EUGENE WATER AND ELECTRIC BOARD, an Oregon municipal corporation, Plaintiff-Respondent,
MWH AMERICAS, INC., a foreign corporation, Defendant, and ADVANCED AMERICAN CONSTRUCTION, INC., an Oregon corporation, Defendant-Appellant. ADVANCED AMERICAN CONSTRUCTION, INC., an Oregon corporation, Third-Party Plaintiff-Appellant,
MacTAGGART, SCOTT & COMPANY LIMITED, a foreign business entity; and Olsson Industrial Electric, Inc., an Oregon corporation, Third-Party Defendants-Appellants.
and submitted March 2, 2017
County Circuit Court 15CV11521; Charles D. Carlson, Judge.
(Orders entered September 9, 2015, and January 21, 2016),
Karsten H. Rasmussen, Judge. (Opinion entered December 10,
M. Johnson argued the cause for appellant Advanced American
Construction, Inc. Also on the briefs were Dan Gragg and
Seifer, Yeats, Zwierzynski & Gragg, LLP.
Jonathan Henderson argued the cause for appellant Olsson
Industrial Electric, Inc. Also on the briefs was Davis
Rothwell Earle & Xochihua, P.C.
Or.App. 42] Susan T. Alterman, Robert B. Lowry, Mathew W.
Lauritsen, and Kell, Alterman & Runstein, L.L.P., fled
the brief for appellant MacTaggart, Scott & Company
Limited. On the reply brief were Eileen I. McKillop and
M. Nokes argued the cause for respondent. Also on the brief
were Nicole A. W. Abercrombie and Cable Huston LLP.
DeVore, Presiding Judge, and Garrett, Judge, and James,
action brought by the Eugene Water and Electric Board (EWEB)
for breach of contract and negligence, defendants appeal from
three orders of the trial court denying defendants'
petitions to stay judicial proceedings and compel arbitration
between EWEB, defendants, and third-party defendants under
ORS 36.625. Held: The trial court did not err in
denying the petitions to stay proceedings and to compel
arbitration. As between EWEB and defendant Advanced American
Construction (AAC), and as between AAC and the third-party
defendants MacTaggart, Scott & Company Limited
(MacTaggart) and Olsson Industrial Electric, Inc. (Olsson),
the court did not have authority to compel arbitration and
stay proceedings because those parties had not refused to
arbitrate, as required by ORS 36.625(1). As between EWEB and
defendants MacTaggart and Olsson, the court did not err in
refusing to compel arbitration and stay proceedings, because
EWEB had not agreed to submit its claims against those
parties to arbitration.
Or.App. 43] DeVORE, P. J.
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.
Contracts and Claims
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
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.
Or.App. 44] B. Order of September 9, 2015
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.
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
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
(EWEB's emphasis and boldface.) EWEB acknowledged,
however, that EWEB and AAC had a contractual agreement for
arbitration and asked the court to deny the stay "to the
extent that it includes any parties other than EWEB
and [293 Or.App. 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
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."
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 [293 Or.App. 46] and [AAC]. This Stipulation does not
stay the remaining claims pending in this case between any
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. The likelihood of us resolving the arbitration
with just AAC, prior to what the Court expects in terms of
judicial finality at the trial level, is incredibly low and
will be very complicated and expensive, not just for EWEB as
a public entity, but for the other businesses that are
involved in this dispute.
"So EWEB would like for all of this to proceed in this
court all on one schedule and meet this court's docket
event, EWEB added that it would not agree to arbitration of
the third-party claims against MacTaggart.
counsel did not have a signed copy of MacTaggart's
contract with AAC, but took the position that provisions in
the prime contract between EWEB and AAC, including a
"flow-down" provision, authorized it to consent to
arbitration, and that it would do so.
counsel stated that Olsson did not have an arbitration
provision in its agreement with AAC and took the position
that the prime contract provided for arbitration between
only EWEB and AAC. Olsson took a neutral [293
Or.App. 47] position as to a stay, expressing a preference
for all claims to be litigated in one forum for the sake of
for A AC asked, in light of EWEB's expressed misgivings
that seemingly suggested a "refusal" to arbitrate,
that the court compel arbitration as to EWEB's claims
against AAC pursuant to ORS 36.625(1) and stay any ...