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TK Services, Inc. v. RWD Consulting, LLC

United States District Court, District of Columbia

June 23, 2017

TK SERVICES, INC., Plaintiff,
v.
RWD CONSULTING, LLC, Defendant.

          MEMORANDUM OPINION

          AMY BERMAN JACKSON, United States District Judge

         Plaintiff TK Services, Inc. ("TKS") has brought this breach of contract action against defendant RWD Consulting, LLC ("RWD"). TKS alleges that RWD wrongfully breached an agreement between the parties by excluding it from working on a government contract, and that RWD converted TKS's property by unlawfully removing contract funds belonging to TKS from a jointly controlled bank account. Compl. [Dkt. #1]. After the complaint was filed, TKS filed a motion for a preliminary injunction. Pl.'sMot. for Prelim. Inj. [Dkt. #2] ("PI Mot."); Mem. of P. & A. in Supp. of Mot. [Dkt. # 2] ("PI Mem."). Defendant opposed the motion, Mem. of P. & A. in Opp. to PI Mot. [Dkt. #10] ("PI Opp."), and it also filed a motion to dismiss and to compel arbitration. Def's Mot. to Dismiss Pl's Compl. & Compel Arb. [Dkt. # 8] ("Def's Mot."). Plaintiff filed a reply in support of its motion for a preliminary injunction, and an opposition to the motion to dismiss and to compel arbitration. Pl's Reply Br. in Supp. of PIMot. [Dkt. # 12] ("Pl's Reply"); Mem. of P. & A. in Resp. to Def's Mot. [Dkt. # 13] ("Pl's Opp"). For the reasons set forth below, the Court concludes that the arbitration agreement is enforceable, that TKS must arbitrate its claims against RWD, and that TKS is not entitled to an injunction in aid of the arbitration. Therefore, it will grant defendant's motions to dismiss and compel arbitration, and it will deny the motion for a preliminary injunction as moot.

         BACKGROUND

         TKS is a Virginia corporation; its business is government contracting, and it specializes in providing engineering, maintenance, and operational services for government facilities managed by the General Services Administration. Compl.¶7. In early 2016, TKS began to discuss a proposal with RWD, a Virginia company owned and managed by Robert W. Dozier, Jr., to provide operations and maintenance services for the EPA headquarters located at 1201 Constitution Avenue N.W. in Washington. Id. ¶ 9. TKS was aware of the opportunity because it was the incumbent subcontractor at the time, working as a subcontractor to Chimes DC. Id.

         On February 23, 2016, in anticipation of RWD's receiving a subcontract from Chimes, TKS and RWD entered into a Mentor Subcontractor's Service Agreement. Compl. ¶ 11; Decl. of Robert Dozier, Jr. [Dkt. # 10-1] ("Dozier Decl.") ¶ 7; Ex. A to Compl. [Dkt. # 1] ("Mentor Agreement"). On July 1, 2016, Chimes awarded a subcontract to RWD, which the parties refer to as the "Chimes Contract." Compl. ¶ 12; Dozier Decl. ¶ 9. Under the Chimes Contract, RWD became the prime subcontractor responsible for providing operation and maintenance-related services for the EPA building. Compl.¶12; Dozier Decl.¶9. TKS and RWD then agreed that any work performed under the Chimes Contract would be performed in accordance with the Mentor Agreement. Compl.¶12; Dozier Decl.¶9.

         Under the Mentor Agreement, TKS was responsible for managing the work required by the Chimes Contract. Compl.¶16; Dozier Decl. ¶ 15; Mentor Agreement at 8. TKS would receive all of the profits under the Chimes Contract, but it was required to pay RWD a fee of $5, 000 per month. Compl. ¶ 16; Dozier Decl. ¶ 21; Mentor Agreement at 9.

         The Mentor Agreement required that all funds received under the Chimes Contract were to be deposited into a joint bank account to which both TKS and RWD were signatories. Compl. ¶ 17; Dozier Decl.¶10; Mentor Agreement at 9. Money could only be withdrawn from the joint account under the terms provided for in the Mentor Agreement. Compl.¶17; Mentor Agreement at 9-10. TKS alleges that it was entitled to a payment of $275, 051.47 for the profits attributable to the Chimes Contract, but that it was only paid $210, 000. Id. ¶ 20.[1]

         The contract also provided that TKS was required to provide "working capital" for the work to be done on the Chimes Contract, and the agreement prohibited RWD from withdrawing any portion of those funds. Mentor Agreement at 8. TKS alleges that it contributed over $140, 000 in working capital to the joint account. Compl.¶18.

         The Mentor Agreement also governed the distribution of profits arising from "reimbursable projects" that were separate from the Chimes Contract. Mentor Agreement at 9. Fifty-one percent of those profits were to be distributed to RWD, and forty-nine percent of the profits were to be distributed to TKS. Id. TKS alleges that it is entitled to its share of those profits for the period between July 1, 2016 andMarch24, 2017, which it calculates to be $38, 121.13. Compl. ¶ 22. The complaint states that TKS has not been paid its share of the profits for the reimbursable projects. Id.

         TKS also alleges that it supplied equipment valued in excess of $22, 500 that was to be used to fulfill the parties' obligations under the Chimes Contract. Compl.¶23.

         According to TKS, on March 23, 2017, without prior warning or notice, RWD withdrew all of the funds from thejoint account- atotal of approximately $35, 000 - and itterminated TKS's online access to the joint bank account. Compl.¶24. TKS alleges that RWD took actions to exclude TKS from accessing the EPA building, and that RWD took steps to unilaterally terminate the Mentor Agreement. Id. ¶ 25.[2] Based on these facts, TKS sued for breach of contract on June 13, 2017, and it states that - in addition to the value of its equipment - it is entitled to a minimum of $34, 000 per month of profit for the months of March and April 2017, and that it continues to be damaged in that amount for each month that it is excluded from the EPA building. Id. ¶¶ 29-31.

         Count I of the complaint alleges that RWD breached the Mentor Agreement by unilaterally terminating it, and by not properly compensating TKS. Compl. ¶¶ 32-39. In Count II, TKS alleges that RWD is liable for conversion of funds that rightfully belong to TKS. Id. ¶¶ 40-51. Count III alleges that RWD has been unjustly enriched by its improper conduct. Id. ¶¶ 52-59. And Count IV requests equitable and injunctive relief, including an accounting, an award of pre-judgment attachment of funds, and an injunction that requires the profits from the Chimes Contract to be sequestered, prevents RWD from excluding TKS from the EPA building and from the joint bank account, and reinstates TKS to its prior role under the Mentor Agreement. Id. ¶¶ 60-66. Pursuant to Federal Rule of Civil Procedure 62, TKS filed a motion for a preliminary injunction based on the same factual allegations. PI Mot.

         The complaint and motion for preliminary injunction are premised upon the Mentor Agreement, but the contract contains an arbitration clause:

         ARBITRATION.

Any controversy or claim between the PARTIES arising out of or in connection with this Agreement, including any claim concerning an alleged breach hereof, shall be subject to final settlement by arbitration. Notice of demand by any PARTY for arbitration of any matter must be given to the other PARTIES within one (1) year from the date on which the controversy occurred or the claim arose.
The arbitration shall be conducted by a single arbitrator in accordance with the Rules of Arbitration of the American Arbitration Association, as then in effect. If and to the extent that it is necessary or appropriate to refer to and apply the law of a particular jurisdiction in reaching a decision on any matter submitted to arbitration under this clause, the arbitrator shall be ...

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