United States District Court, S.D. Mississippi, Southern Division
MEMORANDUM OPINION AND ORDER GRANTING THOMPSON
ENGINEERING, INC.'S MOTION TO STAY
LOUIS
GUIROLA, JR. UNITED STATES DISTRICT JUDGE
BEFORE
THE COURT is the [211] Motion to Stay filed by the defendant
Thompson Engineering, Inc., and joined by T.L. Wallace
Construction, Inc., Neel-Schaffer, Inc., WG Yates & Sons
Construction Company, Roy Anderson Corp., Yates-Anderson, JV,
CH2M Hill, Inc., and Quality Engineering Services, Inc. The
Motion has been fully briefed. After reviewing the
submissions of the parties, the record in this matter, and
the applicable law, the Court finds that this lawsuit should
be stayed pending the appeal of the decision ordering
arbitration in Southern Industrial Contractors, LLC v.
Mississippi State Port Authority, cause number
251-16-681CIV, First Judicial District of Hinds County,
Mississippi.
BACKGROUND
I.
Federal Court Action
The
plaintiff Southern Industrial Contractors, LLC, served as the
general contractor for the West Pier Facilities project at
the Port of Gulfport, Mississippi. It filed this lawsuit
against the project's owner, Mississippi Development
Authority, as well as the project's consultants and
engineers - Neel-Schaffer, Inc., CH2M, T.L. Wallace
Construction, Inc., Thompson Engineering, Inc., W.G. Yates
& Sons Construction Company, Roy Anderson Corp., Yates
Anderson, JV, and Quality Engineering Services, Inc.
(hereafter sometimes collectively referred to as “the
Consultant Defendants”). Southern Industrial alleges
that these defendants failed to provide notice of a large
underground debris field at the project site. Southern
Industrial claims that the Consultant Defendants directed it
to excavate the debris, which made the project much more
expensive and time-consuming. On November 30, 2017, the Court
granted Mississippi Development Authority's Motion to
Dismiss pursuant to the doctrine of sovereign immunity. All
of the remaining defendants now ask this Court to stay this
lawsuit pending the state court appeal of the decision
ordering arbitration in Southern Industrial Contractors,
LLC v. Mississippi State Port Authority, cause number
251-16-681CIV, First Judicial District of Hinds County,
Mississippi.
II.
State Court Action
On
November 16, 2016, Southern Industrial filed a Complaint in
the Circuit Court of Hinds County, Mississippi, against the
Mississippi State Port Authority, asking the court to compel
the Port Authority to submit to arbitration pursuant to the
contract entered into by Southern Industrial and the Port
Authority. In its state court Complaint, Southern Industrial
alleges that the Port Authority was the owner of the West
Pier Facilities project, and Southern Industrial served as
the general contractor. The Complaint further alleges that
Southern Industrial found a large underground debris field
while trying to drive pilings for the project, and that the
Port Authority directed Southern Industrial to excavate and
remove some of the debris. Southern Industrial asserts that
the Port Authority is liable:
for all losses sustained by [Southern Industrial] as a result
of [the Port Authority's] breach of its contractual
obligations, including without limitation, all amounts
incurred by the Project being delayed and all amounts for
additional time, effort, manpower, labor, machinery and money
for which [Southern Industrial] has not been paid.
(State Court Compl. at 4, ECF No. 210-3). The Circuit Court
granted Southern Industrial's Motion to Compel
Arbitration, and the Port Authority appealed. The Port
Authority filed its reply brief with the Mississippi Court of
Appeals on June 20, DISCUSSION
The
defendants seek a stay pursuant to Section 3 of the Federal
Arbitration Act (FAA), which provides:
If any suit or proceeding be brought in any of the courts of
the United States upon any issue referable to arbitration
under an agreement in writing for such arbitration, the court
in which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application of
one of the parties stay the trial of the action until such
arbitration has been had in accordance with the terms of the
agreement, providing the applicant for the stay is not in
default in proceeding with such arbitration.
9 U.S.C.A. § 3. This statute generally only applies to
the parties who signed the agreement containing the
arbitration clause. Rainier DSC 1, L.L.C. v. Rainier
Capital Mgmt., L.P., 828 F.3d 356, 360 (5th Cir.
2016). However, district courts have discretion “to
stay litigation among the non-arbitrating parties pending the
outcome of the arbitration.” Moses H. Cone Memorial
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 21 n. 23
(1983). The Fifth Circuit has held that claims among
non-signatories can be stayed where: “(1) the
arbitrated and litigated disputes involve the same operative
facts; (2) the claims asserted in the arbitration and
litigation are “inherently inseparable”; and (3)
the litigation has a “critical impact” on the
arbitration.” Id. (quoting Waste Mgmt.,
Inc., v. Residuos Industriales Multiquim, S.A. de
C.V., 372 F.3d 339, 343 (5th Cir. 2016)). “The
question is not ultimately one of weighing potential harm to
the interests of the non-signatory, but of determining
whether proceeding with litigation will destroy the
signatories' right to a meaningful arbitration.”
Waste Mgmt., Inc., 372 F.3d at 343.
Southern
Industrial first argues that the FAA does not govern, because
it did not seek to compel arbitration pursuant to the FAA.
However, the FAA governs arbitration provisions in contracts
pertaining to interstate or foreign commerce. 9 U.S.C.
§§ 1, 2. The United States Supreme Court has
interpreted the word “involving commerce” in the
FAA as broadly as the term “affecting commerce, ”
which has been held to mean “a full exercise of
constitutional power.” Allied-Bruce
Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 273-74
(1995). The project at issue in both this lawsuit and the
state court lawsuit involves construction of an international
port. The parties to the contract containing the arbitration
provision - Mississippi Port Authority and Southern
Industrial - are residents of Mississippi and Louisiana,
respectively. Therefore, the contract containing the
arbitration clause certainly “involved” or
“affected commerce, ” and the FAA governs the
arbitration clause.
Southern
Industrial next argues that the defendants are not entitled
to a stay, because a final arbitration order has not been
entered in state court. Southern Industrial claims that this
Court would therefore have to determine whether Southern
Industrial and the Port Authority entered into a binding
arbitration agreement before this Court could impose a stay.
However, the Circuit Court of Hinds County has in fact
ordered the state court parties to proceed to arbitration,
and the likelihood that the ...