CSAA Affinity Insurance Company v. Amerigas Propane LP ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 CSAA Affinity Insurance Company, No. CV-21-08041-PCT-GMS 10 Plaintiff, ORDER 11 v. 12 AmeriGas Propane LP, et al., 13 Defendants. 14 15 16 Before the Court is Defendants AmeriGas Propane, L.P., AmeriGas Propane GP, 17 L.L.C., and New AmeriGas Propane, Inc.’s (collectively “Defendants”) Motion to Compel 18 Arbitration and Stay Proceedings. (Doc. 6.) For the following reasons, Defendants’ Motion 19 to Compel is denied. 20 BACKGROUND 21 Plaintiff CSAA Affinity Insurance Company (“Plaintiff”) issued and provided an 22 insurance policy to Vincent and Carmen Kasarskis (“Insureds”) for their personal property 23 in Pinetop, Arizona. This action arises out of a water loss and resulting damage to the 24 Insureds’ property. Plaintiff alleges that Defendants caused the water loss by negligently 25 disconnecting the Insureds’ gas supply. 26 In March 2021, Defendants filed a Motion to Compel Arbitration and Stay 27 Proceedings. (Doc. 6.) On May 28, 2021, the Court held an evidentiary hearing on the 28 Motion. 1 In support of their motion, Defendants submitted the testimony of the Regional 2 Director of AmeriGas, Robert Cassidy. He explained that the creation of a user account at 3 AmeriGas required completing and signing the Company’s terms of service. AmeriGas’ 4 practice is to either physically print an agreement for a customer to sign in person or email 5 the agreement for a customer to complete remotely. Mr. Cassidy testified that AmeriGas’s 6 practice is to email or print the entire customer agreement when it is shared with 7 prospective customers, not only portions. However, it is common that customers only 8 return the two pages of the agreement which contain blanks for signatures or customer 9 information, rather than the entire agreement. 10 On behalf of Plaintiff, Insured Vincent Kasarskis testified about his contract. In 11 2018, he received terms of service via email, which he completed and returned. Although 12 Mr. Kasarskis did not have specific memory of the agreement, he explained that his 13 practice would normally have been to return an entire agreement after signing it. 14 AmeriGas’ record contains only two pages, which do not contain an arbitration clause. 15 Defendants admitted into evidence a copy of a blank, four-page agreement they allege was 16 being used during the relevant period. (Doc. 8-2.) This agreement contains an arbitration 17 clause. Id. The numbering at the bottom of the four pages of the admitted agreement reads: 18 1 of 3, 2 of 3, 3 of 3, and 4 of 4. Id. The numbering as the bottom of the two pages signed 19 by Mr. Kasarskis reads: 3 of 3, and 4 of 4. (Doc. 6-2 at 6–7.) 20 DISCUSSION 21 I. Legal Standard 22 Under the Federal Arbitration Act (“FAA”), “[a] written provision in . . . a contract 23 evidencing a transaction involving commerce to settle by arbitration a controversy 24 thereafter arising out of such contract or transaction, or the refusal to perform the whole or 25 any part thereof, . . . shall be valid, irrevocable, and enforceable.” 9 U.S.C. § 2; see, e.g., 26 Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113–19 (2001); Chiron Corp. v. Ortho 27 Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). However, “[n]otwithstanding 28 the federal policy favoring it, ‘arbitration is a matter of contract and a party cannot be 1 required to submit to arbitration any dispute which he has not agreed so to submit.’” Tracer 2 Rsch. Corp. v. Nat’l. Env’t Servs. Co., 42 F.3d 1292, 1294 (9th Cir. 1994) (quoting United 3 Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, (1960)). 4 Where the arbitrability of a dispute is in question, a court must look to the terms of 5 the contract. See Chiron Corp., 207 F.3d at 1130. “Any doubts concerning the scope of 6 arbitrable issues should be resolved in favor of arbitration.” Simula, Inc. v. Autoliv, Inc., 7 175 F.3d 716, 719 (9th Cir. 1999) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. 8 Corp., 460 U.S. 1, 20 (1983)). However, a court “cannot expand the parties’ agreement to 9 arbitrate in order to achieve greater efficiency.” Tracer Research Corp., 42 F.3d at 1294. 