JE Dunn Construction Company v. Owell Precast LLC

Filing 43

MEMORANDUM DECISION AND ORDER. It is ORDERED that Olympus Precast's Cross-Petition to Compel Arbitration (Dkt. 9 ) is DENIED. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
JE DUNN CONSTRUCTION
COMPANY, a foreign business
corporation,

Case No. 4:20-cv-00158-BLW
MEMORANDUM DECISION
AND ORDER

Plaintiff/Counter Defendant,
v.
OWELL PRECAST LLC, dba
OLYMPUS PRECAST, LLC,
Defendant/Counterclaimant/
Cross-Petitioner,
v.
ERIKSSON TECHNOLOGIES, INC.,
a foreign business corporation,
Respondent on Cross-Petition,

INTRODUCTION
Before the Court is Olympus’ Cross-Petition to Compel Arbitration. Dkt. 9.
The Court ordered supplemental briefing on the cross-petition, which is now
complete.
Having fully reviewed the record, the Court finds that the facts and legal

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arguments are adequately presented in motions, the briefs on the merits, and the
record. Accordingly, in the interest of avoiding delay, and because the Court finds
that the decisional process would not be significantly aided by oral argument, this
matter will be decided on the record without oral argument. Dist. Idaho Loc. Civ.
R. 7.1. For the reasons that follow, the Court will deny Olympus’ cross-petition.
BACKGROUND
The claims in this case arise out of a contract dispute between J.E. Dunn
(JED) and Olympus, related to precast concrete roof panels used in the Grey Wolf
Project in Pocatello, Idaho. Olympus entered into a contract with JED, in which it
agreed to furnish labor, materials, and services for precast concrete work at the
project. See Memorandum Decision and Order at 3, Dkt. 31. Olympus contracted
its design obligations to Eriksson. Cross-Petition ¶ 10, Dkt. 9.
The JED-Olympus contract contained an arbitration clause. Dkt. 31. It is
undisputed that the Olympus-Eriksson contract does not contain an arbitration
clause. See Dkt. 9. Eriksson was not a party to the JED-Olympus contract.
On August 3, 2020, the Court granted JED’s petition to compel Olympus to
arbitrate. Dkt. 31. Olympus had filed a cross-petition against Eriksson, alleging it
should be compelled to join in the JED-Olympus arbitration. The Court ordered
supplemental briefing, which has now been completed.

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LEGAL STANDARD
The Federal Arbitration Act provides that “any arbitration agreement within
its scope ‘shall be valid, irrevocable, and enforceable’ and permits a party
‘aggrieved by the alleged ... refusal of another to arbitrate’ to petition any federal
district court for an order compelling arbitration in the manner provided for in the
agreement.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th
Cir. 2000) (citing 9 U.S.C. §§ 2 and 4).
By its terms, the FAA “leaves no place for the exercise of discretion by a
district court, but instead mandates that district courts shall direct the parties to
proceed to arbitration on issues as to which an arbitration agreement has been
signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985).
Accordingly, the Court’s role under the FAA is limited to determining “(1)
whether a valid agreement to arbitrate exists and, if it does, (2) whether the
agreement encompasses the dispute at issue.” Chiron Corp., 207 F.3d at 1130. The
party seeking to compel arbitration has the burden of proving each requirement.
Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). If the
Court answers yes to each of the above questions, the FAA requires that the Court
enforce the arbitration agreement in accordance with its terms. Id.
When deciding a petition to compel arbitration, a summary-judgment

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standard applies. Burch-Lucich v. Lucich, 2013 WL 5876317, at *4 (D. Idaho Oct.
31, 2013). “Under this standard, the Court will treat the facts as it would when
ruling on a motion for summary judgment, construing all facts and reasonable
inferences that can be drawn from those facts in a light most favorable to the nonmoving party.” Id. (internal quotations and brackets omitted).
ANALYSIS
It is undisputed that the contract between Olympus and Eriksson did not
contain an arbitration provision. Olympus argues that Eriksson should be
compelled to arbitrate because it is equitably estopped from avoiding arbitration.
Dkt. 9, 35. To support its theory, Olympus argues that Eriksson knowingly
exploited the JED-Olympus contract, even though it was not a signatory to that
contract – or any contract with an arbitration clause.
“Equitable estoppel precludes a party from claiming the benefits of a
contract while simultaneously attempting to avoid the burdens that contract
imposes.” Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006) (internal
quotation marks and citation omitted). In the arbitration context, “nonsignatories
have been held to arbitration clauses where the nonsignatory knowingly exploits
the agreement containing the arbitration clause despite having never signed the
agreement.” Id. (internal quotation marks and citation omitted). While, the Federal

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Arbitration Act created substantive federal law regarding the enforceability of
arbitration agreements, Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630
(2009), state law applies in determining whether a nonsignatory may be compelled
to arbitrate under a theory of equitable estoppel. Id.
The Idaho Supreme Court has held that there is no basis to compel
arbitration against a party who does not have a written agreement to arbitrate. See
Clearwater REI, LLC v. Boling, 155 Idaho 954, 959 (2014). In Clearwater, the
Court declined to adopt the defendant’s argument that nonsignatories to the
contract could be equitably estopped from refusing to arbitrate. Thus, Eriksson
may not be compelled to arbitrate under Idaho law.
Even assuming that federal law applies to determine whether a nonsignatory
can be compelled to arbitrate where it knowingly exploited the agreement
containing the arbitration clause, Comer, 436 F.3d at 1101, Eriksson did not
knowingly exploit the JED-Olympus contract.
Olympus alleges that it provided Eriksson with a copy of the “Front End”
documents, which requires that “Contracts between the Contractor and each
Subcontractor shall: (1) require each Subcontractor …to conform to the Contract
Documents….” Dkt. 36 at 25. Eriksson disputes that it ever received or reviewed a
copy of the “Front End” document. Even if it had, this does not demonstrate that it

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knowingly exploited the JED-Olympus contract. The “Front End” document is an
invitation to bid and includes various form agreements, including a proposed
contract between JED and the contractor – Olympus in this case. Dkt. 36 at 23. The
form contract contains an arbitration provision. However, it does not make
subcontractors party to the agreement, nor does it purport to bind subcontractors.
Instead it requires Olympus to include certain provisions in subsequent contracts
with its subcontractors. Olympus was not required to, nor did it, include an
arbitration agreement in its contract with Eriksson.
Olympus has presented no facts demonstrating Eriksson knowingly
exploited the JED-Olympus contract. The record establishes just the opposite.
Eriksson had a separate contract with Olympus, which does not reference the JEDOlympus contract. Eriksson never claimed any rights arising out of the JEDOlympus contract. Eriksson submitted work to Olympus, which in turn submitted it
to JED. Eriksson’s payment was not contingent on the JED-Olympus contract.
Accordingly, Olympus’ cross-petition will be denied.

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ORDER
IT IS ORDERED that Olympus Precast’s Cross-Petition to Compel
Arbitration (Dkt. 9) is DENIED.

DATED: November 17, 2020

_________________________
B. Lynn Winmill
U.S. District Court Judge

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