United States District Court, D. Maine
ORDER ON PLAINTIFF'S MOTION TO COMPEL ARBITRATION
AND TO STAY PENDING ARBITRATION
LEVY U.S. DISTRICT JUDGE.
Toddle Inn Franchising, LLC (“Toddle Inn”) moves
pursuant to 9 U.S.C.A. §§ 2-4 (West 2018) to compel
arbitration of its claims against Defendants KPJ Associates,
LLC, Kathie L. Murphy, Patrick M. Murphy, and James O.
Haskell (collectively, “KPJ”), and to stay this
litigation pending arbitration (ECF No. 16). For the reasons
explained below, I grant the motion.
Inn and its affiliate, Toddle Inn Daycare, Inc., operate a
franchise business that grants franchisees the right to own
and operate daycare centers under the Toddle Inn name. On
July 19, 2006, Toddle Inn entered into a Franchise Agreement
with KPJ Associates, LLC, which granted KPJ Associates the
right to own and operate a Toddle Inn daycare center in
Kennebunk. The terms of the Franchise Agreement provided that
it would expire ten years from the date it was executed,
subject to renewal by the parties.
Franchise Agreement also includes an arbitration provision,
Section 22.7, titled “Arbitration” (“the
Arbitration Clause”), which provides that all disputes
between the parties will be arbitrated. It states in relevant
All disputes between or among the parties whether now
existing or arising in the future, including without
limitation, any and all claims, defenses, counterclaims,
cross claims, third party claims and intervenor claims,
whether or not arising from or related to the negotiation,
execution and performance of this agreement or the
transaction to which this agreement relates shall be settled
by arbitration under the Federal Arbitration Act, as amended,
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association or any successor body
thereto, before a single arbitrator agreed upon by the
ECF No. 3-2 at 37 (all capitalization removed). Section 22.8,
titled “Injunctive Relief” (“the Injunctive
Relief Clause”) preserves Toddle Inn's rights, as
the Franchisor, to pursue injunctive relief:
Notwithstanding the Arbitration Clause in Section 22.7,
Franchisor may bring an action for injunctive relief in any
court having jurisdiction to enforce the Franchisor's
non-competition trademark, and/or proprietary rights, in
order to avoid irreparable harm to the Franchisor, its
affiliates, or the franchise system as a whole.
Id. at 38 (all capitalization removed).
separate provision of the Franchise Agreement, Section 22.3,
titled “Cumulative Rights and Remedies, ”
similarly states that nothing in the agreement bars the
Franchisor's right to obtain injunctive relief, and that
no right or remedy that the agreement confers is exclusive of
any other. Id. at 36. Finally, Section 17.6, titled
“Survival of Certain Provisions” (“the
Survival Clause”), provides that “[a]ll
obligations of Franchisor and Franchisee which expressly or
by their nature survive the expiration or termination of this
Agreement shall continue in full force and effect subsequent
to and notwithstanding their expiration or termination and
until satisfied or by their nature expire.”
Id. at 27.
Associates did not renew the Franchise Agreement after it
expired by its terms on July 19, 2016, but it continued to
operate the Kennebunk daycare center under the Toddle Inn
name and pay royalties to Toddle Inn for the next two years.
On Friday, July 27, 2018, KPJ informed Toddle Inn by a letter
that KPJ would resign as a Toddle Inn daycare center
effective that evening and would launch a daycare center
known as the Kennebunk Children's Academy from the same
Kennebunk location beginning on Monday, July 30, 2018.
31, 2018, Toddle Inn filed this action seeking to enjoin KPJ
from violating the post-termination provisions of the
parties' Franchise Agreement, including the non-compete
clause. The complaint seeks an injunction requiring, among
other things, that KPJ Associates “[p]ay all sums owing
to Toddle Inn within 5 days of the Court's order.”
Also, on July 31, Toddle Inn moved for a temporary
restraining order. After a hearing, I denied Toddle Inn's
motion for a temporary restraining order (“TRO”)
by an order dated August 2, 2018. On August 27, Toddle Inn
filed its motion to compel arbitration and to stay these
proceedings pending arbitration.
Arbitration Clause in the parties' Franchise Agreement is
governed by the Federal Arbitration Act (FAA). See
generally 9 U.S.C.A. §§ 1-16 (West 2018).
“Federal courts will grant a motion to stay a case and
compel arbitration pursuant to the FAA when ‘(i) there
exists a written agreement to arbitrate, (ii) the dispute in
question falls within the scope of that arbitration
agreement, and (iii) the party seeking an arbitral forum has
not waived its right to arbitration.'” United
States v. Consigli Constr. Co., 873 F.Supp.2d 409, 412
(D. Me. 2012) (quoting Combined Energies v. CCI,
Inc.,514 F.3d 168, 171 (1st ...