Bangor Hydro-Electric v. New England Tel. and Tel.

• Decision Date: 30 July 1999
• Docket Number: No. Civ.A.99-62-B.,Civ.A.99-62-B.
• Citation: 62 F.Supp.2d 152
• Parties: BANGOR HYDRO-ELECTRIC CO., Plaintiff, v. NEW ENGLAND TELEPHONE AND TELEGRAPH CO., Defendant.
• Court: U.S. District Court — District of Maine

62 F.Supp.2d 152

BANGOR HYDRO-ELECTRIC CO., Plaintiff, v. NEW ENGLAND TELEPHONE AND TELEGRAPH CO., Defendant.

No. Civ.A.99-62-B.

United States District Court, D. Maine.

July 30, 1999.

James L. Costello, Curtis, Thaxter, Stevens, Broder & Micoleau, Bangor, Maine, William G. Schaffer, Curtis, Thaxter, Stevens, Broder, & Micoleau, Portland, Maine, for plaintiff.

Ernest J. Babcock, Friedman, Babcock & Gaythwaite, Portland, Maine, for defendant.

ORDER AND MEMORANDUM OF DECISION

BRODY, District Judge.

Plaintiff Bangor Hydro-Electric Co. ("Plaintiff"), a Maine corporation, brings this diversity action against Defendant New England Telephone & Telegraph Co., d/b/a Bell Atlantic ("Defendant"), a New York corporation. Plaintiff alleges that Defendant was obligated to pay a certain portion of tree clearance costs incurred by Plaintiff during the January 1998 ice storm, and that Defendant failed to do so. Plaintiff seeks to recover approximately $295,675.00 under the theories of breach of contract (Count I), quantum meruit (Count II), unjust enrichment (Count III), and equitable contribution (Count IV). Before the Court is Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and to Compel Arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16. For the reasons discussed below, the Court treats Defendant's Motion as a Motion to Stay and Compel Arbitration and the Motion is GRANTED.

I. BACKGROUND

The sole issue presented at this stage of the proceedings is whether Plaintiff's claims are subject to arbitration. Consequently, the Court dispenses with a lengthy discussion of the facts bearing on the merits and focuses instead on the facts related to arbitrability.¹ The following information — drawn from Plaintiff's Complaint, from the Affidavit of Larry Billings², and from a copy of a letter from Larry Billings to George A. Belcher, Jr.³ ("Billings Letter") — is sufficient to provide some context.

Plaintiff is an electric utility that provides electrical transmission and distribution services throughout the greater Bangor area and the surrounding counties, including Penobscot, Piscataquis, Hancock, Washington, and Waldo counties ("Service Territory"). Defendant is a telephone utility that provides telephone services throughout Maine, including the Service Territory. Both Plaintiff and Defendant provide their respective services to customers within the Service Territory via utility distribution poles. Approximately seventy percent of the utility poles used by Plaintiff in the Service Territory are owned jointly, in equal ownership interest, by Plaintiff and Defendant.

In 1984, the parties executed a written contract entitled the "Joint Pole Agreement" that governs their joint ownership and occupancy of the utility poles. Plaintiff asserts that the Joint Pole Agreement provides, among other things, that Plaintiff and Defendant will share equitably the expenses and benefits connected with the jointly owned and occupied poles.

Beginning on or about January 5, 1998, and continuing through January 9, 1998, the State of Maine suffered a series of catastrophic ice storms. The Service Territory was among the most severely damaged areas in the State. Accumulations of ice on utility poles, wires, and trees caused numerous utility poles to weaken and collapse. Trees, limbs, and lines fell on and around utility poles. As a result, electrical power and telephone services were affected or cut off throughout the State and, in particular, the Service Territory.

Starting on January 7, 1998, Plaintiff engaged and dispatched work crews ("Tree Clearance Crews") throughout the Service Territory to cut, trim, and clear away the trees, limbs, and debris that had fallen on and around utility poles and lines ("Tree Clearance Work"). As a result of deploying the Tree Clearance Crews, Plaintiff incurred costs totaling approximately $700,000.00 ("Tree Clearance Costs"). At some point during the next few months, Plaintiff indicated to Defendant that it would bill Defendant for a portion of the Tree Clearance Costs.

