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Weber v. Lewis

United States District Court, D. South Carolina, Florence Division

November 9, 2018

Jenifer Weber Plaintiff,
Delilah Lewis, Defendant.



         This matter is before the Court for a ruling on Defendant Delilah Lewis's motion to compel arbitration and dismiss the action or, in the alternative, stay the action pending arbitration. See ECF No. 7. The Court denies the motion for the reasons herein.[1]


         In her complaint, Plaintiff Jenifer Weber alleges she was injured in an automobile accident on May 20, 2016, when Defendant Delilah Lewis crashed into her vehicle on U.S. Highway 501 in Horry County, South Carolina. See ECF No. 1 at ¶¶ 5-7. Plaintiff is an Illinois citizen, and Defendant is a South Carolina citizen. Id. at ¶¶ 1-2. Plaintiff asserts two causes of action against Defendant Lewis: negligence and negligence per se. Id. at ¶¶ 8-14.

         At the time of the accident, Plaintiff's parents maintained an insurance policy through Safeco Insurance Company of Illinois (“Safeco”) providing underinsured motorist (“UIM”) coverage.[2] See ECF No. 7-2 at pp. 51-56. The Safeco Policy contains an arbitration provision providing that “either party may make a written demand for arbitration” if Safeco and the insured do not agree to the amount of damages and that “arbitration will take place in the county in which the insured lives.” Id. at p. 56. Plaintiff also had additional UIM coverage available under a personal excess liability policy issued by Federal Insurance Company. See ECF No. 13 at p. 1.

         After the accident, Defendant Lewis's liability insurer tendered its $25, 000 liability limits in exchange for a covenant not to execute. See ECF No. 7-1. Plaintiff then submitted a claim to Safeco for UIM benefits demanding the policy limits of $250, 000, but Plaintiff and Safeco were unable to settle the claim. ECF No. 13 at p. 3.

         On January 30, 2018, Plaintiff filed the instant action against Defendant Lewis in this Court invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332. See ECF No. 1. Pursuant to S.C. Code Ann. §§ 15-9-270 and 38-77-160, Plaintiff served the summons and complaint on Safeco and Federal. ECF No. 13 at p. 3. Pursuant to § 38-77-160, [3] counsel for Safeco filed a notice of appearance on February 21, 2018, and counsel for Federal filed a notice of appearance on March 30, 2018. See ECF No. 5.

         On March 5, 2018, Defendant Lewis filed the instant motion, which is captioned “Defendant Delilah Lewis's, By and Through Safeco Insurance Company, Motion to Dismiss and Compel Arbitration Or, Alternatively, Stay Litigation Pending Arbitration.” See ECF No. 7. Plaintiff filed a response in opposition to the motion, and Defendant Lewis filed a reply to Plaintiff's response. See ECF Nos. 13 & 19.[4]


         As mentioned above, Safeco has appeared and is defending in the name of Defendant Delilah Lewis pursuant to S.C. Code Ann. § 38-77-160, and Defendant Lewis has filed the instant motion “by and through Safeco Insurance Company.” ECF No. 7 at p. 1. The motion seeks to enforce the arbitration provision in the Safeco Policy providing UIM coverage and compel arbitration pursuant to the Federal Arbitration Act.[5]

         Plaintiff contends arbitration cannot be compelled in this action for several reasons. Most significant is Plaintiff's argument that Defendant Delilah Lewis-the only named defendant in this action- cannot compel or enforce arbitration pursuant to the Safeco Policy because Defendant Lewis herself is not a party to that policy/contract (i.e., that Defendant Lewis has no standing to compel arbitration). ECF No. 9 at pp. 1-2, 9, 18. The Court agrees with this argument and will therefore deny Defendant Lewis's motion.[6]

         “[C]ourts must rigorously enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes, and the rules under which that arbitration will be conducted.” Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (internal quotation marks, citations, and brackets omitted). “As a general matter, arbitration is a matter of contract interpretation and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Am. Bankers Ins. Grp., Inc. v. Long, 453 F.3d 623, 626-27 (4th Cir. 2006) (internal quotation marks and brackets omitted).

         “A number of courts have held that because the right to compel arbitration derives from a contractual right, one who is not a party to the contract lacks standing to compel arbitration.” Goer v. Jasco Indus., Inc., 395 F.Supp.2d 308, 312 (D.S.C. 2005). “It is well-established, however, that a nonsignatory to an arbitration clause may, in certain situations, compel a signatory to the clause to arbitrate the signatory's claims against the nonsignatory despite the fact that the signatory and nonsignatory lack an agreement to arbitrate.” Am. Bankers, 453 F.3d at 627. “This happens when theories arising out of common law principles of contract and agency law are used to bind nonsignatories to arbitration agreements.” R.J. Griffin & Co. v. Beach Club II Homeowners Ass'n, 384 F.3d 157, 160 (4th Cir. 2004) (internal quotation marks omitted). Here, Defendant Lewis asserts Plaintiff should be equitably estopped from avoiding the Safeco Policy's arbitration provision.[7] See ECF No. 19 at pp. 4-5.

         “[A] signatory to an arbitration agreement may be bound by a nonsignatory through the doctrine of equitable estoppel.” Brantley v. Republic Mortg. Ins. Co., 424 F.3d 392, 395 (4th Cir. 2005). “[E]quitable estoppel allows a nonsignatory to compel arbitration in two different circumstances”: when a signatory to the agreement with the arbitration clause (1) “must rely on the terms of the written agreement in asserting its claims against the nonsignatory” or (2) “raises allegations of substantially interdependent and concerted misconduct by both the non-signatory and one or more of the signatories to the contract.” Id. at 395-96 (internal quotation marks, brackets, and ellipsis omitted). “Because this legal test examines the nature of the signatory's underlying allegations against the nonsignatory, courts should examine the underlying complaint to determine whether estoppel should apply.” Am. Bankers, 453 F.3d at 627. “[E]stoppel is appropriate if in substance the signatory's ...

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