Somerset Consulting, LLC v. United Capital Lenders, LLC

832 F. Supp. 2d 474, 2011 WL 5555622, 2011 U.S. Dist. LEXIS 131444
CourtDistrict Court, E.D. Pennsylvania
DecidedNovember 15, 2011
DocketCivil Action No. 10-3622
StatusPublished
Cited by121 cases

This text of 832 F. Supp. 2d 474 (Somerset Consulting, LLC v. United Capital Lenders, LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Somerset Consulting, LLC v. United Capital Lenders, LLC, 832 F. Supp. 2d 474, 2011 WL 5555622, 2011 U.S. Dist. LEXIS 131444 (E.D. Pa. 2011).

Opinion

MEMORANDUM

DALZELL, District Judge.

Plaintiffs Somerset Consulting, LLC (“Somerset”) and Charlotte Schmeling (“Schmeling”) bring this action against defendants United Capital Lenders, LLC (“United”), Christopher Herghelegiu, and George Herghelegiu, alleging ten claims arising out of a consulting and referral agreement entered into between Somerset and United in April, 2008. Plaintiffs allege in duplicate — on behalf of both Somerset and Schmeling, against all defendants— claims for breach of contract, specific performance, accounting, and unjust enrichment, as well as for attorney’s fees.

Defendants have filed a motion to dismiss plaintiffs’ complaint and refer this matter to arbitration. Plaintiffs oppose that motion. For the reasons set forth below, we will grant defendants’ motion to dismiss and direct the parties to arbitrate plaintiffs’ claims before Judicial Arbitration and Mediation Services (“JAMS”) in accordance with the parties’ arbitration agreement.

I. Factual Background

A. The Standard for Motions to Compel Arbitration

At the threshold we confront a question regarding the proper standard to apply to the factual allegations in this matter. We also must deal with a dispute regarding the ripeness of defendants’ motion for disposition.

Defendants assert their motion pursuant to Fed.R.Civ.P. 12(b)(1), (3), and (6), but explain that they “file[] this Motion to Dismiss pursuant to Rule 12(b)(6) and not Rule 12(b)(3) without waiving the right to do so pursuant to the dicta in various Third Circuit District Courts [that] have indicated that the appropriate vehicle to challenge a pleading based on an arbitration or forum selection clause is a Rule 12(b)(6) motion.” Defs.’ Mem. of L. in Supp. of Mot. to Dismiss (“Defs.’ Mem.”) at 5 n. 3. Plaintiffs respond that “Motions to Compel Arbitration are reviewed under the standard for summary judgment as are found in Fed. Rule of Civil Procedure 56(c) [.] The court must examine all evidence presented by the party opposing arbitration and construe all reasonable inferences in that parties’ [sic ] favor.” Pis.’ Resp. to Defs.’ Mot. to Dismiss (“Pis.’ Resp.”) at 5. Plaintiffs further contend that “[b]efore the courts may resolve that issue [as to whether to compel arbitration in this case], the court must decide the validity of the arbitration provision and in this case that requires extensive discovery to provide This [sic ] Court with the necessary information.” Id. at 6.

We thus must decide whether to apply a motion to dismiss or summary judgment standard to defendants’ motion to compel arbitration, as well as determine, in a related inquiry, whether plaintiffs are entitled to conduct discovery in this matter before we rule on defendants’ motion. With respect to the applicable standard, [478]*478each of the parties’ positions finds support in the case law.

Our Court of Appeals explained in 2004 that “[o]ur prior decisions support the traditional practice of treating a motion to compel arbitration as a motion to dismiss for failure to state a claim upon which relief can be granted.” Palcko v. Airborne Express, Inc., 372 F.3d 588, 597 (3d Cir.2004) (citing Nationwide Ins. Co. v. Patterson, 953 F.2d 44, 45 n. 1 (3d Cir.1991)); see also Digital Signal, Inc. v. VoiceStream Wireless Corp., 156 Fed.Appx. 485, 487-88 (3d Cir.2005) (“It is difficult for us to understand why the district court did not end its inquiry there and grant T-Mobile’s Motion to Dismiss and Compel Arbitration.”). But almost a quarter-century earlier, the Court of Appeals concluded that “when considering a motion to compel arbitration ... [a district court] should give to the opposing party the benefit of all reasonable doubts and inferences that may arise,” employing “the standard used by district courts in resolving summary judgment motions pursuant to Fed.R.Civ.P. 56(c).” Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 & n. 9 (3d Cir.1980). The Court of Appeals recently reiterated this earlier holding, stating that “[a] district court decides a motion to compel arbitration under the same standard it applies to a motion for summary judgment.” Vilches v. The Travelers Companies, Inc., 413 Fed.Appx. 487, 490 (3d Cir.2011) (internal quotation marks omitted).

As for Nationwide, 953 F.2d at 45 n. 1 (citations omitted) — the case cited in Palcko — the Court of Appeals therein observed that “[d]ismissal of a declaratory judgment action because the dispute is covered by an arbitration provision is generally effected under Rule 12(b)(6) covering dismissals for failure to state a claim upon which relief can be granted, or Rule 56 covering summary judgments if matters beyond the pleadings were considered.” See also Spinetti v. Service Corp. Int’l, 324 F.3d 212, 215 (3d Cir.2003) (noting without criticism that the district court “converted the Appellee’s Motion to Dismiss and Compel Arbitration into a Motion for Summary Judgment”).

Our task, then, is to reconcile this jurisprudence, which at first glance appears complicated by the significant differences between Rule 12(b)(6) and Rule 56 standards. In considering a Rule 12(b)(6) motion to dismiss, the test “‘is whether, under any reasonable reading of the pleadings, [the] plaintiff may be entitled to relief,’ ” Kundratic v. Thomas, 407 Fed.Appx. 625, 627 (3d Cir.2011) (brackets in original) (quoting Holder v. City of Allentown, 987 F.2d 188, 194 (3d Cir.1993)), and where “the defendant bears the bur den of showing that no claim has been presented.” Hedges v. U.S., 404 F.3d 744, 750 (3d Cir.2005). To survive this test, “a complaint’s ‘factual allegations must be enough to raise a right to relief above the speculative level.’ ” Ideen v. Straub, 385 Fed.Appx. 123, 124 (3d Cir.2010) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). On such a motion, we “ ‘accept all factual allegations in the complaint as true and give the pleader the benefit of all reasonable inferences that can be fairly drawn therefrom,’” Ordonez v. Yost, 289 Fed.Appx. 553, 554 (3d Cir.2008) (quoting Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993)), and “generally consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.” Lum v. Bank of America, 361 F.3d 217, 221 n. 3 (3d Cir.2004) (internal quotation marks omitted).

In contrast, under Rule 56(a) “[t]he court shall grant summary judgment [479]*479if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law,” where “[a] party asserting that there is a genuine dispute as to a material fact must support that assertion with specific citations to the record.” Bello v. Romeo, 424 Fed.Appx. 130, 133 (3d Cir.2011).

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832 F. Supp. 2d 474, 2011 WL 5555622, 2011 U.S. Dist. LEXIS 131444, Counsel Stack Legal Research, https://law.counselstack.com/opinion/somerset-consulting-llc-v-united-capital-lenders-llc-paed-2011.