United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
M. YANDLE United States District Judge
matter comes before the Court on Defendants' Motion to
Stay Litigation Pending Arbitration (Doc. 3). The motion has
been fully briefed and the Court held a hearing on the motion
on May 15, 2015. The Court also made its tentative rulings on
the record on November 30, 2016 (See Doc. 55). Consistent
with the Court's tentative rulings, for the reasons that
follow and as detailed on the record, Defendants' motion
is GRANTED in part and DENIED in part.
originally filed its Complaint in the Second Judicial Circuit
Court, Franklin County, Illinois. Defendants removed the
action to this Court based on diversity jurisdiction (Doc.
2). Plaintiff, the owner of certain surface property located
in Franklin County, seeks compensatory and punitive damages
as a result of actions taken by Global Geophysical Services
("Global"), under the direction of Defendants
during a seismic survey conducted on Plaintiffs property
(Doc. 2-1, p. 5-6).
asserts that the property was purchased as a relatively
undisturbed, pristine floodplain forest for its unique
characteristics and for the purposes of wildlife conservation
and outdoor recreation and investment. Id., p. 4.
Global's work included entering the surface of the
property, drilling and setting explosive charges under the
surface of the property. Id., p. 5.
alleges that despite promises by Defendants to instruct field
representatives to limit traffic and cause as little surface
damage as possible, the work caused "extensive,
measurable, long-term habitat loss and tree and plant
damage...Rutting and other damage to the forest floor which
will require years to restore." Id., p. 5,
Exhibit B. Plaintiff further alleges that "trails once
available for recreational access are severely damaged"
and that, due to the negligence of Defendants' agents and
employees, the land's scenic, aesthetic, recreational and
market values are diminished. Id.
reservation of mineral rights in a prior deed of conveyance
provides that the Grantor shall pay for damages caused by
mineral extraction activity, and that if no agreement on the
amount of damages is reached within ninety (90) days,
"the amount of damage shall be determined by
arbitration" (Doc. 4, Exhibit B, p. 9-11). Defendants
filed the instant Motion to Stay Litigation Pending
Arbitration pursuant to the Federal Arbitration Act
("FAA") arguing that the FAA authorizes this Court
to enforce the arbitration provisions of Plaintiff s deed.
argues that the FAA does not apply and that the Illinois
Uniform Arbitration Act should not be applied as an
alternative to the FAA because the arbitration provision of
the deed requires a 90-day period for voluntary settlement as
a condition precedent and Defendants have refused to
negotiate. Plaintiff further argues that, because the FAA
does not apply, this case should be remanded because an
Illinois state court would be better suited to determine if
the reservation imposing arbitration in Plaintiffs deed- a
reservation expressed in a prior deed of conveyance but not
expressly referenced in Plaintiffs deed-is enforceable.
holds a Trustee's Warranty Deed dated June 28, 2010 by
which William E. Puckett II, as Trustee of Rainbow Land
Trust, conveyed and warranted to Plaintiff certain parcels of
real estate (Doc. 3, Exhibit 1). Following a description of
conveyed easements and a retained easement in favor of
Grantor for ingress and egress, the deed provides:
EXCEPTING AND RESERVING the coal, oil, gas, methane gas,
casing head gas, or other minerals underlying the same and
all rights and easements in favor of the owner of the mineral
estate or of any party claiming by, through or under said
estate, situated in Franklin County, Illinois.
deed contains a section entitled "ALSO SUBJECT TO"
which lists various other rights of way and easements, the
last of which reads at number seven: "Reservations
contained in a Warranty Deed recorded October 24, 1990 as
Document No. 90-5829 to William E. Puckett, II as Trustee ...
[of] the Rainbow Land Trust." These provisions are the
only references to reservations contained in the prior deed
of conveyance. That prior deed of conveyance (Doc. 3-2), by
which Finite Resources and two other entities granted the
surface only to William E. Puckett, II, contains a lengthy
clause reserving the mineral estate. The portion of the
clause upon which Defendants rely states:
their heirs, successors and assigns shall conduct any and all
mineral exploration, development, mining, transportation, and
related activities in a workmanlike manner and shall pay for
all actual damages caused by such mining activities to any
improvement on the surface of the lands and/or to any
improvements or crops; such actual damages shall be
determined by agreement of those parties Grantee who are
owners of the surface estate on the date of this deed, their
successors and assigns; provided that if no agreement is
reached within ninety (90) days, the amount of damage shall
be determined by arbitration. Surface owner, Grantees,
and Grantors shall each select a competent and disinterested
arbitrator having expertise in damage evaluation, and the two
arbitrators so selected shall select a third arbitrator
initial matter, Plaintiffs suggestion that an Illinois state
court would be better suited to determine whether or not the
arbitration clause at issue is enforceable is without merit.
This case is before the Court based on diversity jurisdiction
and the issues of diversity of citizenship and amount in
controversy are undisputed. Thus, the Court is required to
apply Illinois substantive law - including ...