WR Grimshaw Co. v. NAZARETH LITERARY & BENEV. INST.

• Citation: 113 F. Supp. 564
• Decision Date: 23 May 1953
• Docket Number: Civ. A. No. 2499.
• Parties: W. R. GRIMSHAW CO. v. NAZARETH LITERARY & BENEVOLENT INSTITUTION.
• Court: U.S. District Court — Eastern District of Arkansas

113 F. Supp. 564

W. R. GRIMSHAW CO. v. NAZARETH LITERARY & BENEVOLENT INSTITUTION.

Civ. A. No. 2499.

United States District Court E. D. Arkansas, W. D.

May 23, 1953.

Owens, Ehrman & McHaney, James McHaney, Little Rock, Ark., Smith & Rogers, Tulsa, Okl., for plaintiff.

Sherrill, Gentry & Bonner, Thomas J. Bonner, Little Rock, Ark., for defendant.

LEMLEY, Chief Judge.

This cause comes on for hearing upon the cross motions of the respective parties for judgment on the pleadings, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, 28 U.S.C.A., which motions have been submitted upon written briefs.

The plaintiff, an Oklahoma corporation, commenced this action against the defendant, which is described in the complaint as being "a benevolent association organized and existing under the laws of the State of Kentucky, * * * and * * * a citizen of that State" and as being qualified to do business in Arkansas, for the purpose of securing a declaratory judgment to the effect that under the terms of a certain construction contract, including specifications, entered into between it and the defendant in connection with the construction of the new St. Vincent's Infirmary at Little Rock, Arkansas, it is "entitled to arbitration" of a claim against the defendant for certain additional compensation for the excavation of certain material on the hospital site. Jurisdiction of this Court is predicated upon diversity of citizenship between the parties and the existence of the requisite jurisdictional amount.

The complaint alleges that on June 28, 1951 the parties entered into a contract under the terms of which the plaintiff, for certain considerations, was required to furnish all materials and perform all labor, including excavation work, for the complete construction of the new St. Vincent's Infirmary, according to plans and specifications prepared by defendant's architect, which plans and specifications were made a part of the contract between the parties; that the contract provided that the material at the job site which was to be excavated by the plaintiff was assumed to be "earth" and subject to being removed by a power shovel; that the contract further provided that the plaintiff should receive additional compensation for the excavation of "rock", and that "rock" was defined as being "any stone or boulders that cannot be removed by a power shovel, ½ cu. yd. bucket capacity, without use of drills or explosives." It is further alleged that during the course of the excavation work performed by the plaintiff under the contract substantial quantities of "rock" were encountered, which the plaintiff could not remove with a power shovel having a ½ cubic yard bucket capacity without the use of drills or explosives, and that the plaintiff is entitled to additional compensation for the removal of such "rock". Plaintiff further alleges that, pursuant to the terms of the contract, demand was made upon the defendant, through its architect, for additional compensation for the alleged rock excavation, but that the defendant and its architect contend that the material excavated by the plaintiff "was not rock even though it could not be removed by a power shovel, ½ cubic yard bucket capacity, without the use of drills or explosives," and that plaintiff's claim for additional compensation was rejected.

Plaintiff further alleges that the specifications included in the contract between the parties provided for the arbitration of disputes, and it attached to its complaint a photostatic copy of those portions of the specifications dealing with arbitration. Insofar as here pertinent, the arbitration provisions are as follows:

"7. Arbitration. (a) It is mutually agreed that all disputes arising in connection with this contract shall be submitted to arbitration in accordance with the provisions of the current Standard Form of Arbitration Procedure of the American Institute of Architects and that all findings of fact by the arbitrators under this agreement shall be conclusive and binding on both parties. It is further mutually agreed that the decision of the arbitrators shall be a prior condition to any right of legal action which either party to the contract may have against the other.

* * * * * *

"(c) Demand for arbitration in connection with any dispute shall be filed in writing with the Architect and with the other party to the contract. Any demand for arbitration shall be made within thirty days after the dispute has arisen if practicable, but in any event, no demand for arbitration shall be made after the date of final payment except in the case of a dispute arising in connection with any guarantee provisions of the contract documents.

