Williams v. Groundwater & Envtl. Servs., Inc.

• Docket Number: CIVIL NO. SX-18-CV-552
• Decision Date: 08 January 2020
• Citation: 2020 VI Super 001
• Parties: OWEN WILLIAMS, Plaintiff, v. GROUNDWATER AND ENVIRONMENTAL SERVICES, INC., AND CHRISTIANSTED EQUIPMENT, INC., Defendants.
• Court: Superior Court of the Virgin Islands

2020 VI Super 001

OWEN WILLIAMS, Plaintiff, v. GROUNDWATER AND ENVIRONMENTAL SERVICES, INC.,AND CHRISTIANSTED EQUIPMENT, INC., Defendants.

CIVIL NO. SX-18-CV-552

SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. CROIX

January 9, 2020

January 8, 2020

ACTION FOR DAMAGES

MEMORANDUM OPINION and ORDER OF REFERRAL TO ARBITRATION

¶ 1 THIS MATTER comes before the Court on Defendant Christiansted Equipment, Ltd.'s¹ (CE) Motion to Dismiss Proceedings Pending Arbitration, filed December 31, 2018, joined by Defendant Groundwater Environmental Services, Inc. (GES) on January 28, 2019; Plaintiff's Opposition, filed February 7, 2019;² Defendant CE's Reply and Defendant GES' Reply, both filed February 27, 2019. For the reasons that follow, the Court concludes that the arbitration agreement (Agreement) contained in the employment contract between Plaintiff Owen Williams and Pinnacle Services, LLC is enforceable by Defendant CE and by Defendant GES and that Plaintiff's claims against each must be resolved in arbitration. Accordingly, the Motion will be granted. However, rather than ordering the discretionary dismissal of the case as sought by the Motion, because the terms of the Agreement require that arbitration take place pursuant to the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1-16), the Court will order these proceedings stayed pending arbitration pursuant to section 3 of the FAA (9 U.S.C. § 3).

BACKGROUND

¶ 2 Plaintiff Williams, a citizen and resident of St. Croix, was employed as a Heavy Equipment Operator by Pinnacle Services, LLC at the St. Croix facility of Limetree Bay Terminals, LLC(Facility), pursuant to Hourly Employment Agreement, dated August 14, 2017. Plaintiff claims that he was injured on September 12, 2017 while changing out a windshield of a front-end loader at Limetree's Facility. Plaintiff's Complaint was filed November 21, 2018. Defendant CE responded with its Motion, joined by GES, based on the Agreement which reads in relevant part:

Except as provided below in this section, all claims, controversies or disputes (collectively referred to as "claims" for purposes of this Agreement), whether by Employer or Employee, arising out of or in any way relating to this Agreement or to Employee's employment by Employer, or the termination of that employment, or for bodily injury or property damage, or arising out of or related to Employee's presence (during the term of Employee's employment by Employer) at The Facility...shall be resolved solely and exclusively by arbitration as provided in this Agreement.

In addition, Employee specifically agrees that all claims, accruing from this day forward, that Employee may have at Pinnacle Services, LLC or Groundwater and Environmental Service, Inc (GES) or Limetree Bay Terminals Storage Facility or the Hovensa refinery (collectively Facility) against, involving or arising out of employment at the Facility against Pinnacle, LIMETREE Bay Terminals LLC, Hovensa LLC, The Hovensa Liquidating Trust and the Hovensa Environmental Responses Trust, Government of the Virgin Islands and any Contractor at the Facility..., all as intended third-party beneficiaries of this Agreement (all of the foregoing shall be collectively referred to as "Pinnacle Services, LLC" or "Groundwater and Environmental Service, Inc (GES)", as applicable, for purposes of this agreement to arbitrate) arising out of or in any way relating to Employee's employment by Employer, or the discipline, lay off or termination of that employment, or for bodily injury or property damage, or arising out of or related to Employee's presence (during the term of Employee's employment by Employer) at The Facility shall be resolved solely and exclusively by arbitration as provided in this Agreement.

...The parties also agree to arbitrate the issue of arbitrability of any claim. The arbitrator shall decide all issues of arbitrability including, but not limited to, any defenses to arbitration based on waiver, delay, or like defense. The arbitrator shall also decide whether all conditions precedent to arbitrability have been fulfilled. The parties agree that matters of substantive and procedural arbitrability shall be decided exclusively by arbitration.

... Arbitration shall take place pursuant to the Federal Arbitration Act (Title 9 U.S. Code Sections 1-16 as they may be from time to time amended) and in accordance with the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association (www.adr.org), as they shall be amended from time to time.... Agreement, §§ 14, 15, 17.

