[00:00:00] Speaker 03: We'll hear case number 258037SJH11 versus Dowbilt. [00:00:08] Speaker 01: Good morning, Your Honors. [00:00:09] Speaker 01: May it please the Court. [00:00:11] Speaker 01: My name is Ben Petrie. [00:00:12] Speaker 01: I'm here on behalf of Dowbilt. [00:00:14] Speaker 01: I respectfully request to reserve two minutes for rebuttal, but I'll keep my eye on the clock. [00:00:19] Speaker 01: This appeal primarily turns on a narrow but critical error by the district court. [00:00:24] Speaker 01: The district court denied Dowbilt's motion to compel arbitration. [00:00:28] Speaker 01: on the premise that the arbitrator had already decided arbitrability of SJH's claims against Dow Beltman. [00:00:36] Speaker 01: He did not. [00:00:37] Speaker 01: That's clear on the face of the order, as well as the record, and even more apparent when you view everything in context leading up to that. [00:00:45] Speaker 01: The arbitration had been pending for over a year, and the two-week final hearing was just weeks away when SJH filed a series of motions and amended counterclaim. [00:00:57] Speaker 01: The Rule 9 motion, which attempted to carve out certain claims against Dowbell, Inc., was filed less than two months before the final hearing. [00:01:08] Speaker 01: And when that was rejected, SJH filed an amended counterclaim in which Dowbell was named as a third-party defendant. [00:01:15] Speaker 01: Both of those were rejected on grounds that they were untimely and as a matter of case management. [00:01:22] Speaker 01: In rejecting those, the arbitrator noted, [00:01:25] Speaker 01: a couple critical facts. [00:01:26] Speaker 01: One, well, critical concessions, I should say, on behalf of SJH. [00:01:32] Speaker 01: One, that the parties had always viewed Dow-Built and SDI as interchangeable. [00:01:38] Speaker 01: And two, that SJH had confirmed that it was already pursuing counterclaims against Dow-Built based upon its original counterclaims filed on February 27, 2024. [00:01:51] Speaker 01: On SJH's motion for clarification on striking the amended counterclaims, [00:01:54] Speaker 01: the arbitrary order that SGH could pursue its original counterclaims submitted on February 27, 2024, and proceeded against both entities. [00:02:06] Speaker 01: And it only clarified that SGH was not required to pursue its new counterclaims in that arbitration. [00:02:14] Speaker 01: That phrase in that order on the motion for clarification is absolutely critical, because it shows that he was not deciding arbitrability completely [00:02:24] Speaker 01: He wasn't designing arbitrability at all. [00:02:26] Speaker 01: All he was saying was, as a procedural matter, they could not pursue those counterclaims in this arbitration. [00:02:34] Speaker 02: But counsel, on the original orders, I think in the Rule 9 to pursue the counterclaims, let's say there's some ambiguity, though, as to the orders, whether or not [00:02:46] Speaker 02: The arbitrator was actually issuing a ruling as to arbitrability. [00:02:49] Speaker 02: Why doesn't the last order regarding the motion for clarification sort of settle this? [00:02:54] Speaker 02: You said, you started by saying it's clear on its face that there is not a decision as to arbitrability. [00:03:00] Speaker 02: I have it in front of me and I don't see here where the arbitrator is saying I'm not making such a ruling. [00:03:06] Speaker 02: In fact, fair rating may be quite the opposite. [00:03:09] Speaker 02: So help me understand how it's clear on its face from this order [00:03:12] Speaker 02: that the arbitrator is not making a determination on arbitrability? [00:03:16] Speaker 01: There was no analysis of arbitrability because it wasn't brought before the arbitrator on that motion for clarification. [00:03:24] Speaker 01: The district court made the error of focusing on really two sentences in that order. [00:03:30] Speaker 01: One was in the second paragraph of that order in which he simply made the observation that there was no agreement between SJH and Dow Building. [00:03:40] Speaker 01: And then on the last one, the last sentence, [00:03:43] Speaker 01: is the reference that they can go ahead and pursue a claim in a court of competent jurisdiction. [00:03:49] Speaker 01: But what you have to do is that third paragraph is critical to this analysis. [00:03:54] Speaker 01: That third paragraph, the arbitrator wrote, while allowing the February 