Hussey Metal Division v. Lectromelt Furnace Division
Decision Date | 14 December 1972 |
Docket Number | No. 71-1968.,71-1968. |
Citation | 471 F.2d 556 |
Parties | HUSSEY METAL DIVISION OF COPPER RANGE COMPANY, a corporation, Appellant, v. LECTROMELT FURNACE DIVISION, McGRAW-EDISON COMPANY, a corporation, Appellee. |
Court | U.S. Court of Appeals — Third Circuit |
Frank J. Gaffney, Thorp, Reed & Armstrong, Pittsburgh, Pa., for appellant.
Alan Bruce Bowden, Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, Pa., for appellee.
Before SEITZ, Chief Judge, and FORMAN and HUNTER, Circuit Judges.
Appellant Hussey Metals Division of Copper Range Company appeals under 28 U.S.C. § 1292(a) (1) from an order of the District Court staying proceedings in a breach of contract suit brought by appellant against appellee Lectromelt Furnace Division McGraw-Edison Company.
This is a diversity action, and we are thus bound by Pennsylvania law according to Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The District Court's order is appealable under 28 U.S.C. § 1292(a) (1). Merritt-Chapman and Scott Corp. v. Pennsylvania Turnpike Commission, 387 F.2d 768, 770 (3 Cir., 1967). Under a series of documents, appellee sold, designed, and installed a furnace for appellant. The parties dispute whether these documents constitute one contract or several. There was a document, signed April 20, 1966 and revised May 25, 1966, which provided for the furnishing of a furnace by appellee. There was a document dated May 25, 1966 which provided for the design of the furnace, and a document signed September 7, 1966 which provided for construction and installation of this facility. The first document contained an arbitration clause1 while the other two did not. Appellee installed the furnace and appellant was not satisfied with its performance. Appellant refused to make the final payment due under the contract and eventually brought this suit. Appellee counterclaimed for the final payment and demanded that the suit be stayed pending arbitration. The District Court ordered the parties to arbitration. In doing so, the Court did not decide whether the arbitration clause was applicable to this dispute. Instead it permitted the arbitrator to decide whether the parties had agreed to arbitrate appellant's claims.
Appellant presents several arguments for reversal:
Appellee's basic argument is that this dispute arose under the document for sale of the furnace. This document contains the arbitration clause, and that clause is applicable to this dispute.
Initially, it was incorrect for the District Court not to determine whether this dispute was covered by the terms of the arbitration agreement. It is settled under both Federal and Pennsylvania law that the court must decide whether a party is bound to arbitrate and what issues he must arbitrate. 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, 546, 547, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964); Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 8 L.Ed.2d 462 (1962); Strauss v. Silvercup Bakers, Inc., 353 F.2d 555 (2d Cir. 1965); Howard v. International Brotherhood of Electrical Workers, Local Union No. 570, 423 F.2d 164 (9th Cir. 1970); Women's Society for the Prevention of Cruelty to Animals of Pennsylvania v. Savage, 440 Pa. 34, 269 A.2d 888 (1970); Schoellhammer's Hatboro Manor, Inc. v. Local Joint Executive Board, 426 Pa. 53, 231 A.2d 160 (1967); United Steelworkers of America v. Westinghouse Electric Corp., 413 Pa. 358, 196 A.2d 857 (1964).
In view of the favorable policy towards arbitration, Mendelson v. Shrager, 432 Pa. 383, 248 A.2d 234 (1968), doubts as to whether an arbitration clause may be interpreted to cover the asserted dispute should be resolved in favor of arbitration unless a court can state with "positive assurance" that this dispute was not meant to be arbitrated. See United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U. S. 574, 582-583, 80 S.Ct. 1347, 4 L.Ed.2d 1409.
Because of the Pennsylvania Supreme Court decisions concerning similar arbitration clauses, we can state that the arbitration clause in this case was inapplicable by its own terms.
The clause in pertinent part reads:
The time of final payment was to be the date of "acceptance of the apparatus, but in any event not later than 120 days after shipment."
Three times the Pennsylvania Supreme Court has held that similar language has meant that arbitration was required only while the work was in progress.
In Westmoreland Hospital Association v. Westmoreland Construction Company, 423 Pa. 255, 223 A.2d 681 (1966), the arbitration clause provided:
The Court held that these provisions made it clear that the purpose for providing arbitration was to insure that completion of the work would not be interrupted and that it "obviously was not meant to apply where the contract was completed." It held this despite the expansive language in the initial clause.
In Emmaus Municipal Authority v. Eltz, 416 Pa. 123, 204 A.2d 926 (1964), the Court held that similar language2 meant that arbitration was intended only for disputes that arose while the work was in progress.
Id. at 124, 204 A.2d at 927.
If appellant were to win on the merits of his suit, then there will have been a breach. If appellee were to defend successfully, then there will...
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