In the spring of 1998, Defendant requested that Plaintiff provide a separate billing for its portion of the Tree Clearance Costs, rather than including those costs as an item in Plaintiff's routine monthly cross-billing with Defendant. In accordance with this request, Plaintiff submitted to Defendant in May a bill indicating its assessment of Defendant's share of the Tree Clearance Costs and describing the work performed, the hours worked, and the location of the work. The bill specified that Defendant pay approximately $295,675.00 to Plaintiff. Defendant responded that it would not pay for any of the Tree Clearance Work.

On June 17, 1998, Larry Billings, Plaintiff's Manager of Transmission and Distribution, sent a letter to George A. Belcher, a specialist in Joint Lines Facility Management for Defendant, explaining Plaintiff's position as to the bill and asking "for your re-consideration in this matter and if you still feel that it isn't equitable then we must inform you that we will pursue this to the next step provided for in our agreement, that of `arbitration' as provided for in `Article XV.'" (Billings Letter at 1.) Defendant never responded to this comment in the Billings Letter. The two parties continued to correspond regarding the dispute between June 1998 and the winter months of 1998 with no further mention of arbitration. (Billings Aff. at 3; Def.'s Reply Pl.'s Resp. Mot. Dismiss and Compel at 6.)

On March 8, 1999, Plaintiff filed a Complaint in this court asserting that by refusing to pay the amount specified, Defendant has breached a contract (Count I) and is additionally liable under the theories of quantum meruit (Count II), unjust enrichment (Count III), and equitable contribution (Count IV).

Defendant then filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction and to Compel Arbitration based on Article XV of the Joint Pole Agreement, a copy of which is attached to the Affidavit of George A. Belcher as Defendant's Exhibit B. Article XV of the Joint Pole Agreement is entitled "Arbitration" and states in its entirety:

In any case where it becomes necessary to resort to arbitration to resolve any provisions of this Agreement, each party shall designate an arbitrator and the two so selected shall have the right to appoint a third arbitrator. If they shall be unable to agree upon a third arbitrator, then the third arbitrator shall be appointed by a Justice of the Maine Supreme Judicial Court. Findings of fact by the arbitrators shall be binding and conclusive on the parties.

(Def.'s Ex. B.)

II. DISCUSSION

Section 3 of the FAA provides for the stay of an action brought in federal court where that action involves an issue intended by the parties to be resolved through arbitration.⁴ 9 U.S.C. § 3 (1994). Section 4 of the FAA provides for an order directing the parties to proceed to arbitration where they have agreed upon that dispute resolution method. 9 U.S.C. § 4 (1994). In order to grant a motion brought pursuant to these provisions, the Court must find that (i) there exists a written agreement to arbitrate, (ii) the dispute in question falls within the scope of that arbitration agreement, and (iii) the party seeking an arbitral forum has not waived its right to arbitration. See Brennan v. King, 139 F.3d 258, 263-67 (1st Cir.1998). The Court will discuss each of these elements in turn.

1. Existence of an Arbitration Agreement

The first and primary question before the Court in this case is whether the parties entered into an arbitration agreement at all. As the party seeking to substitute an arbitral forum for a judicial one, Defendant bears the burden of demonstrating, "at a bare minimum, that the protagonists have agreed to arbitrate some claims." McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir.1994); see also MCI Telecommunications Corp. v. Exalon Indus., Inc., 138 F.3d 426, 428-29 (1st Cir.1998) (observing arbitration is "strictly the product of voluntary contractual obligations"). Whether there is an obligation in the first place to arbitrate "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." AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). Where the existence of an arbitration agreement is at issue, that question is to be decided with reference to state contract law principles. Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 19 (1st Cir.1999).

Article XV of the Joint Pole Agreement, entitled "Arbitration," provides:

In any case where it becomes necessary to resort to arbitration to resolve any provisions of this Agreement, each party shall designate an arbitrator and the two so selected shall have the right to appoint a third arbitrator. If they shall be unable to agree upon a third arbitrator, then the third arbitrator shall be appointed by a Justice of the Maine Supreme Judicial Court. Findings of fact by the arbitrators shall be binding and conclusive on the parties.

(Def.'s Ex. B.) Both parties assert that Article XV is unambiguous, but disagree as to its import.⁵ Defendant argues that the language of Article XV indicates that any disputes arising out of the Joint Pole Agreement are to be decided through arbitration.⁶ Plaintiff contends, in contrast, that Article XV merely sets forth the procedures to be followed in selecting an arbitrator in the event the parties decide to utilize arbitration to resolve a dispute.

The language giving rise to these competing interpretations is: "[i]n any case where it becomes necessary to resort to arbitration." (Def.'s Ex. B.) According to Defendant, it is ...