Acevedo Maldonado v. PPG Industries, Inc., No. 74-1280

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Citation: 514 F.2d 614
• Docket Number: No. 74-1280
• Parties: Daniel ACEVEDO MALDONADO et al., Plaintiffs-Appellees, v. PPG INDUSTRIES, INC., and Insurance Company of North America, Defendants and Third-Party Plaintiffs-Appellees, v. FLUOR WESTERN INC., and Fluor Corporation Limited, Third-Party Defendants-Appellants.
• Decision Date: 25 April 1975

Page 614

514 F.2d 614 Daniel ACEVEDO MALDONADO et al., Plaintiffs-Appellees,
v.
PPG INDUSTRIES, INC., and Insurance Company of North
America, Defendants and Third-Party Plaintiffs-Appellees,
v.
FLUOR WESTERN INC., and Fluor Corporation Limited,
Third-Party Defendants-Appellants. No. 74-1280. United States Court of Appeals,
First Circuit. Argued Feb. 6, 1975.
Decided April 25, 1975.

Page 615

John A. Perkins, Boston, Mass., with whom Gale Munson and Palmer & Dodge, Boston, Mass., were on brief for appellants.

Francisco Agrait Oliveras, San Juan, P. R., with whom Agrait, Otero & Oliveras, San Juan, P. R., was on brief for appellees.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

This is an appeal from the district court's refusal to stay proceedings on a third-party complaint pending arbitration.

Residents of a Puerto Rico town brought a diversity negligence action in the district court against PPG Industries, Inc. for injuries suffered from gas escaping from a chlorine manufacturing plant operated by PPG. PPG filed a third-party complaint against Fluor Corporation Limited and Fluor Western, Inc. (hereinafter "Fluor"), which had designed and constructed the plant for PPG. Later Insurance Company of North America, PPG's insurer, intervened as codefendant in the original action and joined in the third-party complaint. While the original third-party complaint alleged causes of action in contract and tort, it was later narrowed by amendment so as to rest on the right of contribution from a joint tortfeasor, proportionate to its negligence in designing and building the plant, for damages that might be awarded against third-party plaintiffs. ¹ Third-party defendants Fluor Western and Fluor Limited moved for a stay of proceedings under the third-party complaint pending arbitration, which they assert was called for in PPG's design and construction contracts with them. The district court denied the motion for stay, and third-party defendants now appeal. ²

Page 616

The contracts at issue are within the coverage of the United States Arbitration Act, ³ and section 3 of the Act requires a federal court in which suit has been brought "upon any issue referable to arbitration under an agreement in writing for such arbitration" to stay the court action pending arbitration once it is satisfied that the issue is arbitrable under the agreement. 9 U.S.C. § 3. The question of whether the amended third-party claim here falls within the reach of this particular arbitration clause is thus a matter for the district court to determine initially as a matter of federal law. See, e.g., Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Altshul Stern & Co. v. Mitsui Bussan Kaisha, Ltd., 385 F.2d 158, 159 n. 1 (2nd Cir. 1967).

In denying the request for stay, the district court ruled that the contractual requirement to arbitrate had no bearing on the third-party complaint, because the third-party complaint "is based exclusively in extra-contractual obligations arising from Article 1802 of the Civil Code of Puerto Rico and the right of contribution from a joint-tort feasor in view of the decision of the Supreme Court of Puerto Rico in the case of Garcia v. Gobierno de la Capital, 72 PRR 133." ⁴ The district court may have reasoned that PPG's narrow claim for contribution would involve but two elements: (1) proof that Fluor's designing or building of the plant had involved independent acts of negligence within article 1802 toward the original plaintiffs; ⁵ and (2) allocation among PPG and Fluor of plaintiffs' recovery against PPG in an amount proportional to the degree of negligence of each. Thus, in theory at least, Fluor's duties contractual or otherwise to PPG would be irrelevant.

However, this analysis ignores the scope of the arbitration clause as well as the contracts' possible effect on any right of PPG to contribution from Fluor. The contracts provide for arbitration of "any controversy or claim arising out of...