TIMOTHY J. CORRIGAN, District Judge.
This case is before the Court on Defendant's Motion to Dismiss or Stay Proceedings and Compel Arbitration. (Doc. 4). Plaintiffs have filed a response in opposition (Doc. 6) and Defendant has filed a reply. (Doc. 12). Plaintiffs have filed a Motion for Emergency Hearing (Doc. 13), which the Court construes as a motion for preliminary injunctive relief, and Defendant responded in opposition. (Doc. 15). The Court held a hearing on the pending motions on October 28, 2014, and the transcript of that proceeding is incorporated herein.
Defendant Aaron's Furniture Rental ("Aaron's") allegedly delivered bunk beds infested with bed bugs and black mold to Plaintiffs Andre Teel and Rebecca Hainey's home. Plaintiffs, individually and as friends, guardians, and next of kin of their five minor children D.T., J.L., R.L., J.L., and E.L., brought suit against Aaron's for economic damages and emotional distress they have suffered and are suffering as a result. As this case is before the Court on a motion to dismiss, the Court takes as true the facts in Plaintiffs' complaint and attached exhibits.
Hainey filled out Aaron's Lease Order Form on November 29, 2013, in which she provided Aaron's her income and personal references in order to rent furniture from Aaron's in the future. (Doc. 4-2, Ex. B at 11). Hainey then signed lease purchase agreements with Aaron's on November 29, 2013, and December 6, 2013 for the purpose of renting a left and right sectional, a table, four chairs, and a bench for her home. (Doc. 4-2, Ex. B at 5, 8). On each of these dates, Hainey also signed separate arbitration agreements with Aaron's which stated, in relevant part, that
On December 9, 2013, Aaron's delivered the furniture covered in the lease purchase agreements to Plaintiffs' new home. (Doc. 1 at ¶ 22). That same day, Plaintiffs also called Aaron's to inquire about renting bunk beds for their children. (Doc. 6 at ¶ 14). Aaron's management informed Plaintiffs that it did not have bunk beds in stock, but would retrieve bunk beds from the inventory of another store and deliver them to Plaintiffs' home. (Doc. 6 at ¶ 15).
Late at night on December 11, 2013, Aaron's delivered bunk beds to Plaintiffs' home; however, Plaintiffs signed neither a lease purchase agreement nor an arbitration agreement for this delivery. (Doc. 6 at ¶¶ 16-17;
Plaintiffs allege that Aaron's failed to conduct an adequate pre-inspection of the bunk beds and that Aaron's knew that its furniture was infested with bed bugs and unfit for homes. (Doc. 1 at ¶¶ 43-44). On April 3, 2014, Plaintiffs reported the bed bug and black mold infestation to Aaron's corporate office as well as the local store manager, Tony Garman. (Doc. 1 at ¶¶ 31-32). Garman allegedly admitted that the bunk beds were the source of the bed bug infestation (Doc. 1 at ¶ 35); however, Plaintiffs allege that Aaron's attempted to cover up the infestation and did not take adequate steps to remedy the situation. (Doc. 1 at ¶¶ 41-42).
On June 3, 2014, Plaintiffs filed a six-count complaint against Aaron's, seeking damages in the amount of $1,500,000 for violations of Florida's Deceptive and Unfair Trade Practices Act (Count I); breach of contract (Count II); unjust enrichment (Count III); breach of implied warranty of merchantability (Count IV); gross negligence (Count V); and intentional infliction of severe emotional distress (Count VI) (Doc. 1).
A preliminary injunction is only appropriate where the moving party demonstrates (1) a substantial likelihood of success in the ultimate case, (2) that it would suffer irreparable harm in the absence of an injunction, (3) that a balance of equities favors granting the injunction, and (4) that the public interest would not be harmed by the injunction.
Plaintiffs fail to meet the requirements for a preliminary injunction. First, they do not demonstrate that they have a substantial likelihood of success on the merits of the case. Second, because Plaintiffs themselves suggest that their injuries can be undone through monetary remedies — they seek $1,500,000 in damages — their injuries are not "irreparable." Finally, while a typical preliminary injunction seeks simply to maintain the status quo pending a resolution on the merits of the case, here Plaintiffs seek to force Aaron's to act (though in some unspecified way). This would constitute a "mandatory affirmative injunction," and for it to be granted Plaintiffs would face an even higher burden than that which they have already failed to meet.
In enacting the Federal Arbitration Act ("FAA"), Congress evinced a "liberal federal policy favoring arbitration agreements."
In determining whether parties agreed to arbitrate, courts distinguish between challenges to the validity of a contract as a whole and challenges specifically to the arbitration clause. Under Section 4 of the FAA, federal courts are instructed to compel arbitration once they are satisfied that the making of the agreement for arbitration or its validity is not at issue.
Plaintiffs argue that the arbitration agreements signed in connection with the November 29, 2013 and December 6, 2013 lease purchase agreements are inapplicable to the December 11, 2013 rental transaction for which they never signed a lease purchase agreement or a separate arbitration agreement. The Eleventh Circuit has acknowledged that "an arbitration clause in an agreement sometimes can require arbitration of a dispute arising not from the agreement itself but from another source, including another agreement[,] . . . when the arbitration clause applies to the dispute at issue."
