The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JAMES BANKSTON ET AL. CIVIL ACTION
VERSUS NO: 22-01289
IMAGINE POOLS MANUFACTURING SECTION: “H” (5)
NORTH AMERICA, INC., ET AL.
ORDER AND REASONS
Before the Court is a Motion to Compel Arbitration and to Dismiss (Doc.
7) from Defendants Imagine Pools Manufacturing North America, Inc., and
Leisure Pools and Spas USA, Inc. For the following reasons, the Motion is
GRANTED.
BACKGROUND
In May 2021, Plaintiffs James Bankston and Heather Berthelot and
Defendant Mardi Gras Pools, L.L.C. (“Mardi Gras Pools”) entered into a
purchase agreement for the installation of a pool. Mardi Gras Pools is a
certified installer for Imagine Pools Manufacturing North America, Inc.
(“Imagine Pools”) and Leisure Pools and Spas USA, Inc., (collectively
“Manufacturer Defendants”). Plaintiffs allege that the pool was improperly
installed by Mardi Gras Pools and that Manufacturer Defendants failed to
properly vet Mardi Gras Pools as a certified installer. Plaintiffs also allege that
Manufacturer Defendants have failed to honor the warranty provided in
connection with their purchase of the pool (“the Warranty”).
Now before the Court is Defendants’ Motion to Compel Arbitration and
to Dismiss. Defendants allege that the Warranty contains a mandatory
arbitration clause and that, in the alternative, Plaintiffs have failed to state a
claim. Plaintiffs oppose.
LEGAL STANDARD
“[T]he Fifth Circuit has endorsed Rule 12(b)(3) as the proper vehicle to
seek dismissal” based on an arbitration clause.1 The question of arbitrability
is governed by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., which
broadly applies to any written provision in “a contract evidencing a transaction
involving commerce to settle by arbitration a controversy thereafter arising out
of such contract or transaction.”2 A two-step analysis governs whether parties
should be compelled to arbitrate a dispute.3 The Court must first determine
whether the parties agreed to arbitrate the dispute.4 This determination
involves two separate inquiries: (1) whether there is a valid agreement to
arbitrate between the parties, and, if so, (2) whether the dispute in question
falls within the scope of that agreement.5 Both inquiries are generally guided
by ordinary principles of state contract law.6 The strong federal policy favoring
arbitration applies “when addressing ambiguities regarding whether a
question falls within an arbitration agreement’s scope,” but it does not apply
1 Sinners & Saints, L.L.C. v. Noire Blanc Films, L.L.C., 937 F. Supp. 2d 835, 845 (E.D.
La. 2013).
2 Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
3 JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007).
4 Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004).
5 Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008).
6 See First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
“when determining whether a valid agreement exists.”7 If the Court finds the
parties agreed to arbitrate, it must then proceed to the second step of the
analysis and consider whether any federal statute or policy renders the claims
non-arbitrable.8 On a Rule 12(b)(3) motion to dismiss, the court may consider,
the complaint, its proper attachments, and other evidence in the record.9
LAW AND ANALYSIS
I. Agreement to Arbitrate
Defendants argue that Plaintiffs are required to arbitrate their claims
pursuant to the arbitration clause in the Warranty. The arbitration clause
provides that “any and all disputes arising out of or in connection with this
Limited Warranty and/or the Pool shall be submitted to and settled by binding
arbitration under the authority of the Federal Arbitration Act.”10 The
Warranty also includes a choice of Tennessee law. In response, Plaintiffs argue
that there was no agreement to arbitrate because the Warranty was not
disclosed to Plaintiffs prior to when the dispute arose. Plaintiffs state that they
received the Warranty after the pool was installed and did not know of its
existence when the pool was purchased, when Mardi Gras Pools broke ground,
or when issues with the pool installation began.
In August 2021, after Plaintiffs advanced $35,000, Mardi Gras Pools
began installing Plaintiffs’ pool. As work commenced, Plaintiffs communicated
their concerns about the installation work performed by Mardi Gras Pools to
Imagine Pools by email. Defendants have provided the email chain to this
Court in support of their Motion.11 In response to Plaintiffs’ concerns, Imagine
7 Sherer, 548 F.3d at 381.
8 Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002).
9 Sinners & Saints, L.L.C., 937 F. Supp. 2d at 845.
10 Doc. 7-2 at 10.
11 Doc 7-2.
Pools emailed Plaintiffs a copy of its Limited Warranty to review and explained
that it typically provides its customers with the Warranty after installation is
completed. The parties continued to correspond on the email chain to which
the Warranty was attached, and Manufacturer Defendants’ factory
representatives later visited Plaintiffs’ home and made repairs to the pool in
accordance with the Warranty. Despite this, the pool was still in need of repair
at the time Plaintiffs filed this action, and their Complaint includes a claim
against the Manufacturer Defendants for failure to honor the Warranty.
