Exchange Mut. Ins. Co. v. Haskell Co.

• Decision Date: 08 August 1984
• Docket Number: No. 83-5811,83-5811
• Citation: 742 F.2d 274
• Parties: EXCHANGE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. The HASKELL COMPANY, Defendant-Appellee, Rogersville Paving Company, Inc.; John Mack Pierce; and Mack Slaughter, Defendants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 274

742 F.2d 274

EXCHANGE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. The HASKELL COMPANY, Defendant-Appellee,

Rogersville Paving Company, Inc.; John Mack Pierce; and

Mack Slaughter, Defendants.

No. 83-5811.

United States Court of Appeals, Sixth Circuit.

Aug. 8, 1984.

Gary S. Rubenstein, argued, Rubenstein, Schulman, LeRoy & Bennett, Nashville, Tenn., for plaintiff-appellant.

Rogers, Towers, Bailey, Jones & Gay, G. Kenneth Norrie, argued, Jacksonville, Fla., James O. Phillips, III, William L. Jenkins, Rogersville, Tenn., for defendant-appellee.

Before KEITH and MARTIN, Circuit Judges, and SWYGERT ^*, Senior Circuit Judge.

PER CURIAM:

This is an appeal from a district court ruling which dissolved a temporary restraining order and directed that the action proceed to arbitration. For the reasons set forth below, we affirm the decision of the Honorable Robert Taylor of the United States District Court for the Eastern District of Tennessee.

The appellee, the Haskell Company, entered into an agreement with Mitchell Homes to build a shopping center. Appellee Haskell was the prime contractor, pursuant to the contract with Mitchell. Haskell subcontracted a portion of the work out to appellee, Rogersville Co. Under the subcontract, Rogersville agreed to install the parking lot for the shopping center. On August 12, 1980, Rogersville obtained a performance bond through appellant, Exchange Mutual Insurance Company. Exchange Mutual, as surety, issued the bond in favor of Haskell, conditioned upon Rogersville performing its obligations under the subcontract. The bond provided that Haskell would be indemnified for any loss it might sustain in the event Rogersville did not perform its obligations under the subcontract.

A dispute arose and Haskell made a claim under the performance bond. Pursuant to its claim, Haskell initiated arbitration proceedings against Exchange Mutual. Exchange Mutual filed a motion to restrain arbitration, which was granted by the Chancery Court. A hearing was held in United States District Court on August 29, 1983 wherein the trial judge dissolved the temporary restraining order and ordered the action to proceed to arbitration. We are in agreement with the district court's order.

The Supreme Court has recently stated that the courts should give broad deference to the enforcement of arbitration clauses.

Although our holding in [Prima Paint Corp. v. Flood & Conklin Mfg. Corp., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967] extended only to the specific issue presented, the Courts of Appeals have since consistently concluded that questions of arbitrability must be addressed with a healthy regard for the federal policy forming arbitration. We agree. 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 alike defense to arbitrability.

Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (footnote omitted).

The district court found appellant's duty to arbitrate arose from a series of contract agreements between the parties. We agree.

The original arbitration contract between appellee Haskell and the owner of the project, Mitchell Homes provided:

All claims, disputes and other matters in question arising out of, or relating to this contract or the breach thereof, except for claims which have been waived by the making or acceptance of final payment as provided by subparagraphs 8.6.5 and 8.6.6 and which cannot be settled by negotiation between the Contractor and the Owner, shall be decided in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. The award rendered by the arbitration shall be final, and judgement [sic] may be entered upon it in accordance with applicable laws to any court having jurisdiction thereof. (emphasis supplied) (J.A. at 37).

The subcontract between the subcontractor Rogersville and the prime contractor Haskell stated that:

Subcontractor hereby assumes the same obligations and responsibilities with respect to his performance under this Subcontract, that Contractor assumes towards Owner with respect to his performance on the General Contract. If the General Contract, which is hereby incorporated by reference, fails or conflicts with any provision of this Subcontract, or any modification hereof, this Subcontract shall govern. (J.A. at 39).

Finally, the performance bond between Rogersville and Exchange Mutual stated:

KNOW ALL MEN BY THESE PRESENTS, That Rogersville Paving Company, Inc., ..., as principal and EXCHANGE MUTUAL INSURANCE COMPANY ..., as Surety, are held and firmly bound unto the Haskell Company ..., in the sum of One Hundred Eight Thousand and No/100 ($108,000) Dollars ..., jointly and severally, firmly by these presents.

WHEREAS, The Haskell Company has been...