Grand Canyon Skywalk Dev., LLC v. ‘SA’ NYU Wa, Inc.

• Decision Date: 11 February 2013
• Docket Number: No. CV–12–08183–PCT–DGC.,CV–12–08183–PCT–DGC.
• Citation: 923 F.Supp.2d 1186
• Parties: GRAND CANYON SKYWALK DEVELOPMENT, LLC, Petitioner, v. ‘SA’ NYU WA, INC., Respondent.
• Court: U.S. District Court — District of Arizona

923 F.Supp.2d 1186

GRAND CANYON SKYWALK DEVELOPMENT, LLC, Petitioner,

v.‘SA’ NYU WA, INC., Respondent.

No. CV–12–08183–PCT–DGC.

United States District Court, D. Arizona.

Feb. 11, 2013.

Mark G. Tratos, Greenberg Traurig LLP, Las Vegas, NV, Pamela M. Overton, Tracy Lynn Weiss, Greenberg Traurig LLP, Phoenix, AZ, Troy A. Eid, Greenberg Traurig LLP, Denver, CO, for Petitioner.

Christopher William Thompson, Glen Carlton Hallman, Jeffrey David Gross, Paul Kipp Charlton, Gallagher & Kennedy PA, Phoenix, AZ, for Respondent.

ORDER

DAVID G. CAMPBELL, District Judge.

Petitioner Grand Canyon Skywalk Development, LLC (“GCSD”) has filed an application for confirmation of an arbitration award. Doc. 1. Respondent ‘Sa’ Nyu Wa, Inc. (“SNW”) has filed a response and a motion to vacate the arbitration award and dismiss this matter. Doc. 7. The petition and motion are fully briefed. Docs. 12, 13, 14. The Court heard oral argument from both parties on January 24, 2012. For the reasons that follow, the Court will grant GCSD's petition, confirm the arbitration award, and deny SNW's motion to vacate and dismiss.

I. Background.A. Management Agreement.

GCSD is a limited liability company with its principal place of business in Las Vegas, Nevada. Doc. 1, ¶ 1. SNW is a tribally chartered corporation of the Hualapai Tribe with its principal place of business in Arizona. Id., ¶ 2. On December 31, 2003, the parties entered into a Development and Management Agreement (“the 2003 Agreement”) for the construction and operation of a glass viewing bridge (“the Skywalk”) and related facilities at the south rim of the Grand Canyon on the Hualapai Indian Reservation. Doc. 1, ¶ 5; see Doc. 1–1 at 1–50. The 2003 Agreement provides that “[a]ny controversy, claim or dispute arising out of or related to this Agreement shall be resolved through binding arbitration” pursuant to the rules of the American Arbitration Association (“AAA”). Doc. 1–1 at 43, 2003 Agreement, § 15.4(a).

B. Arbitration.

After the Skywalk opened to visitors in March of 2007, controversies arose between GCSD and SNW over such things as completion of infrastructure, bookkeeping, and payment of management fees. Doc. 1, ¶ 7; see Doc. 1–1 at 52–72, GCSD's Amended Arbitration Complaint. In July of 2011, GCSD sought to compel arbitration of these issues in the Hualapai Tribal Court. Docs. 1, ¶ 8; 1–1 at 75, ¶¶ 1. That court found that SNW had waived its sovereign immunity for the limited purpose of mandatory arbitration, but had not waived its immunity in the Hualapai Tribal Court. Rather, the 2003 Agreement provided that efforts to compel arbitration should be made in federal court. The Tribal Court therefore found that it was without jurisdiction to compel arbitration. Doc. 1–1 at 76–77, ¶¶ 7, 10–11, Aug. 2, 2011 Hualapai Tribal Court Order.

Thereafter, GCSD filed a notice of arbitration with the AAA and delivered a copy to SNW. Doc. 1, ¶ 9. SNW objected to the jurisdiction of the arbitration tribunal on the grounds that it had only waived sovereign immunity for purposes of arbitration when a federal court issued an order compelling arbitration. See Doc. 1–2 at 2. Arbitrator Shawn Aiken denied the objection and confirmed jurisdiction, finding that SNW had agreed to arbitration, and that while it had also waived sovereign immunity for a federal court to compel arbitration, the 2003 Agreement did not require an order compelling arbitration. Doc. 1–2 at 2, November 21, 2011 Arbitration Order.

