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Williams v. Atlantic Specialty Insurance Co.

United States District Court, D. Arizona

May 2, 2018

Willie F Williams, Jr., Plaintiff,
Atlantic Specialty Insurance Company, Defendant.



         Defendant's Motion for Order to Compel Arbitration and Stay Proceedings is before the Court. Plaintiff filed an opposition and Defendant filed a reply. The Court determined that oral argument was not required to resolve this motion based on the quality of the briefs.

         Defendant Atlantic Specialty Insurance Company (Atlantic) moves for an Order, pursuant to Arizona Revised Statutes (A.R.S.) § 12-1501, compelling Plaintiff to submit to arbitration pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § § 1, et seq., and/or the Arizona Uniform Arbitration Act, A.R.S. § § 12-1501, et seq., on the grounds that all of Plaintiff's claims are subject to an enforceable agreement to arbitrate. In addition, Defendant moves this Court for an Order staying this action, if arbitration is ordered, until the completion of the arbitration. A.R.S. § 12-1502(D).


         Defendant Atlantic, the Underwriter, issued an Occupational Accident Insurance Policy (Policy) to the Trucking Industry Group Insurance Trust (TIGIT), the Policyholder, of which Andrews Van Lines (Andrews) was the Participating Organization. (Doc. 11-2 at 32.) Plaintiff Willie F. Williams, aka Williams Trucking, works as an Independent Contractor for Andrews, a Carrier, based on the contractual relationship between them. (Doc. 14-1 at 1.) Plaintiff is in the business of transporting household goods and freight by motor vehicle. The Policy was effective beginning May 1, 2014. Plaintiff alleges and Defendant agrees, for purposes of this motion, that he is the Insured Person under the Policy as he worked for Andrews, with his premium payment deducted from his paycheck. (Doc. 14-3 at 1.) Obtaining this Policy was a condition of his employment. “The reasonable expectation of the parties was that the policy would insure Plaintiff for the loss of his ability to perform his then occupation as a commercial truck driver of household goods which included duties of loading and unloading household goods involving heavy lifting greater than 20 lbs.” (Complaint, Doc. 1-3 at 8 ¶¶22-25.)

         On December 16, 2014, Plaintiff fell from a ladder while moving household goods during a job for Andrews. (Doc. 1-3 at 9.) He was severely injured and lost consciousness for up to 30 minutes. Id. He reported the claim to Atlantic on December 16, 2014, but had difficulty obtaining financial assistance with getting medical attention. (Doc. 1-3 at 10.) The injuries interfered with his ability to work. Id. Plaintiff was unsuccessful obtaining payments on this medical bills by Atlantic so he was forced to seek treatment from the Veteran's Administration (VA). Id. Plaintiff did not get his first MRI on the left shoulder until September 23, 2016. Id. The result showed a severe rotator cuff tear. (Doc. 1-3 at 11.) Plaintiff was unable to return to his former job and medical doctors advised him that he could not return to his job as a commercial truck driver. He had ongoing extreme pain and decreased range of motion in his left shoulder as a result of the fall. Over six months after the claim was reported, Plaintiff received a check dated June 22, 2015 for $3, 500.00. (Doc. 1-3 at 11.) Plaintiff finally made a demand for payment of all benefits owed under the policy on November 6, 2017. Defendant responded that no other benefits were warranted. Shortly thereafter, Plaintiff filed the action in state court for breach of contract, bad faith and declaratory judgment directed to the arbitration clause of the policy. (Doc. 1-3 at 18.)

         One of the terms and conditions of the Policy is the Arbitration Provision found in Section VII of the Policy. That Arbitration Provision provides, as follows:

Arbitration. Any contest to a claim denial and/or any dispute in connection with a claim under this Policy will be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. The arbitration will occur at the offices of the American Arbitration Association nearest to the Insured Person or the person claiming to be the beneficiary. This provision does not apply if the Insured Person or the person claiming to be the beneficiary is a resident of a state where the law does not allow binding arbitration in an insurance policy, but only if this Policy is subject to its laws. In such a case. binding arbitration does not apply.
This Arbitration provision permanently bars the institution of any individual or class action lawsuit brought by the Insured Person or beneficiary. With this binding Arbitration provision, the Insured Person for himself, herself or any beneficiary is waiving the right to a trial by jury.

(Doc. 11-2 at 27.)

         On December 14, 2017, Williams filed the current lawsuit against Atlantic in the Superior Court for the State of Arizona. Defendant removed the action to federal court based on diversity of citizenship. The parties agree that Arizona substantive law is applicable. Prior to filing an Answer, Defendant filed the motion to enforce arbitration and stay proceedings. Plaintiff made a written demand for a jury trial in the Complaint (Doc. 1-3 at 6) and filed with this Court. (Doc. 12).


         Under the Federal Arbitration Act (FAA), “[a] written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, ... shall be valid, irrevocable, and enforceable....” 9 U.S.C. § 2; see, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113-19 (2001)(holding that FAA applies to employment contracts except those of transportation workers) (citing 9 U.S.C. §§ 1-2); Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000); Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1294 (9th Cir. 1994). “Although [a] contract provides that [state] law will govern the contract's construction, the scope of the arbitration clause is governed by federal law.” Tracer Research Corp, 42 F.3d at 1294 (citing Mediterranean Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1463 (9th Cir. 1983)); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999) (“Federal substantive law governs the question of arbitrability.”); Chiron Corp., 207 F.3d at 1130-31 (holding that “district court correctly found that the federal law of arbitrability under the FAA governs the allocation of authority between courts and arbitrators” despite arbitration agreement's choice-of-law provision).

         “Notwithstanding the federal policy favoring it, ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.' ” Tracer Research Corp., 42 F.3d at 1294 (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960)); see French v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 784 F.2d 902, 908 (9th Cir. 1986). Where the arbitrability of a dispute is in question, a court must look to the terms of the contract. See Chiron Corp., 207 F.3d at 1130. “ ‘Any doubts concerning the scope of arbitrable issues should be resolved in favor ...

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