LocateAI Realty Incorporated, et al. v. Ty Brewster, et al.

• Court: District Court, D. Arizona
• Decided: May 26, 2026
• Docket: 2:25-cv-04959
• Status: Unknown

Opinion

1 WO 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE DISTRICT OF ARIZONA

7 LocateAI Realty Incorporated, et al., No. CV-25-04959-PHX-JZB

8 Plaintiffs, ORDER

9 v.

10 Ty Brewster, et al.,

11 Defendants.

12 13 Pending before the Court is Defendants’ “Motion to Dismiss or Alternatively 14 Motion to Compel Arbitration.”1 (Doc. 26.) In the Motion, Defendants request the Court, 15 pursuant to Rule Fed. R. Civ. P. 12(b)(6) and the Federal Arbitration Act (“FAA”), dismiss 16 this action or, alternatively, stay this action and compel arbitration. (Id. at 1.) Plaintiffs 17 have filed a Response, (doc. 27), and Defendants have filed a Reply (doc. 28). On May 8, 18 2026, this Court heard oral arguments on the Motion. (Doc. 30.) 19 I. SUMMARY. 20 This action is based upon an alleged breach of fiduciary duty and contractual 21 obligations between Plaintiffs and Defendants Brewster and FranReal LLC (“FranReal”). 22 There are two matters at issue here. First, whether Defendant FranReal, as a nonsignatory 23 to the Broker and Employment Agreements between Plaintiffs and Defendant Brewster, 24 may enforce the arbitration clauses contained within both agreements. Second, whether the 25 presence of an injunctive relief carveout in the Broker Agreement and a request for 26 permanent injunctive relief in Plaintiffs’ Complaint requires this action to be litigated only 27 in federal court. 28 1 All parties have consented to Magistrate Judge jurisdiction in this action. (Doc. 19.) 1 Because the trier of fact would be required to consider the Broker and Employment 2 agreements in resolving Plaintiffs’ claims, and considering nonsignatory Defendant 3 FranReal’s conduct was intertwined with signatory Defendant Brewster, the Court finds 4 that both Defendants may compel arbitration here. Second, the Court finds that the 5 injunctive relief carveout and request for permanent injunctive relief does not preclude 6 arbitration in the instant action. Hence, the Court shall grant Defendants’ Motion in part, 7 staying this action pending arbitration. 8 II. BACKGROUND. 9 This action arises from a Broker Agreement and Employment Agreement between 10 Plaintiffs and Defendant Brewster that were executed on October 1, 2020, and February 6, 11 2024, respectively. (Doc. 1 at 5); (doc. 26-1 at 24.) The Broker Agreement required that 12 commissions for property sales and leases would be paid to Plaintiff before being 13 distributed to Defendant Brewster and imposed a strict confidentiality obligation upon 14 Brewster. (Doc. 1 at 6–7.) Additionally, both Agreements contained arbitration provisions. 15 See (doc. 26-1.) The Broker Agreement contained the following provisions: 16 10. Arbitration and Equitable Relief. A. Arbitration. In consideration of Broker’s consulting 17 relationship with the Company, its promise to arbitrate all disputes related to Broker’s consulting relationship with the company and Broker’s receipt of 18 the compensation and other benefits paid to Broker by Company, at present and in the future, Broker agrees that any and all controversies, claims, or 19 disputes with anyone (including Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such 20 or otherwise), arising out of, relating to, or resulting from Broker’s consulting or other relationship with the company, including any breach of 21 this agreement, shall be subject to binding arbitration under the Federal Arbitration Act (the “FAA”). The FAA’s substantive and procedural rules 22 shall govern and apply to this arbitration agreement with full force and effect, and any state court of competent jurisdiction may stay proceedings pending 23 arbitration or compel arbitration in the same manner as a federal court under the FAA. Broker further agrees that, to the fullest extent permitted by law, 24 Broker may bring any arbitration proceeding only in Broker’s individual capacity, and not as a plaintiff, representative, or class member in any 25 purported class, collective, or representative lawsuit or proceeding. Broker may, however, bring a proceeding as a private attorney general as permitted 26 by law. To the fullest extent permitted by law, Broker agrees to arbitrate any and all common law and/or statutory claims under local, state, or 27 federal law, including, but not limited to, claims under Arizona state law, claims relating to employment or independent contractor status, 28 classification, and relationship with the Company, and claims of breach of contract, except as prohibited by law. Broker also agrees to arbitrate 1 any and all disputes arising out of or relating to the interpretation or application of this agreement to arbitrate, but not disputes about the 2 enforceability, revocability or validity of this agreement to arbitrate or the class, collective and representative proceeding waiver herein. With 3 respect to all such claims and disputes that Broker agrees to arbitrate, Broker hereby expressly agrees to waive, and does waive, any right to a 4 trial by jury. Broker further understands that this agreement to arbitrate also applies to any disputes that the Company may have with 5 Broker. Broker understands that nothing in this agreement requires Broker to arbitrate claims that cannot be arbitrated under applicable law, such as 6 claims under the Sarbanes-Oxley Act.

