Northern District of California Compels Arbitration Between Contractor and Non-Signatory Insurer of Subcontractor

On March 11, 2024, in Swinerton Builders, Inc. v. Argonaut Insurance Company, a district court in the Ninth Circuit found a valid arbitration agreement between the contractor, Swinerton Builders, Inc. (“Swinerton”), and the non-signatory insurer, Argonaut Insurance Co. (“Argonaut”), of its subcontractor, Northern Services, Inc. (“Northern”). No. 23-CV-4158 (DMR), 2024 WL 1057473 (N.D. Cal. Mar. 11, 2024). Northern’s projects that Argonaut insured were governed by a framework agreement between Swinerton and Northern which included an arbitration clause. The court denied Argonaut’s motion to dismiss the case for lack of subject matter jurisdiction and converted it into a motion to compel arbitration under Section 4 of the Federal Arbitration Act (“FAA”) which it then granted on the basis of the interconnectedness of the agreements and bonds that bound the parties to the arbitration process outlined in the framework agreement. This decision represents an extension of the reach of arbitration agreements to include parties that have not directly signed the original contract, particularly in the construction industry.