Opinski Construction, No. 1:2009cv00641 - Document 29 (E.D. Cal. 2009)
Court Description: ORDER Granting 18 Motion For Stay signed by Magistrate Judge Gary S. Austin on 11/9/2009. (Esteves, C)
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Opinski Construction Doc. 29 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 17 GREG OPINSKI CONSTRUCTION, INC., a California Corporation, ) ) ) Plaintiff, ) ) v. ) ) BRASWELL CONSTRUCTION, INC., a ) California Corporation; THE EXPLORER ) INSURANCE COMPANY, an unknown ) entity; and DOES 1 through 40, inclusive, ) ) Defendants. ) _____________________________________ ) 1:09-cv-00641 LJO GSA ORDER RE MOTION FOR STAY (Doc. 18) 18 19 On August 27, 2009, Defendant Braswell Construction, Inc. (“Braswell”) filed a Motion 20 for Stay of Proceedings pursuant to Title 9 of the United State Code section 3. (Doc. 18; see also 21 Docs. 19-21.) On October 5, 2009, Plaintiff Greg Opinski Construction, Inc. (“Opinski”) filed an 22 Opposition to the motion. (Doc. 23; see also Doc. 24.) Thereafter, on October 14, 2009, 23 Braswell filed its reply to the opposition. (Doc. 26; see also Doc. 27.) On October 20, 2009, the 24 Court determined the matter was suitable for decision without oral argument pursuant to Local 25 Rule 78-230(h). Thus, the hearing scheduled for October 23, 2009, was vacated. (Doc. 28.) 26 // 27 28 1 Dockets.Justia.com 1 2 RELEVANT PROCEDURAL HISTORY On April 9, 2009, Opinski filed a complaint asserting breach of contract, recovery on 3 payment bond, and quantum meruit, naming Braswell Construction, Inc. and The Explorer 4 Insurance Company (“Explorer”) as defendants. (Doc. 1.) On May 22, 2009, Braswell filed its 5 answer to the complaint. (Doc. 9.) On June 3, 2009, Explorer filed its answer to the complaint. 6 (Doc. 10.) 7 On July 15, 2009, this Court conducted a scheduling conference with the parties. Various 8 discovery deadlines and hearings were scheduled, including a jury trial set before District Judge 9 Lawrence J. O’Neill on June 28, 2010. (Doc. 17.) 10 11 On August 27, 2009, Braswell filed the instant motion. (Doc. 19.) No other matters are currently pending before the Court. 12 DISCUSSION 13 The Parties’ Positions 14 Braswell seeks a stay of the instant proceedings based upon Title 9 of the United States 15 Code section 3, the Federal Arbitration Act. Braswell asserts that in November 2007, it and 16 Opinski entered into an agreement for construction of the Hodgson Duplex in Yosemite National 17 Park. More particularly, paragraph 22 of the agreement provides that 18 19 20 [a]ny controversy or claim arising out of or relating to this contract or the breach thereof which is not resolved pursuant to the provisions of paragraph 11 shall be exclusively resolved through and under the auspices of the American Arbitration Association in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. 21 (Doc. 21, Ex. A, ¶ 22.) Braswell asserts that because Opinski’s complaint concerns claims 22 arising out of the contract and purported breach thereof, this action should be stayed pending 23 arbitration proceedings. (Doc. 19 at 2-3.) 24 Opinski opposes the motion on the grounds that Braswell “failed to file a Petition to 25 Compel Arbitration” and participated in discovery as a part of the instant proceedings. Thus, 26 according to Opinski, Braswell has waived its right to arbitration and the stay must be denied. 27 28 2 1 Additionally, Opinski argues that this Court has exclusive jurisdiction over the matter because 2 Braswell was served with the summons and complaint on April 22, 2009, prior to it having filed 3 any demand for arbitration. (Doc. 23 at 1-5.) 4 In reply, Braswell asserts that a petition to compel arbitration was unnecessary and 5 inappropriate because the arbitration agreement between Braswell and Opinski is self-executing. 6 (Doc. 26 at 2-3.) Braswell further replies that it did not waive any right to demand arbitration 7 pursuant to the agreement between the parties as it has consistently claimed its right to arbitrate, 8 asserted that right as an affirmative defense in its answer, and attempted to ascertain Opinski’s 9 voluntary compliance to the provision prior to filing the instant motion with the Court. Neither, 10 asserts Braswell, has it unreasonably delayed in seeking to arbitrate the matter, nor is Opinski 11 prejudiced in any way as a result of Braswell’s actions. (Doc. 26 at 4-6.) 12 Applicable Statute & Legal Standard 13 Title 9 of the United States Code section 3 provides as follows: 14 If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall upon application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the application for the stay is not in default in proceeding with such arbitration. 15 16 17 18 19 For purposes of the Federal Arbitration Act (“FAA”), “arbitration” is an agreement to submit a 20 dispute to decision by a third party. 