MEMORANDUM OPINION AND ORDER

PAUL W. GRIMM, District Judge.

Plaintiff Matrix North American Construction, Inc. ("Matrix") filed suit, alleging three breach-of-contract claims and one claim for violating Maryland's Prompt Payment Statute, Md. Code Ann., Real Prop. §§ 9-301 — 9-305, against Defendant SNC Lavalin Constructors Inc. ("SNC"). Compl., ECF No. 1. SNC seeks to stay the proceedings in this Court and to compel arbitration based on the parties' construction contract. Def.'s Mot. to Stay & Compel Arbitration, ECF No. 22.1 As SNC sees it, the parties' construction contract (the "Contract"), ECF No. 2-2, requires them to settle all disputes by arbitration. Matrix disagrees. Construed as a motion for summary judgment, I will grant SNC's motion because the parties agreed to arbitrate disputes arising from the Contract. This case will be stayed and administratively closed to permit the arbitration to take place.

Standard of Review

SNC moves to stay the proceedings and compel arbitration under the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16.2 Congress enacted the FAA "to promote the enforceability of arbitration agreements and to make arbitration a more viable option to parties weary of the everincreasing `costliness and delays of litigation.'" Saturn Distribution Corp. v. Williams, 905 F.2d 719, 722 (4th Cir. 1990) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 220 (1985) (quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 2 (1924) (quotation marks omitted))). It "reflects `a liberal federal policy favoring arbitration agreements.'" Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). If an issue is "`referable to arbitration under an agreement in writing for such arbitration,'" then a stay is mandatory and a motion to compel must be granted. Id. (quoting 9 U.S.C. § 3).

When a party moves to compel arbitration, or to dismiss on the basis of a governing arbitration agreement, the Court first must "determine whether the parties agreed to arbitrate that dispute." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). The moving party must show

Adkins, 303 F.3d at 500-01 (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991)). While the Court applies the "federal substantive law of arbitrability," id. (quoting Moses H. Cone Mem'l Hosp., 460 U.S. 1, 24 (1983)), it applies "state law governing contract formation" to determine "[w]hether a party agreed to arbitrate a particular dispute," Adkins, 303 F.3d at 501.

Relevantly, "`even though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate.'" Id. at 501 (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997)). Here, Matrix challenges the very existence of a mandatory arbitration clause, rather than its scope.3 See Pl.'s Opp'n 1. Essentially, it argues that a provision allowing for—but not requiring—arbitration is not an agreement to arbitrate. When a party moves to compel arbitration and the validity of the purported arbitration agreement between the parties is disputed, the motion is treated as one for summary judgment. See Rose v. New Day Fin., LLC, 816 F.Supp.2d 245, 251 (D. Md. 2011); see also id. at 252 n.5 ("If the parties dispute the existence of an arbitration agreement, the court must `hear the parties' on the issue, and the party alleged to have violated the arbitration agreement is entitled to a jury trial on the existence of an agreement. Standard summary judgment rules apply." (quoting 9 U.S.C. § 4 and citing Shaffer v. ACS Gov't Servs., Inc., 321 F.Supp.2d 682, 684 n.1 (D. Md. 2004))). Therefore, I will treat Defendant's motion as one for summary judgment. See id.; see also Fed. R. Civ. P. 12(d) (requiring conversion of motion to dismiss to motion for summary judgment where, as here, movant attaches affidavits in support that are not integral to the pleadings).

Summary judgment is proper when the moving party demonstrates, through "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials," that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). The question here is "whether a contract to arbitrate was formed," and "unless there is no genuine issue of fact as to whether a contract was formed, the court must submit the question to the jury." Galloway v. Santander Consumer USA, Inc., No. CCB-13-3240, 2014 WL 4384641, at *2 (D. Md. Sept. 3, 2014). To determine whether an arbitration agreement exists, "[c]ourts apply `ordinary state-law principles that govern the formation of contracts.'" Id. (quoting Noohi v. Toll Bros., Inc., 708 F.3d 599, 607 (4th Cir. 2013) (internal quotation marks and citations omitted)).

