United States District Court, C.D. California
GLOBAL PRIVATE FUNDING, INC., a California corporation, Plaintiff,
EMPYREAN WEST, LLC, an Arizona corporation; JAY L. CARTER, individually and as managing partner of EMPYREAN WEST LLC; DAVID C. KELLER, individually and as CEO of EMPYREAN WEST LLC; U.S. FUEL CORPORATION, a Nevada corporation; HARRY BAGOT, individually and as President/CEO of U.S. FUEL CORPORATION; STANLEY N. DRINKWATER, III, individually and as Chairman of the Board; U.S. FUEL CORPORATION; WILLIAM CHADY, individually and as Chief Operating Officer of U.S. FUEL CORPORATION; ROBERT SCHWARTZ, individually, Defendants.
ORDER DENYING MOTION FOR PARTIAL SUMMARY JUDGMENT ON DEFENDANTS' SIXTH COUNTERCLAIM [Dkt. No. 116]
DEAN D. PREGERSON, District Judge.
Presently before the Court is Defendants' motion for partial summary judgment as to the sixth counterclaim. Having heard oral arguments and considered the parties' submissions, the Court adopts the following order.
The alleged facts of this case were discussed in the Court's order of September 11, 2014, and need not be rehearsed in detail for purposes of this motion. (Dkt. No. 91.) Briefly, Plaintiff and Defendant Empyrean West ("Empyrean") entered into a "Master Services Agreement" ("MSA") related to the business of connecting foreign investors to American investment opportunities. (Id.) Plaintiff's case is essentially that Defendants took its confidential business information, including leads, violating the MSA and leading to several other common law causes of action. (Second Amended Complaint generally.)
Pertinent to this motion, Defendants allege that the MSA contains a mandatory arbitration clause, which reads as follows:
Arbitration. Except as otherwise provided herein, the Parties agree that all controversies, disputes or claims arising between [EMPYREAN], its officers, directors, agents, employees and attorneys (in there representative capacity) and GLOBAL, its officers, directors, agents, employees and attorneys (in there representative capacity), arising out of or related to: (1) this Master Services Agreement, any provision thereof or Addendum related thereto; (2) the relationship of the Parties hereto; or (3) the validity of this Master Services Agreement, any provision thereof or Addendum related thereto; shall be submitted for arbitration before and in accordance with the Commercial Arbitration Rules of the American Arbitration Association (AAA) then in effect. This agreement to arbitrate shall be specifically enforceable. Demand for arbitration shall be made within a reasonable time after the claim, dispute, breach or other matter in question has arisen....
(Decl. David Keller, Ex. 1, ¶ 13.1.)
The MSA also contained a provision awarding attorney's fees in the event of a "legal proceeding" contrary to the agreement:
Attorneys Fees. Upon withdrawal, dismissal, or stay of any legal proceeding commenced contrary to the provisions of this Master Services Agreement, the Party initiating such proceeding shall promptly reimburse the other Party for its reasonable attorney's fees, costs and expenses incurred in connection therewith.
(Id. at ¶ 13.4.)
Defendants also allege that in May 2013 Plaintiff filed a suit in state court; that action was apparently parallel to, and substantially similar to, this action. (RJN 1.) Approximately two months later, the state court action was dismissed. (RJN 79.) During that time, Defendants filed several motions to quash and a demurrer. (RJNs generally.)
Defendants therefore bring this counterclaim seeking declaratory judgment that the state court action was a proceeding contrary to the provisions of the MSA and "whether GLOBAL is responsible to promptly reimburse EMPYREAN for its reasonable attorney's fees, costs, and expenses." (Counterclaim, ¶ 105.)
II. LEGAL STANDARD
A party may move for summary judgment with regard to any claim or defense or any part of any claim or defense. Fed.R.Civ.P. 56(a). The court must grant summary judgment if "the movant shows that there is no genuine dispute as to any material fact ...