97 Wash. App. 890 | Wash. Ct. App. | 1999
A person who is not a party to an agreement to arbitrate may be bound to such an agreement only by ordinary principles of contract and agency.
Powell, a seaman, suffered injuries while working on the vessel Alaskan Eight. Two corporations, Alaskan Pacific Star, Inc., and Alaska Eight Star Enterprises, Inc., owned the vessel. In 1992, Powell commenced a personal injury action under the Jones Act in federal court against these corporations and arrested the vessel Alaskan Eight to secure payment of recovery of his claim. As a condition of releasing the vessel, a federal magistrate judge ordered the corporate owners of the vessel to post a bond of $160,000 to secure payment of any judgment Powell might obtain. The owners and Sphere Drake allegedly promised Powell that they would post the required bond. Relying on those promises, Powell released the vessel. After the vessel’s release, neither the owners nor Sphere Drake posted the bond.
Thereafter, the corporate owners of the vessel dissolved. Sphere Drake, the insurer for the corporations, continued
Powell then commenced this action against Sphere Drake. He alleged that Sphere Drake had violated the Consumer Protection Act
We granted Powell’s motion for discretionary review.
I. Agreement to Arbitrate
Powell argues that the trial court erred by dismissing his suit against Sphere Drake. We agree.
The threshold question we must address is what standard of review applies to our consideration of the order of dismissal under CR 12(b). When the motion to dismiss is based on an agreement to arbitrate, the law is unsettled as to which subsection of the rule applies.
The narrow question we must decide is whether, under the circumstances of this case, the arbitration provision in Sphere Drake’s policy requires Powell, a person not a party to that agreement, to arbitrate in London. We hold that Powell is not bound to arbitrate his claims.
Enforcement of arbitration clauses in marine insurance contracts is governed by the Federal Arbitration Act.
[T]he first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute. The court is to make this determination by applying the “ ‘federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the [Federal Arbitration Act].’ ”[
But courts generally apply ordinary state law contract principles in deciding whether the parties agreed to arbitrate a particular dispute in the first place.
A plain reading of Powell’s amended complaint shows that his claims are based on alleged violations of the state Consumer Protection Act and the fraudulent conveyance act—not the policy of insurance itself. The gravamen of the former claim is that during the pendency of the prior action in federal court Sphere Drake agreed to post a bond to secure payment of the judgment Powell might obtain in exchange for release of the vessel. Sphere Drake failed to
Viewed in these ways, the respective claims are based on Sphere Drake’s alleged violations of certain statutes well after it insured the judgment debtor. The claims do not arise merely because Sphere Drake insured that judgment debtor. And Powell expressly disclaims making any claims based on the insurance policy itself.
With these points in mind, we turn to the question of whether Powell is bound by an arbitration provision in a contract to which he was not a party. In Thomson,
There, the court started with the general proposition that nonsignatories generally will be bound to arbitrate only when ordinary principles of contract and agency dictate such a result.
Sphere Drake does not and cannot contend that any of these five theories apply here to bind Powell to a clause in an agreement to which he was not a party. We conclude that the reasoning of Thomson is sound and should be applied to this case. That case is consistent with the principle that arbitration agreements are a matter of contract.
Sphere Drake relies heavily on three cases to support its argument that Powell is bound by the agreement to arbitrate between Sphere Drake and its insured.
In Aasma,
“When a plaintiff ‘bases its right to sue on the contract itself, not upon a statute or some other basis outside the contract, the*897 provision requiring arbitration as a condition precedent to recovery must be observed.’ ”[15 ]
Similarly, in Heikkila, a case brought by a seaman against Sphere Drake under Guam’s direct action statute, the court concluded: “In a dispute with the insurer, therefore, the direct action seaman is no less bound by the arbitration clause than the insured would have been.”
None of these cases involved alleged violations by the insurer that gave rise to statutory claims not based on the insurance policies themselves. Even Aasma, the case on which Sphere Drake principally relies, carved out an exception for statutory claims. And in the cases where direct action statutes were at issue, the outcomes were dictated by the wording of those statutes.
Sphere Drake contends that Powell must be bound by the arbitration clause because all of his claims necessarily
For the first time on appeal, Sphere Drake argues that Powell’s statutory claims fail because third-party claimants may not sue an insurer directly for “wrongful conduct in the course of an underlying claim, even where
II. Service of Process
Sphere Drake contends that the insufficiency of service of process provides an alternative basis for upholding the trial court’s dismissal of Powell’s claims. We disagree.
We may affirm an order of dismissal on any basis within the pleadings and proof.
A trial court does not have jurisdiction over a defendant who is not properly served.
Powell contends that RCW 4.28.080(7) cannot be read as the exclusive method for effecting service upon an alien insurer. We agree.
Under RCW 4.28.180 and .185, for instance, alien insurers can always be served directly by means of extraterritorial service.
Service on a foreign corporation under RCW 4.28.080(10) is reviewed for substantial compliance.
Here, Powell contends that he complied with RCW 4.28.080(10) when he served LaMorte Burns. Sphere Drake contends that LaMorte Burns was not its designated agent for receipt of service of process. But Powell presents an excerpt of a Sphere Drake contract designating LaMorte Burns in Connecticut as its sole agent for receipt of service of process for actions commenced in New York. No copy of the contract at issue here is in the record. Nor is there enough in the record to determine whether service on a LaMorte Burns agent in Washington, rather than Connecticut, is sufficient here. In light of this inadequate record,
We reverse the order of dismissal and remand for further proceedings.
Baker and Becker, JJ., concur.
