Case 2:11-mc-00091-PBT Document 11

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ACE AMERICAN INSURANCE COMPANY, AND ESIS, INC., Petitioners v. RCR PLUMBING AND MECHANICAL, INC. f/k/a AMPAM RCR COMPANIES, Respondent. ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION NO. 2:11-mc-00091-PBT ORAL ARGUMENT REQUESTED

RESPONDENTS RESPONSE TO THE PETITION OF ACE AMERICAN INSURANCE COMPANY AND ESIS, INC. PURSUANT TO 9 U.S.C. 4 FOR AN ORDER DIRECTING THAT THE ARBITRATION PROCEED IN ACCORDANCE WITH THE PARTIES ARBITRATION PROVISIONS REQUIRING THAT THE ARBITRATION PANEL DETERMINE THE SCOPE OF ARBITRATION AND RESPONDENTS OBLIGATION TO ARBITRATE WITH PETITIONER ESIS Respondent RCR PLUMBING AND MECHANICAL, INC. f/k/a AMPAM RCR COMPANIES (RCR) respectfully responds to the Petition filed by Petitioners ACE AMERICAN INSURANCE COMPANY (ACE) and ESIS, Inc. (ESIS) (collectively Petitioners), as follows1: 1. 2. 3. 4. Admitted. Admitted. Admitted. Respondent does not dispute that this Court has general jurisdiction over this

matter, but the Parties have already submitted their dispute to Judge Phillips of the United States District Court for the Central District of California who has exercised continuing jurisdiction over this matter and has reserved the right to hear Motions over the scope of arbitrable issues between these parties. (See Respondents Brief in Opposition to the
1

Respondents Response is to the numbered paragraphs contained in Petitioners Petition.

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instant Petition, and Respondents Motion to Stay and/or Dismiss and Brief in Support thereof, which are incorporated herein by reference.) 5. Respondent does not dispute that this Court has general jurisdiction over this

matter, but the parties have already submitted their dispute to Judge Phillips of the United States District Court for the Central District of California who has exercised continuing jurisdiction over this matter and has reserved the right to hear Motions over the scope of arbitrable issues between these parties. Respondent denies that the arbitration provision in the Risk Management Services Agreement (RMSA) between RCR and ESIS requires arbitration within this district. The Arbitration provision in the RMSJ does not provide for any specific venue for Arbitration and Respondent has exercised its rights under Section 5.J of the RMSA to object to Arbitration with ESIS generally, including any contention that the Arbitration proceed in Pennsylvania. (See Respondents Brief in Opposition to the instant Petition, and Respondents Motion to Stay and/or Dismiss and Brief in Support thereof, which are incorporated herein by reference.) 6. Respondent denies that the arbitration provision in the Risk Management

Services Agreement (RMSA) between RCR and ESIS requires arbitration within this district. The Arbitration provision in the RMSA does not provide for any specific venue for Arbitration and Respondent has exercised its rights under Section 5.J of the RMSA to object to Arbitration with ESIS generally, including any contention that the Arbitration proceed in Pennsylvania. Respondent further denies that ESIS is a party to the Program Agreement and denies that ESIS has any right to compel arbitration under the Program Agreement. Respondent also denies that ACE is a party to the RMSA or that ACE has any right to compel or participate in Arbitration with RCR and ESIS under the RMSA Agreement. (See Respondents Brief in Opposition to the instant Petition, and

Respondents Motion to Stay and/or Dismiss and Brief in Support thereof, which are incorporated herein by reference.)

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7.

Admitted that on October 13, 2003, RCRs predecessor, AMPAM RCR

Companies (AMPAM), and certain of its subsidiaries and affiliates (collectively with AMPAM, Debtors) filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Respondent denies all other allegations. 8. Admitted that AMPAM and later RCR entered into an Insurance Agreement

with ACE. Respondent denies all other allegations. 9. Admitted that as a condition of issuing insurance ACE required a collateral

obligation under the Program Agreement. Respondent denies all other allegations. 10. 11. Admitted. Admitted that as a condition of issuing insurance ACE required a collateral