10 “[T]he judicial inquiry . . . must be strictly confined to the question whether the reluctant 11 party did agree to arbitrate[.]” United Steelworkers, 363 U.S. at 582. “The court’s role 12 under the [FAA] is therefore limited to determining (1) whether a valid agreement to 13 arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” 14 Chiron Corp., 207 F.3d at 1130. A party seeking to compel arbitration has the burden under 15 the FAA to show both the existence of an agreement to arbitrate; and, if it exists, that the 16 agreement to arbitrate encompasses the dispute at issue. Ashbey v. Archstone Prop. Mgmt., 17 Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). 18 When determining whether parties have agreed to arbitrate, courts apply ordinary 19 state law principles that govern contract formation. Davis v. Nordstrom, Inc., 755 F.3d 20 1089, 1093 (9th Cir. 2014). To form a valid contract under Arizona law, “there must be an 21 offer, an acceptance, consideration, and sufficient specification of terms so that the 22 obligations involved can be ascertained.” Savoca Masonry Co., Inc. v. Homes & Son Const. 23 Co., Inc., 112 Ariz. 392, 394, 542 P.2d 817, 819 (1975). “Thus, a defendant seeking to 24 compel arbitration must show that the plaintiff accepted the arbitration agreement.” 25 Escareno v. Kindred Nursing Ctrs. W., L.L.C., 239 Ariz. 126, 129, 366 P.3d 1016, 1019 26 (Ct. App. 2016). 27 II. Analysis 28 Defendants have not met their burden of establishing that the Insureds entered into 1 an agreement containing an arbitration clause. Although Defendants assert that the terms 2 of service sent to the Insureds, and which Graves accepted, contained an arbitration clause 3 per their usual practice, they have not established that the specific agreement accepted by 4 the Insureds contained an arbitration clause. The Insured testified that, when he initially 5 enrolled in gas services, he executed an agreement with another company, Graves, which 6 was later acquired by AmeriGas. Although Mr. Cassidy testified about AmeriGas’s policies 7 for customer agreements, Defendants presented no evidence that their predecessor 8 practices reflected their own. Further, Mr. Karsarkis testified that his practice would have 9 been to return the entire agreement after signing it, and both parties agree that only two 10 pages were returned by the Insureds. Additionally, the four-page agreement Defendants 11 assert the Insureds received is improperly numbered, raising questions about its 12 completeness and accuracy. Defendants did not offer an explanation for this disparity. The 13 Court cannot conclude, given these inconsistencies, that the Insureds would have received 14 the presented four-page document as a general practice. 15 Mr. Cassidy also explained that the company’s website, where customers can go to 16 manage their account and pay bills online, contains updated terms and conditions for their 17 customer agreements. AmeriGas invoices direct clients to these updated terms and 18 conditions: “We periodically review and revise our standard Terms and Conditions. Visit 19 our company website to read the T&C that apply.” (Doc. 8-1 at 1.) Although Defendants 20 assert that the website terms and conditions bind customers, they provide no legal basis for 21 their claim that AmeriGas can unilaterally alter its contract with customers to incorporate 22 terms and conditions on its website. Customers’ obligations to AmeriGas remain the same 23 and they are not given an opportunity to opt-out of the updated terms without discontinuing 24 service. The Court thus cannot find that the terms were incorporated into the Insureds’ 25 agreement. See Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1141 26 (9th Cir. 1991) (“Before a party to a lawsuit can be ordered to arbitrate and thus be deprived 27 of a day in court, there should be an express, unequivocal agreement to that effect.”). 28 As the two-page document with the Insured’s signature does not contain an || arbitration clause, and Defendants have not established that the Insured received the four- 2|| page agreement they presented, Defendants have not established that the parties’ agreement 3 || included an arbitration clause. 4 CONCLUSION 5 For the reasons set forth above, Defendants have not established the existence of a 6 || valid agreement to arbitrate. 7 IT IS THEREFORE ORDERED that Defendants AmeriGas Propane, L.P., || AmeriGas Propane GP, L.L.C., and New AmeriGas Propane, Inc.’s (collectively 9|| “Defendants”) Motion to Compel Arbitration and Stay Proceedings. (Doc. 6) is DENIED. 10 Dated this 11th day of June, 2021. Wars ) A Whacrsay Fotos 13 Chief United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 _5-