Eckert/Wordell Architects, Inc. v. FJM Properties of Willmar, LLC

United States Court of Appeals
For the Eighth Circuit
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No. 13-2247
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Eckert/Wordell Architects, Inc., a Michigan corporation; Eckert Wordell, LLC, a
Michigan limited liability company
lllllllllllllllllllll Plaintiffs - Appellants
West-Tech Design, Inc., a Michigan corporation
lllllllllllllllllllll Plaintiff
v.
FJM Properties of Willmar, LLC, a Minnesota limited liability company
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: May 13, 2014
Filed: June 30, 2014
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Before BYE, MELLOY, and BENTON, Circuit Judges.
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BYE, Circuit Judge.
Eckert/Wordell Architects, Inc., and Eckert Wordell, LLC (together “Eckert
Wordell”), appeal the district court’s1 grant of summary judgment to FJM Properties
of Willmar, LLC. The grant of summary judgment, in effect, compels the parties to
submit to an arbitrator the threshold issue of whether FJM Properties of Willmar,
LLC, may use an arbitration provision in a contract it did not sign to compel Eckert
Wordell to arbitrate. We affirm.
I
In June 2003, Fischer Laser Eye Center, LLC (“Fischer”), purchased land as
the eventual site of a proposed clinic. Two months later, Fischer hired Eckert
Wordell to design and build the clinic. Eckert Wordell drafted the architectural
services contract. In pertinent part, the contract indicates the signing entities intended
to submit “[a]ny claim, dispute, or other matter in question arising out of or related
to [the contract]” to arbitration. The contract also incorporated the Construction
Industry Arbitration Rules of the American Arbitration Association (“AAA Rules”)
therein.
In 2005, the shareholders of Fischer formed a separate corporation, Family Eye
Properties, LLC, for the purposes of owning and developing the land for the proposed
clinic. Fischer transferred title to the property to Family Eye Properties, LLC.
Sometime between 2005 and 2009, Family Eye Properties, LLC, changed its
name to FJM Properties of Willmar, LLC (“FJM Properties”). In 2009, FJM
Properties filed notice of claim against Eckert Wordell regarding the clinic’s
ventilation system. FJM Properties filed a demand for arbitration with the American
Arbitration Association (“AAA”) and, to preserve its rights, also filed suit in state
1
The Honorable Richard H. Kyle, United States District Judge for the District
of Minnesota.
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court. Eckert Wordell brought a third-party claim against West-Tech Design, Inc.
(West-Tech), with which it had subcontracted to design the HVAC system.
Shortly after the demand for arbitration was filed with the AAA, FJM
Properties and Eckert Wordell agreed to have their dispute decided by a privately-
chosen arbitrator. The parties selected an arbitrator and proceeded to discovery in
April of 2011, for a hearing scheduled for May of 2012.
On April 5, 2012, Eckert Wordell notified the arbitrator it would no longer
participate in the arbitration, claiming it had recently discovered FJM Properties was
not a signatory to the architectural services contract. Eckert Wordell claimed it had
no agreement with FJM Properties requiring it to arbitrate disputes and, therefore, the
arbitrator did not have subject matter jurisdiction.
The arbitrator concluded the terms of the architectural services contract
committed the threshold issue of arbitrability to an arbitrator to decide. The arbitrator
directed the parties to proceed with the arbitration, in which they could submit
arguments regarding whether they were required to arbitrate.
On April 18, 2012, Eckert Wordell and West-Tech filed this suit, seeking a
declaratory judgment the architectural services contract did not require arbitration of
the dispute with FJM Properties. The parties filed competing motions for summary
judgment. The district court granted summary judgment in favor of FJM Properties,
reasoning the contract had committed to the arbitrator the issue of whether FJM
Properties, as a non-signatory, could use the arbitration provision to compel signatory
Eckert Wordell to arbitrate. As a result, the district court dismissed the case in favor
of arbitration. Eckert Wordell appeals, challenging the grant of summary judgment
to FJM Properties.
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II
On appeal, Eckert Wordell contends the district court erred in granting
summary judgment to FJM Properties, arguing a court should decide the issue of
whether nonsignatory FJM Properties can enforce the arbitration provision against
signatory Eckert Wordell. We review de novo a district court’s decision to dismiss
in favor of arbitration. Donaldson Co., Inc. v. Burroughs Diesel, Inc., 581 F.3d 726,
731 (8th Cir. 2009).
Whether a particular arbitration provision may be used to compel arbitration
between a signatory and a nonsignatory is a threshold question of arbitrability. See
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002) (delineating
potentially dispositive threshold issues between “questions of arbitrability” and
“procedural questions”). We presume threshold questions of arbitrability are for a
court to decide, unless there is clear and unmistakable evidence the parties intended
to commit questions of arbitrability to an arbitrator. Id. at 83; Express Scripts, Inc.
v. Aegon Direct Mktg. Servs., Inc., 516 F.3d 695, 701 (8th Cir. 2008). We have
previously held the incorporation of the AAA Rules into a contract requiring
arbitration to be a clear and unmistakable indication the parties intended for the
arbitrator to decide threshold questions of arbitrability. See Green v. SuperShuttle
Int’l, Inc., 653 F.3d 766, 769 (8th Cir. 2011) (noting the AAA Rules empower the
arbitrator to determine his or her own jurisdiction over a controversy between the
parties). Eckert Wordell’s drafting of the architectural services contract here to
incorporate the AAA Rules requires the same result.
III
The judgment of the district court is affirmed.
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