Hydra-Pro Dutch Harbor Inc. v. Scanmar As

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HYDRA-PRO DUTCH HARBOR INC.,
Plaintiff - Appellant,
v.
SCANMAR AS,
Defendant - Appellee.
No. 12-35199
D.C. No. 2:08-cv-01695-RAJ
MEMORANDUM*
Appeal from the United States District Court
for the Western District of Washington
Richard A. Jones, District Judge, Presiding
Argued and Submitted July 8, 2013
Seattle, Washington
Before: KLEINFELD, M. SMITH, and N.R. SMITH, Circuit Judges.
The district court erred when it granted summary judgment for Scanmar on
Scanmar’s counterclaims (the “Counterclaims”) based on the outcome of the
FILED
JUL 17 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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Norwegian arbitration proceeding (the “Arbitration”).1 Washington law controls
whether the Arbitration has preclusive effect. See Jacobs v. CBS Broad., Inc., 291
F.3d 1173, 1177 (9th Cir. 2002). Under Washington law, issue
preclusion—commonly called collateral estoppel—requires the party seeking
preclusion to establish that:
(1) the issue decided in the earlier proceeding was identical to the issue
presented in the later proceeding, (2) the earlier proceeding ended in a
judgment on the merits, (3) the party against whom collateral estoppel
is asserted was a party to, or in privity with a party to, the earlier
proceeding, and (4) application of collateral estoppel does not work an
injustice on the party against whom it is applied.
Christensen v. Grant Cnty. Hosp. Dist. No. 1, 96 P.3d 957, 961 (Wash. 2004).
Here, the parties do not dispute that the Arbitration resulted in a judgment on the
merits. However, Scanmar fails to demonstrate the remaining three elements.
First, Scanmar cannot show that the Arbitration decision addressed issues
identical to those raised by the Counterclaims. See Regan v. McLachlan, 257 P.3d
1122, 1127 (Wash. Ct. App. 2011). Further, we reject Scanmar’s argument that the
1 We reject Hydra-Pro Dutch Harbor, Inc.’s argument that the district court
erred by granting summary judgment sua sponte without reasonable notice under
Federal Rule of Civil Procedure 56(f). The district court specifically ordered the
parties to brief the issue preclusion question at least twice. Accordingly, the
parties had “a fair opportunity to contest the issues decided” as required by Rule
56. See United States v. 14.02 Acres of Land More or Less in Fresno Cnty., 547
F.3d 943, 955 (9th Cir. 2008).
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Arbitration decision’s factual findings establish the Counterclaims, regardless of
whether the legal issues were identical. Even if factual findings were to preclude
further litigation of those facts under Washington law, see id., despite the privity
and “works injustice” issues discussed below, the Arbitration findings do not prove
each element of the Counterclaims under Washington law, see Leingang v. Pierce
Cnty. Med. Bureau, Inc., 930 P.2d 288, 300 (Wash. 1997) (reciting the elements of
tortious interference with business expectancy). Similarly, we reject Scanmar’s
argument that HPDH admitted statements of fact from the district court’s
September 20, 2010 order and that those facts establish the Arbitration’s preclusive
effect. The document that Scanmar argues is evidence of the “admissions” does
not show HPDH’s agreement with any specific facts, and the record nowhere else
supports Scanmar’s argument.
Second, HPDH was not a party, or in privity with a party, to the Arbitration.
While a related company, HPSEA, was a party to the Arbitration, HPDH was not
in privity with HPSEA. Washington courts will find privity “only when the
nonparty participated in the former adjudication, for instance as a witness, and
when there is evidence that the subsequent action ‘was the product of some
manipulation or tactical maneuvering.’” Stevens Cnty. v. Futurewise, 192 P.3d 1, 9
(Wash. Ct. App. 2008) (quoting Garcia v. Wilson, 820 P.2d 964, 967 (Wash. Ct.
3

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App. 1991)). Here, nothing suggests that HPDH (as distinct from officers of
HPDH) participated in the Arbitration. Further, HPDH has not engaged in tactical
maneuvering to defend against the Counterclaims in the instant suit rather than the
Arbitration. Indeed, it was Scanmar that successfully opposed HPDH’s attempt to
intervene in the Arbitration.
Third, Scanmar’s claim that preclusion does not work injustice to HPDH is
unwarranted. Exclusion from the Arbitration deprived HPDH of “an
unencumbered, full and fair opportunity to litigate [its] [defenses] in a neutral
forum . . . .” Nielson ex rel. Nielson v. Spanaway Gen. Med. Clinic, Inc., 931 P.2d
931, 935 (Wash. Ct. App. 1997) (internal quotation marks omitted). As such, it
would be unjust to saddle HPDH with the outcome of the Arbitration where
Scanmar actively blocked HPDH’s participation in the proceeding.
REVERSED and REMANDED.
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