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Sheridan v. Page

United States District Court, D. New Hampshire

November 28, 2018

Robert Sheridan and Gabriele Meyer
v.
Leroy Page, et al.

          ORDER

          LANDYA MCCAFFERTY JUDGE

         This suit arises out of plaintiffs' purchase of a log home kit from defendant, Southland Log Homes, Inc. (“Southland”).[1]Before the court is Southland's motion to dismiss or stay plaintiffs' claims against it pending mandatory arbitration. Doc. nos. 13, 13-1. Plaintiffs object. Doc. no. 17. For the following reasons, Southland's motion is granted.

         STANDARD OF REVIEW

         The First Circuit has yet to address the proper standard of review for a motion to dismiss or stay pending mandatory arbitration. See Pla-Fit Franchise, LLC v. Patricko, Inc., No. 13-CV-489-PB, 2014 WL 2106555, at *3 (D.N.H. May 20, 2014); Boulet v. Bangor Sec. Inc., 324 F.Supp.2d 120, 123 (D. Me. 2004). Neither party addressed the appropriate standard of review in their pleadings.[2] Some authority suggests that such motions should be reviewed under the Rule 12(b)(6) standard, see Palcko v. Airborne Express, Inc., 372 F.3d 588, 597 (3d Cir. 2004), while other courts have applied the summary judgment standard, see Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003).

         Several district courts in the First Circuit have taken a third approach: determining on a case-by-case basis which of these two standards apply based upon whether, in order to resolve the dispute, the court must look beyond the complaint and materials the court may ordinarily consider in resolving a Rule 12(b)(6) motion. See Johnson & Johnson Int'l v. Puerto Rico Hosp. Supply, Inc., 258 F.Supp.3d 255, 259 (D.P.R. 2017) (applying summary judgment standard where both parties relied upon exhibits filed in the record outside of the complaint and the court intended to reference those materials in assessing the scope of the arbitration clause); Somerset Consulting, LLC v. United Capital Lenders, LLC, 832 F.Supp.2d 474, 482 (E.D. Pa. 2011) (applying Rule 12(b)(6) standard where defendants' motion to stay relied upon arbitration clause in parties' consulting agreement and that same agreement was attached to complaint and formed basis of plaintiffs' claims).

         Here, Southland submitted two affidavits from its Chief Financial Officer, see doc. nos. 13-2 and 21-1, and two exhibits, see doc. no. 13-2, Exhs. 1 (sales contract) & 2 (list of builders). Plaintiffs concede that the two exhibits are “true” copies of the sales contract and list of builders. Doc. no. 17 at 2. The court does not intend to rely upon the facts attested to in the affidavits, but will rely upon the sales contract and list of builders. These documents are appropriate for consideration on a Rule 12(b)(6) motion as they are incorporated by reference in the complaint, and their authenticity is not disputed by the parties. Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009).

         The court will, therefore, resolve this motion using the Rule 12(b)(6) standard. Accordingly, the court will accept the factual allegations in the complaint as true, and draw all reasonable inferences from those facts in plaintiffs' favor. See Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1, 7 (1st Cir. 2014)(describing Rule 12(b)(6) standard). A summary of those facts follows.

         BACKGROUND

         Southland has its principal place of business in South Carolina, where it manufactures log home kits. In January 2017, Southland executed a sales contract with plaintiffs, who are residents of Florida, for the sale of a log home kit to be delivered to New Hampshire. Doc. no. 13-2, Exh. 1. On the first page of the sales contract, and directly above the heading “Sales Contract, ” the following language appears: “NOTICE: ANY CLAIMS ARISING UNDER THIS CONTRACT SHALL BE RESOLVED BY ARBITRATION PURSUANT TO PROVISIONS OF THE UNIFORM ARBITRATION ACT § 15-48-10 ET SEQ S.C. CODE.”[3] Doc. no. 13-2 at 4. Similarly, the sales contract provides under the heading, “Terms of Our Agreement”: “Any claims arising under this contract shall be resolved by arbitration pursuant to provisions of the South Carolina Uniform Arbitration Act . . . .” Id. at 9. Under the subheading “Arbitration, Venue and Governing Law, ” the sales contract states: “This is a South Carolina contract. . . . Any dispute must be settled by arbitration.” Id. at 11. Then, it continues:

This Sales Contract is executed in and shall be governed by and construed in accordance with the laws of the State of South Carolina. Any claims or disputes, whether in contract, tort, statutory, or otherwise, arising out of, relating to, or in connection with, the Sales Contract shall be resolved without resort to any form of class action by arbitration in Richland County, South Carolina in accordance with the rules of the American Arbitration Association.

Id.

         After execution of the sales contract, Southland assigned plaintiffs a project manager, who sent them a list of builders, doc. no. 13-2, Exh. 2, approved by an accreditation business, Home Buyers. The sales contract contains a reference to such a list:

Construction: You are solely responsible for construction of your home. This includes the selection, contracting and supervision of the builder for your home. We do not build your home and strongly recommend that you have a written contract with your builder. If you ask, we will provide a list of builders, but it is our recommendation and your responsibility to review their work. We do not recommend, warrant nor approve any builder.

Doc. no. 13-2 at 9 (emphasis added). Plaintiffs selected a builder, Leroy Page, from this list to construct their log home in New Hampshire. Plaintiffs allege that Page and UWS breached their contract with plaintiffs by ...


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