United States District Court, D. Massachusetts
NONOTUCK RESOURCE ASSOCIATES, INC. Plaintiff,
FOOTHOLD TECHNOLOGY, INC., Defendant.
REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION
TO REMAND TO STATE COURT; DEFENDANT'S MOTION TO DISMISS
AND COMPEL ARBITRATION; AND PLAINTIFF'S MOTION TO STAY
ARBITRATION (Dkt. Nos. 7, 8, 19)
KATHERINE A. ROBERTSON United States Magistrate Judge
Nonotuck Resource Associates, Inc. (“Plaintiff”
or “Nonotuck”) entered into a contract with
defendant Foothold Technology, Inc. (“Defendant”
or “Foothold”) effective May 1, 2016 requiring
Defendant to install, and service a software program to track
and store Plaintiff's data and generate related reports
(Dkt. No. 26 at 2, ¶¶ 6-7). The complaint alleges
that Defendant misrepresented its software's capabilities
and its ability to complete the project on time (id.
at 2-3, ¶ 8). Plaintiff filed its complaint, which
includes claims under the Massachusetts Unfair Trade
Practices Act, Mass. Gen. Laws ch. 93A, §11
(“Chapter 93A”) (Count I); breach of contract
(Count II); breach of oral express warranties (Count III);
breach of implied warranty of merchantability (“Count
IV); breach of implied warranty of fitness for particular
purpose (Count V); and a Motion to Stay Arbitration
Proceedings, in the Superior Court Department of the
Massachusetts Trial Court, Hampshire County, on June 8, 2017,
and served Defendant in hand on June 26, 2017 (Dkt. No. 1 at
2, ¶ 6; Dkt. No. 5 at 2, 6-10). Defendant timely filed
its notice of removal, invoking this court's diversity
jurisdiction, on July 24, 2017 (Dkt. No. 1 at 2, ¶ 6).
court, Plaintiff has filed a Motion to Remand to State Court
(Dkt. No. 7) and a Motion to Stay Arbitration (Dkt. No. 19).
Defendant has filed a Motion to Dismiss and Compel
Arbitration (Dkt. No. 8). These three motions were referred
to me for Report and Recommendation (Dkt. Nos. 18, 20).
See 28 U.S.C. 636 § (a), (b)(1)(A). For the
reasons set forth below, I recommend that: (A)
Plaintiff's Motion to Remand to State Court be denied;
(B) Defendant's Motion to Dismiss and Compel Arbitration
be granted; and (C) Plaintiff's Motion to Stay
Arbitration be denied.
parties entered into a Foothold Technology, Inc. Subscriber
Agreement (“Agreement”) with an effective date of
May 1, 2016 (Dkt. No. 5 at 12). The Agreement, which is
attached as Exhibit 1 to the complaint, set forth the term
and the services to be provided. An addendum to the
Agreement, incorporated therein by reference, stated that
Foothold would install an initial configuration of its AWARDS
system within 4 months of the effective date of the
agreement, train Nonotuck employees on use of the system, and
provide up to ten hours per week of email troubleshooting
support services at no additional costs as long as the
service agreement remained in effect (id. at 17).
Custom development would be available subject to
Foothold's availability at Foothold's customary rates
15 of the Agreement, captioned “miscellaneous, ”
provided, in pertinent part, as follows:
Any dispute arising hereunder shall be exclusively settled by
confidential and binding arbitration under the then current
Arbitration Rules of the American Arbitration Association
(the “AAA”); provided, however, that
nothing in this Agreement shall prohibit (i) either party
from seeking injunctive or other equitable relief in any
court of competent jurisdiction in the event of a breach by
the other party or any of its Agents of the provisions of
Section 7 (Confidentiality) or to prevent any other
unauthorized copying, disclosure, use, retention or
distribution of its Confidential Information or intellectual
or other property or (ii) Supplier from bringing a Collection
Action in any court of competent jurisdiction.
(Id. at 14).
around March 21, 2017, Plaintiff sent a Chapter 93A demand
letter to Defendant, stating that Plaintiff was ceasing
payments to Defendant under the Agreement on the basis of
alleged breaches of the Agreement by Defendant (id.
at 18-21). On May 2, 2017, Defendant responded to the letter
by proposing that the parties terminate the Agreement
effective April 30, 2017 and exchange mutual releases of all
claims concerning the Agreement (id. at 26). On May
31, 2017, Foothold commenced an arbitration proceeding based
on Nonotuck's failure to make payments due to Foothold
under the Agreement (id. at 27). On June 8, 2017,
following Foothold's commencement of the arbitration
proceeding, Nonotuck filed this action in Hampshire Superior
Court (id. at 2-3). The complaint alleges that
Plaintiff is a Massachusetts non-profit agency operating
throughout Massachusetts with its principal place of business
in Northampton, with the Defendant being a corporation with
its principal place of business in New York (id. at
5). Plaintiff claims to have been damaged in the amount of
$200, 000 and to be entitled to treble damages under Chapter
93A (id. at 9-10). Despite its state court filing,
Nonotuck appeared and has participated in the arbitration
proceeding, in which an arbitrator has been selected (Dkt.
No. 9 at 2). At the hearing on the pending motions, the
parties informed the court that the arbitrator was waiting
for rulings from this court on the pending motions before
moving forward with the arbitration proceeding.
Plaintiff's Motion to Remand to State Court
Pursuant to 28 U.S.C. § 1332, this court has original
jurisdiction of any action that is between citizens of
different States when the amount in controversy exceeds the
sum of $75, 000. This action is between citizens of different
states - New York and Massachusetts - and the amount in
controversy exceeds $75, 000 (Dkt. No. 5 at 5, 8-9). Section
1441 of Title 28 of the United States Code provides that a
defendant (here, Foothold) may remove an action over which
this court would have original jurisdiction as long as
removal is made “in accordance with section 1446 of . .
. title .” 28 U.S.C. § 1441(e). Plaintiff does
not dispute that this case meets the requirements for
diversity jurisdiction, nor does it assert that Defendant
failed to remove this case in accordance with the provisions
of section 1446. It is black letter law that when a defendant
has properly removed a case based on diversity jurisdiction,
a “District Court [cannot] properly . . . eliminate
the case from its docket, whether by a remand or by a
dismissal.” Carnegie-Mellon Univ. v. Cohill,
484 U.S. 343, 356 (1988) (citing Thermitron Prods., Inc.
v. Hermansdorfer, 423 U.S. 336, 344 (1976)).
“[D]iversity jurisdiction . . . is not
discretionary.” Id. Plaintiff's contention
that the state court has jurisdiction over this case is
irrelevant as long as the case was properly removed to this
court. It was. “[W]hen, [as here, ] a federal court has
jurisdiction, it also has a ‘virtually unflagging
obligation . . . to exercise' that authority.”
Mata v. Lynch, 135 S.Ct. 2150, 2156 (2015) (quoting
Colorado River Water Conservation Dist. v. U.S., 424
U.S. 800, 817 (1976)). Because this case was properly removed
to this court and this court has a non-discretionary
obligation to provide a forum for the parties' dispute, I
recommend that Plaintiff's Motion to Remand to State
Court be denied.
Defendant's Motion to Dismiss and ...