Ordinary principles of state contract law apply to the determination of
whether parties formed a valid arbitration agreement.12 Under both Louisiana
and Tennessee state law, a contract is formed by consent of all parties.13
Acceptance of an arbitration agreement need not include a signature, and
conduct alone “may show the effect or validity of the agreement.”14 Here,
Imagine Pools emailed the Warranty to Plaintiffs for their review, and
Plaintiffs continued to communicate with Imagine Pools about the product on
the same email chain where the Warranty was received. Plaintiffs also sought
repairs pursuant to the Warranty and have brought a claim in this action for
failure to honor the Warranty. Plaintiffs cannot avail themselves of the
benefits of the Warranty and then claim that they did not agree to the
arbitration clause therein. Accordingly, this Court finds a valid agreement to
arbitrate.
12 Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537–38 (5th Cir. 2003).
13 Chase Bank USA, N.A. v. Leggio, 999 So. 2d 155, 159 (La. App. 2 Cir. 2008) (citing
LA. CIV. CODE. art. 1927); Johnson v. Central Nat. Ins. Co. of Omaha, Neb., 356 S.W.2d 277,
281 (Tenn. Apr. 4, 1962). Despite the Tennessee choice of law in the Warranty, neither party
relies on Tennessee law as it relates to the issue of arbitration.
14 In re Succession of Taravella, 734 So. 2d 149, 151 (La. App. 5 Cir. 1999). “Consent
to a contract may be implied by the action of the parties.” Reed v. Flame Petroleum, Inc., 469
So. 2d 1217, 1218 (La. App. 1 Cir. 1985).
II. Scope
Second, the Court must assess whether this dispute falls within the
scope of the arbitration clause.15 Federal and state policy assert that doubts
about the scope of arbitration “should be resolved in favor of arbitration.”16 The
Fifth Circuit explained that “a valid agreement to arbitrate applies ‘unless it
can be said with positive assurance that [the] arbitration clause is not
susceptible of an interpretation which would cover the dispute at issue.’”17
The arbitration clause here covers “any and all claims and disputes
arising out of or in connection with this Limited Warranty and/or the Pool.”18
The Fifth Circuit has held that broad arbitration clauses such as this one
require only that “the dispute ‘touch’ matters covered” by the agreement to be
arbitrable. Here, Plaintiffs bring claims for failure to honor the Warranty and
faulty installation of the pool. Therefore, the dispute is within the scope of the
arbitration clause. Further, Plaintiffs have not identified any federal statute
or policy that renders their claims non-arbitrable. Accordingly, this Court finds
that Plaintiffs claims should be referred to arbitration.
III. Stay or Dismissal
The FAA provides that “upon being satisfied that the issue involved in
[a] suit or proceeding is referable to arbitration under such an agreement, [the
15 Sherer, 548 F.3d at 381.
16 Safer v. Nelson Fin. Group Inc., 422 F.3d 289, 294 (5th Cir. 2005) (quoting Moses
H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1. 24–25 (1983)); Lafleur v. Law
Offices of Anthony G. Buzbee, P.C., 960 So. 2d 105, 111 (La. App. 1 Cir. 2007); see also L.A.
REV. STAT. § 9:4201 (“A provision in any written contract to settle by arbitration a controversy
thereafter arising out of the contract, or out of the refusal to perform the whole or any part
thereof, or an agreement in writing between two or more persons to submit to arbitration any
controversy existing between them at the time of the agreement to submit, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.”).
17 Personal Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388, 392 (quoting Neal
v. Hardee’s Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990)).
18 Doc. 7-2 at 10.
court] shall on application of one of the parties stay the trial of the action until
such arbitration has been had in accordance with the terms of the
agreement.”!9 While this provision clearly contemplates a stay, Manufacturer
Defendants have requested dismissal. The Fifth Circuit has held that “[t]he
weight of authority clearly supports dismissal of the case when all of the issues
raised in the district court must be submitted to arbitration.”29 Here, however,
Mardi Gras Pools was not a party to the arbitration agreement at issue and
has not sought to compel arbitration of the claims against it. Accordingly, a
stay is the appropriate remedy.
CONCLUSION
For the foregoing reasons, Defendants’ Motion is GRANTED, and IT IS
ORDERED that Plaintiffs’ claims against Defendants Imagine Pools
Manufacturing North America, Inc., and Leisure Pools and Spas USA, Inc.
shall be referred to arbitration.
IT IS FURTHER ORDERED that this case is STAYED and
ADMINISTRATIVELY CLOSED pending arbitration.
New Orleans, Louisiana this 6th day of December, 2022.
UNITED STATES DISTRICT JUDGE
20 Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).