27, 2024 conference to proceed against both SCILLC and Dow Bill, he was acknowledging that in the hearing that at that point was two weeks from the date of that order, right? [00:04:12] Speaker 01: That was issued on January 17th. [00:04:15] Speaker 01: We were scheduled to go to the two-week final hearing on February 3rd. [00:04:19] Speaker 01: So he's saying that, you know, that I'm allowing them to proceed against both defendants, both, well, they were counterclaims, right? [00:04:29] Speaker 01: But against both SCI and Dow built. [00:04:32] Speaker 02: Yeah, but he wasn't allowing them to proceed on all their counterclaims. [00:04:34] Speaker 02: Isn't that the problem? [00:04:36] Speaker 02: As I understand it, [00:04:37] Speaker 02: They said, we want to bring these counterclaims now against Dow Bill. [00:04:39] Speaker 02: We now have understanding that they are different from SDI. [00:04:44] Speaker 02: And the arbitrator said, no, you can't do that. [00:04:46] Speaker 02: And so we're two weeks out from arbitration. [00:04:48] Speaker 02: It may make sense. [00:04:49] Speaker 02: I'll allow you to go forward on your original claims and those that maybe use those two entities interchangeably. [00:04:56] Speaker 02: But you can't do that now on these counterclaims you brought against Dow Bill. [00:05:00] Speaker 02: And those tend to be separate. [00:05:03] Speaker 01: Right. [00:05:04] Speaker 01: That goes back to that critical phrase. [00:05:05] Speaker 01: in this arbitration because he could not allow them to pursue those counterclaims in that arbitration because we were going to hear... Yeah, but he also says, but those counterclaims, you can't pursue them here. [00:05:17] Speaker 02: You know where you need to do it? [00:05:18] Speaker 02: A court of competent jurisdiction. [00:05:20] Speaker 01: But in doing so, he made no rule in his arbitrability because we can file a motion to compel once they file a separate case. [00:05:28] Speaker 01: And in fact, so that was decided on January 17th. [00:05:31] Speaker 03: When the court said it doesn't mandate, the existing counterclaims against Dow Belt does not mandate that SJS is forced to arbitrate its other claims against Dow Belt in this arbitration. [00:05:46] Speaker 01: What does that mean? [00:05:47] Speaker 01: Isn't that clear though? [00:05:49] Speaker 03: I mean, I think it is clear. [00:05:50] Speaker 01: What is it in that sentence? [00:05:54] Speaker 01: It is him allowing them to pursue the claims [00:05:57] Speaker 01: and move forward with claims against both SGH and Dow-built in the upcoming period. [00:06:01] Speaker 01: The existing claims. [00:06:02] Speaker 01: In two weeks, right? [00:06:03] Speaker 03: The existing claims. [00:06:04] Speaker 03: And anything else is not arbitrable. [00:06:06] Speaker 01: No. [00:06:07] Speaker 01: So let's actually look at that paragraph as a whole. [00:06:11] Speaker 03: It doesn't mandate that they're forced to arbitrate their other claims against Dow-built in this arbitration, period. [00:06:16] Speaker 01: Right. [00:06:17] Speaker 01: In this arbitration. [00:06:18] Speaker 01: He's not precluding arbitration completely. [00:06:20] Speaker 01: He's not ruling that they can't be subject to arbitration. [00:06:24] Speaker 01: He's saying you can't rule it in this arbitration. [00:06:26] Speaker 01: And to understand, to even put more context, that that was issued on January 17. [00:06:34] Speaker 01: On January 19, they filed their complaint in district court. [00:06:38] Speaker 01: On January 21, the parties stipulated to vacate in the hearing and stay in the arbitration. [00:06:45] Speaker 01: And the arbitrator granted that. [00:06:47] Speaker 01: If he had determined arbitrability, why would he have ever granted a motion to vacate the hearing and stay in the arbitration? [00:06:55] Speaker 01: And I apologize that that order is not in the record, and I take responsibility for that. [00:06:59] Speaker 01: But I do address it in my declaration, because what he said was, what we discussed was, we're going to file a motion to compel in district court based upon this complaint. [00:07:14] Speaker 01: And so we are asking, in order that we don't have parallel pieces of arbitration litigation moving forward, we're going to ask that we stay this matter. [00:07:23] Speaker 01: SJH agreed to that. [00:07:24] Speaker 02: What does that tell us at all? [00:07:28] Speaker 