¶ 3 CE and GES each assert that the Agreement is a valid and enforceable contract that must be upheld according to its terms, and that Plaintiff's claims against each in this matter must be referred to arbitration. The Motion argues that pursuant to the FAA, a written provision in any contract evidencing a transaction involving commerce to settle a controversy arising out of such contract or transaction by arbitration is valid, irrevocable and enforceable. 9 U.S.C. § 2. CE and GES also assert that each is specifically referenced in the Agreement as a designated third-party beneficiary of its arbitration provisions, such that each may invoke its terms and require that Plaintiff's claims be determined in arbitration.

¶ 4 Williams responds that the Agreement is unenforceable, first, as to CE, because CE is neither a party to nor a third-party beneficiary of the Agreement. As an adjunct to that argument, Williams argues that because the Agreement is a contract of adhesion and vague, it is both procedurally and substantively unconscionable and, therefore, cannot be enforced by CE. Second, as to both Defendants, Williams argues that they have failed to meet their burden of showing that the Agreement evidences a transaction affecting interstate commerce, and therefore the FAA does not apply, and the Agreement is unenforceable.

DISCUSSION

CE as Third-Party Beneficiary

¶ 5 It is well established that arbitration agreements are enforceable as a matter of Virgin Islands law. See Gov't of the V.I. v. United Indus., Svc., Transp., Prof. & Gov't Workers of N.A., 64 V.I. 312, 330 (2016) (discussing the "basic principle that parties are generally free to structure their arbitration agreements as they see fit"). The law will ensure "that private agreements to arbitrate are enforced according to their terms." Id. Recognizing "that there is a strong federal policy favoring arbitration (Martinez v. Columbian Emeralds, Inc., 51 V.I. 174, 191 (V.I. 2009)), "any doubt over whether a particular dispute is covered by an arbitration agreement should be resolved in favor of finding coverage." Daniel v. Treasure Bay V. I. Corp., 62 V.I. 423, 426 (V.I. Super. 2016) (citations omitted).

¶ 6 Applying basic principles of contract law, the Court looks to the language of the Agreement to determine whether CE is an intended third-party beneficiary such that Williams' claims against CE must be resolved in arbitration. A third-party beneficiary may enforce an arbitration agreement. Fay v. Ambient Technologies, Inc., 2009 U.S. Dist. LEXIS 52136, at *5 (D.V.I. 2009). When seeking to compel arbitration, a third-party beneficiary will be bound by contract terms where the claim arises out of the underlying contract to which it was an intended third-party beneficiary, to the extent that the dispute is covered by the contract. Id. (citing E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 195 (3d Cir. 2001)). To prove intended beneficiary status, the third-party must show that the contract reflects the express or implied intention of the parties to the contract to benefit the third-party. Petrus v. Queen Charlotte Hotel Corp., 56 V.I. 548, 555 (V.I. 2012). The contract "need not name a beneficiary specifically or individually in the contract; instead, it can specify a class clearly intended by the parties to benefit from the contract." Id. at 555-56 (citations omitted).

¶ 7 Here, as a contractor at the Limetree Facility, CE is specified as an intended third-party beneficiary of the Agreement, part of "a class clearly identified by the parties to benefit from the contract." CE Reply, Exh. E, Mckenna Declaration, at ¶ 4 ("Christiansted Equipment is a contractor at the Limetree Bay Terminal Storage Facility on St. Croix, USVI."). The Agreement provides that its arbitration provision applies to "all claims, accruing from this day forward, that Employee may have at... Limetree Bay Terminals Storage Facility... against... any Contractor at the Facility ... as intended third-party beneficiaries of this Agreement..." Agreement ¶ 14 (emphasis added).

¶ 8 CE is among the class of intended beneficiaries and Williams' claims against CE are among the types of claims covered by the contract language. Williams claims that he "suffered physical injuries" (Complaint ¶ 18) in the Limetree Bay Facility during the regular course of his employment. The Agreement applies to claims "arising out of or in any way relating to this Agreement or to Employee's employment by Employer... or for bodily injury arising out of or related to Employee's presence (during the term of Employee's employment by Employer) at The Facility." Id. According to the ordinary terms of the language of the Agreement, CE is an intended third-party beneficiary, Williams' claims are covered and both parties are bound by the contract terms. Accordingly, CE is entitled to enforce the Agreement's arbitration provision.

¶ 9 Williams argues that permitting CE to enforce the arbitration provision would render the Agreement procedurally and substantively unconscionable. He contends that because he "had no choice but to sign Pinnacle's employment agreement containing the arbitration provision if he wanted to stay employed and make a living," the Agreement constitutes an unenforceable adhesion contract. He claims that "the terms of the arbitration clause are so vague that Plaintiff could not possibly...