Background

SNC entered into the Contract with Matrix. Matrix agreed to be a subcontractor providing labor and materials in constructing the Keys Energy Center in Prince George's County. Def.'s Mem. 2. The Contract states:

Contract 57-58, ECF No. 2-2.

Matrix alleges that the Contract had an "initial lump sum price of $8,895,000." Compl. ¶ 9. It contends that SNC increased the scope of and delayed Matrix's work on the project and failed to adjust the Contract price accordingly. Id. ¶¶ 10-11. Matrix states, and SNC does not dispute, that the parties then

Pl.'s Opp'n 2 (internal citations omitted).

SNC now has moved to stay the proceedings in this Court and to compel arbitration pursuant to § 22.3 of the Contract, arguing that the dispute is within the scope of the arbitration provision to which the parties agreed to be bound. Def.'s Mem. 1.

Discussion

Under Maryland law,4 a contract exists where there is "`mutual assent (offer and acceptance), an agreement definite in its terms, and sufficient consideration.'" Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769 (4th Cir. 2013) (quoting CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 114, 123 (4th Cir. 2004)). Here, the parties dispute whether the Contract contains a provision mandating arbitration. Def.'s Mem. 4-5; Pl.'s Opp'n 1.

Def.'s Mem. 4-5. As SNC reads the Contract, because the parties' initial informal discussions failed, arbitration was required and litigation was not an option. According to SNC, litigation is an alternative approach for resolving matters outside the scope of the arbitration clause or to "confirm, modify, or vacate an arbitration award." Def.'s Reply 7.

Matrix argues that the parties envisioned "a three-step dispute resolution procedure" and that it satisfied the first two steps, such that it could bring litigation in this Court at the third step. Pl.'s Opp'n 1-2.5 According to Matrix, the first step is negotiation, the second step is mediation, and the third step is litigation. Id. at 4 (arguing that "Subpart 22.4 is appropriately titled `LITIGATION,' begins with a complete sentence, and is properly punctuated" and "clearly references the preceding two steps, NEGOTIATION and MEDIATION, and expressly mandates that disputes not resolved through those steps `shall' be litigated").

The Contract states that when "direct discussions" and negotiations fail, "the Parties shall submit such matter to the dispute mitigation and dispute resolution procedures selected herein" (what Matrix refers to as the second step). Contract § 22.2. Matrix relies on the heading of § 22.3, "MEDIATION," as controlling what the next step entails, Pl.'s Opp'n 4, yet the Contract clearly states that its headers are "for convenience of reference only and shall not in any manner affect the construction, meaning or effect" of any contractual term. Contract § 24.5. Consequently, I must look at the text of the contract provisions themselves for their meaning. See id. § 24.5.

The Contract does not define "dispute mitigation and dispute resolution procedures." Contract language is ambiguous "if, to a reasonably prudent person, the language used is susceptible of more than one meaning and not when one of the parties disagrees as to the meaning of the subject language." Pac. Indem. Co., 488 A.2d at 489. When "there is a bona fide ambiguity in the contract's language or legitimate doubt as to its application under the circumstances . . . the contract [is] submitted to the trier of the fact for interpretation." Plymouth Rubber, 569 A.2d at 1296. Nonetheless, "[t]he court may construe an ambiguous contract if there is no factual dispute in the evidence." Pac. Indem. Co., 488 A.2d at 489.

The sentence following the reference to submission to "dispute mitigation and dispute resolution procedures selected [in the Contract]"—the first sentence of § 22.3—states that the dispute "may be settled by a single arbitrator," whose decision will be written and binding on the parties, and it does not provide for any alternative procedures. Id. § 22.3 (emphasis added). The entire paragraph discusses binding arbitration, without once referencing non-binding mediation. See id. Thus, the dispute mitigation and dispute resolution procedures requirement is not susceptible to the meaning Matrix assigns it—that it allows for mediation as an alternative dispute resolution method to arbitration.6 Indeed, this meaning would require "arbitration" to be viewed as a form of mediation, whereas arbitration (which is binding) is distinct from mediation (which is not). Thus, this language, albeit confusing, is not ambiguous, because it is susceptible to only one meaning — that the step following informal negotiation is mediation. See Pac. Indem. Co., 488 A.2d at 489.