The arbitration proceeded with SNW's participation until early February of 2012, when the Hualapai Tribal Council passed a declaration of taking by eminent domain of GCSD's interests in the 2003 Agreement and the Tribe took physical possession of the Skywalk. Doc. 1, ¶¶ 14–15.¹ The Tribe then submitted a declaration of taking to the Hualapai Tribal Court and requested that the court issue an order declaring that absolute title in GCSD's contractual interests had vested in the tribe, subject to just compensation estimated to be about $11,040,000. Doc. 1–2 at 151–52. The Tribe also requested a temporary restraining order (“TRO”) to prevent GCSD from destroying or removing any property from the Skywalk, which the Tribal Court granted. See Doc. 1–2 at 157.

The Tribe then filed a notice of dismissal in the arbitration action, attempting to dismiss GCSD counsel and GCSD's arbitration claims on the grounds that the taking had substituted the Tribe in the place of GCSD for all purposes under the 2003 Agreement. See Doc. 7–2 at 182–83. The arbitrator ruled that the parties to the arbitration remained the same and that the Tribe was a non-party and therefore without authority to dismiss the arbitration. Doc. 7–2 at 185, March 14, 2012 Arbitration Order. The arbitrator ordered arbitration to proceed with a final hearing scheduled for April 2012. Id.

On March 26, 2012, this Court issued an order in a related case in which GCSD had sought to enjoin the Tribe's taking of its property and contract interests. Grand Canyon Skywalk Development, LLC v. ‘Sa’ Nyu Wa, Inc., No. CV12–8030–PCT–DGC, Doc. 58, 2012 WL 1207149. The Court found that principles of comity required GCSD to exhaust its remedies in tribal court and that GCSD had not shown that any of the recognized exceptions to tribal court exhaustion applied. Id. at 14. The Court stayed the action and required GCSD to exhaust its tribal court remedies. Id. at 15.

Following this Court's order, the arbitrator issued a supplemental order postponing the final arbitration hearing until July 16–20 and July 23–27, 2012, in order to give SNW and the Tribe an opportunity to obtain an order from either the Hualapai Tribal Court or this Court that the Tribe had lawfully taken GCSD's interests in the 2003 Agreement, including its intangible contract claims that had accrued prior to the Tribe's exercise of eminent domain. Doc. 12–5 at 30–31. The arbitrator stated that, in the absence of such an order, he would proceed with the final hearing. Id. at 31.

The Tribe subsequently asked the Tribal Court to enjoin the arbitration. Doc. 1, ¶ 17; see Doc. 1–2 at 156. Upon finding that the Tribal Council had authorized SNW to waive its sovereign immunity for purposes of the 2003 Agreement, the Tribal Court ordered that the arbitration could proceed. Doc. 1–2 at 160, Aug. 3, 2012 Hualapai Tribal Court Minute Entry and Order.²

The final arbitration hearing was held on July 16–20, 2012. GCSD presented extensive documentary and testimonial evidence. Doc. 1, ¶ 18. SNW did not attend. Id. After considering the testimony of witnesses, the briefs of both parties, and the exhibits admitted into evidence, the arbitrator ruled in favor of GCSD and against SNW on nearly all of GCSD's claims. Id., ¶ 19; see Doc. 1–2 at 84–130, August 16, 2012 Arbitration Order. The arbitrator awarded GCSD $28,572,810.25, including attorneys' fees and costs. Id. at 130. Judgment of the award was transmitted to the parties on August 17, 2012. See Doc. 1–2 at 162.

SNW did not file any action to modify, correct, or vacate the award, and the award became final on September 6, 2012. Doc. 1, ¶¶ 21–22. GCSD filed this petition for confirmation of the award five days later.

II. The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq.

Under the 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, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001); 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), cert. dismissed,515 U.S. 1187, 116 S.Ct. 37, 132 L.Ed.2d 917 (1995). “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)); see Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir.2002) (holding that FAA “not only placed arbitration agreements on equal footing with other contracts, but established ... a federal common law of arbitrability which preempts state law”); 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).³

“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, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (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 of arbitration.’ ” Simula, 175 F.3d at 719 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)); see French, 784 F.2d at 908.

“If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may...