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Inc. v. Burr

United States District Court, D. Connecticut

December 28, 2016

DOCTOR'S ASSOCIATES INC., Plaintiff,
v.
BRIAN BURR, et al., Defendants.

          RULING RE: PLAINTIFF'S PETITION TO COMPEL ARBITRATION (DOC. NO. 1)

          Janet C. Hall United States District Judge

         I. INTRODUCTION

         Plaintiff Doctor's Associates, Inc. (“DAI” or “Subway”), the franchiser of Subway sandwich shops in the United States, filed a Petition to Compel Arbitration (Doc. No. 1) against defendants Brian Burr and Bryn Burr (also known as Brynn Burr) (collectively, “the Burrs”). The Burrs entered an arbitration agreement with DAI, as part of two Subway Applications for Additional Information that the Burrs completed. See Subway Applications for Additional Information (Doc. No. 2-8) at 3, 5. DAI now seeks to compel arbitration in connection with a lawsuit that the Burrs are pursuing in California state court (“the California Lawsuit”). See Pet. ¶ 16; see also California Compl. (Doc. No. 2-2).[1] In the California Lawsuit, the Burrs are suing DAI's development agents, Raghu Marwaha and Rohit Marwaha (collectively, “the Marwahas”). See Pet. ¶ 16; California Compl. DAI seeks an order “directing the Burrs to arbitrate with DAI their claims against DAI's agents that they asserted or could have asserted in the California State Court Lawsuit.” See Pet. ¶ 35.

         The Burrs argue that the Petition should be denied for the following reasons: First, the Burrs argue that the California Lawsuit falls outside the scope of the arbitration agreement between the Burrs and DAI. See Response (Doc. No. 13) at 2. Second, the Burrs argue that the Marwahas are required parties whose joinder would destroy diversity jurisdiction. See id. at 2-3. Third, the Burrs argue that the principle of comity dictates that the California court should decide arbitrability. See id. at 2.

         For the reasons stated below, DAI's Petition to Compel Arbitration is granted.[2]

         II. BACKGROUND

         In the fall or winter of 2013, the Morongo Tribal Council approved the Burrs to open and run a new Subway franchise location inside the Morongo Casino Resort & Spa. See California Compl. ¶ 11; Brian Burr Declaration (Doc. No. 13-3) ¶ 3. In December 2013, the Burrs then contacted a Subway regional headquarters regarding the possibility of opening a Subway franchise in the casino. See California Compl. ¶ 12; Brian Burr Decl. ¶ 4.

         On December 13, 2013 and January 5, 2014, the Burrs completed and executed Subway Applications for Additional Information. See Pet. ¶ 6; Ralph Piselli Declaration (Doc. No. 2-7) ¶ 7; Subway Applications for Additional Information. In exchange for the Burrs filling out the Applications, DAI agreed to provide the Burrs with information concerning a Subway franchise and to consider the Burrs as potential Subway franchisees. See Pet. ¶ 6; Piselli Decl. ¶ 7. The Applications both contain the following arbitration clause:

I agree that I will settle any and all previously unasserted claims, disputes or controversies arising out of or relating to my application or candidacy for the grant of a SUBWAY® franchise from Franchisor, pursuant to the laws of Connecticut, USA and by binding arbitration only. The arbitration shall be administered by the American Arbitration Association (“AAA”) . . . in accordance with its administrative rules including, as applicable, the Commercial Rules of the AAA and under the Expedited Procedures of such rules or under the Optional Rules for Emergency Measures of Protection of the AAA. . . . I agree that the arbitration will be held in Bridgeport, Connecticut, USA, conducted in English and decided by a single arbitrator.

         Subway Applications for Additional Information at 3, 5.

         DAI was initially poised to approve the Burrs as franchisers of a new Subway location in the casino. See California Compl. ¶¶ 14-16, 23-26; see also Pet. ¶ 26. In August 2014, the Burrs learned that the Marwahas had become DAI's new development agents for the area. See California Compl. ¶ 19; see also Pet. ¶ 24. As development agents, the Marwahas use an operating company, the Marwaha Group, to operate their development agent business. See Pet. ¶ 26 n.5; David A. Cousins Second Declaration (Doc. No. 15-1) ¶ 6. The Marwahas operate the Marwaha Group with one other individual, Ravi Marwaha. See Response at 4 n.1. DAI ultimately did not approve the Burrs to run the location. See California Compl. ¶ 29-30; Pet. ¶ 27.

         The California Lawsuit alleges that the reason DAI ultimately did not approve the Burrs was because the Marwahas “caused the Marwaha Group to take steps as the Development Agent to cause Subway to withdraw its acceptance so that [the Marwahas] could steal the franchise for themselves.” See California Compl. ¶ 32; Brian Burr Decl. ¶ 26. The California Lawsuit alleges that the Marwahas told the casino's CEO “that they would own the franchise or there would be no franchise.” California Compl. ¶ 34; see also Brian Burr Decl. ¶ 28. The Marwahas currently operate the Subway franchise in the casino. See California Compl. ¶ 34; Brian Burr Decl. ¶ 29.

         On July 22, 2016, the Burrs filed the California Lawsuit against the Marwahas and several Doe defendants. See California Compl. The California Lawsuit alleges intentional misrepresentation, interference with contractual relations and prospective economic relations, and unfair business practices. See California Compl. Counts 1-5. On August 4, 2016, DAI filed an arbitration against the Burrs for declaratory relief relating to the facts underlying the California Lawsuit. See Arbitration Statement of Claims (Doc. No. 2-6).

         III. ...


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