United States District Court, S.D. Indiana, Indianapolis Division
EXTREMELY CLEAN CLEANING SERVICES, LLC, ALISIA BURKS, Plaintiffs,
CAAT, INC. an Ohio Corporation, ANAGO CLEANING SYSTEMS, INC. a Florida Corporation, ANAGO FRANCHISING, INC. a Florida Corporation, ALBERTSON FAMILY JANITORIAL HOLDINGS, INC. an Ohio Corporation, CURT ALBERTSON an individual, COREY ALBERTSON an individual, TERESA ALBERTSON an individual, DAVID R. POVLITZ, Defendants.
ORDER ON PENDING MOTIONS SETTING TRIAL (DKTS. 13, 23,
EVANS BARKER, JUDGE
before the Court are two motions filed by Defendants seeking
to stay these proceedings pending arbitration. Dkts. 13,
See 9 U.S.C. § 3. There is no motion for an order
compelling Plaintiffs to arbitrate in the first instance, see
9 U.S.C. § 4, but “[a] defendant who wants
arbitration is often content with a stay, since that will
stymie the plaintiff's effort to obtain relief unless he
agrees to arbitrate.” Cabinetree of Wis., Inc. v.
Kraftmaid Cabinetry, Inc., 50 F.3d 388, 389 (7th Cir.
1995). The parties' dispute at this juncture obviously
turns on the necessity of arbitration itself rather than
merely the propriety of a stay. We therefore construe the
motions to stay as motions to compel and to stay. Hill v.
Lynch Chevrolet, Inc., 349 F.Supp.2d 1118, 1118-19
explained below, Defendants' motions to stay are granted
in part. We defer decision on the remaining issues until the
trier of fact determines whether the parties have agreed to
are Alisia Burks (“Burks”) and her limited
liability company, Extremely Clean Cleaning Services, LLC
(“Extremely Clean”). Defendants are franchisors
and subfranchisors of a cleaning business. We assume the
parties' familiarity with the facts, such as they are
reflected in the complaint, its various attachments, and
Burks's affidavit, but we restate the most relevant
assertions here in the light most favorable to Plaintiffs.
Clean, through Burks, proposed to purchase a cleaning
franchise from Defendants. On October 15, 2015, Burks
informed Defendants' agent in Indianapolis, Brian Burton
(“Burton”), that Burks's mother, Kearl Ash
(“Ash”), was being dispatched to Defendants'
Indianapolis office on Extremely Clean's behalf to pay
the required franchise fee. Ash's signature had
previously appeared on a prior contract between Extremely
Clean and Defendants and some related documents, but Ash was
not a member, manager, or employee of Extremely Clean and had
no authorization to act on its behalf.
avers that she made clear to Burton that she was not yet
prepared to execute the offered contract to purchase the
franchise (“the Franchise Agreement”). Burks
sought additional time to review the contract's terms
with Burton “to make sure [she] fully understood what
[she] was signing.” Burks Aff. ¶ 21. Burton agreed
that Ash could deposit the franchise fee and Burks could
review the Franchise Agreement with him and execute it later
in the week. Burton represented he would schedule a time for
him and Burks to meet.
depositing the franchise fee, however, Ash also signed the
Franchise Agreement, purportedly on behalf of Extremely Clean
but for reasons that have not been explained. There is no
record of how or why Ash came to do so, nor why Burton
permitted or induced her to sign, particularly since to do so
was against Burks's contrary instructions to Burton. At
that time, Ash was allegedly contemplating purchasing her own
franchise from Defendants, which may have generated confusion
on one or both sides, but we speculate as to that.
as Ash informed Burks that she had signed the Franchise
Agreement, Burks called Burton to inform him that Ash had no
authority to execute the Franchise Agreement on Extremely
Clean's behalf. Burton thus invited Burks to come to his
office the next day to review the terms of the Franchise
Agreement and “redo the paperwork.” Id.
¶ 17. Burks agreed and went to Burton's office the
following day, but Burton failed to appear as scheduled.
Reached by telephone, Burton promised to deliver a new
contract to Burks at a later time. Neither Burton or any
other of Defendants' agents ever did so.
Burks let the matter drop. For the next two years, Burks
cleaned properties as Defendants' franchisee, sometimes
working sixty hours per week and often, unusually, in
competition with other of Defendants' franchisees. Over
the course of that period, Burks signed a series of
“account assumption agreements, ” whereunder
Extremely Clean agreed to assume client accounts from
Defendants “subject to the terms of the Franchise
Agreement[.]” E.g., Dkt. 1 Ex. C, at 1. Again
unusually, payment for the franchisees' services were
remitted directly by the clients to Defendants, who then paid
their franchisees. Burks was sometimes paid late, sometimes
not at all, and often less than Burks believed she was owed.
March 2018, Defendants abandoned their Indianapolis business
without notice to their franchisees, including Burks. This
lawsuit followed. The Franchise Agreement contains an
arbitration clause, Dkt. 1 Ex. B, at 63-64, which Defendants
now seek to enforce against Plaintiffs. The issue now before
the Court is whether the Franchise Agreement has been agreed
to by the parties sufficiently to render it enforceable.
Federal Arbitration Act (FAA) provides,
If any suit . . . be brought in any of the courts of the
United States upon any issue referable to arbitration under
an agreement in writing for such arbitration, the court in
which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application of
one of the parties stay the trial of the action until such
arbitration has been had . . . .
9 U.S.C. § 3. The FAA provides further,
A party aggrieved by the alleged . . . refusal of another to
arbitrate under a written agreement for arbitration may
petition any United States district court [with jurisdiction]
. . . for an order directing that such arbitration proceed .
. . . The court shall hear the parties, and upon being
satisfied that the making of the agreement for arbitration .
. . is not in issue, the court shall make an order directing
the parties to proceed to arbitration . . . . If the making
of the arbitration agreement . . . be in issue, the court
shall proceed summarily to ...