Davis Corp. v. Interior Steel Equipment Co.

• Decision Date: 14 September 1987
• Docket Number: Civ. A. No. 87-1321.
• Parties: The DAVIS CORPORATION, Plaintiff, v. The INTERIOR STEEL EQUIPMENT COMPANY, Defendant.
• Court: U.S. District Court — District of Columbia

669 F. Supp. 32

The DAVIS CORPORATION, Plaintiff, v. The INTERIOR STEEL EQUIPMENT COMPANY, Defendant.

Civ. A. No. 87-1321.

United States District Court, District of Columbia.

September 14, 1987.

Gary K. Stearman, Robert D. Sokolove, Washington, D.C., for plaintiff.

Keith C. Baker, Washington, D.C., for defendant.

MEMORANDUM

JOHN GARRETT PENN, District Judge.

The plaintiff filed this action, in which it seeks a stay of arbitration, on May 15, 1987. The case is now before the Court on the plaintiff's motion for a preliminary injunction staying arbitration, and on defendant's motion to compel arbitration and motion for sanctions. The motions were heard on September 10, 1987.

I

Very briefly, the underlying facts are as follows: On or about June 1, 1984, the plaintiff (Davis) entered into a subcontract with the defendant (ISE) for the fabrication of metal storage cases by ISE. The contract was in furtherance of a prime contract between Davis and the General Services Administration (GSA). Article 13 of the subcontract provides for arbitration of any dispute between the parties arising out of the subcontract. See Complaint Exhibit A. On or about November 20, 1987, ISE commenced an arbitration proceeding with the American Arbitration Association (AAA) and filed a demand in AAA's regional office located in the District of Columbia.

On or about October 16, 1986, Davis filed an action alleging breach of contract against ISE. That action was filed in this court. See Davis Corporation v. Interior Steel Equipment Co., Civil No. 86-2841 (D.D.C.). ISE moved to dismiss that action on the grounds that the matter was in arbitration. Thereafter, on November 18, 1986, the parties in that case filed a joint motion to dismiss the case without prejudice. The motion was granted.

On or about January 13, 1987, ISE instituted a lawsuit in the United States District Court for the District of Maryland relating to the same subcontract. See United States of America for the Use and Benefit of The Interior Steel Equipment Co. v. Davis Corp., Civil No. HAR 87-32 (D.Md.). The action was brought pursuant to the Miller Act, 40 U.S.C. §§ 270a and 270b. Shortly after service of the complaint in the Maryland action, Davis sought to depose the president of ISE, Mr. Robert Jarmusch, and on February 1987, ISE filed its motion to stay the proceedings. That motion was granted on February 9, 1987. See Defendant's Opposition to Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction (ISE Opposition), Exhibit 1. Apparently there was a misunderstanding concerning the position of the parties and the order granting the stay was vacated. ISE moved to quash the deposition of Mr. Jarmusch. The Court is advised that motion is still pending. Davis also noticed the deposition of David Lingrell who was the Project Executive with GSA. The deposition was taken and counsel representing ISE attended the deposition and cross-examined the witness. ISE filed a second motion to stay the proceedings and that motion was granted on May 18, 1987. See ISE Opposition, Exhibit 3.

Davis now argues that ISE waived its right to submit this matter to arbitration since it filed the Maryland action and participated in discovery.

II

The Arbitration Act, 9 U.S.C.A. § 1 et seq., requires district courts to compel arbitration of arbitrable claims when asked to do so. Dean Witter Reynolds Inc v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985).

The Arbitration Act provides that written agreements to arbitrate controversies arising out of an existing contract "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. By its terms, the Act leaves no place for the exercise of discretion by the district court, but instead mandates that the district court shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed. §§ 3-4.

Id. (emphasis in the original).

Davis concedes that the contract at issue contains an arbitration clause and that normally the parties would be bound to go to arbitration. But, Davis contends that the right to arbitration, like any other contract right, can be waived. See National Foundation for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772 (D.C.Cir.1987). Davis relies on National Foundation as support for its argument that ISE has waived its right to arbitrate. It contends that ISE waived that right when it filed the action in the United States District Court for the District of Maryland and participated in the deposition of Mr. Lingrell. This Court cannot agree.

In National Foundation, Edwards waived its right to arbitration. National Foundation filed its lawsuit in January 1983. For the next two years the parties (National Foundation and Edwards) conducted extensive discovery. Edwards moved for summary judgment in October 1984, the motion was argued in February 1985, and the district court took the matter under advisement. No further discovery was conducted. The Supreme Court decided Dean Witter, supra, in March 1985. In February 1986, the district court denied the motion for...