Philadelphia Indemnity Insurance Company v. City Of Fresno

Filing 21

ORDER signed by District Judge John A. Mendez on 7/12/16 ORDERING that Philadelphia's MOTION to Compel Arbitration is GRANTED. The matter is REMANDED to Arbitration. The case is DISMISSED.(Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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PHILADELPHIA INDEMNITY
INSURANCE COMPANY, a
Pennsylvania corporation,

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Petitioner,

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No.

2:16-cv-495-JAM-KJN

ORDER GRANTING PETITIONER’S
PETITION TO COMPEL ARBITRATION

v.
THE CITY OF FRESNO, a
municipal corporation,

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Respondent.
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Petitioner Philadelphia Indemnity Insurance Company

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(“Philadelphia”) petitions the Court for an order compelling The

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City of Fresno (“Fresno”) to proceed to arbitration in accordance

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with an alleged arbitration agreement.

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below, the Court grants the petition and orders Fresno to proceed

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with arbitration. 1

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///

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For the reasons stated

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for June 28, 2016.
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I.

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FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Fresno, through SMG Holdings, Inc., entered into a licensing

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agreement with the California Association of Future Farmers of

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America (“Future Farmers”) for Future Farmers to use a portion of

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the Fresno Convention and Entertainment Center.

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Compel Arbitration (“Petition”) (Doc. #1) ¶ 5.

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agreement required Future Farmers to obtain liability insurance.

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Id.

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into a liability insurance policy with Philadelphia (the “Future

Petition to
The licensing

In accordance with this requirement, Future Farmers entered

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Farmers Policy”).

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that either party may demand arbitration if a dispute arises over

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the scope of coverage.

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Id. ¶ 8.

The Future Farmers Policy states

Id. ¶ 10.

In April 2013, Timothy Sailors (“Sailors”) allegedly slipped

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and fell in the parking lot of the Fresno Convention Center on

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his way to a Future Farmers event.

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(Doc. #7) at 2.

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School District (“Reef”), sued Fresno to recover for his injuries

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and for the employment benefits Reef paid to Sailors after he was

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injured.

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Future Farmers was added as a defendant.

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Id. ¶ 7; Memorandum (“Memo”)

Sailors and his employer, Reef Sunset Unified

Petition ¶¶ 6-7.

The cases were consolidated and
Id. ¶ 6.

Fresno has demanded that Philadelphia defend and indemnify

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Fresno pursuant to the Future Farmers Policy because Fresno

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contends it is an additional insured under the Policy.

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2.

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Philadelphia believes that the dispute over whether Philadelphia

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must indemnify Fresno should be submitted to arbitration in

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accordance with the arbitration clause of the Future Farmers

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Policy.

Memo at

Philadelphia has refused to defend or indemnify Fresno.

Id.

Id.

Fresno has declined to acknowledge the arbitration
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requirement.

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Fresno to submit the coverage dispute to binding arbitration

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pursuant to the arbitration clause in the Future Farmers Policy.

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Petition ¶ 11.

Id.

Philadelphia now moves for an order requiring

Fresno did not oppose Philadelphia’s petition.

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II.

OPINION

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A.

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Philadelphia submitted a request for judicial notice

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Judicial Notice

(“RJN”) (Doc. #9) of the following items: (1) Philadelphia’s

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petition to compel arbitration filed in this action on March 9,

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2016 (RJN, Exh. #1); (2) the first amended complaint in Sailors

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v. City of Fresno, Fresno Superior Court Action No. 14 CE CG

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00069 MBS (RJN, Exh. #2); and (3) the complaint in Reef Sunset

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Unified School District v. City of Fresno, Fresno Superior Court

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Action No. 14 CE CG 00807 (RJN, Exh. #3).

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Philadelphia’s request for judicial notice.

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Fresno did not oppose

A court may take judicial notice of a fact that is not

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reasonably disputed if it “can be accurately and readily

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determined from sources whose accuracy cannot reasonably be

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questioned.”

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take judicial notice of “matters of public record.”

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Fin. Advisors Inc. v. Schwab Investments, 779 F.3d 1036, 1042

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(9th Cir. 2015).

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public record and are not subject to reasonable dispute, the

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Court takes judicial notice of all three exhibits.

Fed. R. Evid. 201(b)(2).

Courts are allowed to
Northstar

Since all three exhibits are part of the

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B.

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The FAA permits a party “aggrieved by the alleged failure,

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Legal Standard

neglect, or refusal of another to arbitrate” in accordance with a
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written arbitration agreement to petition a district court for an

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order directing the parties to proceed to arbitration.

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§ 4.

