United States District Court, D. Montana, Billings Division
GALILEA, LLC. And TAUNIA KITTLER, Plaintiffs,
PANTAENIUS AMERICA LIMITED, ANDREA M. GIACOMAZZA, AGCS MARINE INSURANCE COMPANY, LIBERTY MUTUAL INSURANCE COMPANY, and TORUS INSURANCE COMPANY, Defendants.
P. WATTERS UNITED STATES DISTRICT JUDGE.
the Court are United States Magistrate Judge Timothy
Cavan's findings and recommendations filed February 15,
2019. (Doc. 27). Judge Cavan recommends this Court grant
Defendants AGCS Marine Insurance Company, Liberty Mutual
Insurance Company, and Torus Insurance Company's
("Insurer Defendants") Motion to Compel
Arbitration, Motion to Dismiss and/or Motion to Stay (Doc.
2), grant Defendant Pantaenius America Limited's
("Pantaenius") Motion to Compel Arbitration, Motion
to Dismiss, and/or Motion to Stay (Doc. 6) as to Galilea
LLC's claims and dismiss Galilea's claims against
Pantaenius, deny Pantaenius' Motion to Compel Arbitration
(Doc. 6) as to Taunia Kittler's claims, and stay this
action pending arbitration between Galilea and Pantaenius.
filed their objections to Judge Cavan's findings and
recommendations. (Doc. 32). As Insurer Defendants pointed out
in their response (doc. 36 at 2-3), Plaintiffs objections
were filed three days after they were due, in violation of 28
U.S.C § 636(b)(1) and Fed. R. Civ. Pro. 6. Nevertheless,
while the failure to object (by failing late objections)
waives all objections to the findings of fact, Turner v.
Duncan, 158 F.3d 449, 455 (9th Cir. 1999), it does not
relieve this Court of its burden to review de novo the
magistrate judge's conclusions of law. Barilla v.
Ervin, 886 F.2d 1514, 1518 (9th Cir. 1989). For the
reasons discussed below, this Court adopts Judge Cavan's
Findings and Recommendations in part and rejects them in
findings and recommendations, Judge Cavan determined that
Kittler should be compelled to arbitrate of her claims
against the Insurer Defendants because she is seeking direct
benefits under the insurance policy, and her claims fall
within the scope of the policy's arbitration agreement.
(Doc. 27 at 11-12). Judge Cavan also determined that
Pantaenius can compel Galilea into arbitration because Judge
Cavan found that Pantaenius can enforce the terms of the
insurance application and that as a named insured on the
application, Galilea is bound by the application's
arbitration provision. (Id. at 14-15). In contrast,
Judge Cavan determined that because Pantaenius cannot point
to a direct benefit that Kittler is seeking to enforce under
the application, she is not bound by the application's
arbitration provision. (Id. at 15-16). Judge Cavan
determined that because Kittler and Galilea's claims are
identical, this action should be stayed pending arbitration
between Galilea and Pantaenius. (Id. at 18).
moved to amend her complaint to remove Counts VIII and IX.
Assuming she is allowed to remove these counts, Plaintiffs
assert that Judge Cavan's determination that she must
arbitrate her claims no longer applies. Kittler argues she
has not received and is not seeking any direct benefit under
the policy, so cannot be equitably estopped from denying the
obligation to arbitrate under the policy. (Doc. 32 at 2-3).
Plaintiffs also assert that under the Ninth Circuits'
decision in Galilea, LLC v. AGCS Marine Ins. Co.,
879 F.3d 1052, 1056 (9th Cir. 2018), the insurance
application is not a contract and cannot be used to compel
Galilea to arbitrate its claims against Pantaenius.
(Id. at 5). The Court reviews these issues in order.
Kittler's Claims Against the Insurer
has moved to amend her complaint to dismiss Counts VIII and
IX so that she can avoid equitable estoppel under the direct
benefits theory. (Doc. 32 at 2-3). Notably, Insurer
Defendants already moved to dismiss these counts in their
Motion to Dismiss before the Court. (Doc. 24 at 6-11). Both
parties agree the counts have no merit, and the Court finds
that the two counts should be dismissed.
he determined that Kittler must arbitrate her claims, Judge
Cavan did not address the Insurer Defendants' motion to
dismiss arguments as to Kittler's remaining claims. With
the dismissal of Counts VIII and IX, however, the basis for
Judge Cavan's determination that Kittler must arbitrate
under the direct benefits theory is removed. The Court finds
it appropriate to recommit this matter to Judge Cavan so he
can analyze the remaining arguments in Insurer
Defendants' motion to dismiss in the first instance.
The Insurance Application is Not a Contract
assert that because the Ninth Circuit held that the insurance
application is not a contract, it cannot be used to compel
Galilea to arbitrate its claims against Pantaenius. Insurer
Defendants argue that the Ninth Circuit did not address the
question of whether any arbitration agreement applied to
claims against Pantaenius, so that decision does not preclude
Pantaenius from using the application to compel arbitration.
The Court agrees with Plaintiffs.
Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052,
1056 (9th Cir. 2018), the Ninth Circuit considered whether
Galilea's insurance application was "an agreement to
which the federal law of arbitrability could apply."
Id. There, the Insurer Defendants argued that the
application's arbitration provision should govern the
dispute under the FAA, like Pantaenius asserts in this case.
Id. at 1057. Galilea argued, as it does here, that
the application did not evidence mutual assent to a contract
or to arbitration. Id. The Ninth Circuit determined
that under New York law, made applicable by the policy and
the application, the application was not a contract because
the application was not attached to the policy at the time of
delivery. Id. As a result, the Ninth Circuit
determined that the federal law of arbitrability could not
apply to the application's arbitration clause.
analysis from that case directly applies to this case.
Regardless of which party is trying to enforce the
application, the Insured Defendants in that case or
Pantaenius in this case, the application is not a contractual
agreement under New York law, so its arbitration clause is
unenforceable. Accordingly, Pantaenius cannot compel Galilea
or Kittler to arbitrate under the insurance application
provision. The Court sustains Plaintiffs' objection to
Judge Cavan's findings and recommendations regarding
Galilea on this issue.