Lesser Towers, Inc. v. Roscoe-Ajax Construction Co.

• Decision Date: 15 September 1966
• Docket Number: No. 66-1380.,66-1380.
• Citation: 258 F. Supp. 1005
• Parties: LESSER TOWERS, INC., Petitioner, v. ROSCOE-AJAX CONSTRUCTION CO., Inc., Respondent.
• Court: U.S. District Court — Southern District of California

258 F. Supp. 1005

LESSER TOWERS, INC., Petitioner, v. ROSCOE-AJAX CONSTRUCTION CO., Inc., Respondent.

No. 66-1380.

United States District Court S. D. California, Central Division.

September 15, 1966.

Charles J. Katz and Louis C. Hoyt, Los Angeles, Cal., for petitioner, Lesser Towers, Inc.

Beardsley, Hufstedler & Kemble, Los Angeles, Cal., for respondent Roscoe-Ajax Const. Co.

MEMORANDUM OPINION AND ORDER GRANTING MOTION TO REMAND.

CRARY, District Judge.

Petitioner, on or about July 24, 1964, filed in the Superior Court of the State of California in and for the County of Los Angeles a petition for an order directing arbitration, and so forth, in case No. 842,744. Respondent filed its answer therein about August 27, 1964. On or about August 7, 1964, respondent filed an action in the Superior Court, naming petitioner as a defendant therein, for declaratory relief and to enjoin arbitration. That case, being numbered 843,501, was consolidated with 842,744, supra, by order of the Superior Court. The Superior Court issued its order for arbitration and arbitration was held pursuant thereto.

On or about August 16, 1966, petitioner filed its petition in Superior Court action 842,744 to confirm the award of the arbitrator. On August 24, 1966, respondent filed its petition for removal of the action to this United States District Court under the provisions of Title 28, U.S.C. § 1441, and 28 U.S.C. § 1332, asserting that the filing of the petition to confirm the award, and notice of motion therefor filed August 16, 1966, was a "civil action commenced on August 16, 1966, in the Superior Court of the State of California for the County of Los Angeles" (page 1, lines 19-20, Petition for Removal). On August 26, 1966, petitioner herein filed its motion to remand the case to the State court.

The question presented to the court on the motion to remand is whether the receipt by respondent of a copy of the petition to confirm the award in Superior Court action 842,744, filed August 16, 1966, was the receipt of a copy of the initial pleading such as to start the running of the thirty day period for removal to the United States District Court, within the provisions of Section 1446(b), Title 28, U.S.C.

The respondent, in its points and authorities in opposition to petitioner's motion to remand, urges that the case of Marchant v. Mead-Morrison Mfg. Co., (2 C.A.1928) 29 F.2d 40, and other 2nd Circuit cases are not applicable to the instant matter because "Marchant and the 2nd Circuit cases which follow it are based upon an interpretation of the New York arbitration law, which, unlike California, considers all aspects of an arbitration proceeding to be a single proceeding."

It does not appear that the confirmation of an arbitration award is a separate proceeding under the California Arbitration Act. Section 1292.6 of the Code of Civil Procedure provides:

"After a petition has been filed under this title, the court in which such petition was filed retains jurisdiction to determine any subsequent petition involving the same agreement to arbitrate and the same controversy, and any such subsequent petition shall be filed in the same proceeding."

It is to be noted that the New York Standard Civil Practice Act has a similar provision, as a part of Section 7502 thereof, the last sentence of which reads: "All subsequent applications shall be made by motion in the pending action or the special proceeding."

The court in the Marchant case, supra, ruled that under the New York arbitration law (1920) the various steps were not separate proceedings. The petition to compel arbitration in the New York state court, filed in July, 1925, which had been removed to the Federal court, was remanded because the jurisdictional amount was not involved. On October 14, 1927, plaintiff moved the State court for an order confirming the award and defendant removed same to the United States District Court alleging that the jurisdictional amount was involved. A timely motion to remand the motion for order confirming the award was denied. (The Court of Appeals reversed, holding the motion to remand should have been granted.)

After denial of the motion to remand, defendant moved to confirm the award and plaintiff moved to vacate. These motions were argued together and resulted in an order affirming the award in part and vacating it in part (page 42).

The State of New York court had held that under the New York arbitration law in effect at that time the order for arbitration was a final, appealable order, and that that order was the end of one proceeding and the petition for confirmation was a separate proceeding under the New York law.