02: Maybe because we don't have the order, I may be missing this, but the parties go to the arbitrator and say, well, there's now these claims filed in district court, and we're going to litigate whether or not they're going to proceed in that court. [00:07:42] Speaker 02: So we want to stay this arbitration. [00:07:43] Speaker 02: We don't want parallel proceedings. [00:07:45] Speaker 02: And the arbitrator is saying, if you both, that's what you're asking me, sure, let's stay it. [00:07:50] Speaker 02: How does that inform our analysis here? [00:07:51] Speaker 02: Because why would he stay? [00:07:54] Speaker 01: Why would he make it the hearings, the other proceedings? [00:07:55] Speaker 01: Because the parties asked him to. [00:07:57] Speaker 01: But if he had already determined arbitrability, I think he would have said, I've already determined they're not arbitrable. [00:08:04] Speaker 02: There's this group of claims here against SDI and Dow bill. [00:08:09] Speaker 02: And that's what he's staying, right? [00:08:12] Speaker 02: So he's not talking at all about these other claims that are now in district court. [00:08:16] Speaker 02: I guess that's what I'm not tracking on. [00:08:19] Speaker 01: Well, no, because he said in his order, he said, I understand that if the motion to compel is granted, then we're going to consolidate these actions and move forward together. [00:08:29] Speaker 01: So I mean, he anticipated that the motion to compel, he anticipated that being granted and the parties proceeding in one arbitration. [00:08:38] Speaker 02: OK, again, I haven't read the order. [00:08:40] Speaker 02: That seems maybe like a stretch of a reading to say, well, [00:08:45] Speaker 02: I'm going to get out ahead of the U.S. [00:08:46] Speaker 02: district judge and say that that motion to compel is going to be granted. [00:08:49] Speaker 02: And then when it is, it would be more efficient for us to hear all these claims together. [00:08:53] Speaker 02: I mean, it would just make sense to me if you're an arbitrator and the parties come to you and say we want to stay it so that we can go litigate over here. [00:09:01] Speaker 02: And we don't, you know, that the arbitrator would say, well, I don't know what the district judge is going to decide. [00:09:07] Speaker 02: But sure, if that's what you're asking me to do, that seems like a plausible, reasonable position. [00:09:14] Speaker 01: I stand on the argument that it wouldn't make any sense if he knew that he had already decided arbitrability to go ahead and proceed. [00:09:26] Speaker 01: We would have gone forward with the hearing two weeks from there. [00:09:29] Speaker 01: And that's the thing, the context in which this all happened I think is important to keep in mind as you're reading the arbitrator's order. [00:09:35] Speaker 04: Counsel, let me ask you about that. [00:09:38] Speaker 04: What entitles [00:09:41] Speaker 04: or subjects your client to the opportunity at arbitration in this context? [00:09:49] Speaker 01: Well, there's a concession that they already have claims against Dow-Built, that they're pursuing those in the arbitration. [00:09:57] Speaker 04: There's a concession by whom? [00:09:58] Speaker 01: By SGH. [00:10:00] Speaker 04: There's a concession by them that they have claims against Dow-Built? [00:10:06] Speaker 01: That they are actively pursuing counterclaims against Dow-Built in the pending arbitration. [00:10:11] Speaker 01: The one that's currently state. [00:10:13] Speaker 01: There's also the concession that they've treated the parties interchangeably. [00:10:16] Speaker 03: I'm looking at the last sentence of that clarification order and I don't think I read that earlier. [00:10:24] Speaker 03: The last sentence is [00:10:27] Speaker 03: The arbitrator ordered that the SJH change its rights to pursue claims against Downville that were not brought in its February 27, 2024 counterclaim in a court of competent jurisdiction. [00:10:40] Speaker 03: Why doesn't that answer the question? [00:10:42] Speaker 01: He's responding. [00:10:43] Speaker 01: The motion for clarification did not address arbitrability at all. [00:10:46] Speaker 01: It said, Mr. Arbitrator, we want confirmation that our claims are not precluded moving forward, and two, that we get to pursue these elsewhere. [00:10:56] Speaker 01: That's what the motion for clarification requested. [00:10:59] Speaker 01: So he