Court Opinion

ID: 4403282
Source: CourtListenerOpinion
Date Created: 2019-06-04 20:00:33.559934+00
Date Added: 2024-06-11T14:49:17.414440
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                           JUN 04 2019
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

AMERICAN TRUCKING AND                            No.   18-35414
TRANSPORTATION INSURANCE
COMPANY, A RISK RETENTION                        D.C. No. 9:16-cv-00160-DLC
GROUP, a Risk Retention Group,

              Plaintiff-Appellee,                MEMORANDUM*

 v.

RALPH NELSON; et al.,

              Defendants,

 and

WESTCHESTER SURPLUS LINES
INSURANCE COMPANY,

              Defendant-Appellant.

                   Appeal from the United States District Court
                            for the District of Montana
                Dana L. Christensen, Chief District Judge, Presiding

                        Argued and Submitted May 13, 2019
                               Seattle, Washington

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: KLEINFELD and FRIEDLAND, Circuit Judges, and EZRA,** District
Judge.

      Westchester Surplus Lines Insurance Company (“Westchester”) appeals

from the district court’s denial of its motion to compel arbitration. We reverse and

remand.

      The district court declined to enforce the arbitration clause in a contract

between Westchester and American Trucking and Transportation Insurance

Company (“ATTIC”), on the ground that, under Tidyman’s Management Services,

Inc. v. Davis, 330 P.3d 1139 (Mont. 2014), the insurer was estopped from asserting

contract defenses as a result of its breach of its duty to defend. We need not reach

the questions of whether the insurer did indeed breach its duty to defend, whether

its coverage applied, or whether it was estopped under Montana law from asserting

its defenses. Neither Tidyman’s nor any other Montana case that has been brought

to our attention treats an agreement to arbitrate as a contract defense.

      An agreement to arbitrate establishes how the parties choose to resolve

disputes arising out of the contract. Peeler v. Rocky Mountain Log Homes

Canada, 431 P.3d 911, 919 (Mont. 2018), reasoned that contract defenses are often

“matters for determination by an arbitrator in accordance with the agreement.” An

      **
             The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
                                           2
agreement to arbitrate is not a contract defense, since a party successfully asserting

a right to arbitrate may nevertheless have any insurance contract defenses arising

out of its policy resolved against it by the arbitrator.

      Our attention has been directed to no Montana authority, and no authority

from any other jurisdiction, establishing that an arbitration agreement is a “contract

defense,” and we are aware of none. Tidyman’s does not so hold. Montana uses

the Restatement (Second) of Contracts for its general interpretive assistance, see

Dick Anderson Constr., Inc. v. Monroe Constr. Co., LLC, 221 P.3d 675, 685

(Mont. 2009), and we are aware of nothing in the Restatement that would treat an

arbitration agreement as a contract defense, as opposed to an agreement for how

disputes arising out of the contract are to be resolved. Accordingly, the district

court ought to have granted the motion to compel arbitration.1

      REVERSED and REMANDED.

      1
          We also reject ATTIC’s arguments that it cannot be compelled to arbitrate
because it is not a party to the contract and because arbitration would interfere with
its right of access to the courts under the Montana constitution. See Comedy Club,
Inc. v. Improv W. Assocs., 553 F.3d 1277, 1287 (9th Cir. 2009) (explaining that
arbitration clauses may bind certain non-parties, including assignees); Mortensen
v. Bresnan Commc’ns, LLC, 722 F.3d 1151, 1161 (9th Cir. 2013) (holding that the
Federal Arbitration Act preempts the Montana law rule that arbitration agreements
constitute a waiver of a party’s fundamental constitutional rights to trial by jury
and access to courts).
                                            3