9 U.S.C. § 1, et seq. 21 The FAA creates "a body of federal substantive law of arbitrability." Moses H. Cone 22 Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24 (1983). It is applicable in both state and 23 federal courts. Thus, unless the agreement provides otherwise, all questions regarding 24 interpretation of arbitration agreements are determined by federal standards. Buckeye Check 25 Cashing, Inc. v. Cardegna, 546 U.S. 440, 445 (2006); Moses H. Cone Mem. Hosp., 460 U.S. at 26 22-24. Any question concerning arbitrability must be addressed with a healthy regard for the 27 28 3 1 federal policy favoring arbitration. Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 2 1999). The FAA establishes that "any doubts concerning the scope of arbitrable issues should be 3 resolved in favor of arbitration, whether the problem at hand is the construction of the contract 4 language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. 5 Cone Mem. Hosp., 460 U.S. at 24-25; Simula, Inc., 175 F.3d at 719; Wolsey, Ltd. v. Foodmaker, 6 Inc., 144 F.3d 1205, 1209 (9th Cir. 1998). 7 "Arbitration is a matter of contract and a party cannot be required to submit any dispute 8 which he has not agreed so to submit." AT & T Technologies, Inc. v. Communications Workers 9 of America, 475 U.S. 643, 648 (1986) (citations omitted); Three Valleys Mun. Water Dist. v. E.F. 10 Hutton & Co., Inc., 925 F.2d 1136, 1139 (9th Cir. 1991). As with any contract, the parties' 11 intentions control. Three Valleys Mun. Water Dist., 925 F.2d at 1139. However, the parties' 12 intentions are generously construed to issues of arbitrability. Mitsubishi Motors Corp. v. Soler 13 Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). 14 The FAA "leaves no place for the exercise of discretion by a district court, but instead 15 mandates that district courts shall direct the parties to proceed to arbitration on issues as to which 16 an arbitration agreement has been signed." Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 17 (1985). The court's role is limited to determining: "(1) whether a valid agreement to arbitrate 18 exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp. 19 v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2001). If both questions are 20 answered in the affirmative, the FAA requires the court to enforce arbitration. Id. 21 When a party contends issues must be decided by arbitration, federal substantive law 22 governs the question of arbitrability. Simula, Inc. v. Autoliv, Inc.,175 F.3d at 719. However, the 23 federal policy favoring arbitration is inapplicable to the determination of whether a valid 24 agreement to arbitrate between the parties exists and ordinary contract principles determine who 25 is bound. Comer v. Micor, Inc., 436 F.3d 1098, 1104 n.11 (9th Cir. 2006). In determining the 26 validity of an agreement to arbitrate, courts "should apply ordinary state-law principles that 27 28 4 1 govern the formation of contracts." FirstOptions of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 2 (1995). "Thus, generally applicable contract defenses, such as fraud, duress, or 3 unconscionability, may be applied to invalidate arbitration agreements without contravening 4 [section] 2." Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686 (2000). "Courts may not, 5 however, invalidate arbitration agreements under state laws applicable only to arbitration 6 provisions." Id.; Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 937 (9th Cir. 2001). 7 Analysis 8 Here, Braswell and Opinski entered into a Subcontract Agreement on October 1, 2007. 9 As a part of that agreement, each party agreed to arbitrate “[a]ny controversy or claim arising out 10 of or relating to this contract or the breach thereof.” (Doc. 21, Ex. A, ¶ 22.) Opinski does not 11 challenge the validity of the agreement to arbitrate. Therefore, this Court finds a valid agreement 12 to arbitrate controversies or claims amongst the parties existed. Chiron Corp. v. Ortho 13 Diagnostic Systems, Inc., 207 F.3d at 1130. 14 Moreover, Opinski’s complaint alleges that (1) Braswell breached the contract “on 15 multiple occasions” by “failing and refusing” to pay Opinski in accordance with the agreement 16 (Doc. 1, ¶ 17); and (2) Braswell, by its failure to pay pursuant to the contract between the parties, 17 was unjustly enriched for it profited by the use of goods, services, materials and labor provided 18 by Opinski (Doc. 1, ¶¶ 30-31). In light of the foregoing, this Court further finds the parties’ 19 agreement to arbitrate encompasses the instant dispute. Chiron Corp. v. Ortho Diagnostic 20 Systems, Inc., 207 F.3d at 1130. 21 22 23 24 Waiver Opinski asserts that Braswell has waived its right to arbitration. Braswell contends there is no waiver. In Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1124 (9th Cir. 2008), the Ninth 25 Circuit identified the following factors in determining whether a party had waived its right to 26 demand arbitration: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) 27 28 5 1 whether the party substantially invoked litigation machinery (e.g., motions going to the merits of 2 the claim) before notifying the opposing party of an intent to arbitrate; (3) whether the party 3 either requested arbitration close to the trial date or delayed for a long period before seeking a 4 stay; (4) whether a defendant seeking arbitration filed a counter-claim without asking for a stay 5 of the proceedings; (5) whether important intervening steps (e.g., taking advantage of judicial 6 discovery procedures not available in arbitration) had taken place; and (6) whether the delay 7 affected, misled or prejudiced the opposing party. 