was simply responding to that. [00:11:01] Speaker 01: Arbitrability was never addressed in the motion for clarification. [00:11:06] Speaker 04: To follow up to my question, you talk about the fact that there had been some counterclaims and proceedings in this arbitration that involved your client. [00:11:17] Speaker 04: Your client was never formally joined as a party to the arbitration. [00:11:22] Speaker 04: Isn't that right? [00:11:23] Speaker 01: It was not named, but that goes back to SJH's concession that they were treating the parties interchangeably. [00:11:30] Speaker 04: And what is the evidence of their concession? [00:11:35] Speaker 01: Well, they stated that during the hearing, and the arbitrator noted that in the Rule 9, on the order on the Rule 9 motion. [00:11:42] Speaker 01: The Rule 9 motion was filed. [00:11:45] Speaker 01: There was a hearing shortly thereafter. [00:11:47] Speaker 01: And during that hearing, they conceded that they viewed the parties as interchangeable. [00:11:53] Speaker 01: that they were already pursuing counterclaims against Dow Bill Inc. [00:11:57] Speaker 01: And my friends on the other side have made the argument, well, we just learned of Dow Bill Inc. [00:12:06] Speaker 01: in December of 2024. [00:12:07] Speaker 01: But I would point the court to the record, page 530 in the record, in which they explain in 2023 the understanding of the relationship between Dow Built and SDI. [00:12:23] Speaker 01: goes to that concept of them treating them interchangeably. [00:12:27] Speaker 01: It started before the project even started. [00:12:30] Speaker 01: They treated them as interchangeable throughout the entire course of the construction project, as well as through the arbitration. [00:12:41] Speaker 01: I see I have two minutes left. [00:12:42] Speaker 01: I'd like to reserve that for rebuttal, please. [00:12:45] Speaker 03: That's fine. [00:12:45] Speaker 03: Thank you, counsel. [00:12:48] Speaker 03: Mr. Adams? [00:12:55] Speaker 00: May it please the court, William Adams for SJH, the owner of the properties in the underlying dispute. [00:13:01] Speaker 00: Arbitrability was both submitted to the arbitrator and resolved by the arbitrator. [00:13:06] Speaker 00: To determine the submission issue, you need to look no further than Dalbilt's own submission to the arbitrator. [00:13:13] Speaker 00: If you look at pages 468 to 469, which is their opposition to the motion to clarify, [00:13:22] Speaker 00: It's actually identical to the lead argument that Dalbilt makes to the district court in seeking to compel arbitration. [00:13:29] Speaker 00: So they presented arbitrability. [00:13:32] Speaker 00: SJH did too, and I'll get to that in a moment. [00:13:34] Speaker 00: But they joined issue with SJH on the arbitrability issue. [00:13:38] Speaker 00: At page 468 of the record, Dalbilt says, SJH's proposed claims against Dalbilt, Inc. [00:13:46] Speaker 00: are clearly within the scope of the contract's arbitration provision [00:13:50] Speaker 00: This provision clearly encompasses SJH's proposed claims against Dalbilt, Inc. [00:13:57] Speaker 00: as a matter of Wyoming law. [00:13:59] Speaker 00: It then continues to discuss Wyoming case law, including the Jackson State Bank case, which the arbitrator then distinguishes in the clarification order. [00:14:08] Speaker 00: This submission was not just by SDI. [00:14:11] Speaker 00: It was by Dalbilt, Inc., which had injected itself into the arbitration. [00:14:15] Speaker 00: We know that. [00:14:17] Speaker 00: 460 and A472 where counsel is saying that the argument is on behalf of Dow Built, Inc. [00:14:25] Speaker 00: SJH likewise raised the issue of arbitrability. [00:14:29] Speaker 00: This whole process started with the Rule 9 motion where my client was trying to get confirmation that these claims, these tort claims against Dow Built, Inc. [00:14:40] Speaker 00: were not part of the arbitration, were not arbitrable, and could be brought in a court of competent jurisdiction. [00:14:47] Speaker 00: The Rule 9 motion is at page 376 of the record, and SJH repeats these arguments in seeking clarification. [00:14:57] Speaker 00: In fact, Dalbilt says that the clarification motion is just a motion for reconsideration of the original Rule 9 motion. [00:15:04] Speaker 00: They say that at page A464 of the record. [00:15:10] Speaker 00: So we have SJH raising arbitrability, Dalbilt, Inc. [00:15:14] Speaker 