Virginia Lawyers Weekly VA Lawyers Weekly
Where a software provider admitted an addendum to a contract was authentic and the record evidence showed the addendum was intended to be part of the contract, an arbitration clause in the addendum required the parties’ dispute to be arbitrated.
Background
BIS Global Inc. provides software services to other businesses. It used to provide services to defendant Active Minds Inc. It has now sued Active Minds, alleging it owes plaintiff $155,142.09 as a result of an alleged contract breach. Defendant has moved to compel arbitration, relying upon an addendum to the contract.
Plaintiff contends that the addendum did not constitute part of the agreed-upon contract signed by each party. Plaintiff argues that because the parties signed before the addendum, and because the addendum was not paginated (unlike the body of the contract), the addendum is unenforceable for purposes of contract law. Without the addendum in play, plaintiff maintains adequate grounds to bring this suit against defendant in this forum and not in arbitration.
Analysis
The contract contains no explicit reference to any addendum, exhibit or appendix related to the agreement. Without any reference to the addendum, this court cannot, on the face of the contract, conclude that the addendum is or is not integrated within the four corners of the contract. Nor can this court discern from the plain terms of the contract whether the restrictive clause on amendments and modifications applies to contemporaneous written agreements or simply to instruments in writing and signed by both of the parties at a future time. While defendant argues “[t]here are at least five indicia on the face of the [contract] confirming that it includes [the addendum],” after assessing the contract’s plain meaning, this court does not find these factors sufficiently compelling to conclude that the addendum was executed as part of the contract.
Consequently, this court exercises its prerogative to consider extrinsic evidence to determine the intent of the parties. Moreover, in construing the instant motion to be made pursuant to Federal Rule of Civil Procedure 12(b)(3), this court “is permitted to consider evidence outside of the pleadings.” As such, this court considers the evidence proffered by defendant with respect to the negotiation process between the parties prior to executing the contract.
Plaintiff makes a full-throated admission that the addendum is authentic and fails to address the email chains proffered by defendant discussing the negotiations that occurred between the parties. That approach proves fatal to plaintiff’s argument as this court considers plaintiff to have altogether waived defendant’s intent argument. Even if this court did not consider plaintiff to have waived any defense against defendant’s intent argument, the undisputed extrinsic evidence provided by defendant leads this court to arrive at the same conclusion: the parties executed the contract with the intent that it include the addendum.
Not only does the extrinsic evidence defendant presents demonstrate a good-faith series of negotiations between the parties, the evidence also, without fail, reveals that plaintiff executed the contract in a single document containing the addendum and therefore authenticates the addendum. And because the preamble of the addendum provides that its “clauses entirely replace the corresponding clauses in this Software & Services Contract (Contract Number 10123),” the mandatory arbitration provision supplants clause 34 and thus controls the contract.
Stay or dismiss
Section three of the Federal Arbitration Act permits a party to seek a stay of “any suit or proceeding . . . brought in any of the courts of the United States” if the court determines an arbitration provision controls the dispute. Defendant advocates for dismissal and plaintiff fails to entertain this issue.
In this case, “any dispute arising under [the contract]” must be arbitrated in the Commonwealth of Virginia under the rules of the American Arbitration Association. Each count of the complaint is a contract dispute claim with respect to the Contract and therefore each issue raised in the complaint is arbitrable. Accordingly, this court finds that dismissal of the complaint without prejudice is the proper remedy.
Defendant’s motion to compel arbitration granted.
BIS Global Inc. v. Active Minds Inc., Case No. 1:21-cv-00211, Feb. 23, 2022. EDVA at Alexandria (Alston). VLW 022-3-093. 17 pp.
