Performance Excavators, Inc., v. Tenax Corporation, et al.,

Filing 30

ORDER signed by Senior Judge Ronald S.W. Lew on 1/31/08 GRANTING 19 MOTION to STAY as to Arch Insurance Company. It is also ordered that 19 MOTION to Stay as to Tenax Corporation is GRANTED in part and DENIED in part.(Anderson, J)

Performance Excavators, Inc., v. Tenax Corporation, et al.,

Doc. 30

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

PERFORMANCE EXCAVATORS, INC. Plaintiff, v. ARCH INSURANCE COMPANY, TENAX CORPORATION, and DOES 1 through 20, inclusive, Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. CV 07-1791-LEW-JFM ORDER GRANTING DEFENDANTS' JOINT MOTION TO STAY AS TO ARCH INSURANCE COMPANY ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' JOINT MOTION TO STAY AS TO TENAX CORPORATION

Currently before this Court is Tenax Corporation's Motion to Stay. This matter was taken under submission on January 18, 2008. FOLLOWS : Having considered all the papers submitted in conjunction with this matter, the COURT NOW RULES AS

Dockets.Justia.com

1.
1 2

JOINDER OF ARCH INSURANCE COMPANY TO TENAX CORPORATION'S MOTION TO STAY As a preliminary matter, Arch Insurance Company's1

3 joinder to Tenax Corporation's2 Motion to Stay is 4 granted because the companies are similarly situated in 5 regard to the resolution of this Motion. 6 7 2. 8

MOTION GRANTED AS TO ARCH INSURANCE COMPANY The Motion to Stay is GRANTED as to AIC. PEI is

9 involved in pending arbitration with the Barber-Webb 10 Company.3

PEI's claim against AIC is predicated on a Thus, PEI has no

11 performance bond between AIC and BWC.

12 claim against AIC until PEI establishes the liability of 13 BWC.

It would be fundamentally unfair to allow PEI to

14 proceed against AIC in litigation while also engaging in 15 arbitration with BWC, since this essentially subjects 16 BWC to the same claim in litigation and arbitration. 17 18 3. 19 20

MOTION GRANTED IN PART, DENIED IN PART AS TO TENAX CORPORATION The Motion to Stay is GRANTED in PART and DENIED in PEI's fifth cause of action, for

21 PART as to Tenax.

22 implied indemnity against Tenax, is expressly dependent 23 on the outcome of PEI's arbitration claim against the 24 25 26 27 28
1 2

Hereinafter "AIC". Hereinafter "Tenax". Hereinafter "BWC".

3

Chico Redevelopment Agency.4

If PEI prevails in Therefore,

1 arbitration against RDA's counter-claim, PEI's indemnity 2 action against Tenax will cease to exist.

3 PEI's fifth cause of action is stayed until its 4 arbitration is completed. 5 6

For PEI's second, third, and fourth causes of Tenax is not a signatory to PEI's The Seventh and

7 action, Tenax does not qualify for either a mandatory or 8 discretionary stay.

9 arbitration agreement with BWC and RDA.

10 Eighth Circuits have held that a movant is only entitled 11 to a mandatory stay under 9 U.S.C. §3 if it is a party 12 to the arbitration agreement.

IDS Life Ins. Co. v.

13 SunAmerica, Inc., 103 F.3d 524, 529 (7th Cir. 1997); 14 AgGrow Oils, L.L.C. v. Nat'l Union Fire Ins. Co., 242 15 F.3d 777, 782 (8th Cir. 2001).

Even when courts have Adams

16 applied the mandatory stay provision to a non-signatory, 17 they have required "exceptional circumstances."

18 v. Georgia Gulf Corp., 237 F.3d 538, 541 (5th Cir. 19 2001).

The Court found such exceptional circumstances In

20 in Harvey v. Joyce, 199 F.3d 790 (5th Cir. 2000).

21 Harvey, the signatories to the arbitration agreement 22 were shareholders in the non-signatory.

Moreover, the

23 allegations against the non-signatory were based upon 24 actions taken by a signatory.

Here, however, no such No party in PEI's

25 exceptional circumstances exist.

26 arbitration agreement has a stake in Tenax, and PEI's 27 28
4

Hereinafter "RDA".

allegations against Tenax are based on Tenax's actions.
1 2

There is insufficient basis to grant Tenax's Although PEI's claims

3 request for a discretionary stay.

4 in litigation and arbitration contain common operative 5 facts, PEI's claims in arbitration are separable from 6 its claims against Tenax.

Specifically, PEI's action

7 against Tenax for breach of contract revolves around 8 Tenax's alleged failure to provide materials, while 9 PEI's actions against Tenax for intentional and 10 negligent interference with contract relations revolve 11 around Tenax's independent contact with RDA.

Since the

12 adjudication of these causes of action does not 13 expressly depend on the results of PEI's arbitration 14 claims against BWC or RDA, a stay is not necessary. 15 16 4. 17

CONCLUSION Based on the reasons stated above, Defendants'

18 Joint Motion to Stay is GRANTED as to AIC, and GRANTED 19 in PART, DENIED in PART as to TENAX. 20 21 22 23 24 25 26 27 28

IT IS SO ORDERED. HONORABLE RONALD S.W. LEW Senior, U.S. District Court Judge DATE: January 31, 2008