00: joining issue on the issue of arbitrability, [00:15:16] Speaker 00: And then we get to the clarification order. [00:15:19] Speaker 00: That's the key to the appeal. [00:15:23] Speaker 00: And that is on page A267. [00:15:28] Speaker 02: What was SJH seeking clarification about? [00:15:31] Speaker 02: Was it arbitrability or was it, hey, we have these counterclaims. [00:15:35] Speaker 02: You said they're untimely. [00:15:36] Speaker 00: It was that it could pursue the non-contract claims against Dalbilt Inc. [00:15:44] Speaker 00: in a court of competent jurisdiction. [00:15:45] Speaker 00: That is an issue of arbitrability. [00:15:48] Speaker 00: And then the arbitrator decides that issue. [00:15:50] Speaker 00: The arbitrator has four key rulings on page 267. [00:15:57] Speaker 00: We talked about two of them earlier, but I'll go through all four of them with the court's indulgence. [00:16:04] Speaker 00: that the arbitrator says is there is no evidence that has been presented that Dow Belt Inc. [00:16:10] Speaker 00: was a party to an arbitration agreement with SJH. [00:16:13] Speaker 00: That's about arbitrability. [00:16:15] Speaker 00: The second thing the arbitrator says is that there is no arbitration agreement between Dow Belt Inc. [00:16:23] Speaker 00: and SJH. [00:16:25] Speaker 00: The third thing, which is in the paragraph you spent a lot of time in colloquy with my friend on the other side about, [00:16:32] Speaker 00: That says that SJH's existing contract claims do not mandate that SJH is forced to arbitrate in its other claims against Dow Bill Inc. [00:16:43] Speaker 00: in this arbitration or be precluded from bringing them, you know, inserting those claims at all. [00:16:50] Speaker 00: That implicates arbitrability and the scope of that particular arbitration. [00:16:55] Speaker 00: And then the fourth and final thing, he cashes it out in the final paragraph [00:17:00] Speaker 00: And he says, just as SJH requested, SJH retains its right to pursue claims against Dalbilt, Inc. [00:17:07] Speaker 00: that were not brought in its February 27, 2004, counterclaims in a court of competent jurisdiction. [00:17:13] Speaker 00: That's a ruling on arbitrability. [00:17:15] Speaker 00: And that ruling was for the arbitrator to make. [00:17:19] Speaker 00: There's no dispute that there is a clear and unmistakable delegation of the arbitrability issue to the arbitrators in the contract in which Dalbilt is trying to invoke. [00:17:30] Speaker 00: They incorporate the AAA rules. [00:17:32] Speaker 00: This court has been very clear in Gold Group, Dish Network, Belknap, that that's a sufficient delegation via incorporation of the rules. [00:17:41] Speaker 00: And the only way that this court could set aside the arbitrator's determination of arbitability was if there was manifest disregard of the law. [00:17:49] Speaker 00: That's from this court's decision in Dish Network. [00:17:52] Speaker 00: And Ballot Bill, Inc. [00:17:52] Speaker 00: doesn't suggest that the arbitrator's determination wasn't manifested disregard of the law. [00:17:56] Speaker 00: And of course, it was not. [00:17:58] Speaker 00: And respectfully, we think that's the end of the inquiry. [00:18:00] Speaker 00: Any other issues of arbitrability, whether it's consent or the equitable estoppel argument, those issues were for the arbitrator, but they didn't raise them. [00:18:11] Speaker 00: And there's no basis that I'm aware of for any federal court to be addressing those arbitrability issues. [00:18:19] Speaker 00: You don't get a second bite at the apple. [00:18:22] Speaker 00: And so unless there are any further questions from the court [00:18:26] Speaker 02: Counsel, do I have the situation correct that if the district court would have granted the motion to compel arbitration and the arbitrators already said you can't bring these counterclaims against Dow built and that effectively leaves your client without a forum to adjudicate those claims? [00:18:42] Speaker 00: I think that's right. [00:18:42] Speaker 00: That's what the district court ruled in rejecting. [00:18:45] Speaker 00: the equitable estoppel argument, the arbitrator had concluded that the non-contract claims were untimely in the context of that arbitration and he struck them, the arbitrator did, and so to then send it back [00:19:01] Speaker 00: to the arbitrator who has ruled that these claims don't belong in the arbitration