Gavlik Construction Co. v. HF Campbell Co.

• Decision Date: 24 February 1975
• Docket Number: Civ. A. No. 74-600.
• Citation: 389 F. Supp. 551
• Parties: GAVLIK CONSTRUCTION CO. v. H. F. CAMPBELL CO. v. The WICKES CORP.
• Court: U.S. District Court — Eastern District of Pennsylvania

389 F. Supp. 551

GAVLIK CONSTRUCTION CO. v. H. F. CAMPBELL CO. v. The WICKES CORP.

Civ. A. No. 74-600.

United States District Court, W. D. Pennsylvania.

February 24, 1975.

Ralph E. Smith, Ambridge, Pa., for plaintiff.

Keith West, Pittsburgh, Pa., for defendant.

Allen T. Lane, Pittsburgh, for third party defendant.

OPINION

KNOX, District Judge.

This is a diversity action removed by the defendants from the Court of Common Pleas of Allegheny County. The plaintiff Gavlik Construction Company (Gavlik) alleges that it performed certain construction work for the defendant pursuant to several subcontract agreements, but that it has not been paid. The defendant H. F. Campbell Company (Campbell), the general contractor, has joined as third-party defendant the Wickes Corporation (Wickes) the owner of the completed construction (a large warehouse and store building in Allegheny County, Pennsylvania) and ultimate beneficiary of plaintiff's work. The defendant by motion as amended November 19, 1974, seeks a stay of these proceedings pending arbitration and an order compelling plaintiff, defendant and third-party defendant to submit to a consolidated arbitration. The plaintiff opposes this motion, while the third-party defendant has chosen not to respond. The third-party defendant has, however, in its answer to the third party complaint asserted that the controversy between Campbell and itself is subject to arbitration pursuant to contract.

Initially, we reject Gavlik's argument that Campbell has waived whatever contractual rights they have to arbitration by bringing in Wickes as a thirdparty defendant and attempting to consolidate this action with Harry Dunn Company v. Campbell Company, Civil Action No. 74-501, pending before Judge McCune of this court, which involves another subcontractor under the same general contract. Campbell filed its original motion to stay on June 20, 1974, the same date on which it removed this action from the Court of Common Pleas of Allegheny County. Its later actions in joining Wickes and attempting consolidation with Civil Action No. 74-501 were obviously to bring all these parties before the court and force them to join in one arbitration proceeding. Such action is certainly not waiver but is a procedurally sound attempt to achieve a desired result.

Campbell contends that authority to stay this action is found in Section 3 of the United States Arbitration Act, 9 U. S.C.A. § 1 et seq. The Supreme Court decision in Bernhardt v. Polygraphic Company, 350 U.S. 198, 76 S.Ct. 273, 100 L.Ed. 199 (1956), has settled that Section 3 of the Arbitration Act is subject to the limitation contained in Section 2, viz, it applies only to maritime transactions and contracts evidencing a transaction involving commerce, as defined in Section 1.

The question of whether the contract before us evidenced a transaction involving interstate commerce is not readily resolved, however. The question, as posed by Judge Lumbard in Metro Industrial Painting Corp. v. Terminal Construction Co., 287 F.2d 382 (2d Cir. 1961), is:

"not whether, in carrying out the terms of the contract, the parties did cross state lines, but whether, at the time they entered into it and accepted the arbitration clause, they contemplated substantial interstate activity." Emphasis in original.

Campbell would look at the construction project as a whole, and asserts that it was a contract between a California owner and a Michigan general contractor for construction in Pennsylvania,¹ that it involved numerous non-Pennsylvania subcontractors, and required substantial crossings of state lines by persons and materials. Gavlik, on the other hand, would look simply to the immediate contracts between itself and Campbell, which it asserts did not require it to cross state lines but simply to engage in a purely local construction project. The subcontracts themselves, of course, refer to the general contract and impose on Gavlik certain obligations toward it. Determining whether the agreement involves interstate commerce is made more difficult by the sparse record before us, which consists of copies of the agreements and the deposition of Robert J. Birdsall, Treasurer of Campbell. The remaining facts presented to us are statements of counsel in their briefs — material that we are not to consider as record evidence absent a specific admission by the opposing side. Braden v. University of Pittsburgh, 477 F.2d 1 (3d Cir. 1973). It appears, however, that we can dispose of this motion at this time without determining whether the United States Arbitration Act is applicable.

