Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-01791/USCOURTS-caed-2_07-cv-01791-0/pdf.json

Parties Involved:
Arch Insurance Company
Cross Claimant
Performance Excavators, Inc.
Plaintiff
Tenax Corporation
Cross Defendant

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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.

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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. Having considered all the papers submitted in

conjunction with this matter, the COURT NOW RULES AS

FOLLOWS:

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1 Hereinafter “AIC”.

2 Hereinafter “Tenax”.

3 Hereinafter “BWC”. 

1. JOINDER OF ARCH INSURANCE COMPANY TO TENAX

CORPORATION’S MOTION TO STAY

As a preliminary matter, Arch Insurance Company’s1

joinder to Tenax Corporation’s2 Motion to Stay is

granted because the companies are similarly situated in

regard to the resolution of this Motion. 

2. MOTION GRANTED AS TO ARCH INSURANCE COMPANY

The Motion to Stay is GRANTED as to AIC. PEI is

involved in pending arbitration with the Barber-Webb

Company.3 PEI’s claim against AIC is predicated on a

performance bond between AIC and BWC. Thus, PEI has no

claim against AIC until PEI establishes the liability of

BWC. It would be fundamentally unfair to allow PEI to

proceed against AIC in litigation while also engaging in

arbitration with BWC, since this essentially subjects

BWC to the same claim in litigation and arbitration.

3. MOTION GRANTED IN PART, DENIED IN PART AS TO TENAX 

CORPORATION

The Motion to Stay is GRANTED in PART and DENIED in

PART as to Tenax. PEI’s fifth cause of action, for

implied indemnity against Tenax, is expressly dependent

on the outcome of PEI’s arbitration claim against the

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28 4 Hereinafter “RDA”.

Chico Redevelopment Agency.4 If PEI prevails in

arbitration against RDA’s counter-claim, PEI’s indemnity

action against Tenax will cease to exist. Therefore,

PEI’s fifth cause of action is stayed until its

arbitration is completed.

For PEI’s second, third, and fourth causes of

action, Tenax does not qualify for either a mandatory or

discretionary stay. Tenax is not a signatory to PEI’s

arbitration agreement with BWC and RDA. The Seventh and

Eighth Circuits have held that a movant is only entitled

to a mandatory stay under 9 U.S.C. §3 if it is a party

to the arbitration agreement. IDS Life Ins. Co. v.

SunAmerica, Inc., 103 F.3d 524, 529 (7th Cir. 1997); 

AgGrow Oils, L.L.C. v. Nat’l Union Fire Ins. Co., 242

F.3d 777, 782 (8th Cir. 2001). Even when courts have

applied the mandatory stay provision to a non-signatory,

they have required “exceptional circumstances.” Adams

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

2001). The Court found such exceptional circumstances

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

Harvey, the signatories to the arbitration agreement

were shareholders in the non-signatory. Moreover, the

allegations against the non-signatory were based upon

actions taken by a signatory. Here, however, no such

exceptional circumstances exist. No party in PEI’s

arbitration agreement has a stake in Tenax, and PEI’s

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allegations against Tenax are based on Tenax’s actions.

There is insufficient basis to grant Tenax’s

request for a discretionary stay. Although PEI’s claims

in litigation and arbitration contain common operative

facts, PEI’s claims in arbitration are separable from

its claims against Tenax. Specifically, PEI’s action

against Tenax for breach of contract revolves around

Tenax’s alleged failure to provide materials, while

PEI’s actions against Tenax for intentional and

negligent interference with contract relations revolve

around Tenax’s independent contact with RDA. Since the

adjudication of these causes of action does not

expressly depend on the results of PEI’s arbitration

claims against BWC or RDA, a stay is not necessary.

4. CONCLUSION

Based on the reasons stated above, Defendants’

Joint Motion to Stay is GRANTED as to AIC, and GRANTED

in PART, DENIED in PART as to TENAX.

IT IS SO ORDERED.

 

 HONORABLE RONALD S.W. LEW

 Senior, U.S. District Court Judge

DATE: January 31, 2008

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