7 B. Procedure. Broker agrees that any arbitration will be administered by Judicial Arbitration & Mediation Service, Inc. (“JAMS”)] 8 pursuant to its Employment Arbitration Rules & Procedures[], which are available at http://www.jamsadr.com/rules-employment-arbiration/. If the 9 JAMS rules cannot be enforced as to the arbitration, then the parties agree that they will arbitrate this dispute utilizing JAMS comprehensive arbitration 10 rules and procedures or such rules as the arbitrator may deem most appropriate for the dispute. Broker agrees that the use of the JAMS rules does 11 not change Broker’s classification to that of an employee. To the contrary, Broker reaffirms that Broker is an independent contractor. Broker agrees that 12 the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or 13 adjudication and motions to dismiss and demurrers applying the standards set forth under the Arizona Rules of Civil Procedure. Broker agrees that the 14 arbitrator shall issue a written decision on the merits. Broker also agrees that the arbitrator shall have the power to award any remedies available under 15 applicable law, and that the arbitrator shall award attorneys’ fees and costs to the prevailing party, where permitted by applicable law. Broker agrees that 16 the decree or award rendered by the arbitrator may be entered as a final and binding judgment in any court having jurisdiction thereof. Broker agrees that 17 the arbitrator shall apply substantive and decisional Arizona law to any dispute or claim, without reference to rules of conflict law. Broker further 18 agrees that any arbitration under this agreement shall be conducted in Maricopa County, Arizona. 19 * * * 20 D. Availability of Injunctive Relief. The parties agree that 21 any party may also petition the court for injunctive relief where either party alleges or claims a violation of any agreement regarding intellectual property, 22 confidential information or noninterference. In the event either party seeks injunctive relief, the prevailing party shall be entitled to recover reasonable 23 costs and attorneys’ fees. 24 (Doc. 26-1 at 5–6) (emphasis in original). 25 The Employment Agreement contains a similar arbitration provisions but does not 26 include an injunctive relief carveout provision. See (id. at 21–22.) Arbitration under the 27 Employment Agreement would also be administered by JAMS. (Id. at 21.) 28 During the course of his employment, Defendant Brewster formed FranReal and 1 allegedly breached “his fiduciary obligations and contractual promises of loyalty and 2 confidentiality.” (Doc. 1 at 9.) Specifically, while he was still employed by Plaintiffs, 3 Defendant Brewster allegedly “diverted his attention to developing a competing entity, 4 used [Plaintiffs’] confidential client data to populate FranReal’s business pipeline, and 5 positioned himself to usurp commissions and goodwill from transactions that were initiated 6 while he was affiliated with [Plaintiffs].” (Id.) 7 On December 26, 2025, Plaintiffs filed their six-count Complaint against both 8 Defendants. (Id. at 1.) Plaintiffs asserted the following claims against the Defendants: (1) 9 a breach of contract claim against Defendant Brewster; (2) a breach of the duty of loyalty 10 against Defendant Brewster; (3) a tortious interference with contract and business 11 relationships against both Defendants; (4) a conversion claim against both Defendants; (5) 12 a claim for declaratory relief against Defendant Brewster; and (6) a claim for injunctive 13 relief against both parties. (Id. at 18–30.) 