M.T. Bores, LLC v. Mountain Valley Pipeline, LLC

• Citation: 552 F.Supp.3d 580
• Decision Date: 02 August 2021
• Docket Number: CIVIL ACTION NO. 5:20-cv-00602
• Parties: M.T. BORES, LLC, Plaintiff, v. MOUNTAIN VALLEY PIPELINE, LLC, and US Trinity Energy Services, LLC, Defendants.
• Court: United States District Courts. 4th Circuit. Southern District of West Virginia

552 F.Supp.3d 580

M.T. BORES, LLC, Plaintiff,

v.MOUNTAIN VALLEY PIPELINE, LLC, and US Trinity Energy Services, LLC, Defendants.

CIVIL ACTION NO. 5:20-cv-00602

United States District Court, S.D. West Virginia, at Beckley.

Signed August 2, 2021

James W. Lane, Jr., Eric Michael Johnson, Jason A. Proctor, Flaherty Sensabaugh & Bonasso, Charleston, WV, for Plaintiff.

David K. Hendrickson, Stephen Edward Hastings, Hendrickson & Long, Charleston, WV, Scott D. Cessar, Eckert Seamans Cherin & Mellott, Pittsburgh, PA, for Defendant Mountain Valley Pipeline, LLC.

Amy K. Wolfshohl, Emily A. Pendleton, Jack Edwards Byrom, Porter Hedges, Houston, TX, Carte P. Goodwin, Joseph M. Ward, Katherine B. Capito, Frost Brown Todd, Charleston, WV, for Defendant US Trinity Energy Services, LLC.

MEMORANDUM OPINION AND ORDER

Frank W. Volk, United States District Judge Pending is Defendant US Trinity Energy Services, LLC's ("Trinity") Motion to Compel Arbitration, Motion to Stay, and (alternative) Motion to Dismiss Counts III and IV of the Amended Complaint [Doc. 8], filed October 9, 2020. M.T. Bores, LLC ("MT Bores") responded on November 2, 2020, [Doc. 14], to which Mountain Valley Pipeline, LLC ("MVP") and Trinity replied. [Docs. 16, 17]. Also pending is Plaintiff MT Bores’ Motion to Compel Mountain Valley Pipeline, LLC to Participate in Arbitration Between MT Bores, LLC and U.S. Trinity Energy Services, LLC [Doc. 21], filed November 17, 2020. After several extensions, MVP and Trinity responded respectively on January 8, 2021, and January 22, 2021. [Docs. 29, 31]. MT Bores did not reply.

I.

MVP contracted with Trinity relating to the construction and installation of the Mountain Valley Pipeline across property located in Greenbrier County. MVP is the owner of the pipeline, and Trinity is the general contractor for Spread "F" of the pipeline, running through Greenbrier, Summers, and Monroe counties. In May 2019, Trinity subcontracted with MT Bores, with MT Bores agreeing to furnish equipment to excavate a tunnel under U.S. Route 64 in connection with the installation of the pipeline ("Subcontract"). MT Bores alleges it fully performed. The equipment furnished was valued at $671,525, including interest. MT Bores was paid $120,000. Before the installation of the pipeline was completed, however, MVP terminated the project. MT Bores alleges it was not paid the $515,125 balance for the equipment. MT Bores thus placed a mechanic's lien against the property for the balance due.

MT Bores instituted this action in the Circuit Court of Greenbrier County seeking enforcement of the mechanic's lien against MVP's real property in Greenbrier County. Trinity removed on September 11, 2020. Count I of MT Bores’ Amended Complaint asserts a claim against MVP seeking foreclosure of the mechanic's lien. Count II asserts a claim against Trinity for breach of contract. Count III asserts quantum meruit and quantum valebant claims against both MVP and Trinity. Count IV likewise asserts a claim against both MVP and Trinity for unjust enrichment.

On October 9, 2020, Trinity filed a Motion to Compel Arbitration, Motion to Stay and – in the alternative – Motion to Dismiss Counts III and IV of the Amended Complaint. Trinity moves to compel MT Bores to arbitrate Counts II, III, and IV pursuant to the arbitration clause contained in Section 9.01 of the Subcontract. Trinity further seeks a stay on the remaining claims against MVP pending arbitration. MT Bores does not dispute that its claims against Trinity are subject to an arbitration clause in the Subcontract; nor does MT Bores challenge the arbitration clause's enforceability or validity. MT Bores contends, however, MVP should be compelled to arbitrate in the forthcoming arbitration.

MT Bores seeks that very relief in its November 11, 2020, Motion to Compel. MT Bores contends that despite MVP not being a party to the Subcontract, the Court should require MVP to participate in the arbitration for four reasons, namely, that MVP is bound by (1) the doctrine of equitable estoppel, (2) third-party beneficiary status under the Subcontract, (3) interests of judicial efficiency, and (4) essential party status. MVP asserts these contractual and extracontractual theories offer no basis to compel its participation. Trinity agrees, asserting additionally that it must first consent to MVP's participation. Trinity contends the Subcontract vests it as sole arbiter on that matter.

