Bigge Crane & Rigging Co. v. Entergy Ark., Inc.

• Court: Arkansas Supreme Court
• Writing for the Court: JIM HANNAH, Chief Justice
• Citation: Bigge Crane & Rigging Co. v. Entergy Ark., Inc., 2015 Ark. 58, 457 S.W.3d 265 (Ark. 2015)
• Decision Date: 26 February 2015
• Docket Number: No. CV–14–549,CV–14–549
• Parties: Bigge Crane & Rigging Co.; Claus Frederiksen; DP Engineering, Ltd.; John Scroggins; and Vei General Contractors, Inc., Appellants v. Entergy Arkansas, Inc.; and Entergy Operations, Inc., Appellees

2015 Ark. 58

457 S.W.3d 265

Bigge Crane & Rigging Co.; Claus Frederiksen; DP Engineering, Ltd.; John Scroggins; and Vei General Contractors, Inc., Appellants

v.Entergy Arkansas, Inc.; and Entergy Operations, Inc., Appellees

No. CV–14–549

Supreme Court of Arkansas.

Opinion Delivered February 26, 2015

Munson, Rowlett, Moore and Boone, P.A., by: Bruce E. Munson, Elizabeth A. Fletcher, and Beverly A. Rowlett ; and Kane Russell Coleman & Logan PC, by: Lawrence T. Bowman and Sanjay K. Minocha, for appellants.

Quattlebaum, Grooms, Tull & Burrow, PLLC, Little Rock, by: Steven W. Quattlebaum, John E. Tull III, and Michael N. Shannon, for appellees.

Opinion

JIM HANNAH, Chief Justice

Appellants, Bigge Crane and Rigging Co. and Claus Frederiksen (“Bigge”), appeal an order of the Pope County Circuit Court denying a motion to compel arbitration with appellees, Entergy Arkansas, Inc., and Entergy Operations, Inc. (“Entergy”). Bigge sought to arbitrate tort claims as a purported third-party beneficiary of a contract between Entergy and Siemens Energy, Inc. (“Siemens”). For reversal, Bigge contends that the circuit court erred in concluding (1) that issues of arbitrability were matters for judicial determination and (2) that Bigge could not invoke arbitration. We affirm the circuit court's order.

In March 2010, Entergy entered into an Alliance Agreement with Siemens, under which Siemens was to provide Entergy with multi-outage turbine generator work; field maintenance and repair services; equipment, modernization, and upgrade services; and other technical services at three nuclear facilities. The Alliance Agreement included an arbitration provision, which stated that “[a]ny claim, dispute or controversy arising out of or relating to this Agreement, shall be submitted to binding arbitration.” Pursuant to the Alliance Agreement, Entergy and Siemens agreed to a contract order for Siemens to replace a large component of a generator called a stator at Entergy's Arkansas Nuclear One (“ANO”) facility in London, Arkansas.

Siemens had a separate, long-term agreement called the Master Services Agreement (“MSA”) with Bigge. Under the MSA, Bigge was to provide “rigging, lifting, loading, transporting, transloading to rail trucks, and other services associated with crane services ... and materials associated with lifting and crane services.” The dispute-resolution terms in the MSA called for Bigge and Siemens to use all reasonable efforts to resolve disputes amicably prior to commencing any formal legal proceedings, but if they were unable to resolve such disputes, they were free to pursue any and all remedies at law or in equity.¹

Bigge and Siemens executed a separate purchase order under the MSA to govern Bigge's removal of the existing stator at ANO. On March 31, 2013, a gantry crane designed, engineered, built, and operated by Bigge collapsed while moving the 524–ton stator out of ANO. The crane failure and collapse killed one person, injured ten others, and caused significant damages to ANO.

On July 12, 2013, Entergy filed suit against Bigge and others in circuit court, alleging tort claims for negligence, gross negligence, and willful and wanton conduct. Bigge moved to dismiss parts of Entergy's complaint on August 22, 2013.² On November 26, 2013, Bigge filed a motion in Arkansas state court to compel arbitration of Entergy's tort claims against Bigge. Bigge's motion relied exclusively on the arbitration provisions contained in the Alliance Agreement between Entergy and Siemens. Bigge argued that the arbitration provisions deprived the circuit court of jurisdiction to determine whether Entergy and Bigge had a valid agreement to arbitrate. Bigge also argued that, even if the circuit court had jurisdiction to make that determination, Bigge could enforce the Alliance Agreement's arbitration provisions as a third-party beneficiary or through equitable estoppel.