14 On January 12, 2026, Defendant Brewster filed an Answer. (Doc. 11.) On January 15 26, 2026, and February 6, 2026, respectively, Defendant Brewster filed Amended Answers 16 on his and Defendant FranReal’s behalf. (Docs. 14, 21.) On February 24, 2026, both 17 Amended Answers were stricken because Defendant Brewster—a non-attorney—lacked a 18 legal right to represent Defendant FranReal pro se. (Doc. 24.) On February 27, 2026, 19 Defendants obtained counsel. (Doc. 25.) Thereafter, on March 20, 2026, Defendants filed 20 the instant Motion. (Doc. 26.) 21 III. LEGAL STANDARDS. 22 Under Rule 12(b)(6), dismissal is proper where “the complaint either (1) lacks a 23 cognizable legal theory or (2) fails to allege sufficient facts to support a cognizable legal 24 theory.” Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013). “To survive a motion to 25 dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a 26 claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 27 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 28 Regarding the FAA, the act, “[w]ith limited exceptions, . . . governs the 1 enforceability of arbitration agreements in contracts involving interstate commerce.” 2 Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (citing 9 U.S.C. § 1 3 et seq.). “The FAA states that ‘a written provision in any . . . contract evidencing a 4 transaction involving commerce to settle by arbitration a controversy thereafter arising out 5 of such contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds 6 as exist at law or in equity for the revocation of any contract.’” Id. (quoting 9 U.S.C. § 2). 7 Section 3 of the FAA “provides that a federal court must, upon application of one of the 8 parties, stay an action ‘brought upon any issue referable to arbitration,’ unless ‘the 9 applicant for the stay is in default in proceeding with such arbitration.’” Altela Inc. v. Ariz. 10 Sci. & Tech. Enters. LLC, No. CV-16-01762-PHX-DGC, 2016 U.S. Dist. LEXIS 117370, 11 at *10–11 (D. Ariz. Aug. 31, 2016) (cleaned up) (quoting 9 U.S.C. § 3). Additionally, 12 section 4 of the FAA “provides that ‘a party aggrieved by the alleged failure, neglect, or 13 refusal of another to arbitrate may petition a district court to compel arbitration, and ‘upon 14 being satisfied that the making of the agreement to arbitrate or the failure to comply 15 therewith is not in issue,’ the court must enforce the agreement.” Altela Inc., 2016 U.S. 16 Dist. LEXIS 117370, at *11 (cleaned up) (quoting 9 U.S.C. § 4). 17 “By its terms, the [FAA] ‘leaves no place for the exercise of discretion by a district 18 court, but instead mandates that district courts shall direct the parties to proceed to 19 arbitration on issues as to which an arbitration agreement has been signed.’” Chiron Corp. 20 v. Ortho Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir. 2000) (quoting Dean Witter 21 Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985)). “The court’s role under the Act is 22 therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it 23 does, (2) whether the agreement encompasses the dispute at issue.” Chiron Corp., 207 F.3d 24 at 1130. 25 IV. DISCUSSION. 26 Presently, the parties do not refute that both the Broker and Employment 27 Agreements are valid and enforceable arbitration agreements. Rather, the parties, both in 28 their briefings and during oral arguments, disagree on whether the Broker and Employment 1 Agreements encompass the dispute at his here. The crux of the parties’ dispute is first, 2 whether Defendant FranReal, as a nonsignatory, may enforce the arbitration agreement, 3 and second, whether the Broker Agreement’s injunctive relief provision along with 4 Plaintiffs’ request for permanent injunctive relief prevents the instant dispute from being 5 sent to arbitration. For the following reasons, the Court finds that neither Defendant 6 FranReal’s nonsignatory character nor the possibility of injunctive relief bars this matter 7 from being sent to arbitration. 