In determining whether an arbitration clause found in one agreement can require arbitration of a dispute arising from another agreement, courts consider a variety of factors. Courts have found that an arbitration provision found in a principal or umbrella agreement can require arbitration of a dispute arising from a subsidiary agreement. Compare Consol. Brokers Ins. Servs., Inc., 427 F.Supp.2d 1074 (D. Kan. 2006) (applying arbitration clause in a broader "General Agent Contract" to a "Marketing General Agent Agreement Contract" that furthered the purposes of the "General Agent Contract"), with Int'l Underwriters AG, 533 F.3d at 1346, 1349 (holding that narrow arbitration provision found in subsidiary escrow agreement could not compel arbitration of dispute arising out of principal agreement when there was no reference to arbitration in the principal agreement and the principal agreement could have existed without the escrow agreement).
Similarly, courts frequently apply arbitration provisions in one agreement to other agreements which pertain to the same subject matter.
In contrast, courts are unwilling to apply an arbitration provision from one contract to another contract on a different subject.
In addition to the relationship between two or more agreements and their subject matter, courts consider whether the parties to the separate agreements are identical,
On November 29, 2013 and December 6, 2013, Plaintiffs signed lease purchase agreements (Doc. 4-2, Ex. B at 5, 8) and arbitration agreements (Doc. 4-1, Ex. A) with Aaron's, which arbitration agreements contain a provision that "YOU AND WE AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF OR RELATING IN ANY WAY TO YOUR AGREEMENT(S) WITH AARON'S . . . [or] THE PRODUCTS OR SERVICES PROVIDED TO YOU BY AARON'S . . . SHALL BE RESOLVED EXCLUSIVELY IN BINDING ARBITRATION RATHER THAN LITIGATION IN COURT." (Doc. 4-1, Ex. A). On December 11, 2013, Plaintiffs received bunk beds from Aaron's but did not sign a lease purchase agreement or an arbitration agreement. (Doc. 6 at ¶¶ 16-17;
The Lease Order Form, signed by Hainey on November 29, 2013, suggests that the November 29, 2013, December 6, 2013, and December 11, 2013 rental transactions were interrelated parts of one larger transaction between Aaron's and Plaintiffs. The documentation customers provide in the Lease Order Form enables them to rent furniture from Aaron's in the future, not just on the date the Lease Order Form is signed. (Doc. 4-2, Ex. B at 11). Furthermore, even though Plaintiffs did not sign an arbitration agreement with respect to the December 11, 2013 rental transaction, and none of the lease purchase agreements referred to the December 11, 2013 rental transaction, all three transactions related to the same subject matter — the rental of furniture for Plaintiffs' house.
The Court also finds it significant that the rental transactions were all between the same parties, Aaron's and Hainey, and Plaintiffs accepted the December 11, 2013 furniture delivery after Hainey had already signed two lease rental agreements and arbitration agreements with Aaron's. Moreover, the rental transactions all occurred within a two week period.
Finally, the Court notes the broad language of Aaron's arbitration agreement. (Doc. 4-1 at ¶ 1). While this broad language alone is insufficient to compel arbitration of the dispute over the December 11, 2013 transaction, it is one additional factor in support of arbitration.
In light of the interrelated nature of the rental transactions, that the rental transactions relate to the same subject matter and were executed by the same parties closely in time, and the breadth of Aaron's arbitration agreement, the arbitration agreements signed on November 29, 2013 and December 6, 2013 cover the December 11, 2013 rental transaction.
While a party can only be required to submit to arbitration those disputes which he has agreed to submit (
Equitable estoppel precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that the contract imposes. Blinco, 400 F.3d at 1312. Courts have applied this principle to compel arbitration where non-signatories to contracts containing an arbitration clause have sought to enforce their alleged contractual rights.
Plaintiffs claim that because Teel never signed a lease purchase agreement or an arbitration agreement with Aaron's, he should not be compelled to arbitrate. (Doc. 6 at ¶ 3). However, Plaintiffs' own Complaint states that "Plaintiffs Andre Teel and Rebecca Hainey paid valuable consideration and executed an enforceable contract with Aaron's for the rental/purchase of home furnishings/furniture." (Doc. 1 at ¶ 11). Furthermore, each of Plaintiffs' six counts rely on the unsigned lease purchase agreements (Doc. 4-2, Ex. B at 1, 3) to establish claims against Aaron's. (Doc. 1 ¶¶ 1, 20, 65, 67, 71, 74, 77, 78, 79, 80, 81, 82, 83, 87, 90, 91, 96, 97, 107). And this Court has already found that the December 11, 2013 transaction represented by the unsigned agreements must be arbitrated. By relying on the existence of the lease purchase agreements to establish his claims against Aaron's, but repudiating its existence when it works to his disadvantage by requiring arbitration, Teel is trying to "have his cake and eat it too," the very situation equitable estoppel is designed to prevent. Because the minor Plaintiffs' claims also rely on the existence of the lease purchase agreements, their status as non-signatories similarly does not prevent the arbitration agreements from applying to them.
Accordingly, it is hereby
1. Plaintiffs' Motion for Preliminary Injunctive Relief (Doc. 13) is
2. Aaron's Motion to Dismiss or Stay Proceedings and Compel Arbitration (Doc. 4) is
This decision is based on the totality of the circumstances and is limited to its facts.
This Court need not address Plaintiffs' argument that the December 11, 2013 unsigned lease purchase agreements are unenforceable because a) Plaintiffs accepted the December 11, 2013 furniture delivery even though they never signed a lease purchase agreement on this date and b) Plaintiffs are attempting to bring claims for breach of contract based on those lease agreements. Plaintiffs cannot both challenge the validity of a lease purchase agreement and benefit from its enforcement.