United States District Court, W.D. Texas, El Paso Division
MEMORANDUM OPINION AND ORDER
C. GUADERRAMA, UNITED STATES DISTRICT JUDGE
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
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
"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.
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.
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.
Request to Compel Arbitration of the Rudolph-North American
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.
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.
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 ...