8 A. Invocation of Arbitration Clause by a Nonsignatory. 9 The parties first disagree whether signatory Defendant Brewster and nonsignatory 10 Defendant FranReal have standing to compel arbitration in this matter. Plaintiffs assert that 11 Defendant FranReal cannot compel arbitration in this matter because Arizona’s equitable 12 estoppel rule to arbitration is inapplicable here. (Doc. 27 at 8–9.) Defendants assert that 13 equitable estoppel is not the only pathway for a nonsignatory to enforce and arbitration 14 agreement, and in any event, it is clear that Arizona’s equitable estoppel rule applies to the 15 case at hand. (Doc. 28 at 6–8.) Because the Court finds that Arizona’s equitable estoppel 16 rule permits nonsignatory Defendant FranReal to invoke the arbitration clauses in the 17 Broker and Employment Agreements, the Court need not address the alternative pathways 18 asserted by Defendants. 19 At its core, “[a]rbitration is a matter of contract.” Olson v. FCA US, LLC, 172 F.4th 20 1033, – –, 2026 U.S. App. LEXIS 9916, at *7 (9th Cir. 2026); Rent-A-Center, W., Inc. v. 21 Jackson, 561 U.S. 63, 67 (2010) (“The FAA thereby places arbitration agreements on an 22 equal footing with other contracts . . . and requires courts to enforce them according to their 23 terms.”). “Generally, parties who have not assented to an arbitration agreement cannot be 24 compelled to arbitrate under its terms.” Franklin v. Cmty. Reg’l Med. Ctr., 998 F.3d 867, 25 870 (9th Cir. 2021); Kramer, 705 F.3d at 1126 (“Generally, the contractual right to compel 26 arbitration may not be invoked by one who is not a party to the agreement and does not 27 otherwise possess the right to compel arbitration.”) (citation omitted). “But ‘the United 28 States Supreme Court has held that a litigant who is not a party to an arbitration agreement 1 may invoke arbitration under the FAA if the relevant state contract law allows the litigant 2 to enforce the agreement.’” Id. (cleaned up) (quoting Kramer, 705 F.3d at 1128); Arthur 3 Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009) (noting that a litigant who is not a 4 party to an arbitration agreement may nonetheless invoke the agreement if the relevant 5 state contract law so allows). 6 Here, it is undisputed that Arizona state contract law applies. Generally, under 7 Arizona law, a party is only bound to arbitrate disputes which it has contractually agreed 8 to arbitrate. See Smith v. Pinnamaneni, 254 P.3d 409, 415 (Ariz. Ct. App. 2011) (citing 9 Clarke v. ASARCO, Inc., 601 P.2d 587, 589 (Ariz. 1979)). But, a nonsignatory may be 10 bound to arbitrate a dispute based on the theories of “incorporation by reference, 11 assumption, agency, veil-piercing or alter ego, equitable estoppel, and third-party 12 beneficiary.” Dueñas v. Life Care Ctrs. of Am., 336 P.3d 763, 772 (Ariz. Ct. App. 2014). 13 The theory applicable to the case at hand is the principle of equitable estoppel.2 14 “Equitable estoppel precludes a party from claiming the benefits of a contract while 15 simultaneously attempting to avoid the burdens that contract imposes.” Comer v. Micor, 16 Inc., 436 F.3d 1098, 1101 (9th Cir. 2006) (citation omitted). Under Arizona law, the 17 principle of equitable estoppel applies differently in two scenarios: (1) whether a signatory 18 is attempting to compel a nonsignatory to arbitrate; and (2) when a nonsignatory is 19 attempting to compel a signatory to arbitrate. See Sun Valley Ranch 308 Ltd. P’ship v. 20 Robson, 294 P.3d 125, 134 (Ariz. Ct. App. 2012). This action involves the latter category 21 of equitable estoppel. 22 “A non-signatory may compel arbitration with a signatory to an arbitration 23 agreement if the claims at issue are ‘intimately founded in and intertwined with the 24 underlying contract obligations.’” Tradeline Enters. Private v. Jess Smith & Sons Cotton, 25 LLC, 772 F. App’x 585, 586 (9th Cir. 2019) (quoting Sun Valley Ranch, 294 P.3d at 135). 