United States District Court, N.D. California
ORDER DENYING APPLICATION FOR ENTRY OF DEFAULT, SETTING BRIEFING SCHEDULE, DENYING MOTION FOR ENLARGEMENT OF TIME AS MOOT Re: ECF Nos. 8, 21
JON S. TIGAR, District Judge.
Petitioner seeks entry of default on its Petition to Compel Arbitration, Pet., ECF No. 1, Mot., ECF No. 8, and Respondents seek an enlargement of time to respond to the Petition, ECF No. 21. The parties seek relief premised on a misinterpretation of the nature of a petition to compel arbitration filed pursuant to 9 U.S.C. § 4. The Court will deny both motions and set a briefing schedule on the Petition.
Petitioner Bridgeport Management, Inc. filed its Petition to Compel Arbitration on January 6, 2014, against Lake Mathews Mineral Properties, Ltd. and Lawrence Holmes Senior Mining, Inc. ECF No. 1. The Petition seeks an order compelling Respondents to arbitrate a contract dispute between the parties arising out of Respondents' alleged failure to pay sums owed under the contract. The Petition asserts subject matter jurisdiction in this Court pursuant to 28 U.S.C. § 1332 diversity jurisdiction because Petitioner and Respondents are diverse and the amount in controversy exceeds $75, 000.
On January 6 and 8, 2014, Petitioner caused to be issued two summonses ordering Respondents to respond within five days of service of the summons rather than the twenty-one days listed on the Court's form summons and required by Federal Rule of Civil Procedure 12. ECF Nos. 2, 5. According to the certificates of service filed by Petitioner, the summonses were served by personal service on Respondents on January 13, 2014. ECF Nos. 6, 7.
On January 22, 2014, seven days after service of the summonses, Petitioner filed a "Motion for Default and Entry of Order for Arbitration" moving the Court pursuant to Rule 5(a)(2) for an order of default for Respondents' failure to respond to the summons, and for an order compelling Respondents to arbitrate the dispute. ECF No. 8. The motion argues that Respondents were required to respond to the summons within five days pursuant to 9 U.S.C. § 4.
The next day, Respondents' counsel, Shirley Smith, filed a letter addressed to the Magistrate Judge then assigned to this action stating that the summons' return date was unlawfully altered, and "to beg for an extension of the date for Defendants' Response to Plaintiff's Petition to 21 Court days from service of the Summons - February 12, 2014." ECF No. 12 at 2. Petitioner filed an objection to the letter opposing Respondents' request for additional time. ECF No. 13.
The Clerk issued a request for the parties to complete their forms for consent/declination to proceed before a magistrate judge on January 27, 2014. On February 12, 2014, Respondents filed a declination to proceed before a magistrate judge. ECF No. 19. Petitioner filed a response arguing that Respondents' declination was invalid because they were in default. ECF No. 20.
On the same day, February 12, 2014, Respondents filed a motion extending the time to respond to the Petition to March 6, 2014, due to Respondents' counsel's medical issues. ECF No. 21. The matter was reassigned to this Court on February 14, 2014. ECF No. 24.
Petitioner has argued that it was entitled to alter the response deadline on the summonses to five rather than twenty-one days by virtue of 9 U.S.C. § 4, which sets forth the procedure for petitions to compel arbitration, and states, in relevant part:
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court... for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days' notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure. The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.... If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.
Further, Petitioner argues that Respondents' failure to respond within five days entitled Petitioner to entry of default against Respondents. The confusion between the parties stems from the Federal Arbitration Act's ("FAA") reference to "five days' notice." Petitioner argues that Respondents were required to respond within five days, in sole reliance on the First Circuit's decision in Unionmutual Stock Life Ins. Co. of Am. v. Beneficial Life Ins. Co. , 774 F.2d 524, 526 (1st Cir. 1985).
In Unionmutual, the respondent received notice of a petition to compel arbitration, and the petitioner filed a "motion in district court requesting a hearing on the previously filed petition" ten days later. Id. at 525. That hearing was held four days after that, which was less than the twenty-one day deadline for responding to a civil complaint provided for by Federal Rule of Civil Procedure 12. The respondent moved to dismiss the petition at the hearing due to improper service, arguing that the respondent was entitled to a twenty-one-day response window. The First Circuit held that the district court properly denied the motion because the ...