H & M CHARTERS, INC. v. Reed, No. C2-91-75.

• Decision Date: 14 February 1991
• Docket Number: No. C2-91-75.
• Citation: 757 F. Supp. 859
• Parties: In the Matter of the Arbitration Between H & M CHARTERS, INC., Petitioners, and Alison V. REED, Respondent.
• Court: U.S. District Court — Southern District of Ohio

757 F. Supp. 859

In the Matter of the Arbitration Between H & M CHARTERS, INC., Petitioners,

and

Alison V. REED, Respondent.

No. C2-91-75.

United States District Court, S.D. Ohio, E.D.

February 14, 1991.

Elizabeth Thym Smith, Columbus, Ohio, for plaintiff.

Jerry M. Wade, II of Law Offices of Daniel H. Jones, West Palm Beach, Fla., for defendant.

GEORGE C. SMITH, District Judge.

OPINION AND ORDER

This matter is before the Court upon petitioner, H & M Charters' (Hereinafter "Charters") Petition to Compel Arbitration filed January 28, 1991. Charters Petition was followed by a Motion to Stay Proceedings Pending Arbitration filed the same day. This matter was set for oral argument on February 6, 1991, at 9:00 A.M. to address the issues presented¹ and to accommodate Charters' Petition, inasmuch as trial in Florida could commence on February 15, 1991.² This Court telephoned personally all of the counsel within this matter to inform them of the hearing date. The defendant nor counsel for the defendant appeared.³ Charters filed a Memorandum In Support Of Petition To Compel Arbitration on February 6, 1991. After hearing the oral argument presented by Charters, this Court on February 6, 1991 issued an Order Staying Proceedings Pending Arbitration. This Court will now turn to the remaining issues seriatim.

FACTS

This matter revolves solely around Six Thousand Four Hundred and Forty Two Dollars and Sixty Cents ($6,642.60) which defendant herein, Reed, alleges that Charters owes her as a commission for the chartering of a yacht in 1988.⁴ Specifically, on or about April 14, 1988, Virginia Thomas and H & M Charters entered into a Charter Party Agreement (Charters' Exhibit A attached to Charters' Petition) whereby H & M Charters agreed to let and Virginia Thomas allegedly agreed to hire H & M Charters' yacht named the "Gigi". Virginia Thomas was to rent said yacht from July 1, 1988, through August 31, 1988, for a fee of Forty Four Thousand Two Hundred Eighty four Dollars ($44,284.00). H & M Charters orally authorized Reed to enter into the Charter Agreement with Thomas on their behalf and Thomas paid the agreed rental of $44,284.00. Reed thereafter disbursed Thirty Seven Thousand Six Hundred and Forty One Dollars and Forty Cents ($37,641.40) to H & M Charters while keeping for herself Six Thousand Six Hundred and Forty Two Dollars and Sixty Cents ($6,642.60) representing her Fifteen Percent (15%) brokerage commission.

After Reed had entered into her Charter Party Agreement with Thomas, H & M entered into a subsequent Charter Party Agreement with Virginia Thomas. This time, however, H & M Charters employed Rybovich Marine Services Corp. as the chartering agent, which is documented within another Charter Agreement. (See Exhibit B). In receipt of their services, Rybovich received from Charters Seven Thousand Eight Hundred Thirty Dollars ($7,830.00) in commission.

Reed filed a complaint against Charters on October 4, 1989, in the Circuit Court of the Fifteenth Judicial District in Palm, Beach Florida. (Case No. CL 89-8766-AD). Reed sought from Charters the commission referenced above. Specifically, Reed alleged that pursuant to Paragraph 13 of the Charter Agreement and for her efforts in obtaining Thomas for the charter, she was entitled to additional brokerage fees for the subsequent charter brokered by Rybovich. H & M Charters answered the Complaint and also filed an Amended Answer, Affirmative Defenses, and Counterclaims to Amend Complaint. With said Answers, Charters asserted their right to arbitration. They also filed a Motion to Stay Action and Compel Arbitration. On May 7, 1990, the Florida Circuit Court denied Charters' request for a stay. There was no opinion attached to that Order. (See Charters Exhibit F attached to Petition). The Fourth District Court of Appeals for the State of Florida affirmed the trial court's order not staying the trial pending arbitration. (See Charters' Exhibit G). Again, beyond the mere language of the Appellate Court Order granting the affirmance, there is no separate opinion attached explaining on what grounds or by what means they reached their decision. It is from these two Florida state denials of the stay to arbitrate that Charters sought relief in this matter pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

LAW AND ANALYSIS

9 U.S.C. § 4 provides in pertinent part as follows:

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 which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in a manner provided for in such agreement....

