Court Opinion

ID: 4183195
Source: CourtListenerOpinion
Date Created: 2017-07-03 20:15:42.840145+00
Date Added: 2024-06-11T07:47:18.760241
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

RAVEN OFFSHORE YACHT,
SHIPPING, LLP,
                                                  No. 75935-3-1
                     Appellant,
                                                  DIVISION ONE
       V.

F.T. HOLDINGS, LLC, a Washington                  PUBLISHED OPINION
limited liability company,

                     Respondent.                  FILED: July 3, 2017

       SPEARMAN, J. — Whether a specific dispute is within the scope of an

arbitration agreement is generally a question for the court. But the parties may,

by contract, delegate the issue of arbitrability to the arbitrator. By incorporating

the rules of an arbitration body, the parties give clear and unmistakable evidence

that they agree to be bound by those rules, including on the issue of arbitrability.

       F.T. Holdings, LLC (FT), entered into a contract with Raven Offshore

Yacht Shipping, LLP (Raven). The contract included an arbitration clause, under

which the parties agreed to arbitrate disputes according to the rules of the

Maritime Arbitration Association (MAA). FT later brought claims of negligence,

negligent misrepresentation, and violations of the consumer protection act (CPA),

chapter 19.86 RCW, against Raven. Raven moved to compel arbitration. The trial

court denied the motion. But because the parties agreed to arbitration according
No. 75935-3-1/2

to MAA rules, and those rules entrust questions of arbitrability to the arbitrator,

we reverse.

                                       FACTS

       FT owned the yacht Nanea. In August 2015, FT entered into a contract

with Raven to transport the Nanea from Florida to British Columbia. The yacht

was to be shipped as cargo onboard an ocean carrier. Under the contract's terms

and conditions, FT was required to maintain various types of insurance. The

contract specifies a total price of $101,480, a price that included transport and

"Lloyd's Cargo Insurance in the amount of 2.9 Million USD value." Clerk's Papers

(CP) at 21. The contract also includes an arbitration clause in which the parties

agreed to resolve disputes arising from the contract through arbitration

"conducted in accordance with the Rules of the Maritime Arbitration Association

of the United States." CP at 27.

       The Nanea was transported to British Columbia. During transport,

electricity onboard the Nanea was disconnected and, as a result, the yacht's

bilge pumps were not functional. The yacht took on water during shipping and

suffered damage amounting to about $300,000. FT filed a claim with Lloyd's

insurance. Lloyd's denied the claim because the Nanea's bilge pumps were not

operable when the damage occurred.

       FT filed suit against Raven and Raven's managing partner, Richard

Gladych. FT alleged that it discussed insurance with Gladych in July 2015. FT

asserted that, during these discussions, Gladych acted for and on behalf of

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No. 75935-3-1/3

Raven; Gladych represented that he was an insurance broker with expertise in

obtaining appropriate insurance for transporting a yacht as cargo;

FT agreed to entrust Gladych with insurance arrangements; and the July 2015

discussions and agreement with Gladych induced FT to enter into the August

2015 contract with Raven. FT alleged that Gladych did not have a valid insurance

broker's license and the insurance he procured was not suitable for the Nanea's

transportation onboard an ocean carrier. FT asserted claims for negligence,

negligent misrepresentation, and violations of the CPA. Raven moved to compel

arbitration. The trial court denied the motion.

                                   DISCUSSION

       Raven appeals the trial court's denial of its motion to compel arbitration.

An arbitration clause is a matter of contract and is enforceable as a contract

term. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S. Ct. 1740, 179
L. Ed. 2d 742 (2011) (citing Buckeye Check Cashing, Inc., v. Cardegna, 546 U.S.
440, 443, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006)). An arbitration agreement

only applies to those issues the parties have agreed to submit to arbitration.

Satomi Owners Ass'n v. Satomi, LLC, 167 Wash. 2d 781, 810, 225 P.3d 213 (2009)

(citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S. Ct. 588,

154 L. Ed. 2d 491 (2002)).

       The threshold question of arbitrability, or whether a specific dispute is

within the scope of an arbitration agreement, is generally for the court. RCW

7.04A.060(2). But the parties may, by contract, delegate the question of

arbitrability to the arbitrator. RCW 7.04A.040(1). See First Options of Chicago,

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No. 75935-3-1/4

Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995). A

court will only find that the parties entrusted arbitrability to the arbitrator where

the contract provides "[c]lear and unmistakabl[e] evidence" that the parties so

agreed. First Options, 14 U.S. at 944-45 (quoting AT& T Technologies, Inc. v.

Communications Workers of Am., 475 U.S. 643, 649, 106 S. Ct. 1415, 89
L. Ed. 2d 648 (1986)). We review the trial court's decision on a motion to compel

arbitration de novo. Otis Housing Ass'n, Inc., v. Ha, 165 Wash. 2d 582, 586, 201
P.3d 309 (2009).

       The arbitration clause in this case applies to "[d]isputes arising from this

Contract" and specifies that arbitration is to be "conducted in accordance with the

rules of the Maritime Arbitration Association of the United States." CP at 27. As

relevant here, MAA Rule 9(a) states:

       Unless the parties otherwise agree, the arbitral tribunal shall have
       the power to decide all issues arising out of or related to any claim
       or response, or agreement to arbitrate an existing dispute. This
       includes not only the merits of the dispute but any issues with
       respect to the jurisdiction of the arbitral tribunal and the existence,
       scope or validity of the underlying arbitration agreement.

