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Gar Disability Advocates, LLC v. Taylor

United States District Court, D. New Jersey

February 6, 2019

GAR DISABILITY ADVOCATES, LLC, Plaintiff,
v.
PAMELA S. TAYLOR, Defendant.

          OPINION

          KEVIN MCNULTY UNITED STATES DISTRICT JUDGE

         Plaintiff GAR Disability Advocates, LLC ("GAR") has brought this action against one of its former employees, defendant Pamela S. Taylor, for breach of contract and for various forms of equitable relief. Taylor has filed a counterclaim for breach of contract, seeking monetary damages.

         Now before the court is GAR's motion to dismiss Taylor's counterclaim and to compel arbitration. For the reasons expressed herein, GAR's motion to compel arbitration is granted. (DE 24). However, because the arbitration provision covers all disputes arising from the agreements at issue, I find that both GAR's and Taylor's complaints are arbitrable. GAR's motion to amend to the complaint is denied as moot.

         I. Background

         GAR is an organization that assists individuals that are either applying for or receiving Social Security Disability Benefits ("SSDI") or Supplemental Security Income ("SSI"). On February 26, 2015, GAR and Taylor entered into Asset Purchase and Sale Agreement (DE 5-1, "APS Agreement", 19).[1] Pursuant to the terms of this agreement, Taylor agreed to sell and assign her current and prospective SSDI and SSI cases to GAR. (APS Agreement ¶2). In return, GAR agreed to pay $275, 000 for those "assets," and it alleges that it paid Taylor that amount on March 3, 2015. (Id. ¶¶ 15-16).

         The APS Agreement addressed Taylor's right to seek the advice of an attorney prior to executing the agreement:

Seller hereby acknowledges that she has been advised to retain her own attorney, was given adequate time to seek the advice of such attorney and that she has either done so or has voluntarily chosen not to seek such counsel. The parties acknowledge and agree that this Agreement was entered into an arm's length, without duress or coercion, and is to be interpreted as an agreement between two parties of equal bargaining strength.

[Id., Representations and Warranties, ¶8(f)).

         The APS Agreement contains an arbitration provision:

Any disputes regarding this agreement shall be decided by arbitration before one (1) arbitrator. The parties shall first try to find a mutually agreeable arbitrator. If one cannot be found then they shall choose one arbitrator from a list provided by the American Arbitration Association with the costs to be paid by the losing party to the dispute. This Agreement shall be controlled by and interpreted in accordance with the laws of the State of New Jersey, without regard to any choice of law rules which may direct the application of laws of another jurisdiction.

(Id. 18(d)).

         The APS Agreement referenced and attached as an exhibit an unexecuted copy of an Employment Agreement. (Id. ¶5). The APS Agreement provided that the parties would execute the attached Employment Agreement once die "assets" were transferred to GAR. (Id.).

         On March 2, 2015, the parties executed the Employment Agreement. ("Employment Agreement", DE 5-2). Under the Employment Agreement, GAR agreed to employ Taylor as a "Case Manager/Advocate." Like the APS Agreement, the Employment Agreement contains an arbitration clause:

Governing Law; Jurisdiction. Any disputes regarding this agreement shall be decided by arbitration before one (I) arbitrator. The parties shall first try to find a mutually agreeable arbitrator. If one cannot be found then they shall choose one arbitrator from a list provided by the American Arbitration Association with the costs to be paid by the losing party to the dispute. This Agreement shall be controlled by and interpreted in accordance with the laws of the State of New Jersey, without regard to any choice of law rules which may direct the application of laws of another jurisdiction.

(Employment Agreement ¶ 15)

         The Employment Agreement also contained non-disclosure, non-compete, and non-disparagement clauses. (Id. ¶¶8-10). In the event of a breach of any of those provisions, the contract provided that GAR could seek injunctive and equitable relief:

[T]he Employee acknowledges that, in the event of any breach or threatened breach by the Employee of the provisions of Sections 8, 9 or 10, the Employer and its subsidiaries and affiliates shall be entitled to temporary, preliminary and permanent injunctive or other equitable relief against the Employee . . . and to an equitable accounting of all earnings, profits and other benefits arising, directly or indirectly, from such violation, which rights shall be cumulative and in adding to (rather than instead of) any other rights or remedies available at law or in equity.

(Id. ¶l 1). In the agreement, Taylor acknowledged that she "read and understands all of the terms of this Agreement," had "had an opportunity to consult with independent counsel with respect to the terms of this Agreement," and had "made such investigation of the facts pertaining to this Agreement and of all the matters pertaining hereto as she deems necessary." [Id. ¶24).

         GAR claims that Taylor breached the non-disclosure, non-compete, and non-disparagement clauses of the Employment Agreement when she failed to assign new cases and clients to GAR, and held herself out as the primary representative to clients, instead of GAR. (AC ¶¶41-43). On April 7, 2017, GAR terminated Taylor's employment. (AC ¶44). The parties dispute whether this termination was with or without cause. Since Taylor's termination, GAR alleges, she has sent various emails to GAR, threatening to take employees and claimants, and to release confidential information. (AC ¶¶48, 50-51).

         On May 20, 2017, GAR filed its original complaint seeking an injunction and equitable relief related to Taylor's alleged violation of the non-disclosure, non-compete, and non-disparagement clauses. (DE 1).

         On May 30, 2017, GAR filed its Amended Complaint (DE 5), asserting four different causes of action: breach of the APS Agreement; breach of the Employment Agreement; temporary restraints/ permanent injunction; and an accounting. (AC ¶¶ 52-76).

         On June 16, 2017, Taylor filed an Answer to the Amended Complaint, which included a Counterclaim for breach of contract. (DE 7). Taylor asserts that she was not paid her salary, reasonable expenses, or compensation for unused vacation time, as required by her Employment Agreement. (Id.), On July 14, 2017, GAR filed the original version of this motion to compel arbitration of Taylor's counterclaim. (DE 10). That motion was dismissed without prejudice so that the parties discuss whether they wished to proceed with ...


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