"(d) The arbitrators hereunder shall have authority to award to the party whose contentions are approved as being in conformity with contract requirements such sum as they, or a majority of them consider is proper to compensate the injured party for any loss in connection with the proceedings and if they find that the arbitration proceedings were demanded without reasonable cause, they may in addition award the injured party damages for delay, unless precluded by agreement between the contracting parties before arbitration. The arbitrators shall set their own compensation and determine the total amount of such compensation and other costs and expenses of the proceedings incurred by them, unless otherwise agreed prior to the proceedings, and shall assess the total of the costs of the proceedings upon either or both parties to the contract in such proportions as they or a majority of them may approve."

It is next alleged in the complaint that the plaintiff made due demand for arbitration, but that the defendant has refused to arbitrate; it is further alleged that an actual controversy has arisen and now exists between plaintiff and defendant with respect to the right of the plaintiff to arbitration of its claim for additional compensation for rock excavation, and that the plaintiff "is in urgent need of declaratory relief to define its rights and other legal relations with defendant under said specifications and contract." The prayer of the original complaint is for a "judgment declaring that, under the contract and specifications aforesaid, plaintiff is entitled to arbitration of its claim to additional compensation for rock excavation; and plaintiff prays for such other and further relief as may be just."

In its answer to the original complaint the defendant admitted the execution of the contract, that the plaintiff had made demand for payment of additional compensation for rock excavation, which demand had been denied, that the plaintiff had demanded arbitration, and that the "defendant has declined to arbitrate said demands." It was further admitted that "a controversy exists between plaintiff and defendant." The answer then goes on to set up certain defenses relating to the merits of the plaintiff's claim for additional compensation, and concludes with a prayer for a dismissal of the complaint.

Shortly after the defendant had filed its answer, the plaintiff filed a "Motion For Judgment on the Pleadings Or To Strike Defenses," and a memorandum brief in connection therewith as required by Local Rule 8 of this Court. In support of this motion the plaintiff took the position that the defendant had admitted execution of the contract, the existence of a controversy between the parties, the plaintiff's demand for arbitration, and its own refusal to arbitrate; that the defendant did not dispute plaintiff's right to arbitration under the contract; and that the allegations of the answer to the effect that plaintiff was not entitled to additional compensation went to the merits of the plaintiff's claim and not to the latter's right to have said claim arbitrated, and that said allegations were as to matters properly to be considered by the arbitrators but not by the Court in the instant proceeding.

Thereafter the defendant filed a response to the plaintiff's motion and also filed a cross motion for judgment on the pleadings. In its response and cross motion the defendant alleged that the complaint showed on its face that the plaintiff was attempting to enforce by declaratory judgment procedure "an executory agreement for the arbitration of all disputes;" that the defendant had revoked the arbitration clause in the contract and had declined to arbitrate; that "such clause is void and revocable under the laws of the State of Arkansas and that the law of Arkansas is binding on this Court in this instance." It was further alleged that even if the arbitration clause was not revocable, nevertheless "such executory agreements are not enforceable by either the courts of the State of Arkansas or the courts of the United States; that the arbitration clause in question ousts the courts' jurisdiction; that the Federal Declaratory Judgments Act, 28 U.S.C.A. §§ 2201-2202 was intended to supply a remedy where the courts of the United States formerly were without power to act, and was not intended to supply remedies indirectly by declaratory judgment which the courts of the United States had power to give before the Act, but refused to give;" it was further alleged that declaratory judgments "are granted only where the controversy between the parties will be terminated by the judgment;" that none of the controversies between the parties would be terminated by a declaratory judgment; "that arbitration of the controversies and suit on the award would necessarily follow before the disputes would be settled; that an admitted remedy of law exists whereby the plaintiff's claim for damages, if any, can be adjudicated." Defendant filed a memorandum brief in support of its response and cross motion, and the plaintiff thereafter filed a reply brief.

Subsequent to the filing of the briefs just referred to, the Court entered upon a consideration of the case and came to the conclusion that the prayer of the complaint,...