8 9 Considering the factors identified above, this Court has determined that: (1) Braswell’s actions are not inconsistent with a right to arbitrate for it plainly referenced arbitration agreement 10 in its answer as its first affirmative defense (Doc. 9 at 5); (2) Braswell has not substantially 11 invoked litigation machinery for it has not filed any motion going to the merits of the claim prior 12 to notifying Opinski of its intent to arbitrate; (3) Braswell has not delayed prior to seeking a stay 13 of the instant proceedings, and in fact acted in a reasonable manner; (4) Braswell has not filed a 14 counter-claim without asking for a stay of these proceedings; (5) no important intervening steps 15 have taken place in this matter; and (6) no delay has occurred as a result of Braswell’s actions so 16 as to affect, mislead or prejudice Opinski. 17 Additionally, with specific regard to discovery in this matter, only the initial disclosure 18 deadline has passed, to wit: August 14, 2009. (Doc. 17 at 2; see also Doc. 14 at 3.) Thus, this is 19 not a case wherein significant discovery has been undertaken and completed, prior to one party 20 filing a motion to stay the action. Braswell has not waived its right to arbitration. Cox v. Ocean View Hotel Corp., 533 21 22 F.3d at 1124. Moreover, because this Court found a valid agreement to arbitrate existed between 23 the parties, and that the agreement encompasses the dispute now pending before this Court, it 24 must stay this action. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. at 218. 25 // 26 // 27 28 6 1 Enforcement Procedures 2 Opinski also contends that Braswell was required to file a petition for order compelling 3 arbitration, and because it failed to do so, it may not properly move to stay these proceedings. 4 (Doc. 23 at 3.) Braswell replies that such a filing is unnecessary and unavailable. (Doc. 26 at 2- 5 3.) 6 The FAA provides two methods for enforcing arbitration: (1) an order compelling 7 arbitration of a dispute; and (2) a stay of pending litigation raising a dispute referable to 8 arbitration. 9 U.S.C. §§ 3-4. Clearly, both methods are not required given the permissive 9 language employed in the statute: section 4 of the code provides that “a party to an arbitration 10 agreement covered by the FAA may petition the district court . . .” 11 Morever, Braswell argues that because the agreement between the parties is self- 12 executing a petition to compel arbitration is not necessary. Here, the parties agreed to arbitrate 13 disputes, and the agreement expressly includes language that the matter will be arbitrated in 14 accordance with the Construction Industry Arbitration Rules of the American Arbitration 15 Association. (Doc. 21, Ex. A, ¶ 22.) 16 "A ‘self-executing’ arbitration clause is one which permits and provides for arbitration 17 under rules therein incorporated" without the need for a prior court order. Mitchum, Jones & 18 Templeton, Inc. v. Chronis, 72 Cal.App.3d 596, 601, 140 Cal.Rptr. 160 (1977); see also Nat'l 19 Marble Co. v. Bricklayers & Allied Craftsmen, 184 Cal.App.3d 1057, 1063, 229 Cal.Rptr. 653 20 (1986) (stating an agreement's "provisions are self-executing in . . . that they set forth, without 21 the necessity of resort to extrinsic material, the procedure to be followed . . . in deciding 22 contractual disputes"). This Court finds that the agreement between Opinski and Braswell is 23 self-executing, and thus, a prior court order is not required. 24 In any event, Opinski has not been asked to participate in arbitration proceedings that it 25 did not previously agree to (AT & T Technologies, Inc. v. Communications Workers of America, 26 475 U.S. at 648; Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d at 1139), 27 28 7 1 and this Court has determined that both a valid agreement to arbitrate exists and that the 2 agreement encompasses the dispute giving rise to this action, therefore, the matter must be stayed 3 (Dean Witter Reynolds, Inc., v. Byrd, 470 U.S. at 218). 4 CONCLUSION 5 Defendant Braswell Construction, Inc.’s Motion for Stay of Proceedings is GRANTED. 6 This matter shall be stayed during the pendency of arbitration proceedings. Upon completion of 7 arbitration, the parties are ordered to inform this Court forthwith, move to lift the stay, and file 8 appropriate documents for the completion or continuation of this case. 9 10 11 12 13 IT IS SO ORDERED. Dated: 6i0kij November 9, 2009 /s/ Gary S. Austin UNITED STATES MAGISTRATE JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8
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