Ocean Industries, Inc. v. SOROS ASSOCIATES INTERNAT'L, INC.
| Decision Date | 24 June 1971 |
| Docket Number | No. 70 Civ. 3788 D.N.E.,70 Civ. 3788 D.N.E. |
| Citation | 328 F. Supp. 944 |
| Parties | OCEAN INDUSTRIES, INC., and Marine Transportation Co., Ltd., Plaintiffs, v. SOROS ASSOCIATES INTERNATIONAL, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Cahill, Gordon, Sonnet, Reindel & Ohl, New York City, for plaintiffs.
M. Carl Levine, of Morgulas & Foreman, New York City, for defendant.
OPINION
Defendant, Soros Associates International, Inc., has cross-moved to dismiss the complaint in this action upon the ground that the issues presented by the complaint are referrable to arbitration,1 or, in the alternative, to stay the trial of this action until arbitration has been had,2 and to compel plaintiffs to arbitrate the dispute referred to in the "Demand for Arbitration."3 Plaintiffs originally moved for a prelinimary injunction to stay arbitration. At the oral argument on plaintiffs' motion and defendants' cross motion, plaintiffs withdrew their motion for a preliminary injunction and opposed the defendant's cross motion. Plaintiffs assert that there is no arbitration agreement in existence. Jurisdiction over the parties is grounded on diversity and the Federal Arbitration Act is invoked.
Prior to January 1968 plaintiff Marine alleges that it was granted an option by Union Carbide Corp. to purchase from Union Carbide its aragonite business in the area of the Bahama Islands. Plaintiff Marine agreed in January 1968 with defendant Soros that Soros would undertake to furnish certain preliminary engineering services in connection with the mining of aragonite in one location in the waters adjacent to the Bahama Islands. Subsequent to January 1968, plaintiff Ocean acquired the aragonite business. It is further alleged that Soros continued to perform services pursuant to the January 1968 agreement with Marine. Ocean made certain payments to Soros for work performed. On August 20, 1970, plaintiffs Marine and Ocean received, at their offices in Florida, a "Demand for Arbitration." The "Demand for Arbitration" alleged the existence of a written contract, dated January 9, 1968, between Soros and plaintiffs which provided for arbitration of any disputes arising from the contract. In the "Demand for Arbitration" Soros alleged that the plaintiffs failed to pay certain amounts due and owing under the alleged contract, and that plaintiffs further breached their alleged contract with Soros by refusing to permit Soros to proceed with the "final" engineering work allegedly provided for in the January 9th contract. Shortly after service of the "Demand for Arbitration" plaintiffs commenced an action for declaratory judgment. Plaintiffs seek a declaration that they are not liable for any part of the money claimed by Soros, that Soros is not entitled to proceed with any further work under the alleged contract, and that there exists no contract for "final" engineering work.
Plaintiff Marine and defendant entered into negotiations prior to January 1968 concerning the preparation by defendant of a preliminary engineering report concerning the feasibility of using an offshore terminal for the mining and loading of aragonite, deposits in the Bahamas. By a letter dated January 9, 1968, Soros Associates set forth its formal proposal for furnishing the preliminary engineering services. The letter stated that it was Soros' policy to make its "basic know-how" available on the basis that "if the project eventually proceeds onto the final design and construction phase Phases II, III and IV substantially in accordance with our design scheme," Soros would continue to be responsible for the later stages of the engineering work. The proposal also stated that "the engineering services for Phase II and Phase III would be performed in accordance with the `Standard Form of Agreement,' enclosed." (Defendant's Notice of Cross-Motion, Exhibit # 1.) Enclosed with the proposal was the "Standard Form of Agreement Between Owner and Engineer for Professional Services" issued by the National Society of Professional Engineers. The "Standard Form" enclosed in the January 9, 1968, proposal contained certain proposed modifications which had been made and initialed by Paul Soros. The Standard Form, however, was not signed.
By a letter of January 29, 1968, plaintiff Marine rejected some offers set forth in defendant's letter of January 9th and authorized only a preliminary study. The Standard Form of Agreement was not signed by the plaintiffs or returned with the January 29th letter. Subsequent to January 29, 1968, at the request of defendant, Mr. Hans Hvide, acting on behalf of plaintiff Marine, also initialed the proposd modifications made by Mr. Paul Soros in the Standard Form. These modifications dealt with performance of the engineering services for Phases II and III and for compensation for those services.
It does not appear to be disputed that a document labeled "Standard Form of Agreement Between Owner and Engineer for Professional Services," (the "Standard Form") contains a clause which reads:
There is a dispute, however, as to whether the "Standard Form" and the arbitration clause contained therein were a part of the alleged contract upon which this action is based. Plaintiffs, opposing the motion, contend that there was no agreement to arbitrate. There is no claim of fraud, misrepresentation, or deceit.
In passing upon a Sec. 3 application for a stay while the parties arbitrate, a federal court may consider only those issues relating to the making and performance of the agreement to arbitrate. Prima Paint v. Flood & Conklin, 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). Arbitration is a creature of contract. United Steelworkers of America v. American Manufacturing Company, 363 U.S. 564, 571, 80 S.Ct. 1343, 4 L.Ed.2d 1403. The issue on this motion is whether there was mutual assent to the arbitration agreement. Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978 (2d Cir. 1948).
If the "Standard Form" had been signed by the parties it would be clear that it constituted an agreement and that the parties intended to be bound by all the terms thereof, including the arbitration provision. However, the "Standard Form" never was signed by any part...
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