Martin Marietta Aluminum, Inc. v. General Elec. Co., 76-3763

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Before WRIGHT and GOODWIN; JAMESON
• Citation: 586 F.2d 143
• Parties: MARTIN MARIETTA ALUMINUM, INC., a California Corporation, Plaintiff-Appellant, v. GENERAL ELECTRIC COMPANY, a New York Corporation, Defendant-Appellee.
• Docket Number: No. 76-3763,76-3763
• Decision Date: 13 November 1978

Page 143

586 F.2d 143 MARTIN MARIETTA ALUMINUM, INC., a California Corporation,
Plaintiff-Appellant,
v.
GENERAL ELECTRIC COMPANY, a New York Corporation, Defendant-Appellee. No. 76-3763. United States Court of Appeals,
Ninth Circuit. Nov. 13, 1978.

Page 144

John E. Ederer (argued), of Helsell, Fetterman, Martin, Todd & Hokanson, Seattle, Wash., for plaintiff-appellant.

Page 145

Coleman P. Hall (argued), of Karr, Tuttle, Koch, Campbell, Mawer & Morrow, Seattle, Wash., for defendant-appellee.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT and GOODWIN, Circuit Judges, and JAMESON, ^* District Judge.

JAMESON, District Judge:

Martin Marietta Aluminum, Inc. (MMA), brought this action for damages as a result of the breakdown of 12 high voltage rectifier transformers at its aluminum reduction plant. MMA contends that its losses were the result of improper design and manufacture by General Electric Company (GE), which by contract supplied the plant's high voltage electrical system. The complaint alleged that GE was negligent and was liable for breach of implied and express warranties. An amended complaint added causes sounding in fraud and strict liability.

In its answer, GE denied the charging allegations and raised seven affirmative defenses, including MMA's failure to comply with a contractual arbitration clause. Following discovery, GE moved for summary judgment on the basis of several of its affirmative defenses. The district court granted the motion solely on the ground that MMA had failed to comply with the contractual provision requiring MMA to seek arbitration prior to instituting suit.

The contract between MMA ¹ and GE consisted of a Purchase Order, General Conditions for Procurement of Equipment and three volumes of specifications. Section 24 of the General Conditions provided:

Arbitration. If any controversy arising out of the Purchase Order cannot be settled or adjusted by mutual agreement of Seller and Harvey, then either party may, within six (6) months after such controversy shall have arisen, request arbitration of such controversy to be held in the State of Washington under the rules of the American Arbitration Association; provided, however, that a request for arbitration of any controversy regarding any warranty of Seller set forth in the Purchase Order may be made at any time during the period of warranty or within six (6) months thereafter. If arbitration is entered into, the judgment on the award may be entered in any Washington court or federal court having jurisdiction. It shall be a condition precedent to the institution, by either Seller or Harvey, of any action at law or in equity on any matter arising out of the Purchase Order that such party shall have first requested arbitration of such matter, as aforesaid, and shall not have received the agreement of the other party to such arbitration within ten (10) days after such request.

In granting GE's motion for summary judgment, the court said in part:

The arbitration provision unambiguously provides that after a controversy arising out of the purchase order has arisen, the party seeking relief has six months to request arbitration. Such request gives the defending party the choice of accepting arbitration or forcing the plaintiff to litigate in the courts. It is clear that a request for arbitration must precede the institution of a suit. The conclusion is unavoidable that failure to request arbitration within six months of the arising of the controversy leaves the plaintiff barred. Notably, this arbitration clause was drafted by the plaintiff's predecessor, Harvey Aluminum.

On appeal MMA contends primarily that summary judgment was improperly granted because GE, by its pre- and post-litigation conduct, either waived or is estopped from

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requiring compliance with the contractual arbitration provision. ²

Interpretation of Arbitration Provision

Both parties agree that the arbitration clause is unique. The standard arbitration clause is Mandatory, requiring that any dispute be arbitrated. MMA argues that the arbitration provision here "Permits but does not require arbitration, and arbitration is possible only where both parties want to arbitrate". MMA's construction of the arbitration clause would permit a person seeking relief to decide whether to arbitrate or litigate, but require the other party to request arbitration or be forced to forego reliance on the arbitration clause as an affirmative defense.

GE contends that the arbitration clause requires the party seeking relief to request arbitration within the specified time limit, but permits the other party either to arbitrate or to refuse to arbitrate, thus forcing litigation. Under this construction if the party seeking...