JAMES KELLY v. PUDN2GC

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 13, 2014
• Docket: 12-35639
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JAN 13 2014

MOLLY C. DWYER, CLERK UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

JAMES V. KELLY; et al., No. 12-35639

Plaintiffs - Appellees, D.C. No. 2:11-cv-023-JLQ

v. MEMORANDUM* PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY,

Defendant - Appellant,

And

PORT OF QUINCY, PORT OF DISTRICT NO. 1 OF GRANT COUNTY; et al.,

Defendants. JAMES v. KELLY; et al., No. 12-35700

V.

PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY and CRESCENT BAR INC.,

Defendants,

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. And

PORT OF QUINCY, PORT OF DISTRICT NO. 1 OF GRANT COUNTY,

Defendant - Appellant.

Appeal from the United States District Court for the Eastern District of Washington Justin L. Quackenbush, Senior District Judge, Presiding

Argued and Submitted November 6, 2013 Seattle, Washington

Before: SCHROEDER and PAEZ, Circuit Judges, and BENITEZ, District Judge.**

The Public Utility District No. 2 of Grant County (PUD) and Port of Quincy,

Port District No. 1 of Grant County (Port) filed an interlocutory appeal of the

district court’s denial of their joint Motion to Compel Arbitration. We have

jurisdiction pursuant to 28 U.S.C. § 1291 and 9 U.S.C. § 16(a), and we affirm.1

The district court properly determined that both PUD and Port waived their

right to compel arbitration. A party seeking to prove a waiver of arbitration must

demonstrate: (1) knowledge of an existing right to compel arbitration; (2) acts

** The Honorable Roger T. Benitez, United States District Judge for the Southern District of California, sitting by designation. 1 Because the parties are familiar with the facts and procedural history, we do not restate them here except as necessary to explain our disposition.

2 inconsistent with that existing right; and (3) prejudice to the party opposing

arbitration resulting from such inconsistent acts. Fisher v. A.G. Becker Paribus

Inc., 791 F.2d 691, 694 (9th Cir. 1986).

PUD and Port were aware of the arbitration clause, and could have

compelled arbitration of this dispute at the outset of this litigation. Plaintiffs

clearly raised claims under the 1979 lease containing the arbitration clause, both

directly and as third party beneficiaries. Particularly given the broad language of

the lease, it was not necessary for a dispute to arise between signatories to allow

PUD and Port to demand arbitration of this matter. There is no reason to

distinguish between Plaintiffs and Crescent Bar Inc., which Plaintiffs own and

control.

PUD and Port waited eleven months after the lawsuit was filed to demand

arbitration, actively litigating the case in district court. The parties conducted

discovery and litigated motions, including a preliminary injunction and a motion to

dismiss. Such activity is inconsistent with preserving the right to compel

arbitration. See Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 759 (9th

Cir. 1988) (holding that a party’s extended silence and much-delayed demand for

arbitration indicated a conscious decision to seek judicial judgment of the merits of

arbitrable claims) (internal citation omitted).

3 We agree with the district court that appellees would be prejudiced by

compelling them to arbitrate their claims. A late shift to an arbitrator would force

the parties to bear the expense of educating arbitrators and threaten to require the

appellees to relitigate matters decided by the district judge. It would waste the

time and money spent by the appellees in federal court.

A party that is aware that it has a right to compel arbitration of a dispute

cannot wait to exercise that right until the parties have expended a significant

amount of time and money to litigate that dispute in federal court. This is

especially true where the untimely exercise of an arbitration clause would allow a

party to evade future rulings of a federal judge which it fears will be unfavorable.

AFFIRMED.