Following a hearing, the circuit court denied Bigge's motion to compel arbitration. The circuit court ruled that because there was no agreement to arbitrate that applied to disputes between Entergy and Biggee, it was appropriate for the court to decide the issue of arbitrability; that Bigge was not a third-party beneficiary of the Alliance Agreement; and that Entergy was not equitably estopped from pursuing its remedies in court. In addition, the circuit court found that Bigge had waived any right to compel arbitration by litigating some of the same issues in Florida federal court and by filing a motion to dismiss and engaging in discovery in Arkansas state court. Bigge appeals.

An order denying a motion to compel arbitration is an immediately appealable order. Ark. R. App. P.—Civ. 2(a)(12) (2014). This court reviews a circuit court's order denying a motion to compel arbitration de novo on the record. E.g., Bank of the Ozarks v. Walker, 2014 Ark. 223, at 4, 434 S.W.3d 357, 360.

Entergy does not dispute Bigge's contention that the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 –16, governs the arbitration provisions in the Alliance Agreement. A party seeking to compel arbitration under the FAA must establish that (1) there is a valid agreement to arbitrate between the parties, and (2) the claims in dispute fall within that agreement's scope. See LegalZoom.com, Inc. v. McIllwain, 2013 Ark. 370, at 8–9, 429 S.W.3d 261, 265. Bigge is not a party to the Alliance Agreement, but in some instances, a nonparty may compel arbitration through “traditional principles of state law” such as “assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel.” Arthur Andersen, LLP v. Carlisle, 556 U.S. 624, 631, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009). In this case, Bigge contends that it may compel arbitration because it is a third-party beneficiary of the Alliance Agreement between Entergy and Siemens and, as such, it has the right to invoke that contract's arbitration provisions. Before addressing the merits of Bigge's position, we must consider Bigge's contention that the arbitrator, and not the circuit court, should have decided issues of arbitrability.

I. Who Decides Arbitrability

Although the Supreme Court of the United States has

recognized and enforced a liberal federal policy favoring arbitration agreements, it has made clear that there is an exception to this policy: The question whether the parties have submitted a particular dispute to arbitration, i.e., the “question of arbitrability, ” is an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (internal citations omitted); see also HPD, LLC v. TETRA Techs., Inc., 2012 Ark. 408, at 6, 424 S.W.3d 304, 308 (stating that the court, rather than the arbitrator, decides the question of arbitrability unless the parties clearly and unmistakably delegate that question to the arbitrator).

The relevant arbitration provisions are contained in Article 56 of the Alliance Agreement between Entergy and Siemens:

56.1 The parties, through their respective Project Managers, shall use all reasonable efforts to resolve any disputes that may arise between them under this Agreement. If a dispute is not resolved at the Project Manager level, a meeting shall be held promptly between the parties' Alliance Directors.

....

56.2 If the Alliance fails to resolve the dispute ... they shall ... prepare and transmit a briefing package regarding the dispute to an assigned “Alliance Steering Committee” for review.

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56.3 If the Steering Committee also fails to resolve the dispute ... the Alliance Directors shall ... submit the issue to an assigned “Advisory Committee” for final resolution.

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56.4 If the parties are not successful in resolving the dispute, they may mutually agree to submit the dispute to non-binding third party mediation.... If the parties are not successful in resolving the dispute through mediation, or if the dispute otherwise remains unresolved ... then either party may submit the dispute to binding arbitration as provided in 56.5 below, which shall be the exclusive method of resolving such disputes. Each party shall bear its own costs and expenses of any mediation or arbitration.

56.5 Any claim, dispute, or controversy arising out of or relating to this Agreement shall be submitted to binding arbitration by the American Arbitration Association for arbitration in Little Rock, Arkansas in accordance with the Commercial Arbitration Rules then in effect. There shall be three arbitrators, with each party selecting one; the third neutral arbitrator, who shall be the chairman of the panel, shall be elected by the two party-appointed arbitrators. The claimant shall name its arbitrator in the demand for arbitration and the responding party shall name its arbitrator within 30 days after the receipt of the demand for arbitration. The third arbitrator shall be named within 30 days after the appointment of the second arbitrator. The American Arbitration Association shall be empowered to appoint any arbitrator not named in accordance with the procedure herein. The arbitrators shall have no jurisdiction to consider (i) claims for consequential damages or damages beyond the limitations of liability contained in the Contract and (ii) any challenge to the limitation of the liability contained in the Contract. The decision of the arbitrators shall be final and binding upon the parties without the right of appeal to the courts. The award rendered by the arbitration shall be final and judgment thereon may be entered by any court having jurisdiction thereof. Each Party shall bear its own cost and expenses in connection with such arbitration. Provided, however, that nothing herein shall in any way be deemed or construed to limit or restrict either Party from seeking or obtaining injunctive relief to protect its patents, copyrights, trade secrets, or other intellectual property in

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