of any Claim, after which the Parties must engage in an Initial Meeting, a Second Meeting, and a Mediation, all as described in the ESA. (Id. at 178-79, §§ 2-5.) If these steps do not resolve the dispute, the parties must proceed to arbitration according to the rules of the American Arbitration Association (the "AAA"):

*902Notwithstanding any other provision herein to the contrary, if the Parties do not settle or resolve a Claim (other than Claims involving requests for equitable or injunctive relief or specific performance) within one hundred twenty (120) days after the Initial Meeting, then the Claim shall be submitted to binding arbitration and each Party shall act in accordance with the AAA Rules.

(Id. at 179, § 6.) Further, "[a]ll arbitration proceedings shall be conducted ... in accordance with the AAA Rules." (Id. § 8.2.) The ESA defines the AAA Rules as the "Construction Industry Arbitration Rules and Mediation Procedures of the AAA." (Id. at 178, § 5.)

The ESA contains an exception to arbitration for Claims involving requests for equitable relief, injunctive relief, or specific performance:

Notwithstanding any other provision herein to the contrary, any Claim involving a request for equitable or injunctive relief or specific performance may will? [sic] be litigated at any time under the exclusive jurisdiction of the courts of Hamilton County, Tennessee or the U.S. District Court for the Eastern District of Tennessee
....

(Id. at 179, § 7.4 )

On April 19, 2016, after construction of the manufacturing plant and pursuant to the dispute-resolution procedures in Exhibit 8 to the ESA, Defendant presented Plaintiff with a written statement of claim (the "Statement of Claim") for Plaintiff's alleged breaches of the ESA during construction. (Doc. 43-1 at 6, ¶ 28 & Ex. D.) The Statement of Claim was for over one hundred million dollars, but stated that investigation was ongoing and Defendant reserved the right to supplement or amend its Statement of Claim. (Id. at 302.)

On May 18, 2017, Defendant initiated arbitration proceedings (the "Arbitration") against Plaintiff pursuant to the ESA. (Id. at 3, ¶ 13 & Ex. B.) Defendant's demand in the Arbitration (the "Demand") was for a total claim amount of $ 134,276,341. (Id. at 264.) The Demand included a purported pass-through claim against Plaintiff on behalf of non-party Baker Concrete Construction Company ("Baker") of $ 18,581,480.01 (the "Baker Pass-Through Claim"). (Id. at 292.) Defendant's Demand also included $ 3,493,582.00 of increased construction and construction-management costs Defendant incurred addressing changes to Baker's scope of work as a result of Plaintiff's alleged design and engineering errors (the "Baker-Related Markup").5 (Id. at 285, 293.)

After the Arbitration began, Plaintiff filed a verified complaint in the Chancery Court for Hamilton County, Tennessee (the "Verified Complaint"). (Doc. 43-1.) In the Verified Complaint, Plaintiff seeks a declaration that the Baker Pass-Through Claim is not subject to arbitration, and seeks a stay of the entire Arbitration-or, in the alternative, a stay of the part of the Arbitration relating to the Baker Pass-Through Claim-pending such a declaration. (Id. at 13.) Plaintiff attached a copy of Defendant's Demand to the Verified Complaint. (Id. at 3, ¶ 13 & at 264-300.)

Defendant removed the action to this Court based on diversity jurisdiction. (Doc.

*9031.) Plaintiff moves to remand (Doc. 11), and Defendant moves to dismiss (Doc. 4).

II. STANDARD OF REVIEW

A. Motion to Remand

A defendant may remove a civil action from state court to federal district court if the district court would have had subject matter jurisdiction had the case originally been filed there. 28 U.S.C. § 1441. The party seeking removal bears the burden of establishing the district court has original jurisdiction over the matter. Long v. Bando Mfg. of Am., Inc.

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Bluebook (online)
375 F. Supp. 3d 898, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jacobs-field-servs-n-am-inc-v-wacker-polysilicon-n-am-llc-tned-2019.