All Premium Contractors Inc v. Sunlight Financial LLC

Background

All Premium Contractors Inc. brought five claims against Sunlight Financial LLC: breach of contract, fraud, conversion, breach of the duty of good faith and fair dealing, and unjust enrichment. The dispute concerned a Financing Program Agreement that the parties entered into on March 23, 2019, involving the installation of solar panels. All Premium alleged that Sunlight failed to pay for work performed under the agreement.

The agreement included an arbitration clause stating that any dispute not settled by the parties or through mediation would be resolved through final, binding arbitration under the Federal Arbitration Act and the American Arbitration Association’s Commercial Arbitration Rules. The agreement also included a forum-selection clause requiring actions, proceedings, or other litigation related to the agreement to be brought in federal or state courts located in New York City.

The parties later entered into a Prequalification Addendum, a Solar Plus Product Amendment, and a Direct Funding Program Addendum. The first later addendum did not address dispute resolution. The amendment and second addendum stated that the agreement’s terms would remain in effect unless expressly changed and that they were subject to Section 16 of the agreement, which contained the forum-selection clause. Neither expressly changed the arbitration clause.

Arguments and legal standard

Sunlight moved under the Federal Arbitration Act to compel arbitration and stay the lawsuit. All Premium argued that the later agreements had eliminated the original arbitration clause. It also argued that the arbitration clause conflicted with the forum-selection clause and that the forum-selection clause therefore required the dispute to be litigated in court.

The court applied a standard similar to the standard used for summary judgment. It considered whether the record showed any genuine dispute about facts material to whether arbitration was required. Under the Federal Arbitration Act, a court must order arbitration when the parties agreed to arbitrate the dispute and the dispute falls within that agreement. The court applied New York contract law because the agreement selected New York law.

Analysis

The court rejected All Premium’s argument that the later agreements voided the arbitration clause. The Prequalification Addendum merely supplemented the agreement concerning All Premium’s use of Sunlight’s credit agency and did not address dispute resolution. The later amendment and addendum preserved all agreement terms unless they were expressly amended or modified. Because neither expressly changed the arbitration provision, the court held that the provision remained binding and in effect.

The court also held that the merger provisions in the later agreements did not eliminate the arbitration clause because those provisions applied to the particular subject matter of the later agreements. The later agreements’ references to Section 16 confirmed that the forum-selection clause applied to them, but did not displace the separate arbitration provision in Section 15.1.

The court concluded that the arbitration and forum-selection clauses could be read together. The arbitration clause governed how the parties’ disputes would be resolved, while the forum-selection clause governed related court proceedings, such as proceedings to compel arbitration or to confirm or vacate an arbitration award. Reading the forum-selection clause as requiring all disputes to be litigated in New York courts would eliminate the arbitration clause, which the court found was not a preferred interpretation.

The court further noted that the agreement incorporated the American Arbitration Association’s Commercial Arbitration Rules. That incorporation clearly delegated questions about whether a dispute is arbitrable to the arbitrator. In any event, All Premium did not dispute that its current claims fell within the agreement’s broad coverage of “any disputes.”

Ruling

Judge Jennifer L. Rochon granted Sunlight’s motion to compel arbitration. The court ordered that the case be stayed while the parties arbitrate and directed them to file a joint letter updating the court on the arbitration’s status by April 19, 2024. The opinion does not state that the case or claims were dismissed.