The Court of Appeals, at page 42, observes:

"Decisions of the state court as to the nature of the proceedings, under the state statutes, while persuasive, are not conclusive on the question of removal of causes under the federal statutes. Removal under the federal statutes is a question for the consideration of the federal court."

The court went on to hold that the application to the State court for an order to arbitrate, to and including the petition for confirmation of the award, "was a suit for specific performance of the contract. It was all one arbitration proceeding, to settle the controversies which had arisen between the parties. They were not separable controversies." (Page 43)

It does not appear to this court that the court in the Marchant case followed the then New York law but made its own determination of the question of whether the petitions involved were part of the same action for the purpose of removal.

The Court of Appeals, 2nd Circuit, cites the Marchant case in Ballantine Books, Inc. v. Capital Distributing Co., (2 C.A.1962) 302 F.2d 17, for the rule that the time for removal of the supervision of an arbitration proceeding from the State to the Federal courts begins to run from the date of the first court action relating to the arbitration (page 19).

The appellate division of the New York Supreme Court held that motion to disqualify an arbitrator made in the State court was premature and should not have been entertained, and such action by the State court was not in any practical sense an assumption of supervision over arbitration. The court then states at page 20:

"Moreover, we hold that at the time of Ballantine's petition to confirm the state court did not have the arbitration proceedings sub judice and thus there was in actuality no conflict of jurisdiction. Whether or not such jurisdiction had attached is for this purpose a question of federal law."

Marchant, supra, is also cited with approval in Hetherington & Berner, Inc. v. Melvin Pine & Co., (2 C.A.1958) 256 F.2d 103, 107, where the court states:

"In the first place the application to confirm the award, Civil Action No. 122-64, was ancillary to and a continuation of the earlier suit in which a temporary restraining order had been issued and a stipulation of the parties had been filed. Cf. Marchant v. Mead-Morrison Mfg. Co., 2 Cir., 1928, 29 F.2d 40, certiorari denied 278 U.S. 655, 49 S.Ct. 179, 73 L.Ed. 565. The parties clearly contemplated that judgment on the arbitrators' award would be entered in the federal court where they already were and properly so by reason of diversity of citizenship."

In the Hetherington case the United States District Court granted a preliminary injunction against defendants' use of funds alleged to belong to plaintiff. On stipulation of the parties the District Court stayed the action pending arbitration, which was decided in favor of plaintiff. The plaintiff moved to confirm in the District Court and removed to the Federal court a proceeding brought by defendants in the New York Supreme Court to vacate the award as being indefinite. The Court of Appeals held that the District Court had both ancillary and original jurisdiction to confirm an award of arbitration in favor of plaintiff where a prior District Court action was stayed pending arbitration.

In Davenport v. Procter & Gamble Mfg. Co., (2 C.A.1957) 241 F.2d 511, 63 A.L.R.2d 1350, the court held the removal of a petition to arbitrate was proper. The petition was the first judicial proceeding in the matter. Motion to remand was denied on the grounds that the jurisdictional amount was involved, the court observing that in considering the jurisdictional amount requirement it should look through a possible award resulting from desired arbitration, since petition to compel arbitration was only an initial step in litigation which sought as its goal a judgment affirming an award. At page 513 of its opinion the court cites Marchant v. Mead-Morrison Mfg. Co., supra, as repudiating "* * * the view that each step in the state court suit is `a separate proceeding' within the meaning of the removal statute * * *."

Respondent, at oral argument, initiated its position that the Federal arbitration statute (9 U.S.C. §§ 1-14) applies, not the California Act, and that under the Federal Act the petition for confirmation of the award should not be considered as a continuation of or ancillary to any action for an order for arbitration but that said petition for confirmation is a claim for an entirely different relief, independent of the petition for the order for arbitration.

In Victorias Milling Co. v. Hugo Neu Corp., (S.D.N.Y.1961) 196 F.Supp. 64, Neu petitioned the New York Supreme Court to vacate the award of the arbitrator. Victorias then moved the Federal court to confirm the award and removed the State court proceeding to vacate the award. Neu then moved the District Court to remand its motion to vacate. The court held that the proceeding in the New York court was brought in reliance upon a Federal statute 28 U.S.C. § 1333(1) which provides that the District Court shall have original jurisdiction exclusive of State courts over civil actions of maritime jurisdiction, "saving to suitors in all cases all other remedies to which they are otherwise entitled", and that...