Formigli Corporation v. Alcar Builders, Inc.
| Decision Date | 12 March 1964 |
| Docket Number | No. 14450.,14450. |
| Citation | 329 F.2d 79 |
| Parties | FORMIGLI CORPORATION, Appellant, v. ALCAR BUILDERS, INC. |
| Court | U.S. Court of Appeals — Third Circuit |
Benjamin Kuby, Philadelphia, Pa. (Paul N. Minkoff, Klovsky & Kuby, Philadelphia, Pa., on the brief), for appellant.
Robert F. Cushman, Philadelphia, Pa. (Kenneth M. Cushman, Cushman & Oobert, Philadelphia, Pa., on the brief), for appellee.
Before STALEY, GANEY and SMITH, Circuit Judges.
This is an appeal from an order of the District Court staying an action for breach of contract and directing the parties to proceed to arbitration at the request of the defendant-appellee.1 Diversity of citizenship and the amount involved are the basis for the District Court's jurisdiction over the subject matter. The threshold question is a jurisdictional one. In Kirschner v. West Company, 300 F.2d 133 (C.A.3, 1962), this Court states at page 134 of the opinion:
"An order granting a stay pending arbitration is analogous to an injunctive order which is interlocutory in nature and consequently not appealable as a final decision under § 1291, 28 U.S.C.; appealability exists, however, under § 1292(a) (1), 28 U.S.C., when such a stay is granted (or denied) in an action at law; appealability does not exist under § 1292(a) (1) when a stay is granted (or denied) in an action in equity since the grant (or denial) is merely a step in the control of the litigation. * * *"
Therefore we must determine whether the stayed action is at law or in equity. In substance the complaint avers that the defendant-appellee by written contract engaged the services of the plaintiff-appellant as a sub-contractor for the performance of some of the work in the construction of an apartment house in Horsham, Pennsylvania, and that as a result of defendant preventing it from performing the work under the sub-contract, it sustained damages for loss of profit approximating the sum of $25,000, and demands judgment for that amount against the defendant. The sole relief sought is money damages; no coercive remedy is requested. Plainly the action is one at law, and we have jurisdiction to hear the appeal.
Plaintiff contends that the arbitration provision of the sub-contract does not expressly encompass a dispute involving a total breach of contract and a claim for damages for the resulting loss of profits.
Article XV of the sub-contract provides: "In case, the parties hereto disagree in relation to any clause or provision of this contract and the right of the parties with regard thereto such disagreement shall be arbitrated under the law of the State of Pennsylvania, * * Such arbitration shall be a condition precedent to the institution of any suit arising out of any such disagreement."
In the absence of the applicability of the Federal Arbitration Act, a provision of a contract providing for arbitration is enforceable by a Federal court in a diversity action where the substantive law of the forum is that an agreement to submit a disagreement to arbitration is binding upon the parties. Bernhardt v. Polygraphic Co., 350 U.S. 198, 202-204, 76 S.Ct. 273, 100 L.Ed. 199 (1956). The contract before us was executed on May 21, 1962, in Philadelphia and was to be performed at Horsham, Pennsylvania. The law of that State governs the interpretation and construction of the contract here. Badgett Mine Stripping Corp. v. Pennsylvania Turnpike Commission, 173 F.Supp. 425 (M.D. Pa.1959).
With exceptions immaterial here, arbitration provisions in contracts are valid and enforceable in Pennsylvania.2 Wm. Linker Co., Inc., v. Feinberg, 360 Pa. 601, 62 A.2d 839 (1949). In the case of Philadelphia Marine Trade Ass'n v. International Longshoremen's Ass'n, Local Union No. 1291, 382 Pa. 326, 115 A.2d 733 (1955), cert. den., 350 U.S. 843, 76 S.Ct. 84, 100 L.Ed. 751, the Supreme Court of Pennsylvania states at p. 336 of its opinion, 115 A.2d at p. 738: "The construction of a contract to determine what questions the parties have agreed therein to submit to arbitration is one, not for the arbitrators themselves, but for the court to decide, and the court will not readily infer that it was intended to empower the arbitrators to determine the extent of their own jurisdiction * * *." But where the parties have agreed that the...
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