Eagle Rebar & Cable Company, Inc. v. Southern Industrial Contractors, LLC et al

Filing 20

ORDER granting in part and denying in part 11 Motion to Compel. Granted as to Eagle Rebar's claims against Southern Industrial and is denied as to Eagle Rebar's claims against ADS, LLC; granting 11 Motion to Stay Proceedings. This lawsuit is stayed pending arbitration of Eagle Rebar's claims against Southern Industrial. Signed by Chief District Judge Louis Guirola, Jr. on 7/20/17. (RLW)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
EAGLE REBAR & CABLE COMPANY, INC.
v.

PLAINTIFF
CAUSE NO. 1:17CV25-LG-RHW

SOUTHERN INDUSTRIAL CONTRACTORS,
LLC; ADS, LLC; and TRAVELERS CASUALTY
AND SURETY COMPANY OF AMERICA

DEFENDANTS

ORDER GRANTING IN PART AND DENYING IN PART MOTION
TO COMPEL ARBITRATION AND STAY PROCEEDINGS
BEFORE THE COURT is the Motion to Compel Arbitration and Stay
Proceedings [11] filed by the defendant Southern Industrial Contractors, LLC. No
party has responded to the Motion. After reviewing the Motion, the record in this
matter, and the applicable law, the Court finds that the Motion to Compel
Arbitration and Stay Proceedings should be granted as to Eagle Rebar’s claims
against Southern Industrial. To the extent that Southern Industrial is seeking to
compel arbitration of Eagle Rebar’s claims against ADS, LLC, another defendant
that has not made an appearance in this lawsuit, the Court finds that the Motion
should be denied. Southern Industrial’s request for a stay is granted.
BACKGROUND
Southern Industrial served as the general contractor on a construction
project at the port in Gulfport, Mississippi. The defendant Travelers Casualty and
Surety Company allegedly provided a payment bond to Southern Industrial for the
project. Southern Industrial retained the defendant ADS, LLC, and the plaintiff

Eagle Rebar & Cable Company, Inc., to work as subcontractors on the project. ADS
also retained Eagle Rebar to perform portions of ADS’s subcontract.
Eagle Rebar filed this lawsuit, claiming that the defendants have not paid it
for the work it performed pursuant to the subcontract with Southern Industrial and
the sub-subcontract with ADS. Southern Industrial seeks an order compelling
arbitration and staying this lawsuit pending arbitration.
DISCUSSION
I. MOTION TO COMPEL ARBITRATION
The Federal Arbitration Act (FAA) applies to arbitration agreements
involving interstate commerce. 9 U.S.C. '' 1, 2. Southern Industrial is a Louisiana
limited liability company, and Eagle Rebar is a Mississippi corporation. Southern
Industrial has represented to the Court that the port construction project was a
multi-million-dollar construction project involving entities and supplies from
multiple states, and no party has objected to this characterization. Since the
subcontract involved interstate commerce, the agreement to arbitrate contained in
the subcontract is governed by the FAA, which Aestablishes a liberal policy favoring
arbitration and a strong federal policy in favor of enforcing arbitration agreements.@
See New Orleans Glass Co. v. Roy Anderson Corp., 632 F. App’x 166, 169 (5th Cir.
2015) (holding that a construction subcontract was governed by the FAA); see also
Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388, 392 (5th Cir. 2002)
(discussing FAA policy favoring arbitration).

