Dependable Highway Express, Inc. v. Navigators Ins.

498 F.3d 1059, 2007 U.S. App. LEXIS 20051
CourtCourt of Appeals for the Ninth Circuit
DecidedAugust 22, 2007
Docket05-56346, 05-75033
StatusPublished
Cited by367 cases

This text of 498 F.3d 1059 (Dependable Highway Express, Inc. v. Navigators Ins.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dependable Highway Express, Inc. v. Navigators Ins., 498 F.3d 1059, 2007 U.S. App. LEXIS 20051 (9th Cir. 2007).

Opinion

TALLMAN, Circuit Judge:

In this diversity action, Dependable Highway Express, Inc. (“Dependable”) appeals from a district court order staying Dependable’s domestic contract dispute against Navigators Insurance Company (“Navigators”) pending resolution of arbitration proceedings in England. We hold that the district court abused its discretion, and we remand for further proceedings.

I

Dependable, a California company, operates a warehouse in Los Angeles and a fleet of trucks to service warehouse customers. Navigators, a New York insurance company, issued indemnity insurance to Dependable for the period of November 1999 to October 2001. As the result of two cargo thefts in 1999 and 2001, Dependable incurred expenses totaling approximately $245,000 (for third-party payments to the aggrieved customers, as well as claims defense costs), which it submitted to Navigators for indemnification. When Navigators refused to reimburse Dependable, Dependable filed a complaint in California superior court on January 8, 2005, alleging breach of the insurance contract.

Shortly thereafter, Navigators commenced proceedings in the High Court of Justice, Queen’s Bench Division, Commercial Court, in London, England. Navigators sought a restraining order against Dependable to forbid Dependable from proceeding with litigation in the United States. Navigators asserted that Dependable’s insurance policy was subject to the general terms and standard conditions of its “Columbus Wording” document, which designated English arbitration as the means for resolving disputes between the parties. 1 After hearing ex parte testimony from Navigators’ English lawyer on two occasions, the English court granted an injunction and assessed court fees of roughly $23,000 against Dependable on March 11, 2005. Despite Navigators’ attempts to notify Dependable of the English proceedings, Dependable never appeared in England.

*1063 Around the same time, Navigators removed the California state case to federal court and answered Dependable’s complaint. As an affirmative defense, Navigators raised the English arbitration provision found in its Columbus Wording document. In response, Dependable filed a motion for summary judgment, which the district court “vacated,” reasoning that a motion for summary judgment was improper before discovery.

On May 20, 2005, Navigators filed a motion to dismiss or stay the federal action in light of the English proceedings. Dependable opposed Navigators’ motion, claiming that the Columbus Wording (and specifically the arbitration provisions) were not part of Dependable’s insurance policy because the schedules summarizing the policy’s key terms referred only to “Transport Wording.” Thus, in Dependable’s view, the difference between the words “Transport” and “Columbus” established that the English arbitration provision was not part of its insurance policy. 2 The district court granted Navigators’ motion for a stay in a brief minute order that acknowledged the English court’s injunction and stayed the federal proceedings “pending the resolution of the London proceedings, including arbitration.” This timely appeal followed.

II

Before considering the merits, we must first decide whether we have jurisdiction under 28 U.S.C. § 1291 to review the district court’s stay. Generally, interlocutory orders are not immediately appealable. See 28 U.S.C. § 1291 (restricting appellate jurisdiction to “final decisions”). However, in certain cases, an interlocutory order may be deemed “final” for jurisdictional purposes. See Lockyer v. Mirant Corp., 398 F.3d 1098, 1101-04 (9th Cir.2005). We hold that we have jurisdiction under § 1291 because the stay order puts Dependable “effectively out of court” under Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 9, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), and Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S. 713, 715 n. 2, 82 S.Ct. 1294, 8 L.Ed.2d 794 (1962), and because the stay is an appealable collateral order under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). 3

*1064 A

In Moses H. Cone, a federal district court issued a stay so that the parties could resolve an arbitrability issue raised in a concurrent state court action. 460 U.S. at 7, 103 S.Ct. 927. Relying on its earlier decision in Idlewild, the Supreme Court concluded that the stay was appeal-able because there would be “no further litigation in the federal forum” and the state’s decision would be res judicata, leaving the defendant “effectively out of court.” Moses H. Cone, 460 U.S. at 10, 103 S.Ct. 927. In Idlewild, a federal district court stayed an action seeking to invalidate a New York law to allow the state court the opportunity to address the plaintiffs various claims. 370 U.S. at 714, 82 S.Ct. 1294. Notably, the Court held that the stay was appealable despite the fact that the state court decision might not moot the federal proceedings. Id. at 714, 715 n. 2, 82 S.Ct. 1294 (holding that Idlew-ild was “effectively out of court” where the district court’s stay allowed the state court to address issues that would not necessarily dispose of the case); see also Lockyer, 398 F.3d at 1102 (“Even ... where the case might well come back to federal district court, Idlewild Liquor was ‘effectively out of court’ for purposes of appealability of the stay order.”).

The stay in this case presents a strong likelihood that the English proceedings will leave one of the parties “effectively out of court.” If the English arbitrators decide in Navigators’ favor, Dependable will have little recourse back in the United States district court. See Ministry of Def. of the Islamic Republic of Iran v. Gould, Inc., 969 F.2d 764, 770 (9th Cir.1992) (“The district court’s ... review of a foreign arbitration award is quite circumscribed.”); id. (noting that the party challenging a foreign award bears a substantial burden because “public policy in favor of international arbitration is strong” (internal quotation marks omitted)). 4 On the other hand, were Dependable to prevail in England, its domestic suit would be mooted, “just as Idlewild’s federal constitutional claims in the district court would have been mooted if the New York state courts had granted relief on state-law grounds.” Lockyer, 398 F.3d at 1102 (citing Terra Nova Ins. Co. v.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
498 F.3d 1059, 2007 U.S. App. LEXIS 20051, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dependable-highway-express-inc-v-navigators-ins-ca9-2007.