26 Specifically, Arizona law recognizes two scenarios whereby a nonsignatory may compel 27 2 Sometimes termed the “alternative estoppel theory.” Guglielmo v. LG&M Holdings 28 LLC, No. CV-18-03718-PHX-SMB, 2019 U.S. Dist. LEXIS 121102, at *16 (D. Ariz. July 19, 2019). 1 arbitration. See Cardona v. Exclusive Auto Grp. LLC, No. CV-25-01843-PHX-SPL, 2025 2 U.S. Dist. LEXIS 256452, at *4 (D. Ariz. Dec. 11, 2025). First, a nonsignatory may compel 3 arbitration “when the relationship between the signatory and nonsignatory defendants is 4 sufficiently close that only by permitting the nonsignatory to invoke arbitration may 5 evisceration of the underlying arbitration agreement between the signatories be avoided.” 6 Id. at *4–5 (quoting Sun Valley Ranch, 294 P.3d at 134). At issue in the instant litigation 7 is the second scenario, where “[a] non-signatory may compel arbitration when ‘each of a 8 signatory’s claims against a nonsignatory makes reference to or presumes the existence of 9 the written agreement,’ such that ‘the signatory’s claims arise out of and relate directly to 10 the written agreement.’” Shivkov v. Artex Risk Sols., Inc., 974 F.3d 1051, 1070 (9th Cir. 11 2020) (quoting Sun Valley Ranch, 294 P.3d at 135). 12 In this action, Plaintiffs’ claims against Defendant FranReal are intertwined with 13 Defendant Brewster’s Broker and Employment Agreements. In fact, each of Plaintiffs’ 14 claims against Defendant FranReal “makes reference to or presumes the existence of 15 th[ose] written agreement[s],” Sun Valley Ranch, 294 P.3d at 135, making arbitration 16 appropriate here. Presently, Plaintiffs have asserted three claims that touch Defendant 17 FranReal: (1) a tortious interference with contract and business relationships claim; (2) a 18 conversion claim; and (3) a claim for injunctive relief. (Doc. 1 at 21–26, 28–30.) Each 19 claim plainly makes reference to or presumes the existence of the Broker and Employment 20 Agreements between Plaintiffs and Defendant Brewster. 21 First, regarding Plaintiffs’ tortious interference with a contract claim, Plaintiffs state 22 that “LocateAI has a contractual relationship with Brewster himself under the Broker [and] 23 Employment Agreement[s], which govern the ownership of transactions, commission 24 payments, confidentiality obligations, and post-termination restrictions,” whereby 25 “FranReal enabled Brewster’s breaches [of these agreements] by providing the vehicle 26 through which he continued to service LocateAI customers, divert commissions owed to 27 LocateAI, and misuse Confidential Information[.]” (Id. at 22–23.) Indeed, Plaintiffs further 28 note that “FranReal intentionally interfered with LocateAI’s contractual relationship with 1 Brewster by knowingly inducing, encouraging, and substantially assisting Brewster to 2 breach his contractual obligations to LocateAI.” (Id. at 23.) Given these allegations in the 3 Complaint, Plaintiffs’ tortious interference with a contract claim arise out of and directly 4 relate to the Broker and Employment Agreements. 5 Turning next to Plaintiffs’ conversion claim, Plaintiffs unconditional assert that 6 “[u]nder the Broker Agreement, all . . . commissions were required to be paid directly to 7 Locate Realty,” and that Defendants “Brewster and FranReal wrongfully exercised 8 dominion and control over these funds” in contravention to the Broker Agreement. (Id. at 9 25.) In short, Plaintiffs conversion claim against nonsignatory Defendant FranReal is 10 grounded by the provisions contained within the Broker Agreement. (Id.) Therefore, 11 Plaintiffs’ conversion claim against Defendant FranReal arises out of and directly relates 12 to the Broker Agreement. 