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Alemayehu v. Gemignani

United States District Court, D. Colorado

August 14, 2018

GIRUM ALEMAYEHU, Plaintiff,
v.
CONNIE GEMIGNANI, JOHN MARHSALL, CLEAR STONE DEVELOPMENT, INC., a Colorado corporation, and DOCTOR'S ASSOCIATES, INC., a Delaware corporation, Defendant.

          ORDER DENYING PLAINTIFF'S MOTION TO DISSOLVE STAY AND PLAINTIFF'S MOTION/REQUEST FOR ORAL ARGUMENT

          CHRISTINE M. ARGUELLO, UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiff Girum Alemayehu's Motion to Dissolve Stay. (Doc. # 17.) For the following reasons, the Court denies Mr. Alemayehu's Motion.

         I. BACKGROUND

         Defendant Doctor's Associates, Inc., is an international sandwich franchise known as Subway's, and Defendant Clear Stone Development, Inc., was, at all relevant times, its franchise development agency for southern Colorado and the Denver metropolitan area. (Doc. # 1 at 2.) Defendants Connie Gemignani and John Marshall were employed by Clear Stone Development, Inc. (Id.)

         Mr. Alemayehu filed an online application (the “Franchise Application”) to operate a Subway store in Aurora, Colorado, in February 2017. (Doc. # 1 at 6; Doc. # 17-2 at 2.) The Franchise Application was two pages long and included the following provision for residents of the United States and Canada:

I agree that I will settle any and all previously unasserted claims, disputes or controversies arising out of or relating to my application or candidacy for the grant of a SUBWAY franchise from Franchisor, pursuant to the laws of Connecticut, USA, and by binding arbitration only. I agree that the arbitration will be administered by either the American Arbitration Association or its successor (“AAA”) or the American Dispute Resolution Center or its successor (“ADRC”) at the discretion of the party first filing a demand for arbitration. I understand that AAA will administer the arbitration in accordance with its administrative rules (including, as applicable, the Commercial Rules of the AAA and the Expedited Procedures of such rules), and ADRC will administer the arbitration in accordance with its administrative rules (including, as applicable, the Rules of Commercial Arbitration or under the Rules for Expedited Commercial Arbitration). If both AAA and ADRC are no longer in business, then I understand that the parties will mutually agree upon an alternative administrative arbitration agency. If the parties cannot mutually agree, then the parties agree to take the matter to a court of competent jurisdiction to select the agency. I agree that arbitration will be held in Bridgeport, Connecticut, USA, conducted in English and decided by a single arbitrator.

         See (Doc. # 17-2 at 2.) In May 2017, Defendants denied Mr. Alemayehu's Franchise Application, and in September 2017, Defendants declined to reconsider their decision. (Doc. # 1 at 10, 12.)

         On January 26, 2018, Mr. Alemayehu initiated the action presently before the Court against Defendants, alleging that Defendants denied his Franchise Application due to his race. (Doc. # 1 at 5-13.) He asserted claims of racial discrimination in the making of a contract pursuant to 42 U.S.C. § 1981; tortious interference with prospective business advantage; extreme and outrageous conduct; deceit based on fraud; violations of the Colorado Consumer Protect Act, Colo. Rev. Stat. § 6-1-105; breach of contract - implied covenant of good faith and fair dealing; and civil conspiracy. (Id. at 14-22.)

         Prior to filing a responsive pleading in this matter, Defendant Doctor's Associates, Inc., filed a Petition to Compel Arbitration with the United States District Court for the District of Connecticut (the “Connecticut Court”) based on the arbitration clause in the Franchise Agreement.

         To facilitate proceedings in the Connecticut Court, the parties in this action filed a Joint Motion for a Stay of Proceedings Pending Decision by Connecticut Court on March 16, 2018. (Doc. # 8.) Though the parties disagreed about “whether arbitration is the proper forum” for their dispute, they both “recognize[d] that whether the dispute must be arbitrated is a threshold issue and that it would be inefficient” for the litigation in this Court to proceed “until a decision has been reached by the Connecticut [C]ourt on that issue.” (Id. at 2.)

         On March 23, 2018, this Court granted the parties' Joint Motion for Stay of Proceedings and ordered “that all deadlines in this case are STAYED pending a resolution of Defendants' Petition to Compel Arbitration in the District of Connecticut.” (Doc. # 16 at 1.) The Court therefore administratively closed this action. (Id.)

         The Connecticut Court denied Defendant Doctor Associates, Inc.'s Petition to Compel Arbitration on June 7, 2018. (Doc. # 17-2.) It concluded that the Franchise Application was not supported by consideration, and therefore, the parties did not agree to arbitrate disputes arising out of it. (Id. at 13.) Defendant Doctor Associates, Inc., has appealed the Connecticut Court's ruling to the United States Court of Appeals for the Second Circuit. (Doc. ## 18-2, 18-3.)

         On June 22, 2018, Mr. Alemayehu filed the Motion to Dissolve Stay now before this Court. (Doc. # 17.) He argues that this Court's stay, see (Doc. # 16), does not extend to any appellate proceedings arising out of the Connecticut Court's decision and that the stay should therefore be dissolved. (Doc. # 17.) Defendants timely responded in opposition to Mr. Alemayehu's request on June 28, 2018 (Doc. # 18), to which Mr. Alemayehu replied on July 11, 2018 (Doc. # 19.) With the Court's permission, Defendants filed a Sur-reply on July 24, 2018. (Doc. # 22.) Mr. Alemayehu filed a Renewed Request for Oral Argument on August 6, 2018. (Doc. # 23.)

         II. STANDA ...


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