II.

Our Court of Appeals has generally required proof of four elements from a party moving to compel arbitration:

(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.

Galloway v. Santander Consumer USA, Inc. , 819 F.3d 79, 84 (4th Cir. 2016) (citing Rota-McLarty v. Santander Consumer USA, Inc. , 700 F.3d 690, 696 n. 6 (4th Cir. 2012) ); see also Adkins v. Labor Ready, Inc. , 303 F.3d 496, 500-01 (4th Cir. 2002).

As noted, there is no dispute Trinity has established these prerequisites against MT Bores. Accordingly, the Court need only consider (1) whether it is proper to compel MVP to arbitrate, and, if not (2) whether a stay is appropriate respecting MT Bores’ remaining claims against MVP pending arbitration.

A. Compelling MVP to Arbitrate

"It must be remembered that mandatory arbitration is not the default form of dispute resolution but rather is permitted only when the parties agree to it." Rowland v. Sandy Morris Fin. & Est. Plan. Servs., LLC , 993 F.3d 253, 258 (4th Cir. 2021). This is so inasmuch as " ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which [it] has not agreed’ to arbitrate." R.J. Griffin & Co. v. Beach Club II Homeowners Ass'n , 384 F.3d 157, 160 (4th Cir. 2004) (quoting Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH , 206 F.3d 411, 416 (4th Cir. 2000) ). Nonetheless, a party can "agree to submit to arbitration by means other than personally signing a contract containing an arbitration clause." Id. Indeed, there are five instances obviating the need for a signed arbitration agreement: "(1) incorporation by references; (2) assumption; (3) agency; (4) veil piercing/alter ego; and (5) estoppel." Int'l Paper , 206 F.3d at 417 (internal citations omitted).

1. Estoppel

MT Bores first asserts that MVP should be estopped from refusing to arbitrate. It contends MVP directly benefited from the Subcontract inasmuch as the subject equipment contributed to MVP's pipeline.

Our Court of Appeals has recognized that "[i]n deciding whether a party may be compelled to arbitrate a dispute, we ‘apply ordinary state law principles that govern the formation of contracts,’ ... and ‘the federal substantive law of arbitrability.’ " R.J. Griffin , 384 F.3d at 160 n.1. (internal citations omitted); see also Int'l Paper , 206 F.3d at 417 n.4. Specifically, "state law determines questions concerning the validity, revocability, or enforceability of contracts generally," whereas, "the Federal Arbitration Act ... create[s] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act." Id. (quoting Int'l Paper , 206 F.3d at 417 n.4 ). So, when applying the doctrine of equitable estoppel in the context of arbitration, our Court of Appeals has stated given that "the determination of whether ... a nonsignatory, is bound by [an arbitration clause] presents no state law question of contract formation or validity, we look to the federal substantive law of arbitrability to resolve this question." Id. ; see also Jackson v. Iris.com , 524 F.Supp.2d 742, 748 (E.D. Va. 2007) (concluding the Fourth Circuit has determined "that courts should apply the federal substantive law of arbitrability incorporated into the FAA when determining whether a non-signatory is bound to an arbitration agreement by the doctrine of equitable estoppel.").

It may be that the analysis has changed following Arthur Andersen LLP v. Carlisle , 556 U.S. 624, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009). The Supreme Court in Carlisle reiterated that "traditional principles of state law allow a contract to be enforced by or against nonparties to the contract[.]" Carlisle , 556 U.S. at 631, 129 S.Ct. 1896 (internal quotations omitted). The Supreme Court went on to conclude that appellate courts have jurisdiction to review a district court's denial of a stay under the Federal Arbitration Act, "if the relevant state contract law allows [a non-party litigant to the contract] to enforce the agreement." Id. at 632, 129 S.Ct. 1896 (emphasis added). One could conclude that "this reference to ‘the relevant state contract law’ could be read as requiring courts to consult a particular state's substantive law, not federal common law, to determine whether a nonsignatory may enforce [or be bound by] an arbitration clause." Meridian Imaging Solutions, Inc. v. OMNI Business Solutions LLC , 250 F. Supp. 3d 13, 22 (E.D. Va. 2017) (quoting Carlisle , 556 U.S. at 632, 129 S.Ct. 1896 ).

The Court need not ponder the change for at least two reasons. First, our Court of Appeals is generally the arbiter respecting the impact, if any, upon its own precedent from intervening Supreme Court jurisprudence. As noted by the Court of Appeals, " ‘[i]t is axiomatic that in our judicial hierarchy, the decisions of the circuit courts of appeals bind the district courts[.]’ Such a decision is binding, not only upon the district court, but also upon another panel of this court—unless and until it is reconsidered en banc." Doe v. Charleston Area Med. Ctr., Inc. , 529 F.2d 638, 642 (4th Cir. 1975) (quoting Doe v. Chao , 511 F.3d 461, 465 (4th Cir. 2007) ). Second, as was the case in Meridian Imaging Solutions , the perceived "puzzle is strictly...