Eugene Water & Elec. Bd. v. MWH Ams., Inc.

426 P.3d 142, 293 Or. App. 41
CourtCourt of Appeals of Oregon
DecidedJuly 25, 2018
DocketA160312
StatusPublished
Cited by4 cases

This text of 426 P.3d 142 (Eugene Water & Elec. Bd. v. MWH Ams., Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eugene Water & Elec. Bd. v. MWH Ams., Inc., 426 P.3d 142, 293 Or. App. 41 (Or. Ct. App. 2018).

Opinion

DeVORE, P.J.

*144*43This case involves the procedure to compel arbitration and the applicability of a contractual arbitration provision to defendants who are not parties to the contract. We conclude that the trial court did not err in denying petitions to arbitrate or in concluding that the arbitration provision was not applicable. We affirm.

I. PROCEDURAL BACKGROUND

A. Contracts and Claims

The Eugene Water and Electric Board (EWEB) entered into an agreement with MWH Americas, Inc. (MWH) for the engineering of improvements to the Leaburg Dam on the McKenzie River. In turn, MWH facilitated the bidding process through which EWEB selected Advanced American Construction (AAC) as the general contractor for construction of the project. EWEB, as the owner of the property, and AAC, as the general contractor, executed the prime contract. AAC then engaged subcontractors MacTaggart, Scott & Company Limited (MacTaggart) and Olsson Industrial Electric, Inc. (Olsson). When the improvements failed, EWEB filed a complaint against AAC and MWH in Lane County Circuit Court on May 5, 2015. AAC filed third-party claims against MacTaggart and Olsson, and EWEB filed claims against the subcontractors in an amended complaint.

In three separate orders, the trial court rejected petitions by defendants to stay judicial proceedings and compel arbitration of EWEB's claims against AAC and MacTaggart, and the third-party claims of AAC against MacTaggart and Olsson. The court concluded that there was no enforceable agreement to arbitrate between EWEB and MacTaggart or Olsson. See ORS 36.625(1) ("On petition of a person showing an agreement to arbitrate and alleging another person's refusal to arbitrate," the court shall order the parties to arbitration, "unless it finds that there is no enforceable agreement to arbitrate."). Defendants have assigned error to each of the orders. We write to address each contention.

*44B. Order of September 9, 2015

The first order on appeal, entered on September 9, 2015, rejected a petition by AAC to compel arbitration of EWEB's claims against AAC and to stay judicial proceedings pending arbitration. We recount the proceedings to explain the order. On June 19, 2015, AAC filed a third-party complaint naming MacTaggart and Olsson as third-party defendants. Simultaneously, AAC filed a "petition to stay judicial proceeding and compel arbitration," seeking to have "the parties compelled to pursue their claims via private binding arbitration," pursuant to provisions in AAC's contract with EWEB (the prime contract). AAC alleged in its petition that EWEB and AAC had entered into a contractual relationship relating to improvements to the Leaburg Dam and that EWEB had asserted claims against AAC relating to services provided under the contract. AAC alleged that, pursuant to the contract between EWEB and AAC, either party was entitled to request arbitration. AAC alleged that, in light of the contractual provisions, the court should stay judicial proceedings and the parties should be compelled to pursue their claims via private, binding arbitration. Critically, as we will later explain, AAC's petition did not allege that EWEB had refused a request to arbitrate any claims between EWEB and AAC.

AAC also sought a stay of the third-party proceeding pending arbitration "to have the entirety of these third party claims also abated and compelled to independent private binding arbitration." On July 2, 2015, MWH filed a response to AAC's petition and an answer and affirmative defenses to EWEB's complaint. MWH did not seek arbitration.

On July 6, 2015, EWEB filed a response to AAC's petition, asserting that AAC

"has no power to cut off EWEB's jury trial right and right to immediate recourse against MWH . The contract between EWEB and MWH does not include an arbitration provision *** and MWH has not consented to arbitration."

(EWEB's emphasis and boldface.) EWEB acknowledged, however, that EWEB and AAC had a contractual agreement for arbitration *145and asked the court to deny the stay "to the extent that it includes any parties other than EWEB and *45[AAC]." (Emphasis added.) EWEB requested an order "establishing parallel litigation tracks, allowing EWEB to simultaneously pursue its claims against [AAC] in arbitration and its claims against MWH here, in Lane County Circuit Court." On July 17, 2015, AAC replied that it conceded that "[t]he intent of the pending Petition was to address those claims between AAC and EWEB."1

On August 26, 2015, third-party defendant MacTaggart filed a response to AAC's petition, denying "that it may be compelled to arbitrate the claims asserted by AAC." MacTaggart noted that AAC had not produced any signed written agreement between AAC and MacTaggart requiring arbitration. Nevertheless, "in the interest of efficient resolution of all claims and judicial economy," MacTaggart agreed to consent to "participated in such arbitration" on certain conditions, including the conditions that it be "permitted to provide input on the choice of the third arbitrator (the other two having already been selected by AAC and EWEB)," and that MacTaggart "will not be deemed to have waived any right, defense or claim of any kind by consenting to arbitration."

On the same day, August 26, 2015, EWEB and AAC filed a "stipulation to stay proceedings" between EWEB and AAC pending resolution of the arbitration. Their filing stated that AAC and EWEB

"hereby stipulate to entry of an order staying proceedings related to claims between EWEB and [AAC] in this case, until resolution of Arbitration of the claims between EWEB

*46and [AAC]. This Stipulation does not stay the remaining claims pending in this case between any other parties."

On August 31, 2015, each of the parties appeared at a hearing on the petitions before Judge Carlson. At the hearing, counsel for EWEB expressed doubt about the desirability of the arbitration to which it had stipulated. EWEB's misgivings were based on MacTaggart's position that it could not be compelled to arbitrate the third-party claims asserted by AAC and by MWH's choice not to participate in private arbitration. EWEB's counsel observed:

"[W]e end up with a very unattractive procedural posture standing here today. ***
"EWEB's strong preference is to have everything come in a single forum, all at once, quickly, so that it can recover and pay for the repairs happening at the Leaburg Dam right now. So the issue is what to do with this stipulation.
"Standing here today, I'd ask that we just set this stipulation aside, look at what's best for the Court and the parties.

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Bluebook (online)
426 P.3d 142, 293 Or. App. 41, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eugene-water-elec-bd-v-mwh-ams-inc-orctapp-2018.