Tehran-Berkeley Civil and Environmental Engineers v. Tippetts-Abbett-McCarthy-Stratton

• Decision Date: 20 October 1989
• Docket Number: TEHRAN-BERKELEY,D,CARTHY-STRATTO,No. 886,R,TIPPETTS-ABBETT-M,886
• Citation: 888 F.2d 239
• Parties: In the Matter of the Arbitration betweenCIVIL AND ENVIRONMENTAL ENGINEERS, Petitioner-Cross-Respondent-Appellee, andcespondent-Cross-Petitioner-Appellant. ocket 88-9064.
• Court: U.S. Court of Appeals — Second Circuit

Page 239

888 F.2d 239

In the Matter of the Arbitration between TEHRAN-BERKELEY CIVIL AND ENVIRONMENTAL ENGINEERS Petitioner-Cross-Respondent-Appellee and TIPPETTS-ABBETT-McCARTHY-STRATTON Respondent-Cross-Petitioner-Appellant.

No. 886, Docket 88-9064.

United States Court of Appeals Second Circuit.

Argued March 21, 1989.

Decided Oct. 20, 1989.

Frank H. Penski, New York City (Abigail T. Reardon, John A. Rudy, Nixon, Hargrave, Devans & Doyle, New York City, of counsel), for respondent-cross-petitioner-appellant.

David B. Wolf, New York City (Walter, Conston, Alexander & Green, P.C., New York City, of counsel), for petitioner-cross-respondent-appellee.

Before OAKES, Chief Judge, and KEARSE and MAHONEY, Circuit Judges.

MAHONEY, Circuit Judge:

This is an appeal from a summary judgment entered in the United States District Court for the Southern District of New York, Richard Owen, Judge, compelling Respondent-Cross-Petitioner-Appellant Tippetts-Abbett-McCarthy-Stratton ("TAMS") to arbitrate a claim of $999,922 plus interest brought against it by Petitioner-Cross-Respondent-Appellee Tehran-Berkeley Civil and Environmental Engineers ("Tehran-Berkeley") under a contract for soil and foundation investigation in connection with the construction of an airport in Tehran, Iran.

This case was previously before this court in Tehran-Berkeley Civil & Envtl. Eng'rs v. Tippetts-Abbett-McCarthy-Stratton, 816 F.2d 864 (2d Cir.1987) ("Tehran-Berkeley I"), familiarity with which is assumed. In Tehran-Berkeley I, the district court had ruled that TAMS, a New York engineering and architectural consulting partnership, could not be compelled to arbitrate a claim by Tehran-Berkeley against a partnership of which TAMS was a partner. The partnership was styled "TAMS-AFFA Consulting Engineers and Architects" ("TAMS-AFFA"). The other partner was Abdul Aziz Farmanfarmaian & Associates ("AFFA"), an Iranian engineering firm.

On appeal, we vacated and remanded for "a hearing on the question of whether TAMS-AFFA as an entity or TAMS and AFFA individually are parties to the contract" with Tehran-Berkeley. 816 F.2d at 869. On remand, the district court concluded that "TAMS/AFFA as a joint venture ... entered into this contract with Tehran-Berkeley," and that "TAMS, as a partner, is properly a party to arbitration, and such arbitration should be compelled."

TAMS now contends that the district court's determination that TAMS-AFFA contracted as a joint venture with Tehran-Berkeley bars compelling TAMS to arbitrate Tehran-Berkeley's claim. We disagree, and accordingly affirm.

Background

The facts underlying this litigation are comprehensively stated in Tehran-Berkeley I, and will be briefly summarized here. TAMS and AFFA were parties to a series of joint venture agreements dating back to 1968 with respect to their anticipated work on construction of the Tehran International Airport ("TIA"). This anticipation was crystallized in a contract dated March 19, 1975 (the "CAO Contract") between TAMS and AFFA, on the one hand, and the Civil Aviation Organization of the Imperial Government of Iran (the "CAO"), on the other, under which TAMS and AFFA were to act together as "Consultant" to the CAO for construction of the TIA, with joint and several liability as to their obligations under the CAO Contract. The CAO Contract contemplated that "[f]or the purpose of carrying out its obligations [thereunder], the Consultant may establish an independent entity under the laws of Iran and register the same."

As of August 1, 1975, TAMS and AFFA executed a document forming TAMS-AFFA, a partnership intended to perform their obligations under the CAO Contract, with equal ownership for TAMS and AFFA in the partnership. ¹ TAMS-AFFA was not registered in the Iranian Register for Non-Commercial Firms, however, until October 16, 1975.