13 Finally, Plaintiffs’ injunctive relief claim against nonsignatory Defendant FranReal 14 similarly arises out of the Broker and Employment Agreements. In this claim, Plaintiffs 15 clearly state that they “seek[] preliminary and permanent injunctive relief . . . to prevent 16 ongoing and irreparable harm arising from Defendants’ continuing misuse of Confidential 17 Information, solicitation of Company clients, and diversion of business opportunities in 18 violation of the Broker Agreement and applicable law.” (Id. at 28) (emphasis added). Based 19 upon this unqualified assertion, it is apparent that Plaintiffs’ injunctive relief claim against 20 nonsignatory Defendant FranReal makes reference to the Broker Agreement. 21 Given these facts, it is self-evident that the trier of fact will be required to consider 22 both the Broker and Employment Agreements in resolving Plaintiffs’ claims against 23 nonsignatory Defendant FranReal. Further, considering that Defendant FranReal is a 24 “single member LLC,” (doc. 30), its conduct is inextricably intertwined with that of 25 Defendant Brewster. Accordingly, the Court finds that, pursuant to Arizona’s principle of 26 equitable estoppel, nonsignatory Defendant FranReal may compel arbitration here. 27 B. Possibility of Injunctive Relief. 28 The parties’ second dispute revolves around section 10(D) of the Broker Agreement, 1 which provides that: “any party may also petition the court for injunctive relief where either 2 party alleges or claims a violation of any agreement regarding intellectual property, 3 confidential information or noninterference.”3 (Doc. 26-1 at 6.) Plaintiffs assert that section 4 10(D) of the Broker Agreement preserves this Court’s jurisdiction over the dispute and 5 precludes arbitration of their claims against both Defendants. (Doc. 27 at 6–8.) Particularly, 6 Plaintiffs aver that their claims for permanent injunctive and declaratory relief “fall 7 squarely within [section 10(d)’s] carveout,” precluding arbitration here. (Id. at 7.) 8 Defendants disagree. (Doc. 28 at 3–5.) Specifically, Defendants assert that section 10(D) 9 is “not a forum selection clause for the entire dispute.” (Id. at 4.) The Court agrees with 10 Defendants. 11 The Supreme Court has made abundantly clear that the FAA “require[s] that if a 12 dispute presents multiple claims, some arbitrable and some not, the former must be sent to 13 arbitration even if this will lead to piecemeal litigation.” KPMG LLP v. Cocchi, 565 U.S. 14 18, 19 (2011). Although courts “may submit to arbitration only those disputes that the 15 parties have agreed to submit,” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 16 302 (2010), it cannot “issue a blanket refusal to compel arbitration merely on the grounds 17 that some of the claims could be resolved by the court without arbitration.” Cocchi, 565 18 U.S. at 19. To do so would contravene the FAA’s “emphatic federal policy in favor of 19 arbitral dispute resolution.” Cf. id. at 21 (quoting Mitsubishi Motors Corp. v. Soler 20 Chrysler-Plymouth, 473 U.S. 614, 631 (1985)). Instead, where “a complaint contains both 21 arbitrable and nonarbitrable claims, the Act requires courts to ‘compel arbitration of 22 pendent arbitrable claims when one of the parties files a motion to compel, even where the 23 result would be the possibly inefficient maintenance of separate proceedings in different 24 forums.’” Cocchi, 565 U.S. at 22 (quoting Dean Witter Reynolds, 470 U.S. at 217). 25 Given the FAA’s liberal federal policy favoring arbitration, and considering the 26 parties’ express agreements “to arbitrate any and all common law and/or statutory claims 27 under local, state, or federal law, including, but not limited to, . . . claims relating to

