United States District Court, W.D. Oklahoma
TIMOTHY D. DeGIUSTI, UNITED STATES DISTRICT JUDGE
the Court is Petitioner MidFirst Bank's (MidFirst)
Petition to Compel Arbitration and Designate an Arbitrator
[Doc. No. 1]. Defendant Safeguard Properties, LLC
(Safeguard) has filed its response in opposition [Doc.
No. 13] and MidFirst has replied [Doc. No. 16]. The matter is
fully briefed and at issue.
provides retail banking and residential mortgage services.
Safeguard is a provider of mortgage field services throughout
the United States. It provides a number of services to
financial institutions with interests in defaulted,
foreclosed, and bank-owned real property. It also contracts
with mortgagees and mortgage servicers to conduct property
inspections, property preservation, and repair services.
December 4, 2007, the parties executed a Master Service
Agreement (the Agreement) under which Safeguard was to
provide services on properties throughout the United States.
In the Agreement, Safeguard represented it would, inter
alia, perform the services in accordance with (1)
industry standards and all applicable laws and regulations,
(2) service standards set forth in the Agreement, and (3) the
“Rules, ” which were defined as “all
published HUD, VA, Fannie Mae, Freddie Mac, GNMA, private
investor and private mortgage insurer regulations, guidelines
and requirements and all updates thereto [as well as] all
applicable federal, state and local laws, rules, regulations
and ordinances, and [MidFirst's] requirements, policies
and procedures, and all amendments thereto.”
MidFirst's right to indemnification from Safeguard was
governed by section 11 of the Agreement, which stated:
[Safeguard] shall indemnify and hold [MidFirst], its
Affiliates, respective employees, officers, directors, and
agents harmless from any and all loss, payments, expenses,
claims, injury, liability, damages, penalties, fines,
forfeitures, denials of insurance and/or guarantee claims,
lost compensation or reimbursement amounts, attorneys fees
and costs, of any kind whatsoever, arising from or in any way
connected with (a) any violation or failure to comply with
the Rules; (b) non-compliance with the terms of this
Agreement or any Exhibit, Addendum or Amendment hereto,
including but not limited to breach of any warranty or
representation or performance standard set forth herein; (c)
any claims or actions whatsoever brought by any Subcontractor
or on behalf of a Subcontractor hired by or working on behalf
of Company; (d) negligent, wrongful acts or misconduct by
Company, its employees, officers, directors, agents,
contractors or Subcontractors, (e) any claims or actions
brought by a third party alleging damage or injury to the
property or person arising out of an act or omission of
Company, its affiliates, respective employees, officers,
directors, contractors, Subcontractors, and agents or (f) any
mistakes by Company, its affiliates, respective employees,
officers, directors, contractors, Subcontractors, and agents
relating to the Contract Services herein.
indemnification provision also contained the following
In the event any disputes arise relating to this Section,
then the parties agree to submit the dispute to arbitration,
in accordance with the laws of Oklahoma, unless both parties
agree in writing not to go to arbitration. Such dispute will
be brought in the jurisdiction of Oklahoma with a venue of
the Western District of Oklahoma.
alleges that for more than 2, 600 properties, Safeguard
failed to perform its services in conformity with HUD rules,
which caused HUD to reconvey the properties back to MidFirst
and/or refuse payment of insurance benefits. MidFirst
contends that as a result, it incurred substantial monetary
damages and other losses, including interest curtailments,
reconveyance losses, costs assessed by HUD, and other
miscellaneous expenses. MidFirst submitted claims to
Safeguard for indemnification for the aforementioned losses.
However, Safeguard refused to indemnify MidFirst and gave
notice it was terminating the Agreement, to be effective
February 13, 2017.
alleges Safeguard has breached the Agreement, entitling it to
“offset its Damages by an amount equal to Safeguard
invoices yet to be paid.” Pet. ¶ 20. Pursuant to
the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1
et seq., MidFirst filed the present action, invoking
the arbitration clause set forth in § 11. Safeguard
objects to arbitration on the grounds that (1) the
arbitration clause does not apply to MidFirst's set off
claims and the parties did not agree to arbitrate such
claims, and (2) the arbitration clause is so vague that it is
unconscionable and unenforceable under Oklahoma law.
deciding whether an enforceable agreement to arbitrate
exists, the Court views the facts and all reasonable
inferences in the light most favorable to the party opposing
arbitration. Ragab v. Howard, 841 F.3d 1134, 1139
(10th Cir. 2016). “The FAA provides that arbitration
agreements ‘shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.'” In
re Cox Enter., Inc. Set-top Cable Television Box Antitrust
Litig., 835 F.3d 1195, 1201 (10th Cir. 2016) (quoting 9
U.S.C. § 2)). The FAA is a “congressional
declaration of a liberal federal policy favoring arbitration
agreements.” Id. at 1201 (quoting Moses H.
Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983)). Its purpose is to place arbitration agreements upon
the same footing as other contracts and reverse the
judiciary's longstanding refusal to enforce agreements to
arbitrate. E.E.O.C. v. Waffle House, Inc., 534 U.S.
279, 289 (2002).
contract contains an arbitration clause, there is a
“strong presumption” that the dispute is
arbitrable. Cox Enter., 835 F.3d at 1201. Thus,
“an order to arbitrate the particular grievance should
not be denied unless it may be said with positive assurance
that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute. Doubts
should be resolved in favor of coverage.” Id.
(quoting United Steelworkers of Am. v. Warrior & Gulf
Nav. Co., 363 U.S. 574, 582-83 (1960)). Although such
presumption “disappears” where there is a dispute
over whether a valid arbitration agreement exists, Dumais
v. American Golf Corp., 299 F.3d 1216, 1219 (10th Cir.
2002), “[i]n the absence of any express provision
excluding a particular grievance from arbitration, ... only
the most forceful evidence of a ...