obligation under the Program Agreement. Respondent denies all other allegations. 12. Admitted that the Program Agreement required the appointment of a third party claims administrator. Respondent denies all other allegations. 13. Admitted that the third party claims administrator was ESIS. Respondent denies all other allegations. 14. Denied. 15. Admitted that RCR and ESIS entered into the Risk Management Services Agreement. Respondent denies all other allegations. 16. Responding Party denies that the Arbitration provision to the RMSA is a broad mandatory arbitration provision as the agreement provides that: Notwithstanding this provision, it is not the parties intention to resolve by arbitration the rights and obligations of the parties or any other person pursuant to any policy of insurance, either directly or indirectly. If a dispute arises under this Agreement, the resolution of which purports or appears in anyway to define or affect the rights or obligations of any insured under any insurance contract, then either party may choose not to arbitrate the dispute, and if the parties choose to arbitrate, then no award or finding by any arbitrator shall be authority or precedent for any purpose in any 3

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litigation brought to define or affect such rights or obligations. Respondent denies all other allegations. 17. Admitted as to the contents of the Program Agreements, but denied as to the operative effect of the AAA Rules given Judge Phillips June 3, 2011 Order exercising continued jurisdiction over the scope of arbitrable issues. 18. Admitted as to the contents of the Program Agreements, but denied as to the operative effect of the AAA Rules given Judge Phillips Order exercising continued jurisdiction over the scope of arbitrable issues pursuant to her June 3, 2011 Order. Responding Party further denies on the grounds that RCR has elected to opt out of the Arbitration provision under the RMSA pursuant to the terms of the Arbitration provision which state: Notwithstanding this provision, it is not the parties intention to resolve by arbitration the rights and obligations of the parties or any other person pursuant to any policy of insurance, either directly or indirectly. If a dispute arises under this Agreement, the resolution of which purports or appears in anyway to define or affect the rights or obligations of any insured under any insurance contract, then either party may choose not to arbitrate the dispute, and if the parties choose to arbitrate, then no award or finding by any arbitrator shall be authority or precedent for any purpose in any litigation brought to define or affect such rights or obligations. Responding Party further objects on the grounds the RMSA does not require arbitration in Pennsylvania and Responding Party has asserted its objection to Arbitration with ESIS under the RMSA. 19. Responding Party does not admit or deny the accuracy of Petitioners recitation to a portion of the rules of the AAA. 20. Responding Party does not admit or deny the accuracy of Petitioners recitation to a portion of the rules of the AAA.

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21. Responding Party does not admit or deny the accuracy of Petitioners recitation to a portion of the rules of the AAA. 22. Responding Party admits that it initiated a lawsuit against ACE and ESIS. Responding Party denies all other allegations. 23. Admitted. 24. Admitted Responding Party made a demand for Arbitration on March 21, 2011. Responding Party denies all other allegations. 25. Admitted that RCR responded by challenging the arbitrability of the dispute as to ACE and ESIS. Responding Party identified a party appointed arbitrator so as to avoid any potential contention by RCR or ESIS that it waived its rights to do so. Responding Party denies all other allegations. By way of further reply, see Declaration of Michael S. Faircloth, Esquire, which is attached hereto as Exhibit A. 26. Responding Party admits that ACE and ESIS filed a Motion to Dismiss for Failure to Arbitrate or, in the Alternative Stay the California Action. Responding Party denies all other allegations. 27. Responding Party admits the Court issued an Order Staying the Arbitration. Responding Party denies all other allegations. 28. Admitted. 29. Admitted. 30. Responding Party admits the Court issued an Order Staying the Arbitration. The Courts Order speaks for itself. 31. Responding Party admits the Collateral Obligation under the Program Agreement is subject to Arbitration. Responding Party denies all other allegations. 32. Denied. The Arbitrators Order determined the Collateral Obligation under the Program Agreement was arbitrable and declined to address whether additional claims were arbitrable. The Court ordered the Parties to try and resolve the issue and Ordered