really sets up a... I'm not sure exactly what would happen then, right? [00:19:10] Speaker 00: I mean, there's a great uncertainty, and sort of as the district court explained, a great sort of unfairness to my client to be put in that circumstance. [00:19:19] Speaker 00: But the arbitrator was very clear that they could be pursued in a court of competent jurisdiction, and my client therefore filed its complaint in the district court. [00:19:27] Speaker 00: I know you may not want to travel down this path at all, but is equitable estoppel even recognized under Wyoming law in this context? [00:19:44] Speaker 00: tools to this court to predict what the Wyoming Supreme Court would do. [00:19:48] Speaker 00: And so I don't think that they have carried their burden. [00:19:50] Speaker 00: Even if you were to get there, of course, we don't think you should get there. [00:19:53] Speaker 00: I don't think they've carried their burden to show that the Wyoming Supreme Court would accept. [00:19:57] Speaker 00: Are you suggesting then that waiver may come into play? [00:20:00] Speaker 00: I think that it's either a burden or they didn't satisfy their burden or they waived it by not adequately developing the argument either in the district court or in this court. [00:20:09] Speaker 00: But again, those are issues that frankly would be for the arbitrator if they had made it to the arbitrator because equitable estoppel, of course, is an issue of arbitrability. [00:20:17] Speaker 00: The delegation clause means that it should be for the arbitrator to resolve that issue, but they didn't present it to him. [00:20:25] Speaker 00: And I respectfully suggest there's no reason for this court to reach that issue. [00:20:30] Speaker 00: If there are no further questions, we respectfully ask the court to affirm. [00:20:36] Speaker 03: Thank you. [00:20:37] Speaker 00: Thank you. [00:20:49] Speaker 01: Your Honor, on the issue of ephemeral estoppel, we can see that the Wyoming Supreme Court has not addressed that. [00:20:57] Speaker 01: But obviously, the Tenth Circuit has. [00:20:59] Speaker 01: We would ask this court to follow Reeves. [00:21:03] Speaker 01: Yeah, but Reeves is Oklahoma law. [00:21:05] Speaker 01: It is, and we acknowledge that, but that rationale would apply. [00:21:10] Speaker 01: It's been adopted by numerous circuits, and as explained in Reeves, and we would ask the court to apply the Reeves analysis here. [00:21:19] Speaker 01: That obviously will bar the signatory to an arbitration agreement from avoiding arbitration with a non-signatory [00:21:28] Speaker 01: And we focused, as you saw in our briefs, on the second possibility. [00:21:33] Speaker 01: If plaintiffs' claims raise allegations of substantially interdependent and concerted misconduct by both the non-signatory and the signatory to a contract, when you look at their claims in the complaint in the district court, they're all tied to the contract, right? [00:21:49] Speaker 01: They talk about payment issues. [00:21:51] Speaker 01: They talk about the use of the money. [00:21:53] Speaker 01: They talk about the audit, the audit that occurred. [00:21:56] Speaker 01: All of those are tied to the contract. [00:21:59] Speaker 01: And for that reason, equitable estoppel should apply. [00:22:04] Speaker 01: I think it's also important to note that going back to that third paragraph, at the very least, we've asked for a reversal of the denial of the motion compel. [00:22:26] Speaker 01: At the very least, I think remanding to the arbitrator to say whether or not he ruled on the issue of arbitrability makes sense under these circumstances. [00:22:38] Speaker 01: Well, it hasn't been used in this context. [00:22:41] Speaker 01: I think remand makes sense because it goes to ambiguity within the order, which I think is evident based upon the discussion that we've had today. [00:22:50] Speaker 01: And it helps give the parties the benefit of the bargain. [00:22:55] Speaker 01: in terms of entering into a contract with an arbitration agreement. [00:22:59] Speaker 01: So I see that my time is up, unless the panel has any questions. [00:23:05] Speaker 03: Thank you, counsel. [00:23:06] Speaker 03: Thank you. [00:23:06] Speaker 03: Thanks to both of you. [00:23:07] Speaker 03: We appreciate your arguments today. [00:23:08] Speaker 03: They've been helpful, and we will submit the case. [00:23:14] Speaker 03: And counsel are excused.