In 2006, AHL Development entered into contracts with Resurrection Baptist Church for the construction of a facility in Silver Spring, Maryland and preliminary site development work. In 2008, AHL entered into a general indemnity agreement with Developers Surety and Indemnity Company ("Developers Surety"). Under that agreement, Developers Surety agreed to act as a surety for AHL and to issue payment and performance bonds to secure AHL's performance under the building contract. Soon after, Developers Surety issued bonds and named Resurrection Baptist and PNC Bank as co-obligees.

Resurrection Baptist declared AHL to be in default in February 2010 when the building was only 80 percent complete and there were insufficient funds to complete the project. Resurrection Baptist made a demand to Developers Surety to complete the facility's construction pursuant to the performance bond. Developers Surety refused the demand, claiming that Resurrection Baptist and PNC Bank materially deviated from the payment application process required under the building contract.

In May 2010, Developers Surety filed the instant lawsuit against Resurrection Baptist and PNC Bank claiming breach of contract and seeking a declaratory judgment that its obligations under the performance and payment bond are discharged. Resurrection Baptist filed an Answer and simultaneously filed a Motion to Stay Litigation and Compel Mediation and Arbitration. Developers Surety opposed the stay of the action and argued that it is not bound by the terms of the mediation and arbitration provision of the building contract.

The building contract contained a mandatory mediation clause and mandatory arbitration clause. The performance bond issued by Developers Surety, however, did not contain a similar mediation or arbitration clause. The issue was whether a surety must arbitrate its dispute relating to a performance bond when the performance bond lacks an arbitration or mediation clause, yet incorporates by reference a contract that contains a mandatory arbitration or mediation clause. The United States District Court of Maryland looked to other circuits on this issue and found that the majority have held that sureties must arbitrate disputes relating to performance bonds when the performance bonds specifically incorporate by reference a contract containing an arbitration clause.

The performance bond issued by Developers Surety explicitly incorporated the construction contract, which contained a mandatory arbitration provision. Accordingly, the Court held that Developers Surety must arbitrate its claims against Resurrection Baptist and PNC Bank.