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Sentry Select Insurance Company v. Ruiz

United States District Court, W.D. Texas, El Paso Division

June 20, 2017

SENTRY SELECT INSURANCE COMPANY, Plaintiff,
v.
CHRISTIAN ULISES RUIZ; RUDOLPH CHEVROLET, LLC; RUDOLPH AUTOMOTIVE, LLC d/b/a RUDOLPH MAZDA; MARCELO FLORES; and LYNN CRAWFORD, Defendants. CHRISTIAN ULISES RUIZ; RUDOLPH CHEVROLET, LLC; RUDOLPH AUTOMOTIVE, LLC d/b/a RUDOLPH MAZDA, Third-Party Plaintiffs,
v.
NORTH AMERICAN CAPACITY INSURANCE COMPANY, Third-Party Defendant.

          MEMORANDUM OPINION AND ORDER

          DAVID C. GUADERRAMA, UNITED STATES DISTRICT JUDGE

         Presently before the Court is Third-Party Defendant North American Capacity Insurance Company's ("North American") "Motion to Compel Arbitration and Brief in Support" (ECF No. 22) ("Motion"). For the reasons that follow, the Court GRANTS in part and DENIES in part North American's Motion.

         I. BACKGROUND

         On August 16, 2016, Plaintiff Sentry Select Insurance Company ("Sentry") filed a declaratory judgment complaint before this Court against Defendants Christian Ulises Ruiz ("Ruiz"), Rudolph Chevrolet, LLC ("Rudolph Chevrolet"), Rudolph Automotive, LLC d/b/a Rudolph Mazda ("Rudolph Mazda"), Marcelo Flores ("Flores"), and Lynn Crawford ("Crawford") (collectively, "Defendants"). See Pet. for Declaratory J., ECF No. 1. Therein, Sentry claims, and seeks declarations, that under a garage policy (hereinafter, the "Sentry Policy") it issued to Rudolph Chevrolet, LLC, it has no duty to defend or indemnify Defendants in connection with a lawsuit entitled Andrea Juarez, individually and as Permanent Guardian of Irma Vanessa Villegas, an incapacitated person v. Christian Ulises Ruiz, et. al, Cause No. 2015-DCV-0473, which is pending in the 384th Judicial District Court, El Paso, County, Texas (hereinafter, the "Underlying Lawsuit"). Id. ¶¶ 7, 33(B). The Underlying Lawsuit involves a 2013 auto accident that occurred on Rudolph Mazda's parking lot: a car driven by Ruiz struck Irma Vanessa Villegas (the plaintiff in the Underlying Lawsuit), causing her injuries. Id. ¶ 9. At the time of the accident, Ruiz and Villegas were employees of Rudolph Chevrolet or Rudolph Mazda, and had consumed alcohol; Rudolph Chevrolet's managers, Flores and Crawford, allegedly provided the alcohol. See id.

         On November 14, 2016, Defendants filed their "Original Answer and Christian Ulises Ruiz, Rudolph Chevrolet, LLC, and Rudolph Automotive, LLC d/b/a Rudolph Mazda's Counterclaim and Third-Party Petition for Declaratory Judgment" (ECF No. 12) ("Rudolph's Answer"). Therein, Ruiz, Rudolph Chevrolet, and Rudolph Mazda (collectively "Rudolph") assert a counterclaim for declaratory judgment against Sentry and a claim for declaratory judgement against North American, which issued an indemnity policy (hereinafter "Nation American Policy") to Rudolph Chevrolet and includes coverage for Rudolph Mazda. Rudolph's Answer ¶ 8. ECF No. 12. Rudolph alleges that either or both the Sentry Policy and the North American Policy covers the claims made in the Underlying Lawsuit and therefore, both Sentry and North American have a duty to defend and/or indemnity Rudolph. Id. ¶ 17. North American filed its "Original Answer of North American Capacity Insurance Company" (ECF No. 20), denying any such duty. On April 6, 2017, North American filed the instant Motion.

         II. DISCUSSION

         By its Motion, North American asks the Court to compel arbitration of (1) Rudolph's claims against North American (hereinafter the "Rudolph-North American Claims") and (2) Sentry's claims against Defendants and Rudolph's counterclaims against Sentry (hereinafter the "Sentry-Defendants Claims"). Mot. at 13. In the "Certificate of Conference" section of the Motion, North American states that Sentry is opposed to arbitration and that Rudolph is not opposed to arbitration so long as "all of the claims in this action" are compelled to arbitration. Mot. at 14. Neither Sentry, nor Rudolph, filed a response to North American's Motion.

         A. Request to Compel Arbitration of the Rudolph-North American Claims

         Pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (the "FAA"), North American seeks to compel arbitration of Rudolph's claims against North American, i.e., the Rudolph-North American Claims, as provided under an arbitration clause in the North American Policy. The FAA requires the Court to enforce an arbitration agreement in the same manner that it would enforce any other contract. See 9 U.S.C. §§ 1-16; Specialty Healthcare Mgmt., Inc. v. St. Mary Par. Hosp.9 220 F.3d 650, 654 (5th Cir. 2000). Specifically, the FAA provides that:

A party aggrieved by the alleged failure ... of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction ... for an order directing that such arbitration proceed in the manner provided for in such agreement.

9 U.S.C. §4.

         In ruling on a motion to compel arbitration, a district court conducts a two-step analysis. Washington Mut. Fin. Grp., LLC v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004). First, the court must "determine whether parties agreed to arbitrate the dispute." Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013). That determination is guided by two questions "'(1) is there a valid agreement to arbitrate the claims and (2) does the dispute in question fall within the scope of that arbitration agreement?'" Klein, 710 F.3d at 236 (quoting Sherer v. Green Tree Servicing LLC, 548 F.3d 378, 381 (5th Cir. 2008)). Federal courts apply state law contract principles when determining the validity of an agreement to arbitrate. Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996) (per curiam). Second, once the court finds that the parties did agree to arbitrate, it must then "consider whether any federal statute or policy renders the claims nonarbitrable." Washington Mut. Fin. Grp, LLC, 364 F.3d at 263.

         Here, Rudolph Chevrolet and Rudolph Mazda, as insureds, are a party to the North American Policy, see App. in Supp. of Mot. at 6, 32, ECF No. 22-1, and so is North American, id. at 25. The policy provides, in relevant part:

In the event of any dispute, controversy or claim between you and us ... related to or arising out of matters covered by this policy . . . will be finally settled by binding arbitration pursuant to the ...

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