IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT

IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

WESTERN DIVISION

BANK OF ENGLAND d/b/a ENG

Lending

Plaintiff

TREVOR BARRETT and BARRETT

FINANCIAL GROUP LLC

Defendants

NO: 4:15CV00683 SWW

ORDER

Plaintiff Bank of England, d/b/a/ ENG Lending, filed this contract dispute pursuant to the

Court’s diversity jurisdiction against Trevor Barrett (“Barrett”) and Barrett Financial Group

LLC. Before the Court is Plaintiff’s motion to compel arbitration and stay the case [ECF No. 8]

and Defendants’ response [ECF No. 11]. After careful consideration, the motion to compel

arbitration is granted, and the Clerk of the Court is directed to administratively terminate this

case for reporting purposes, subject to its reopening in the event that either party files a motion

to reopen within the thirty-day period following the arbitrator’s decision.

The following facts are taken from the complaint. ENG Lending is the name of the

mortgage division of the Bank of England, a federally-insured bank with headquarters and a

principal place of business in Arkansas. Barrett, a resident of Arizona, has experience in the

mortgage industry, and he is the manager and sole member of Barrett Financial Group LLC, an

Arizona mortgage company. On March 12, 2012, Barrett and Bank of England entered an

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employment agreement (the “Agreement”) by which Barrett agreed to serve as ENG Lending’s

branch manager in Mesa, Arizona. The Agreement contained a provision that prohibited Barrett

from competing with ENG Lending during the term of the Agreement and for one year

thereafter.

With its complaint in this case, Bank of England charges that Barrett breached the

Agreement by secretly operating Barrett Financial Group LLC and diverting ENG Lending leads

and business to that competing business. Bank of England sues Barrett for breach of fiduciary

duty, breach of contract, fraud, violation of the Lanham Act, tortious interference with business

expectancy, and unjust enrichment. Bank of England also brings these claims against Barrett

Financial Group LLC, alleging that Barrett used the LLC as the vehicle by which he deceived

and damaged the Bank of England.

II.

Pursuant to an arbitration clause set forth in the Agreement, Bank of England has moved

to compel arbitration and stay this case. The arbitration clause provides that in event of any

dispute or claim regarding the interpretation, enforcement or breach of the Agreement, the

parties agree to submit the dispute to the American Arbitration Association.

The arbitration

clause also provides that arbitration hearings will be held in Pulaski County, Arkansas.

Bank of England reports that after it initiated this lawsuit, Barrett and Barrett Financial

Group LLC filed suit against it the United States Court of the District of Arizona. After

answering the complaint in the Arizona action, Bank of England filed a motion to compel

arbitration in that case, which was opposed by the defendants. Bank of England reports that on

ECF No. 8-1 (Branch Manager Employment Agreement, ¶ 23).

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February 8, 2016, the District Court of Arizona held a scheduling conference, and

“acknowledged the merit of ENG’s motion and stayed the Arizona ation for 60 days to give this

Court [the Eastern District of Arkansas] an opportunity to rule on the arbitrability of the parties’

disputes.”

“State and federal courts must enforce the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et

seq., with respect to all arbitration agreements covered under that statute.” Marmet Health Care

Center, Inc. v. Brown, – U.S. –, 132 S. Ct. 1201, 1202 (2012)(holding that state prohibition

against pre-dispute agreements to arbitrate personal injury or wrongful death claims against

nursing homes was preempted by the FAA). Section 2 of the FAA provides that a “written

provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a

controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable,

and enforceable, save upon such grounds as exist at law or in equity for the revocation of any

contract.” 9 U.S.C. § 2. Section 3 of the FAA, in turn, allows litigants already in federal court to

invoke agreements made enforceable by § 2, and it requires a court, on application of one of the

parties, to stay the action if it involves an issue referable to arbitration under an agreement in

writing. See 9 U.S.C. § 3.

“A court's role under the FAA is . . . limited to determining (1) whether a valid agreement

to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute.” See Pro

Tech Industries, Inc. v. URS Corp., 377 F.3d 868, 871 (8

Cir. 2004)(citing Gannon v. Circuit

City Stores, Inc., 262 F.3d 677, 680 (8th Cir.2001)). Here, there is no dispute that the

Agreement between Barrett and Bank of England evidences a transaction involving interstate

ECF No. 8, at 5.

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commerce, that a valid agreement to arbitrate exists, and that the dispute falls within the scope of

the agreement. The only open question is whether separate defendant Barrett Financial Group

LLC is also bound

to arbitrate the claims against it.

“[A] willing signatory seeking to arbitrate with a non-signatory that is unwilling must

establish at least one of the five theories described in Thomson-CSF, S.A. v. Am. Arbitration

Ass'n, 64 F.3d 773, 776 (2d Cir.1995). Those five theories are (1) incorporation by reference;

(2) assumption; (3) agency; (4) veil-piercing/alter ego; and (5) estoppel. Thomson-CSF, 64 F.3d

at 776.” Reid v. Doe Run Res. Corp., 701 F.3d 840, 846 (8th Cir. 2012). Here, Defendants argue

that Barrett Financial Group LLC should be compelled to arbitrate under veil-piercing and

estoppel theories. Defendants state that they do not believe that Barrett Financial LLC can be

required to submit to arbitration, but despite this position, Defendants do not oppose the motion

to compel because they “prefer to avoid an outcome where the Arkansas claims and defenses

pertaining to . . . Barrett are referred to arbitration and the claims and defenses against Barrett

Financial Group LLC remain in district court.”

Barrett Financial Group LLC’s role in Barrett’s alleged conduct and whether the LLC is

bound by the arbitration agreement cannot be determined on the current record. However,

because Barrett Financial Group LLC is willing to submit to arbitration, the Court finds it

unnecessary to determine whether it is bound to the arbitration agreement under one of the

foregoing theories and will grant the motion to compel arbitration.

As for Bank of England’s request for a stay, the Court prefers to administratively

ECF No. 11, at 5.

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terminate the case subject to a motion to reopen.

III.

IT IS THEREFORE ORDERED that Defendants’ motion to compel arbitration

[ECF No. 8] is GRANTED. The Clerk of the Court is directed to administratively terminate this

case for reporting purposes.

IT IS FURTHER ORDERED that any party may file a motion to reopen this case within

the thirty-day period following the arbitrator’s decision.

IT IS SO ORDERED THIS 31

DAY OF MARCH, 2015.

/s/Susan Webber Wright

UNITED STATES DISTRICT JUDGE

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