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Inc. v. Rahimzadeh

United States District Court, D. Connecticut

April 9, 2018

DOCTOR'S ASSOCIATES, INC., Plaintiff,
v.
AZIZ RAHIMZADEH, Defendant.

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

          Janet C. Hall United States District Judge

         This case comes before the court pursuant to a Petition to Compel Arbitration filed by the plaintiff, Doctor's Associates, Inc. (“DAI”). See Petition to Compel Arbitration (“Petition”) (Doc. No. 1). DAI is the franchisor of Subway sandwich shops in the United States. See id. at 2. The defendant, Aziz Rahimzadeh (“Rahimzadeh”), was a Subway franchisee. See id. at ¶ 6. Pursuant to the Federal Arbitration Act (“FAA”), title 9 section 4 of the United States Code, DAI moves to compel arbitration of claims that Rahimzadeh has raised in Michigan state court against DAI and an independent contractor with DAI, Development Agent Nikolaos Moschouris (the “DA”). See generally id. Rahimzadeh opposes DAI's Petition. See generally Memorandum in Opposition to Plaintiff's Petition to Compel Arbitration (“Opposition”) (Doc. No. 18).

         For the following reasons, DAI's Petition to Compel Arbitration (Doc. No. 1) is granted.

         I. FACTUAL BACKGROUND

         Rahimzadeh entered into a franchise agreement with DAI to operate Subway franchise #25334 on or about May 28, 2015. See Petition at ¶ 6; Exh. 1, Petition (“Franchise Agreement”) (Doc. No. 1-1). The Franchise Agreement contains provisions governing “Relocation of the Restaurant, ” “Termination and Expiration Provisions, ” and “Transfer and Assignment of the Restaurant.” See Franchise Agreement at ¶¶ 6, 8. The Franchise Agreement also incorporates DAI's “Operation's Manual.” Id. at ¶ 5(b)(ii) (“The Operations Manual, as amended, is intended to further the purposes of this Agreement and is specifically incorporated into this Agreement.”).

         The Franchise Agreement also contains an arbitration clause, which provides that “[a]ny dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof will be settled by arbitration.” Id. at ¶ 10(a). The arbitration clause further provides, “The parties agree that Bridgeport, Connecticut, will be the site for arbitration.” Id. at ¶ 10(b). In addition, the arbitration clause provides that the intended beneficiaries of the arbitration clause include DAI's “employees, agents and representatives” and that “[a]ny disputes concerning the enforceability or scope of the arbitration clause will be resolved pursuant to the [FAA].” Id. at ¶ 10(d), (f).

         In 2017, DAI initiated arbitration proceedings against Rahimzadeh seeking termination of the Franchise Agreement. See Petition at ¶ 14. Rahimzadeh did not participate in the arbitration and, on October 10, 2017, the arbitrator rendered a final award in favor of DAI. See id.; Exh. 2, Petition (Doc. No. 1-2). On or about October 31, 2017, Rahimzadeh initiated a lawsuit against DAI and the DA in Michigan state court (the “Michigan Lawsuit”). See id. at ¶ 15; Exh. 3, Petition (Doc. No. 1-3). In his Complaint in the Michigan Lawsuit, Rahimzadeh seeks declaratory relief that the arbitration clause in the Franchise Agreement is not enforceable; damages for breach of the Franchise Agreement, unjust enrichment, tortious interference, and fraud; and specific performance of the Franchise Agreement and the terms of the Operations Manual. See generally Exh. 2, Petition. He alleges damages of “no less than $25, 000.” Id. at 12.

         II. DISCUSSION

         The FAA provides that a district court shall compel arbitration if a “party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration” moves the court for an order compelling arbitration so long as the court is satisfied, after hearing the parties, “that the making of the agreement for arbitration or the failure to comply therewith is not in issue.” 9 U.S.C. § 4. The Second Circuit has held that, “if the [arbitration] clause is ‘broad, '” the district court “should compel arbitration, and permit the arbitrator to decide whether the dispute falls within the clause.” Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir. 1983).

         Here, the arbitration clause in the Franchise Agreement, which states, “Any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof will be settled by arbitration” is a broad clause. Franchise Agreement at ¶ 10(a); see Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 20 (2d Cir. 1995) (describing the language “[a]ny claim or controversy arising out of or relating to th[e] agreement” as “the paradigm of a broad clause”); see also Doctor's Assocs., Inc. v. Quinn, 42 F.Supp.2d 184, 186 (D. Conn. 1999) (“The clause at issue here, submitting to arbitration ‘any controversy or claim arising out of or relating to this Agreement or the breach thereof, ' is a broad arbitration clause.”). The broad language of the Franchise Agreement creates a presumption of arbitrability of matters that are “somehow connected to the main agreement that contains the arbitration clause.” Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224-25 (2d Cir. 2001) (“When parties use expansive language in drafting an arbitration clause, presumably they intend all issues that ‘touch matters' within the main agreement to be arbitrated . . . .”).

         Rahimzadeh does not dispute that he is a party to the Franchise Agreement, or that the Franchise Agreement contains a broad arbitration clause. Instead, he raises the following arguments why this court should deny DAI's Petition: (1) this court lacks jurisdiction to compel arbitration, Opposition at 4-5; (2) the agreement to arbitrate in Connecticut is void pursuant to Michigan franchise law, id. at 3-4, 5; and (3) Rahimzadeh is not in violation of the arbitration agreement because his claims in the Michigan Lawsuit do not arise out of the Franchise Agreement, id. at 5-6.

         The court addresses each argument in turn.

         A. Diversity Jurisdiction

         DAI asserts that this court has diversity jurisdiction over its Petition because the parties are citizens of different states and the amount in controversy exceeds $75, 000. See Petition at ¶ 4. Rahimzadeh does not dispute that the parties are citizens of different states. See Opposition at 4. However, Rahimzadeh argues that the amount in controversy requirement has not been satisfied because ...


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