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“determining [1] whether a valid arbitration agreement exists

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and, if so, [2] whether the agreement encompasses the dispute at

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issue.”

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1010, 1012 (9th Cir. 2004).

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favoring arbitral dispute resolution,” Simula, Inc. v. Autoliv,

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Inc., 175 F.3d 716, 720 (9th Cir. 1999), and courts have been

9 U.S.C.

When deciding such a petition, the court’s sole role is

Lifescan, Inc. v. Premier Diabetic Sevs., Inc., 363 F.3d
There is a “strong federal policy

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directed to resolve “any doubts concerning the scope of

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arbitrable issues . . . in favor of arbitration.”

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Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983).

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As such, the Supreme Court has held that a party seeking to avoid

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arbitration under the FAA bears the burden of proving that the

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claims are unsuitable for arbitration.

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Alabama v. Randolph, 531 U.S. 79, 91-92 (2000).

Moses H. Cone

Green Tree Fin. Corp.-

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C.

Analysis

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As noted above, Fresno did not oppose Philadelphia’s

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petition to compel arbitration and therefore failed to challenge

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“the strong federal policy favoring arbitral dispute resolution.”

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Simula, 175 F.3d at 720.

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grant Philadelphia’s petition.

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(“the party resisting arbitration bears the burden of proving

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that the claims at issue are unsuitable for arbitration.”).

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Still, the Court must analyze whether the arbitration agreement

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is valid between Philadelphia and Fresno and whether it covers

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their present dispute.

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On that basis alone, the Court could
Green Tree Fin, 531 U.S. at 91

Lifescan, 63 F.3d at 1012.

A valid arbitration agreement certainly exists between
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Philadelphia and Future Farmers – the two signatories to the

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Future Farmers Policy.

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“either party may make a written demand for arbitration” if

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“[Philadelphia] and [Future Farmers] do not agree whether

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coverage is provided . . . for a claim made against the insured.”

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Larkin Decl., Exh. 11, at 14.

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arbitration agreement between Philadelphia and Future Farmers may

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also bind Fresno even though Fresno is not an official signatory

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to the policy. Since Fresno did not file any opposition to the

The Future Farmers Policy states that

The issue is whether this valid

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motion to compel arbitration, the Court presumes that Fresno

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concedes that it is bound by the arbitration agreement.

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Even though Fresno was not a signatory to the Future Farmers

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policy, Fresno is seeking to benefit from the policy by claiming

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that it is an additional insured and that Philadelphia must

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indemnify and defend Fresno in the Sailors litigation pursuant to

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the Policy.

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Farmers Policy, it cannot then turn around and argue that the

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arbitration clause in the Policy does not apply to Fresno.

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Ninth Circuit has held that “equitable estoppel precludes a party

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from claiming the benefits of a contract while simultaneously

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attempting to avoid the burdens that contract imposes.”

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Union Sec. Life Ins. Co., 555 F.3d 1042, 1045 (9th Cir. 2009);

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Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006)

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(“nonsignatories have been held to arbitration clauses where the

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nonsignatory knowingly exploits the agreement containing the

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arbitration clause despite having never signed the agreement.”).

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Thus, the arbitration agreement is valid and enforceable between

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Philadelphia and Fresno.

Given that Fresno seeks to benefit from the Future

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The

Mundi v.

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Once the court concludes that the parties have entered into

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a valid arbitration agreement, the court must then determine

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whether the agreement encompasses the dispute at issue.

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Lifescan, 363 F.3d at 1012.

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looks to the language of the agreement.

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House, Inc., 534 U.S. 279, 289 (“Absent some ambiguity in the

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agreement, [] it is the language of the contract that defines the

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scope of disputes subject to arbitration.”).

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Policy states that arbitration may be initiated to determine

To determine this, the court first
E.E.O.C. v. Waffle

The Future Farmers

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“whether coverage is provided . . . for a claim made against the

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insured.”

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and Fresno dispute whether coverage under the Future Farmers

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Policy extends to the area in which Sailors was injured, the

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arbitration clause clearly encompasses the dispute in this case.

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Thus, Philadelphia has demonstrated that there exists a valid

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arbitration agreement that covers the dispute over whether

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Philadelphia must indemnify and defend Fresno in the underlying

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Sailors litigation.

Larkin Decl., Exh. 11, at 14.

Given that Philadelphia

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III.

For the reasons set forth above, Philadelphia’s motion to

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compel arbitration is GRANTED.

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arbitration.

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ORDER

The matter is REMANDED to

The case is DISMISSED.

IT IS SO ORDERED.
Dated: July 12, 2016

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