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Cotton Exchange Investment Properties, LLC v. Xcel Air Conditioning Services, Inc.

United States District Court, E.D. Louisiana

November 7, 2018


         SECTION "L" (5)

          ORDER & REASONS

          Eldon E. Fallon United States District Judge.

         Before the Court is Third Party Defendant Cosentini Associates, Inc.'s motion to Compel Arbitration and to Dismiss Third Party Plaintiff John T. Campo & Associates, Inc.'s Complaint against it, or Alternatively to Stay the Action Pending Arbitration. R. Doc. 111. John T. Campo & Associates, Inc. (“Campo”) has filed an opposition. R. Doc. 120. Cosentini Associates, Inc. (“Cosentini”) has filed a reply in support of its motion. R. Doc. 123. Having considered the parties' arguments and the applicable law, the Court is now ready to rule.

         I. BACKGROUND

         This case arises out of the claims of Plaintiff Cotton Exchange Investment Properties, LLC (“CEIP”), which alleges its hotel property was damaged by water and moisture exposure as a result of faulty renovations. R. Doc. 1 at 1; R. Doc. 88 ¶ 9. Plaintiff contends that in January 2014, Supreme Bright New Orleans LLC (“Supreme Bright”), which at the time owned the hotel, contracted with Xcel Air Conditioning Services, Inc. (“Xcel”) to provide HVAC services, including the maintenance of the hotel's cooling tower, roof top units, and chilled water pumps. Id. at 3. That same month, Supreme Bright entered into a contract with Campo, whereby Campo would provide architectural, design, and engineering services. Id. at 4. A few months later, Supreme Bright contracted with Commercial Renovation Services, Inc. (“CRS”) to serve as general contractor for the project. Id. at 2.

         In June 2015, Pacific Hospitality Group (“PHG”) bought the hotel and assumed the rights to all three contracts. R. Doc. 1 at 3. PHG subsequently assigned its rights, title, and interest in the purchase to Plaintiff, including the contracts with Xcel, Campo, and CRS. R. Doc. 1 at 4. Plaintiff alleges Xcel's defective or faulty workmanship caused serious water/moisture damage to the hotel due to exposed chilled water piping, missing or improperly sealed insulation, and cracked or leaking draining pans. R. Doc. 23 at 7. Plaintiff alleges it had to close the hotel and incur damages from loss of use and repairs due to this extensive damage. R. Doc. 23 at 6. Based on these allegations, Plaintiff filed suit against Xcel, Campo, and CRS on December 16, 2016, bringing breach of contract and negligence claims against all three Defendants and breach of warranty of good workmanship claims against CRS and Campo. R. Doc. 23 at 7-16.[1]

         On June 26, 2018, Campo filed a third-party demand against Cosentini alleging Cosentini provided the architectural plans for the hotel renovation and is therefore liable to defend and/or indemnify Campo for any claims arising from the use of Cosentini's architectural plans. R. Doc. 88. Campo alleges that on or about August 14, 2013, Cosentini submitted a proposal to Campo “to provide MEP/FP engineering design services” for the hotel's renovation (the “Proposal”). Id. at 2. Pursuant to the Proposal, Campo alleges that,

[i]n the event that any party proves that the MEP/FP plans, drawings and/or specifications were inadequate or insufficient, or that any alleged damage was caused by the MEP /FP design and/or design services related to MEP/FP design, which is specifically denied, Cosentini is in breach of the Cosentini Proposal by failing to provide engineering services in accordance with the Cosentini Proposal and/or in accordance with the standard of care owed by a MEP/FP engineer in this locale.

Id. at 4.

         On October 10, 2018, Cosentini filed the instant motion seeking to compel arbitration pursuant to the terms of the Proposal as well as a motion to dismiss the third-party demand, or in the alternative, to stay the proceedings pending arbitration. R. Doc. 111.[2]


         In its motion, Cosentini argues the Proposal's arbitration clause requires Campo to arbitrate the claims Campo brings against it. R. Doc. 111-1. In support of its motion, Cosentini points to the Proposal, which it attached to its motion, and contends that, because: (1) the arbitration agreement contained in the Proposal is valid and enforceable and (2) Campo's claims against it are subject to the arbitration agreement's provisions, the Federal Arbitration Act (“FAA”) requires Campo's claims be resolved by arbitration. Id.

         In opposition, Campo first argues that, because Cosentini's motion references matters outside of the pleadings, namely the Proposal, the Court must treat Cosentini's motion as one seeking summary judgment. R. Doc. 120 at 3. Second, Campo submits the Court should not consider the Proposal Cosentini attached to its motion, as “Cosentini failed to submit any affidavit authenticating the purported Cosentini Proposal as a true and correct copy of the agreement between the parties.” Id. at 4. Finally, Campo contends the arbitration provision contained in the Proposal does not apply to a third-party's claims of professional negligence, such as CEIP's claims against Campo, which underlie Campo's third-party demand against Cosentini.

         III. LAW & ANALYSIS

         As an initial matter, the Court addresses Campo's threshold arguments that: (1) the Court may not consider the Proposal, and (2) if the Court does consider the Proposal, ...

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