Gavlik Const. Co. v. HF Campbell Co.

• Citation: 526 F.2d 777
• Decision Date: 31 October 1975
• Docket Number: 75-1447,75-2043 and 75-2044.,No. 75-1446,75-1446
• Parties: GAVLIK CONSTRUCTION COMPANY, a Pennsylvania Corporation, Appellant in Nos. 75-1446 and 75-2043, v. H. F. CAMPBELL COMPANY, a Michigan Corporation, Appellant in Nos. 75-1447 and 75-2044, v. The WICKES CORPORATION.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

526 F.2d 777

GAVLIK CONSTRUCTION COMPANY, a Pennsylvania Corporation, Appellant in Nos. 75-1446 and 75-2043, v. H. F. CAMPBELL COMPANY, a Michigan Corporation, Appellant in Nos. 75-1447 and 75-2044, v. The WICKES CORPORATION.

Nos. 75-1446, 75-1447, 75-2043 and 75-2044.

United States Court of Appeals, Third Circuit.

Argued September 18, 1975.

Decided October 31, 1975.

COPYRIGHT MATERIAL OMITTED

Robert W. Lewis, Rowley, Smith & Lewis, Ambridge, Pa., for Gavlik Const. Co.

David M. FitzGerald, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., Keith H. West, Thorp, Reed & Armstrong, Pittsburgh, Pa., for H. F. Campbell Co.

James A. Wood, Wayman, Irvin, Trushel & McAuley, Pittsburgh, Pa., for third party appellee, The Wickes Corp.

Before SEITZ, Chief Judge, and ROSENN and GARTH, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge:

This diversity case presents the questions of whether a subcontractor-contractor-owner dispute must be arbitrated, and, if so, whether the parties' agreements provide for three-party consolidated arbitration. We hold, as did the district court, that there has been no waiver of the contractual right to arbitrate and that legal proceedings were properly stayed pending arbitration. However, we further hold, unlike the district court, that the subcontractor and owner contracts provide for consolidated arbitration. We, therefore, affirm so much of the district court's order as stayed proceedings but vacate the remainder for the entry of an order compelling consolidated arbitration.

I. PROCEDURAL HISTORY

Plaintiff Gavlik Construction Co. (Gavlik) commenced an action on May 1, 1974 in the Pennsylvania Court of Common Pleas claiming that it had performed construction work for the defendant H. F. Campbell Co. (Campbell) under seven subcontracts but had not received full payment. On June 20, 1974 Campbell petitioned for removal of the Gavlik action to the United States District Court for the Western District of Pennsylvania under 28 U.S.C. § 1441 on the basis of 28 U.S.C. § 1332.¹ That same day Campbell moved for a stay of proceedings in the district court pending arbitration.

At the same time Campbell removed the Gavlik action another suit brought by Harry Dunn Company was then pending against Campbell in the United States District Court for the Western District of Pennsylvania.² On July 1, 1974 Campbell moved pursuant to Rule 42(a), Fed.R.Civ.P., to consolidate the Gavlik and Dunn actions.³

Campbell filed a third-party complaint in the Gavlik action against The Wickes Corp. (Wickes) on July 2, 1974.⁴ In the third-party complaint Campbell alleged that Wickes was liable to it for any amount that Campbell might be found liable to Gavlik plus a fee as provided in their contract. On July 3, 1974 Campbell moved for a stay of all proceedings with respect to the third-party defendant Wickes pending arbitration.

Gavlik moved to dismiss Campbell's motion for a stay of proceedings pending arbitration and to require Campbell to answer its complaint on July 16, 1974. Campbell, on November 18, 1974, amended its motions for stays pending arbitration in the Gavlik action by seeking an order compelling Gavlik, Campbell, and Wickes to submit to a consolidated arbitration. On December 5, 1974 Gavlik responded by moving to dismiss Campbell's amended motion for a stay of proceedings and a consolidated arbitration. Wickes did not contest Campbell's motion for a stay of the third-party complaint⁵ or Campbell's amended motion for a consolidated arbitration.

The district court entered an order on September 2, 1975,⁶ (1) granting a stay of proceedings pending arbitration between Gavlik and Campbell, (2) requiring Gavlik and Campbell to proceed forthwith with arbitration procedures, and (3) denying the request for consolidated arbitration. Both Gavlik and Campbell timely appealed from the district court's order. As later appears (III, infra), we have jurisdiction pursuant to 28 U.S.C. §§ 1291, 1292(a)(1).

II. FACTS

Owner Wickes entered into a contract on October 6, 1972 with general contractor Campbell for the construction of a sales and warehouse facility in Allegheny County, Pennsylvania. Under this agreement Campbell was to be paid for the cost of the work plus a contractor's fee. Article 18 of the Wickes contract provided that all disputes arising from the agreement would be decided by arbitration.⁷ This contract also contained numerous provisions relating to subcontractors.

