The opinion of the court was delivered by: MARILYN PATEL, Chief Judge, District
Plaintiff Fujian Pacific Electric Company Limited ("Fujian")
brought this diversity action against defendant Bechtel Power
Corporation ("Bechtel") seeking payment of damages pursuant to a
written guaranty. Fujian also seeks specific performance of the
terms of the guaranty that allegedly afford it access to records
and documents in Bechtel's possession. Now before the court is
Bechtel's motion to dismiss the complaint for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6), or
alternatively, to stay this action pending arbitration of a
related dispute. Having considered the arguments presented, and
for the reasons set forth below, the court rules as follows.
This action arises out of a series of agreements relating to
the construction of two coal-fired electric power generating
units located in Fujian Province, People's Republic of China
("the Project."). Pl.'s Compl. ¶ 5. Fujian, a corporation formed
to develop and operate the Project, entered into two contracts
with wholly-owned subsidiaries of Bechtel in which the Bechtel
entities agreed to provide various construction-related services.
Id. ¶¶ 6-7. In the first of these contacts, the "Engineering
Contract," Bechtel Overseas Corporation ("BOC") agreed to furnish
certain engineering, design, procurement, construction, and
supervision services for the Project. Id. ¶ 7. Under the second contract, the Construction Agreement, another
Bechtel subsidiary, Bechtel China, Inc. ("BCHI"), agreed to
provide similar construction-related services. Id.
In addition, Fujian, Bechtel, BOC, and BCHI entered into a
"Coordination Agreement" in which the Bechtel entities
collectively agreed to carry out the project on a fixed-price,
"turnkey" basis. Id. ¶ 8. As a condition of the Coordination
Agreement, Bechtel was required to execute and deliver a
"Corporate Guaranty" providing Fujian with assurances of
performance. Lindsay Decl., Exh. 2, Coordination Agreement at 12
§ 3. Pursuant to the Corporate Guaranty, Bechtel agreed to
"absolutely, irrevocably, and unconditionally" guarantee:
(i) the full and prompt payment when due, whether by
indemnification or otherwise, of all the payment
obligations of the Companies under the Guaranteed
Documents [i.e., the Engineering Contract, the
Construction Agreement and the Coordination
Agreement], together with all renewals,
modifications, consolidations, extensions thereof,
and (ii) the full and prompt payment and/or
performance, as the case may be, when due of all
warranties, indemnity obligations, liquidated
damages, covenants and agreements, both monetary and
non-monetary, of [BOC and BCHI] under the Guaranteed
Id., Corporate Guaranty at 2 § 2(a). The guaranty further
provides that Bechtel's liability "shall be direct and immediate
and not conditional or contingent upon the pursuit of any remedy
against [BOC, BCHI,] or any other Person." Id. at 7 § 5.
Fujian now alleges that BOC and BCHI breached the Construction
Agreement and Engineering Contract by failing to meet the January
15, 2001 and June 1, 2001 deadlines for substantially completing
construction of the first and second power generating units,
respectively. Pl.'s Compl. ¶¶ 16, 19. In addition, Fujian asserts
that the BOC and BCHI failed to fulfill various duties of
performance under the contracts and refused to complete their
remaining duties under the Guaranteed Documents after leaving the
Project site in June 2001. Id. ¶¶ 23-24. Fujian also seeks
equitable relief, alleging that Bechtel has a contractual duty to
produce certain documents relating to the transaction. Id. ¶¶
In addition to proceedings in this court, BOC and BCHI have
filed a demand for arbitration of their disputes with Fujian,
seeking payment of the more than $41 million for services
rendered under the Construction Agreement and Engineering
Contract. Lindsay Decl. ¶ 10 & Ex. 1. In their demand, BOC and BCHI rely on the "Dispute Resolution" clauses
contained in the two contracts, which provide for the arbitration
of all disputes involving an amount in excess of $1 million.
Lindsay Decl., Ex. 1, Construction Agreement, art. XVI, § 16.2 &
Engineering Contract, art. XVI, § 16.2. Bechtel now moves to
dismiss this action, or alternatively, to stay proceedings in
this court pending arbitration of the dispute between Fujian,
BOC, and BCHI.
A motion to dismiss for failure to state a claim will be denied
unless it appears beyond doubt that the plaintiff can prove no
set of facts which would entitle him or her to relief. Conley v.
Gibson, 355 U.S. 41, 45-46 (1957); Parks Sch. of Bus., Inc. v.
Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). All material
allegations in the complaint will be taken as true and construed
in the light most favorable to the plaintiff. NL Indus., Inc. v.
Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). Although the court is
generally confined to considering the allegations in the
pleadings, any documents attached to the complaint are deemed
part of the pleadings and may be considered in determining
whether dismissal is proper without transforming the motion to
one for summary judgment. Durning v. First Boston Corp.,
815 F.2d 1265, 1267 (9th Cir.), cert. denied, 484 U.S. 944 (1997).
In addition, the court may rely upon "documents crucial to the
plaintiff's claims, but not explicitly incorporated in his
complaint." Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th
Cir.), cert. denied, 525 U.S. 1001 (1998).
II. Motion to Stay Action Pending Arbitration
The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, requires
federal courts to enforce arbitration agreements and to stay any
litigation that contravenes such agreements. Arbitration is a
matter of contact, and the court cannot require a party to
arbitrate a dispute unless the party has agreed to do so. United
Steelworkers of Am. v. Warrior & Gulf Navigation Co.,
363 U.S. 574, 582 (1960). Accordingly, the court's role under the Act is
limited to (1) determining whether a valid agreement to arbitrate
exists and, if it does, (2) deciding whether the agreement
encompasses the dispute at issue. 9 U.S.C. § 4; Simula, Inc. v. Autoliv, Inc.,
175 F.3d 716, 719-20 (9th. Cir. 1999). On the other hand, a
district court retains the inherent power to stay litigation "to
control the disposition of the cases on its docket with economy
of time and effort for itself, for counsel, and for the
litigants." Landis v. North Am. Co., 299 U.S. 248, 254 (1936).
In exercising ...