9 U.S.C. § 3 provides:

If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

This case implicates both of these two code sections. Inherent within Charters' request is the need for a stay of the underlying state trial scheduled to commence February 15, 1991, (which the Order has been entered, but until this Opinion and Order is without written articulation as to its basis) as well as an order from this Court directing the parties to arbitration. Therefore, sections 3 and 4 of the Arbitration Act need to be analyzed in light of the proceedings which have taken place in the Florida state courts to date.⁵

It has been held that the Arbitration Act, by its terms, leaves no room for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed. "Thus, insofar as the language of the Act guides our disposition of this case, we would conclude that agreements to arbitrate must be enforced, absent a ground for revocation of the contractual agreement." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985). (Emphasis in Original). See Also Sedco, Inc. v. Petroleos Mexicanos Mexican Nat. Oil Co., 767 F.2d 1140 (5th Cir.1985) (By its terms the Arbitration Act leaves no room for exercise of discretion by district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement is signed); Conticommodity Services, Inc. v. Phillip & Lion, 613 F.2d 1222 (2nd Cir.1980); (Unless the making of an agreement to arbitrate or failure, neglect or refusal of one party to arbitrate is in dispute, the court must compel arbitration under this title); Siam Feather and Forest Products Co. v. Midwest Feather Company, Inc., 503 F.Supp. 239, 241 (S.D. Ohio 1980) (arbitrability, "should not be denied unless it may be said with positive assurances that the arbitration clause is not susceptible of an interpretation that covers the asserted disputes. Doubts should be resolved in favor of coverage"); and, C. Itoh & Co. (America) Inc. v. Jordan Intern. Co., 552 F.2d 1228 (7th Cir. 1977) (District court may not deny a stay pending arbitration based on discretionary considerations such as judicial economy). The United States Supreme Court has further enunciated the standard applicable to arbitration agreements and has noted that federal law imposes a strong presumption in favor of arbitration in holding:

The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.

Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). See also Aspero v. Shearson American Express, Inc., 768 F.2d 106, 108 (6th Cir.1985), cert. denied, 474 U.S. 1026, 106 S.Ct. 582, 88 L.Ed.2d 564 (quoting Moses H. Cone Memorial Hospital, 460 U.S. at 24-25, 103 S.Ct. at 941) ("As a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration."). It therefore is clearly established that as a matter of federal law, arbitration agreements which meet the textual language of the Arbitration Act must, except for a few limited and delineated exceptions, proceed to arbitration.

In order to properly invoke either § 3 or 4 of the Act, it is inherent that this Court first have the requisite underlying jurisdiction, as well as be satisfied that in fact the parties had bound themselves to an agreement to arbitrate. The United States Arbitration Act grants both state and federal courts concurrent jurisdiction over disputes involving arbitration agreements. Merrill Lynch, Pierce, Fenner, Etc. v. Haydu, 637 F.2d 391 (5th Cir.1981). Specifically, the 5th Circuit stated:

... the act alone is insufficient to confer federal jurisdiction: not only must the transactions involved constitute "interstate commerce" within the meaning of 9 U.S.C.A. § 2, but also an independent basis for jurisdiction such as diversity or a federal question must exist before a federal court may properly assume jurisdiction. See Commercial Metals Co. v. Balfour, Guthrie & Co. Ltd, 577 F.2d 264, 268-69 (5th Cir.1978) (discussing Coastal States Gas Producing Co., et al. v. Producing Properties, Inc., et al., 203

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