United States District Court, D. Montana, Missoula Division
AMERICAN TRUCKING AND TRANSPORTATION INSURANCE COMPANY, a Risk Retention Group, Plaintiff,
RALPH NELSON, ROBERT GORMAN, SR., BOBBY J. GORMAN, DAN DOOLEY, and WESTCHESTER SURPLUS LINES INSURANCE COMPANY, Defendants.
L. Christensen, Chief Judge.
26, 2019, the mandate of the Ninth Circuit Court of Appeals
issued. This matter has been remanded to this Court with
instructions to compel arbitration. On the day the mandate
issued, Plaintiff American Trucking and Transportation
Insurance Company ("ATTIC") filed a motion and
supporting brief asking the Court to lift the stay and to
retain jurisdiction in part. (Docs. 101 & 102.) Defendant
Westchester Surplus Lines Insurance Company
("Westchester") opposes the motion. (Doc. 104.)
ATTIC has modified its request in part, stipulating to a
continued stay of proceedings related to its claims against
Defendant Dan Dooley. (Doc. 106.) See 9 U.S.C.
§ 3 ("If any suit... be brought. . . upon any issue
referable to arbitration under an agreement in writing for
such arbitration, the court... shall.. . stay the trial of
the action until such arbitration has been had . . ..").
Thus, there is no longer any dispute that proceedings should
remain stayed pending arbitration.
several controversies remain. The Court must now determine
whether to: (1) retain jurisdiction over any motions to
confirm, modify, or vacate the arbitrators' decision; (2)
retain jurisdiction over Counts I through X of the Complaint;
and (3) specify that the only arbitrable issue in this matter
is whether Westchester breached its duty to defend under
Montana law. (Doc. 105.) The Court considers each issue in
Jurisdiction to confirm, modify, or vacate the
asks the Court to retain jurisdiction over any motion to
confirm, modify, or vacate the arbitration decision.
Westchester does not argue against retaining jurisdiction for
such purpose. Upon conclusion of the arbitration process,
either party may file a motion to confirm, modify, or vacate
the arbitration decision. 9 U.S.C. § 9-11. As this Court
continues to have jurisdiction over the stayed proceedings
against Dooley, it will also retain jurisdiction over any
Jurisdiction over Counts I through X
asks the Court to retain jurisdiction over Counts I through X
of the Amended Complaint. ATTIC did not bring these counts
against Westchester but against the other named defendants;
it has since settled its claims against all of the individual
defendants except Dooley. ATTIC seeks continuing judicial
oversight "over issues involving the resolution of
Counts I through X of the Amended Complaint, including
enforceability and reasonableness of the [stipulated
judgments between ATTIC and the individual defendants other
than Dooley]." (Doc. 102 at 5-6.) Westchester argues
that ATTIC is seeking to sidestep arbitration by construing
"Counts 1 through X, insofar as they involve the
reasonableness of the stipulated settlements, [as] somehow a
dispute between it and the settled defendants rather than
between it and Westchester." (Doc. 104 at 9 n.4.)
Westchester has the better argument.
I through X are not themselves arbitrable, as they are claims
between ATTIC an non-parties to the Westchester insurance
contract. Thus, the Court retains jurisdiction over ATTIC s
claims against Dooley, although proceedings remain stayed.
any legal issue a court would consider in deciding the
insurance coverage dispute between ATTIC and Westchester
falls under the purview of the arbitrator. The Westchester
policy provides that "[t]he Insureds and the Insurer
shall submit any dispute or controversy arising out of or
relating to this Policy or the breach, termination, or
invalidity thereof to arbitration. (Doc. 49-1 at ¶ J.)
Broad on its face, the arbitration provision also must be
"construed broadly." Chiron Corp. v. Ortho
Diagnostic Sys., Inc., 207 F.3d 1126, 1131 (9th Cir.
2000). The reasonableness of the settlements may give rise to
a "dispute or controversy .. . relating to [the]
Policy." Accordingly, to the degree that the
reasonableness of the settlements bears on Westchester's
indemnification or defense of the settled defendants, such
reasonableness falls under Count XI of the Amended Complaint.
If, after arbitration has concluded, an issue remains as to
the settlement of Counts I through X, the Court will consider
it at that time.
Choice of Law
seeks a declaration that Montana law be applied in the
arbitration. However, the Ninth Circuit squarely held that
the Court ought to have granted Westchester's motion to
compel arbitration. The Court will not sidestep the clear
ruling of the Ninth Circuit by limiting the arbitrator to the
question of whether Westchester breached its duty to defend
the individual defendants under Montana law.
the arbitration provision encompasses choice of law. The
Court cannot limit the scope of the arbitration without
ignoring the policy's broad arbitration provision and the
Federal Arbitration "liberal federal policy favoring
arbitration." Moses H. Cone Mem 7 Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Legal
issues regarding the scope of arbitrability are themselves
arbitrable. Id. at 24-25. Choice of law is one such
arbitrable issue. See Vimar Dequros y Reasequros, S.A. v.
M/V Sky Reefer, 515 U.S. 528, 541 (1995). In this
instance, the parties must raise in arbitration their
arguments regarding the appropriate state law, and the Court
will not reserve exclusive jurisdiction over the measure of
damages. If the arbitrator "exceed[s] [her] powers, or
so imperfectly execute[s] them that a mutual, final and
definite award upon the subject matter submitted was not
made," the parties may challenge the arbitrator's
decision in this Court. 9 U.S.C. § 10; see also
9 U.S.C. § 11 (allowing modification of an award under
ATTIC misstates Count XI of the Amended Complaint, through
which it sought more than a declaration that Westchester
breached its duty to defend. In Count XI, ATTIC
"s[ought] a judicial declaration of Westchester's
obligations under the Policy, the Settlement Agreement, and
Stipulated Judgment and ... a declaration that Westchester is
liable for the [$3, 121, 758.45] Stipulated Judgment, without
regards to the merits of the underlying action." (Doc.
32 at 42.) Resolution of Count XI requires determinations of:
(1) what state law applies; (2) whether Westchester violated
that law; and (3) if so, the appropriate financial remedy.
These determinations may be made by an arbitrator in the
Motion to Compel Arbitration as to ...