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ATo determine whether the parties agreed to arbitrate this dispute, we ask
two questions: (1) is there a valid agreement to arbitrate the claims and (2) does the
dispute in question fall within the scope of that arbitration agreement.@ Sharpe v.
AmeriPlan Corp., 769 F.3d 909, 914 (5th Cir. 2014) (internal quotation marks
omitted). Courts also Aconsider whether any federal statute or policy renders the
claims non-arbitrable.@ Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214
(5th Cir. 2003). Any doubts regarding the scope of the arbitration clause are
generally resolved in favor of arbitration. Pers. Sec. & Safety Sys. Inc., 297 F.3d at
392.
The subcontract between Southern Industrial and Eagle Rebar provides:
30.0 Notwithstanding the above, and except for Contractor’s rights to
terminate for convenience as set forth herein above, the Parties agree
to work in good faith to resolve issues that may arise under this
Subcontract or related to the Project pursuant to the following process
as a condition precedent to the filing of any legal action:
(a) First level review will be performed by Contractor’s Project
manager and Subcontractor’s counterpart. In the event the
disagreement is not resolved to both Parties’ satisfaction after
reasonable and diligent efforts, within five (5) business days from the
time a Party’s representative first provides written notice to the other
Party’s representative, the issue shall be submitted to (b) below.
(b) The Contractor’s and Subcontractor’s Senior Executive level shall
perform a second review of any unresolved issue.
(c) In the event the disagreement is not resolved within five (5)
business days to both Parties’ satisfaction after reasonable and diligent
efforts, any matter remaining unresolved may then be filed as a legal
action in a court located in the county where the Project is located.
However, Subcontractor hereby stipulates and agrees that at
the sole and exclusive option of the Contractor, any claim,
dispute[,] issue[,] or matter remaining unresolved arising from
or in any way whatsoever connected with the Subcontract or
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Project shall be submitted to binding arbitration to be
administered by the American Arbitration Association in
accordance with the American Arbitration Association
Construction Industry Arbitration Rules which arbitration
shall be conducted in Rayville, Louisiana. The Contractor’s
election to require arbitration may be made at any time within 60 days
prior to the commencement of a trial on the merits.
(Def.’s Mot., Ex. B at 11, ECF No. 11-3) (emphasis added). Based on the record
before the Court, Eagle Rebar and Southern Industrial have entered into a valid
agreement to arbitrate, and this lawsuit falls within the scope of the arbitration
agreement. Eagle Rebar has not filed a response in opposition to Southern
Industrial’s Motion to Compel Arbitration, and it has not presented any reason for
denying Southern Industrial’s Motion to Compel Arbitration. Therefore, the Motion
is granted to the extent it seeks an order compelling arbitration of Eagle Rebar’s
claims against Southern Industrial.
However, Southern Industrial also seeks an order compelling arbitration of
Eagle Rebar’s claims against ADS. The Court will not compel arbitration of claims
against a party that has not appeared in this lawsuit, particularly since Southern
Industrial has not demonstrated that it has standing to seek an order compelling
arbitration of Eagle Rebar’s claims against ADS.
II. MOTION TO STAY
A case can be stayed among non-arbitrating parties where “(1) the arbitrated
and litigated disputes involve the same operative facts; (2) the claims asserted in
the arbitration and litigation are inherently inseparable; and (3) the litigation has a
critical impact on the arbitration.” Rainier DSC 1, K.L.C. v. Rainier Capital Mgmt.,

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L.P., 828 F.3d 356, 360 (5th Cir. 2016). Since Eagle Rebar’s claims against
Southern Industrial are closely related to and inherently inseparable from its
claims against ADS and Travelers, the Court finds that the entire lawsuit should be
stayed pending arbitration of Eagle Rebar’s claims against Southern Industrial.
CONCLUSION
For the foregoing reasons, the Court finds that Eagle Rebar should be
compelled to submit its claims against Southern Industrial to binding arbitration.
Eagle Rebar’s lawsuit against Southern Industrial, ADS, and Travelers is stayed
pending the outcome of that arbitration.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion to
Compel Arbitration [11] filed by the defendant Southern Industrial Contractors,
LLC, is GRANTED as to Eagle Rebar’s claims against Southern Industrial and is
DENIED as to Eagle Rebar’s claims against ADS, LLC.
IT IS, FURTHER, ORDERED AND ADJUDGED that the Motion for a
Stay [11] filed by the defendant Southern Industrial Contractors is GRANTED.
This lawsuit is STAYED pending arbitration of Eagle Rebar’s claims against
Southern Industrial.
SO ORDERED AND ADJUDGED this the 20th day of July, 2017.

s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE

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