The applicability of both the United States Arbitration Act, 9 U.S.C. § 1 et seq., and the Pennsylvania Arbitration Act of 1927, 5 Pa.Stat. 161-179, has been analyzed by the Third Circuit in Merritt-Chapman & Scott Corp. v. Pennsylvania Turnpike Commission, 387 F.2d 768 (3d Cir. 1967). That case involved a controversy over the construction of a tunnel known as Allegheny No. 2 on the Pennsylvania Turnpike. Recognizing that under Bernhart v. Polygraphic Company of America, supra, the United States Arbitration Act was applicable only to agreements evidencing "a transaction involving commerce", the Third Circuit held that it was unable to make such a factual determination on appeal as the record before it consisted merely of allegations of diversity of citizenship but made no reference to commerce.

The Third Circuit then turned to the Pennsylvania Arbitration Act of 1927, which like the federal act, expressly authorizes a stay of proceedings pending arbitration. While Section 16 of the Pennsylvania Arbitration Act required that that Act apply to all contracts in which the Commonwealth and its agencies are parties, the Merritt-Chapman & Scott Corporation case went on to hold that explicit statutory authority to stay proceedings was unnecessary:

"Staying proceedings pending arbitration is one which is within the inherent power of a court and does not require statutory authority. As Mr. Justice Cardozo said in Landis v. North American Co., 299 U.S. 248, 254, 57 S.Ct. 163, 166, 81 L.Ed. 153 (1936), the power to stay proceedings is `incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for the litigants.' Moreover, in staying the action pending arbitration we do no more than what a Pennsylvania court would do if the proceeding were before it, and we thereby effectuate in this diversity action the policy of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)." Footnote omitted. 387 F. 2d at 773.

The question then becomes whether the parties did in fact agree to arbitrate disputes of this kind.² Whether a party is bound to arbitrate and what issues he must arbitrate is a matter for the court. Hussey Metals Division v. Lectromelt Furnace, 471 F.2d 556 (3d Cir. 1972). Arbitration is a matter of contract, and a party cannot be forced to arbitrate something which he did not agree to. John Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964); Hussey Metals Division, supra. Under Pennsylvania law, with its favorable policy towards arbitration,³ doubts as to whether an arbitration clause may be interpreted to cover the asserted dispute should be resolved in favor of arbitration unless the court can state with "positive assurance" that the dispute was not meant to be arbitrated. Hussey, supra.

The arbitration clause in the subcontract agreements is Article 22, a form provision that provides as follows:

"Any disagreement arising out of this Agreement or any other Contract Document or from the breach thereof shall be submitted to arbitration, and judgment upon the award rendered may be entered in the Court of the forum, state or federal, having jurisdiction. It is mutually agreed that the decision of the Arbitrators shall be a condition precedent to any right of legal action that either party may have against the other. The Arbitration shall be conducted pursuant to the Construction Industry Rules of the American Arbitration Association prevailing at the time arbitration proceedings are initiated. The arbitrators shall be a panel of three — one selected by the Contractor, one selected by the Subcontractor, and the third selected by the first two Arbitrators. The Subcontractor shall not cause a delay of its work due to any disagreement or dispute or during any arbitration resulting therefrom, except by agreement with Contractor."

Article 22 by its own terms applies to "any disagreement arising out of this agreement or any other Contract Document or from the breach thereof . . ." The only serious question of interpretation is raised by the last sentence of Article 22, providing that the subcontractor shall not "cause a delay of its work due to any disagreement or dispute or during any arbitration resulting therefrom, except by agreement with Contractor." We hold that this language does not limit the broad applicability of the first sentence.

In Hussey Metals, supra, and the three Pennsylvania Supreme Court cases cited therein,⁴ it was held that such language is an indication that the purpose of providing for arbitration was to insure that completion of the work would not be interrupted and that the arbitration provision was therefore not meant to apply where...