Thomson-CSF, S.A. v. American Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1995).
RCW 19.86 and WAC 284-30.
RCW 19.40.
See e.g., Heikkila v. Sphere Drake Ins. Underwriting Management, Ltd., 1997 WL 995625 at *2 (D. Guam 1997) (noting the various subsections of Fed. R. Civ. E 12(b), which parallel our civil rules, that have been applied to motions to dismiss based on arbitration clauses).
See Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567, 575, 964 P.2d 1173 (1998) (interpretation of insurance contract is question of law, reviewed de novo).
9 U.S.C. §§ 1-307; Chapter 2 of the Federal Arbitration Act, 9 U.S.C. §§ 201-8, ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (1985).
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995).
RCW 19.40.011(7)(ii)(C).
Thomson-CSF, S.A. v. American Arbitration Ass ’n, 64 F.2d 773 (2d Cir. 1995).
Id. at 776. See also Cariaga v. Local No. 1184 Laborers Int’l Union, 154 F.3d 1072, 1074 (9th Cir. 1998) (because arbitration is a matter of contract, a party will not be required to submit to arbitration unless that party has agreed to do so); Beach Air Conditioning & Heating, Inc. v. Sheet Metal Workers Int’l Ass’n Local 102, 55 F.3d 474, 476 (9th Cir. 1995) (same).
Thomson, 64 F.3d at 776.
Aasma v. American S.S. Owners Mut. Protection & Indem. Ass’n, 95 P.3d 400 (6th Cir. 1996); Heikkila, 1997 WL 995625; McAleer v. John Does 1-10, 1996 WL 384248 (1996).
Aasma v. American S.S. Owners Mut. Protection & Indem. Ass’n, 95 F.3d 400 (6th Cir. 1996).
Aasma, 95 F.3d at 405 (emphasis added) (quoting Cheshire Place Assocs. v. West of Eng. Ship Owners Mut. Ins. Ass’n, 815 F. Supp. 593, 597 (E.D.N.Y. 1993) (vessel and marine equipment owners bound by arbitration clause because they derived their rights from application for the insurance policy containing that clause) (quoting Wells Fargo Bank Int’l Corp. v. London S.S. Owners Mut. Ins. Ass’n, 408 F. Supp. 626, 630 n.10 (S.D.N.Y. 1976) (mortgagee, who was a loss payee on an insurance policy, sued for payments allegedly due under that policy, and was bound by arbitration provision in the policy)). We note that both of these United States District Court cases cited in Aasma are from the Second Circuit. Presumably, they are controlled by the principles stated in Thomson, although neither is cited in that case.
Heikkila v. Sphere Drake Underwriting Management, Ltd., 1997 WL 995625 at *8 (D. Guam 1997).
Id. at *5 (“The plain language of the direct action statute answers this question. The express language of § 18305 limits the ‘right of direct action against the insurer within the terms and limits of the policy.’ ”). (Emphasis added.)
McAleer v. John Does 1-10, 1996 WL 384248 (1996).
Br. of Resp’t at 10.
Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S. Ct. 2332, 96 L. Ed. 2d 185 (1987) (holding that “duty to enforce arbitration agreements is not diminished when a party bound by an agreement raises a claim founded on statutory rights”); Perry v. Thomas, 482 U.S. 483, 107 S. Ct. 2520, 96 L. Ed. 2d 426 (1987) (where appellee had signed form agreeing to arbitrate any dispute with his employer, the Federal Arbitration Act preempted any state statute requiring judicial consideration of claims); Mitsubishi, 473 U.S. at 624-28 (when a party is bound by an arbitration clause, the statutory claims raised by that party are also subject to arbitration); Southland Corp. v. Keating, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984) (where franchisees are parties to franchise agreement containing arbitration clause, Federal Arbitration Act preempts state statute requiring judicial consideration of claims).
See, e.g., Zimmerman v. International Cos. & Consulting, Inc., 107 F.3d 344, 346 (5th Cir. 1997); Morewitz v. West of Eng. Ship Owners Mut. Protection & Indem. Ass’n, 62 F.3d 1356, 1365 (11th Cir. 1995) (“Although we recognize that Morewitz now ‘stands in the shoes’ of General Development, we are reluctant to mandate arbitration where the claimants clearly did not bargain to do so.”), cert. denied, 516 U.S. 1114 (1996); In re Talbott Big Foot, Inc., 887 P.2d 611, 614 (5th Cir. 1989) (citing, inter alia, AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648-49, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986)).
Br. of Resp’t at 13.
Doe v. Puget Sound Blood Ctr., 117 Wn.2d 772, 780, 819 P.2d 370 (1991).
LaMon v. Butler, 112 Wn.2d 193, 200-01, 770 P.2d 1027, cert. denied, 493 U.S. 814 (1989).
Scott v. Goldman, 82 Wn. App. 1, 6, 917 P.2d 131, review denied, 130 Wn.2d 1004 (1996).
Weiss v. Glemp, 127 Wn.2d 726, 734, 903 P.2d 455 (1995).
(Emphasis added.)
Kiblen v. Mutual of Omaha Ins. Co., 42 Wn. App. 65, 68, 708 P.2d 1215 (1985).
RCW 4.28.080(10) states: “If the suit be against a foreign corporation or nonresident joint stock company, partnership or association doing business within this state, to any agent, cashier or secretary thereof.”
Reiner v. Pittsburgh Des Moines Corp., 101 Wn.2d 475, 479-80, 680 P.2d 55 (1984).
See Wichert v. Cardwell, 117 Wn.2d 148, 152, 812 P.2d 858 (1991).