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that if the Parties could not agree the Parties should bring a Motion to her Court to resolve the dispute. 33. Admitted. 34. Admitted. 35. Admitted. 36. Admitted. 37. Admitted. 38. Admitted. 39. Admitted. 40. Admitted in part. Responding Party told counsel for ACE and ESIS that if they disagreed with RCR over the scope of the Arbitration they should comply with Judge Phillips June 3, 2011 Order and file a Motion to Compel with the United States District Court for the Central District of California. 41. Admitted that ACE and ESIS filed a Petition with this Court. Responding Party denies that filing a Petition with this Court is not a direct violation of Judge Phillips June 3, 2011 Order. 42. Denied for the reasons stated in Responding Partys Response to Petitioners Petition and Respondents Motion to Dismiss or Stay. 43. Denied for the reasons stated in Responding Partys Response to Petitioners Petition and Respondents Motion to Dismiss or Stay. 44. Responding Party does not admit or deny the accuracy of Petitioners recitation to a portion of Title 9 U.S.C. Section 4. 45. Denied. Responding Party further denies on the grounds that the arbitration provision in the RMSA does not require arbitration in Philadelphia. 46. Responding Party denies on the grounds that Judge Phillips June 3, 2011 Order preempts the AAA Rules wherein Judge Phillips retained jurisdiction to determine the scope of the arbitration between the parties. 6

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47. Denied for the reasons stated in Responding Partys Response to Petitioners Petition and Respondents Motion to Dismiss or Stay. 48. Denied for the reasons stated in Responding Partys Response to Petitioners Petition and Respondents Motion to Dismiss or Stay. WHEREFORE Respondent respectfully requests entry of an Order in the form attached, denying Petitioners the relief requested or, in the alternative, either dismissing this matter or staying the matter pending further proceedings before the United States District Court for the Central District of California. DATED THIS 1st day of July, 2011. YOUNG RICCHIUTI CALDWELL & HELLER, LLC By: /s/ Joseph F. Ricchiuti Joseph F. Ricchiuti (Pa. I.D. No. 09222) Gregory B. Heller (Pa. I.D. No. 61130) 1600 Market Street, Suite 3800 Philadelphia, PA 19103 (267) 546-1002 jricchiuti@yrchlaw.com gheller@yrchlaw.com Co-Counsel for Respondent, RCR PLUMBING AND MECHANICAL, INC. f/k/a AMPAM RCR COMPANIES OLIVA & ASSOCIATES, ALC By: /s/ Joseph L. Oliva Joseph L. Oliva, Esq. (Pro Hac Vice Admission Pending) Michael S. Faircloth, Esq. (Pro Hac Vice Admission Pending) 11770 Bernardo Plaza Court, Suite 350 San Diego, CA 92128 (858) 385-0491 joliva@olivalaw.com mfaircloth@olivalaw.com Counsel for Respondent, RCR PLUMBING AND MECHANICAL, INC. f/k/a AMPAM RCR COMPANIES

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ACE AMERICAN INSURANCE COMPANY, AND ESIS, INC., Petitioners, v. RCR PLUMBING AND MECHANICAL, INC. f/k/a AMPAM RCR COMPANIES, Respondent. ) ) ) ) ) ) ) ) ) ) CIVIL ACTION NO. 2:11-mc-00091-PBT

CERTIFICATE OF SERVICE I, Gregory B. Heller, hereby certify that the foregoing Response to the Petition of Ace American Insurance Company and ESIS, Inc. Pursuant to 9 U.S.C. 4 for an Order Directing that the Arbitration Proceed in Accordance with the Parties Arbitration Provisions, and Respondents Brief in Opposition thereto, have been filed electronically and are available for viewing and downloading from the Courts ECF system, and have also been served by first class mail upon the following: Richard H. Lowe, Esquire Daniel R. Walworth, Esquire Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103-7396 Attorneys for ACE American Ins. Co And ESIS, Inc. Charles Fanning, Esquire Joseph L. Oliva, Esquire Michael S. Faircloth, Esquire Oliva & Associates, ALC 11770 Bernardo Plaza Court Suite 350. San Diego, CA 92128 Counsel for Respondent, RCR PLUMBING AND MECHANICAL, INC. f/k/a AMPAM RCR COMPANIES

YOUNG RICCHIUTI CALDWELL & HELLER, LLC BY: /s/ Gregory Heller GREGORY B. HELLER, ESQUIRE Identification No. 61130 Suite 3800 1600 Market Street Philadelphia, PA 19103 (267) 546-1004 Attorneys for Respondent RCR Plumbing and Mechanical, Inc. f/k/a AMPAM RCR Companies

Dated: July 1, 2011