United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER DENYING MOTION TO
N. PARRISH UNITED STATES DISTRICT COURT JUDGE.
Vivint, Inc. asks the court to bifurcate the trial into two
phases. In the first phase, the parties would litigate
Vivint's first cause of action. Vivint, in connection
with that cause of action, seeks a declaration that Defendant
NorthStar Alarm Services, LLC is bound by a settlement
agreement that Vivint entered into with Vision Security,
LLC-a non-party that sold many of its assets to NorthStar. If
NorthStar is bound by the settlement agreement, Vivint
contends that a number of instances where NorthStar used
“improper sales tactics” will be subject to
binding arbitration. Thus, according to Vivint, the court and
the parties will save time and resources if there is a
determination as to whether NorthStar is bound by the
settlement agreement at the outset. But Vivint has waived its
right to arbitration, so whatever issues were subject to
arbitration will nevertheless be tried in court. And thus it
is not convenient, expeditious, or economical to resolve
Vivint's first cause of action at the outset.
Vivint's motion to bifurcate is therefore denied.
2014, Vivint and Vision, two alarm companies, were embroiled
in litigation. But instead of going to trial, they entered
into a settlement agreement. Under the settlement agreement,
Vision agreed to pay Vivint $1.6 million and, importantly,
both parties agreed that they would be prohibited from using
“Improper Sales Tactics.” An example of an
improper sales tactic: a Vision employee tells a Vivint
customer that Vivint has gone out of business and is unable
to monitor the customer's alarm system.
settlement agreement provides a mechanism for resolving
disputes when one party claims that the other used improper
sales tactics. If one party alleges that the other
“engaged in Prohibited Conduct [i.e., used an improper
sales tactic] for a customer . . . the Parties shall submit
the matter to the binding Arbitration Proceeding which is set
forth in the attached Exhibit 3 which is expressly
incorporated herein by reference.”
3 is a four-page document that outlines the arbitration
procedures to which the parties agreed. A party commences
arbitration by filing a “Notice of Violation.”
The notice would include information such as a description of
the improper sales tactic, the identity of the employee that
used the improper sales tactic, and the date on which the
employee used the improper sales tactic. In response, the
other party could either admit or deny the alleged violation.
If the violation is contested, the parties would then provide
information to an arbitrator who, after conducting an
investigation, would issue a written ruling. This entire
process takes a matter of weeks, as opposed to the months, if
not years, that it would take to resolve a civil action.
and Vision also agreed that the settlement agreement would be
binding on their successors, assignees, and affiliates.
Specifically, the settlement agreement provides, “This
Agreement and the terms hereof shall be binding on the
successors, assignees, and affiliates of each Party. Neither
Party may avoid the effect, obligations, or rights of this
Agreement by assigning, renaming, reconstituting, or
re-characterizing their business in any fashion.”
early 2015, shortly after Vivint and Vision executed the
settlement agreement, Vision entered into an asset purchase
agreement with NorthStar, another alarm company. Vision
transferred the majority of its customer accounts, about 8,
000, to NorthStar; Vision retained about 1, 500 accounts.
NorthStar acquired all of Vision's furniture, fixtures,
and equipment. And NorthStar acquired Vision's office
leases in Orem, Utah, and Tempe, Arizona.
2015, Vivint sued NorthStar in state court. NorthStar
promptly removed the action to federal court. Vivint amended
its complaint shortly thereafter. Vivint, in its amended
complaint, alleges that NorthStar has engaged in a campaign
to damage Vivint's reputation and steal its customers.
Vivint alleges six causes of action: (1) declaratory relief,
(2) deceptive trade practices, (3) violation of the Lanham
Act, (4) unfair competition, (5) intentional interference
with customer contracts, and (6) injunctive relief. Vivint
explains that in the event it does not prevail on its first
cause of action, it has pled the remaining five “in the
under its first cause of action, seeks a declaration that
NorthStar is bound by the terms of the settlement agreement
to the same extent as Vision based on the successor-liability
doctrine. Vivint explains that it attempted to initiate
arbitration, per the terms of the settlement agreement, by
serving a notice of violation on NorthStar. But NorthStar
stated that it was not bound by the settlement agreement and
refused to submit to binding arbitration.
2016, Vivint filed a motion for partial summary judgment on
its first cause of action. Vivint contended that there were
no genuine disputes of material fact and that NorthStar was
bound by the terms of the settlement agreement as a matter of
law. The court, however, held that there were disputes of
material fact and therefore denied the motion.
2017, Vivint filed a motion to bifurcate. Vivint argues that
it will save time to bifurcate the trial into two phases. In
the first phase, the parties would litigate whether NorthStar
is bound by the settlement agreement. If NorthStar is, Vivint
believes that certain issues can be sent to arbitration.
Specifically, there are instances where NorthStar is alleged
to have used improper sales tactics that supposedly fall
under the settlement agreement's arbitration clause. So
those instances could be tried in front of an arbitrator, as
opposed to the court. NorthStar opposes the motion.