Pursuant to this general contract, Campbell entered into a series of written subcontract agreements with subcontractor Gavlik. Under these subcontracts Gavlik agreed to ". . . be bound to the Contractor by the terms and provisions of all of the Contract Documents,⁸ . . ." and assumed toward the contractor all obligations which the contractor had to the owner. Gavlik subcontracts, art. 7. Furthermore, article 22 of the Gavlik subcontracts provided that "any disagreement arising out of this Agreement or any other Contract Document . . . shall be submitted to arbitration. . . ."

Gavlik commenced this suit to recover $53,798.85 allegedly owing under the subcontracts.

III. JURISDICTION

Gavlik seeks review of the district court's orders staying proceedings pending arbitration and requiring it to proceed to arbitration with Campbell. Campbell appeals from the order denying consolidated arbitration.

A. Stay of District Court Proceedings

Here, in an action to recover money damages, the district court has stayed proceedings pending arbitration. We have in similar circumstances held that such a stay constitutes the grant of an interlocutory injunction appealable under 28 U.S.C. § 1292(a)(1). In McCreary Tire & Rubber Co. v. CEAT, 501 F.2d 1032, 1034-35 (3d Cir. 1974), we said:

The order denying a stay pending arbitration is not a final order appealable under § 1291. But McCreary's complaint seeks recovery of money damages and no other relief. Since this suit would, prior to the merger of law and equity, have been an action at law, the motion for a stay pending arbitration is treated as a motion for an injunction against continuing the action at law. It is appealable pursuant to § 1292(a)(1) as an order denying an injunction.

See Enelow v. New York Life Insurance Co., 293 U.S. 379, 55 S.Ct. 70, 79 L.Ed. 642 (1935); Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583 (1935); Kirschner v. West Co., 300 F.2d 133 (3d Cir. 1962).

To the extent that the district court ordered proceedings stayed under paragraph (1) of its order of September 2, 1975,⁹ this Court has jurisdiction pursuant to 28 U.S.C. § 1292(a)(1).

B. Order Compelling Arbitration

In Goodall-Sanford v. Textile Workers, 353 U.S. 550, 77 S.Ct. 920, 1 L.Ed.2d 1031 (1957), the Supreme Court held that an order directing arbitration in a suit brought under Section 301(a) of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a), was appealable. The Court reasoned that

. . . arbitration is not merely a step in judicial enforcement of a claim nor auxiliary to a main proceeding, but the full relief sought. A decree under § 301(a) ordering enforcement of an arbitration provision in a collective bargaining agreement is, therefore, a "final decision" within the meaning of 28 U.S.C. § 1291.

353 U.S. at 551-52, 77 S.Ct. at 921.

We followed the Goodall-Sanford decision in Rogers v. Schering Corp., 262 F.2d 180, 182 (3d Cir. 1959), cert. denied, 359 U.S. 991, 79 S.Ct. 1121, 3 L.Ed.2d 980 (1959), where we stated in a commercial arbitration context:

It is settled that an order for arbitration is a final appealable decision where it is not merely a step in the judicial enforcement of a claim nor auxiliary to a main proceeding but is the full relief sought.¹⁰

The order compelling commercial arbitration here, like the order compelling labor arbitration in Goodall-Sanford, supra, represents the "full relief" sought by Campbell. Once the parties are directed to arbitration, judicial involvement in the controversy for all practical purposes ends, as it is the arbitrator who then resolves all matters in dispute. Hence, the arbitration order of September 2, 1975, being neither a step in the judicial enforcement of the disputed claims, nor auxiliary to any main proceeding, is a final decision over which we have jurisdiction pursuant to 28 U.S.C. § 1291.

C. Order Denying Consolidated Arbitration

Where the district court has ordered the parties to proceed with separate arbitrations, an order denying consolidated arbitration also constitutes a final decision within the meaning of 28 U.S.C. § 1291. Section 1291 was enacted

. . . to disallow appeal from any decision which is tentative, informal or incomplete. Appeal gives the upper court a power of review, not one of intervention. So long as the matter remains open, unfinished or inconclusive, there may be no intrusion by appeal.

. . . . .

Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949). The denial of a motion to consolidate arbitrations in the context presented here not only terminates judicial involvement but requires the two arbitrations to proceed as independent and separate arbitrable controversies, each seeking full relief as to the contested claims. See Goodall-Sanford v. Textile Workers, supra, and Rogers v. Schering Corp., supra. An order leading to this substantive result is final and absolute as opposed to "tentative, informal, or incomplete." Cohen v. Beneficial Industrial Loan Corp., supra at 546, 69 S.Ct. 1221. Based upon a "practical rather than a technical construction" of 28 U.S.C. § 1291, as required by the Supreme Court in Cohen v. Beneficial Industrial Loan Corp., supra at 546, 69 S.Ct. at 1226, we hold the district court's denial of consolidation an appealable final decision.¹¹

IV. WAIVER

Gavlik argues that Campbell waived its contractual right to arbitrate when it filed a third-party complaint...