MAR. ARBITRATION ASS'N OF THE U.S., ARBITRATION RULES r. 9(A) (rev. Feb. 2008),

http://www.maritimearbitration.com/files/MAA%20Arbitration%20Rules%200208.

pdf [https://perma.cc]. (Emphasis added). Raven asserts that MAA rules

empower the arbitrator to decide questions of arbitrability and that, by

incorporating MAA rules, the parties agreed to the rules' arbitrablity provision. FT

contends that the mere incorporation of MAA rules is insufficient evidence that

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No. 75935-3-1/5

the parties entrusted the question of arbitrability to the arbitrator.1

        Washington courts have apparently not addressed the effect of

incorporating the rules of an arbitration body in an arbitration clause. Raven

relies on federal cases holding that, when an arbitration agreement incorporates

the rules of an arbitration body, and those rules clearly delegate questions of

arbitrability to the arbitrator, the parties have agreed to submit arbitrability to the

arbitrating body. See, Contec Corp. v. Remote Solution, Co., Ltd., 398 F.3d 205,

208 (2d Cir. 2005) ("when, as here, parties explicitly incorporate rules that

empower an arbitrator to decide issues of arbitrability, the incorporation serves

as clear and unmistakable evidence of the parties' intent to delegate such issues

to an arbitrator"); Apollo Computer, Inc. v. Berg, 886 F.2d 469, 473 (1st Cir.

1989) (holding that, by incorporating the arbitration rules of the International

Chamber of Commerce, the parties were bound by the arbitrability provision of

those rules); Terminix Intl Co., LP v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327,

1332, (11th Cir. 2005) (holding that, by incorporating the rules of the American

Arbitration Association, "the parties clearly and unmistakably agreed that the

arbitrator should decide whether the arbitration clause [was] valid.").

        FT does not address these cases. FT argues that no Washington or Ninth

Circuit authority has held that incorporation of MAA rules constitutes clear and

         1 At oral argument, FT asserted, for the first time, that Raven did not argue arbitrability
below and thus consented to the trial court's jurisidiction. We decline to consider this argument as
raised for the first time at oral argument. See State v. Johnson, 119 Wash. 2d 167, 170, 829 P.2d
1082 (1992).

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No. 75935-3-1/6

unmistakable evidence of the parties' intent to delegate arbitrability to the

arbitrator. In addressing rules with similar arbitrability provisions, however, the

Ninth Circuit agrees with the circuits cited above. See Oracle Am., Inc. v. Myriad

Grp. A.G., 724 F.3d 1069, 1074-75 (9th Cir. 2013) (considering a contract

incorporating the rules of the United Nations Commission on International Trade

Law and holding that, where sophisticated parties to commercial contracts

incorporate rules of an arbitrating body, they clearly and unmistakably agree to

be bound by arbitrability provision of those rules). FT advances no argument that

MAA rules should be treated differently than the rules of other arbitrating bodies.

       FT asserts that the only case it has located addressing the incorporation

of MAA rules is an unreported case from a Massachusetts district court. The

cited case, Micoperi, S.R.L. v. CHM Maritime, S.A.P.I de C.V., 2015 WL 997663,

is instructive.

       In that case, Micoperi contracted with CHM to charter vessels. Micoperi,

2015 WL 997663, *1. Under the contract's arbitration clause, contract disputes

were to be decided in accordance with MAA rules. Id. at *3. Micoperi submitted

tort claims to arbitraton. Id. at *1. The arbitrator ruled that the claims were outside

the scope of arbitration because they did not arise out of or relate to the contract.

Id. Micoperi then filed a motion to compel arbitration in district court, which the

court denied. Id. at *2. The court stated that MAA Rule 9(a) "unequivocally

delegates to the arbitrator the power to decide the proper scope of the arbitration,

and to rule upon what claims may or may not be arbitrable in that proceeding." Id.

at *3. Relying on case law addressing the rules of other arbitration bodies, the

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No. 75935-3-1/7

Micoperi court ruled that, by incorporating MAA rules, the parties manifested their

agreement to be bound by those rules, including on the issue of arbitrability. j.çj.

       Like the Micoperi court, we conclude that MAA Rule 9(a) unequivocally

empowers the arbitrator to decide whether a specific dispute is arbitrable. By

incorporating MAA rules, the parties clearly and unmistakably manifested their

agreement to be bound by those rules. Because the parties agreed to arbitrate

arbitrability, the trial court erred in denying Raven's motion to compel arbitration.

We do not reach the parties' arguments as to whether FT's claims are within the

scope of the arbitration agreement.

       FT contends, however, that even if Raven and FT agreed to entrust

arbitrability to the arbitrator, Gladych never agreed to arbitrate claims against

him. FT thus argues that the question of whether Gladych is bound by the

agreement must be decided by the court.

       Generally, an arbitration agreement binds only the parties to that

agreement. Satomi, 167 Wash. 2d at 810. Whether a particular person is bound by

an agreement is a threshold question of arbitrability. Id. at 809. A nonsignatory

may be bound to an arbitration agreement through contract or agency principles.

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

incorporation by reference, assumption, agency, and estoppel. Id.

       In this case, FT's complaint alleges that "at all times described above,

Defendant Gladych was acting for and on behalf of Defendant Raven." CP at 4.

FT thus posits that Gladych was acting as Raven's agent. A company's agent,

though a nonsignatory, is bound by an arbitration agreement. See Pritzker v.

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No. 75935-3-1/8

Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1122 (3d Cir. 1993)

(noting that a company can only act through its employees and "'an arbitration

agreement would be of little value if it did not extend to' its agents) (quoting Trott

v. Paciolla, 748 S. Supp. 305, 309 (E.D. Pa. 1990)). There is no threshold

dispute as to whether Gladych, as Raven's agent, is bound by the arbitration

agreement.

       Reversed.

WE CONCUR:

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