28 3 The Employment Agreement does not contain an injunctive relief carveout provision. (Doc. 26-1 at 20–23.) 1 employment or independent contractor status, classification, and relationship with the 2 Company, and claims of breach of contract”—including whether the question of 3 arbitrability is subject to arbitration4—the Court finds that section 10(D) does not bar 4 arbitration of Plaintiffs’ claims in this action. Put simply, it would contravene decades of 5 federal policy favoring arbitration to find that a permissive injunctive relief provision and 6 the hypothetical chance of injunctive relief down the road of this litigation precludes 7 arbitration of arbitrable claims. Hence, the Court does not find that the presence of claims 8 for declaratory nor permanent injunctive relief preclude compelling arbitration of the 9 arbitrable claims in this case. Accordingly, the Court shall compel arbitration. 10 C. Dismissal or Stay of this Action. 11 Because the Court finds that there are arbitrable claims in this action, the Court must 12 now decide whether to stay or dismiss this action. Pursuant to the FAA, “upon determining 13 that an issue in a pending action is subject to a mandatory arbitration provision, a federal 14 court ‘shall . . . stay the action until such arbitration has been had.’” LeFever v. Fairway 15 Indep. Mortg. Corp., No. CV-18-08326-PCT-DJH, 2019 U.S. Dist. LEXIS 248077, at 16 *18–19 (D. Ariz. Oct. 31, 2019) (quoting 9 U.S.C. § 3). “[N]otwithstanding the language 17 of § 3, a district court may either stay the action or dismiss it outright when, as here, the 18 court determines that all of the claims raised in the action are subject to arbitration.” 19 Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014). 20 4 Neither party has asserted the scope of the arbitration provision. And the Court need 21 not address it here, because the parties have delegated the issue of arbitrability to the arbitrator. “Generally, in deciding whether to compel arbitration, a court must determine 22 two ‘gateway’ issues: (1) whether there is an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute.” Brennan v. Opus Bank, 796 F.3d 1125, 23 1130 (9th Cir. 2015) (citing Howsam v. Dean Witter Reynolds, 537 U.S. 79, 84 (2002)). “However, these gateway issues can be expressly delegated to the arbitrator where ‘the 24 parties clearly and unmistakably provide otherwise.’” Brennan, 796 F.3d at 1130 (quoting AT&T Techs. v. Communs. Workers of Am., 475 U.S. 643, 649 (1986)) (emphasis omitted). 25 In this circuit, an arbitration agreement can “clearly and unmistakably delegates issues of arbitrability to an arbitrator when it incorporates by reference the American Arbitration 26 Association’s rules of arbitration.” Ehrmantraut v. Safeway Inc., 732 F. Supp. 3d 1030, 1037 (D. Ariz. 2024) (Brennan, 796 F.3d at 1130). Courts within this circuit “have 27 extended this logic to the JAMS rules.” Ehrmantraut, 735 F. Supp. 3d at 1037 (citations omitted). Just as was the case in Ehrmantraut, the parties incorporated the JAMS rules in 28 their Agreements here. Hence, the Court finds that the issue of arbitrability has been delegated to the arbitrator. 1 Because of Plaintiffs’ requests for injunctive relief, and considering that the exact 2|| scope of arbitrability in this matter is unresolved,” the Court finds the proper course here is 3 || to compel arbitration and stay this matter. While Plaintiffs assert that staying this action pending arbitration would “substantially prejudice” them, (doc. 27 at 15—16), the Court 5 || disagrees. First, Plaintiffs’ assertion that “JAMS has no jurisdiction over FranReal,” (id. at 6|| 16), is incorrect for the reasons stated above.® Second, Plaintiffs’ claim that “staying this || action would effectively strip [Plaintiffs] of the injunctive relief the parties expressly 8 || agreed to,” (id.), is unavailing considering the Court, by not dismissing this action, has 9|| created an off ramp should Plaintiffs, following arbitration, still seek injunctive relief || against Defendants. Therefore, the Court shall stay this action pending arbitration. 11 Accordingly, 12 IT IS ORDERED that Defendants’ Motion to Dismiss or Alternatively Motion to 13 || Compel Arbitration (doc. 26) is GRANTED IN PART. The Court shall compel arbitration 14]| in this matter. 15 IT IS FURTHER ORDERED that this action is STAYED pending completion of the parties arbitration. 17 IT IS FURTHER ORDERED that the parties shall jointly file a status report within 18] 60 DAYS of this Order and every 120 DAYS thereafter describing the status of arbitration. 19 IT IS FURTHER ORDERED that the parties shall PROMPTLY notify the Court of any arbitration decision or settlements. 21 Dated this 22nd day of May, 2026.

23 Uvited States Nlawistence Judge 24 25 26 27 5 See supra note 4. 6 See supra section IV.A.

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