Since the contract does not include mediation as an alternative to arbitration, the next critical question is whether it compels arbitration of all disputes not resolved through negotiation, or, alternatively, permits the parties to elect whether to arbitrate or litigate any unresolved disputes. The answer turns on the meaning of the language that any dispute "may" be settled by an arbitrator, in accordance with the rules of the American Arbitration Association. Contract, § 22.3. Thus, the issue is whether use of the word "may" is permissive, or mandatory, in this context.

The Contract states that any dispute not resolved by negotiation "may be settled by a single arbitrator." Contract § 22.3 (emphasis added). Austin v. Owens-Brockway Glass Container, Inc., 78 F.3d 875 (4th Cir. 1996), provides guidance. There, the plaintiff argued that arbitration was not mandatory, but permissive because the collective bargaining agreement clause read that "[a]ll disputes not settled pursuant to the procedures set forth in Article 31, Grievance Procedures, may be referred to arbitration." 78 F.3d at 879. The Fourth Circuit interpreted the language "may be referred" to mandate that arbitration was obligatory and held:

Id. Following the Fourth Circuit's precedent, Judge Bredar of this Court held arbitration was mandatory when interpreting a contract provision that read that "[a]ny grievance which is not resolved in Step 3 to the Union's satisfaction may be submitted to arbitration." Williams v. Tero Tek Int'l, Inc., No. JKB-10-2752, 2011 WL 2174505, at *1-2 (D. Md. June 1, 2011) (emphasis in original) ("The Court's rationale [in Austin] was that, if the parties intended arbitration to be permissive, this provision would be meaningless since they could always submit to voluntary arbitration. No significant difference is perceived between the language before the Austin Court and the language in the instant case.") (internal citations omitted). Judge Bredar added that because the language of the agreement also included that the arbitrator's decision was final and binding, the Court was without jurisdiction to entertain the claims in that case. Id.

There is not a "significant difference" between the language of the Contract here and those in Austin and Williams. The Contract between SNC and Matrix states that

Contract § 22.3 (emphasis added). As in Williams and Austin, the parties clearly agreed to arbitrate their disputes, and therefore, this Court may not resolve any claims "relating to or arising out of the Agreement," unless the parties first complete arbitration and there is subsequent litigation to challenge or enforce the decision of the arbitrator. See Austin, 78 F.3d at 879; Williams, 2011 WL 2174505, at *1-2; Contract § 22.2. As the parties do not disagree that this dispute is "relating to or arising out of the Agreement," the Court is without jurisdiction to entertain Matrix's claims and they must be submitted to arbitration.

It is true that the foregoing construction of § 22.3 of the Contract calls into question exactly when, if ever, litigation would be appropriate under § 22.4, if all disputes arising out of the Contract must be resolved through binding arbitration. Importantly,

City of Coll. Park v. Precision Small Engines, 161 A.3d 728, 734 (Md. Ct. Spec. App. 2017) (quoting Walker v. Dep't of Human Res., 842 A.2d 53 (2004)); see also Sagner v. Glenangus Farms, Inc., 198 A.2d 277, 283 (Md. 1964) ("A recognized rule of construction in ascertaining the true meaning of a contract is that the contract must be construed in its entirety and, if reasonably possible, effect must be given to each clause so that a court will not find an interpretation which casts out or disregards a meaningful part of the language of the writing unless no other course can be sensibly and reasonably followed.").

Given the Court's finding that the parties are required to arbitrate, Section 22.4 is then susceptible to only one meaning. While the Contract does provide for litigation, it is reserved for "[d]ispute[s] not resolved through negotiation [i.e., the procedures discussed in § 22.2] or mediation [i.e., the procedures discussed in § 22.3, which must be construed to require arbitration]." Contract § 22.4. The most direct way to harmonize all three Contract sections is to read § 22.4 to permit litigation when a party either files suit to enforce the arbitrator's award or to vacate it. In such circumstances, § 22.4 then dictates the forum where such a suit is to be filed.

Accordingly, I will grant Defendant's motion to stay proceedings and compel arbitration, treated as a motion for summary judgment.8

ORDER

Accordingly, it is, this 2nd day of August, 2018, hereby ORDERED that