The contract at issue here (the "Tehran-Berkeley Contract") was dated August 12, 1975 and was executed by TAMS and AFFA, on the one hand, as "Consultant," and by Tehran-Berkeley, on the other, as "Contractor." It called for Tehran-Berkeley to conduct "soils and foundations investigations" in connection with the TIA project, and included an arbitration clause covering "[a]ll the disputes that may arise between the Contractor and the Consultant." ² Invoices for work performed were to be submitted by the Contractor to the Consultant for review, and then by the Consultant to the CAO for payment; the Consultant was to pay the Contractor "immediately upon receipt of payment from the CAO."

As stated in Tehran-Berkeley I, the revolution in Iran resulted in the seizure of AFFA and TAMS-AFFA by the government of Iran, and ultimately in an award to TAMS by the Iran-United States Claims Tribunal of $5,594,405 plus interest for TAMS' share of the "dissolution value" of TAMS-AFFA, defined as "the value of TAMS-AFFA after the collection of all assets and the discharge of all obligations." See 816 F.2d at 866-67. The Tribunal stated "that [its] Award involve[d] no adjudication of the rights and obligations of the parties to [the CAO Contract] or of any obligations owed by TAMS-AFFA to ... third parties." See id. at 867.

On October 31, 1985, Tehran-Berkeley filed a demand for arbitration against TAMS with the American Arbitration Association, seeking $999,922 plus interest for unpaid work performed on the TIA project under the Tehran-Berkeley Contract. TAMS refused to arbitrate the dispute, whereupon Tehran-Berkeley commenced this litigation by filing a petition to compel arbitration pursuant to 9 U.S.C. Sec. 4 (1982).

The district court granted summary judgment to TAMS and dismissed the petition, concluding that Tehran-Berkeley contracted "with but a single counter-contracting 'party', the 'consultant' which was the TAMS-AFFA partnership earlier established on August 1, 1975 to do consulting work on the Tehran Airport." The district court concluded that because TAMS-AFFA was expropriated by Iran, "petitioner's cause of action no longer lies against TAMS as a partner, or the TAMS-AFFA partnership itself, but against some agency of the Islamic Republic of Iran which is its successor." The district court further expressed "as dictum" its view that TAMS-AFFA "was only a conduit for payment" from CAO to Tehran-Berkeley, thus requiring either that CAO be joined as an indispensable party, or that Tehran-Berkeley establish that CAO had made payments to TAMS-AFFA for Tehran-Berkeley's account which had not been transmitted to Tehran-Berkeley.

On appeal, we vacated the summary judgment, stating:

The contract was negotiated and executed individually by principals of TAMS, of AFFA, and of Tehran-Berkeley. The partnership, TAMS-AFFA, did not purport to sign the contract; and, despite the fact that it was established, though not officially registered, as of August 1, 1975, it is not mentioned in the contract. Appellee TAMS focuses on the singular designations, "Contractor" and "Consultant," which were used throughout the contract and contends that the contract expressly indicates that it is "between ... two parties" (emphasis added). Appellee also suggests that the course of conduct between the parties confirms this reading of the contract. Conversely, appellant Tehran-Berkeley argues that these singular designations need not be interpreted to mean that TAMS and AFFA intended to act as a single entity, but instead may indicate that they entered the agreement as joint obligors. Appellant further contends that the Persian text may be translated so as to read not "between ... two parties," but by "the parties." Faced with such divergent interpretations of the contract the district court erred in not finding a genuine issue of fact and in not proceeding summarily to trial as [9 U.S.C.] section 4 requires.

Tehran-Berkeley I, 816 F.2d at 868-69.

We remanded to the district court "for a hearing on the question of whether TAMS-AFFA as an entity or TAMS and AFFA individually are parties to the contract," id. at 869, noting that "[s]hould the trier of fact find that TAMS is a party to the contract in its individual capacity, the district court should compel arbitration and refer all remaining questions to the arbitrator including those relating to CAO's obligations, if any, under the contract and to the joinder of AFFA," id.

On remand, the district court framed the issue as "whether TAMS/AFFA was a joint venture, with joint and several liability for each venturer, or whether it was in fact a corporate entity, a 'moassesseh ' ³ under Iranian law, not individually liable on the contract with Tehran-Berkeley." The district court concluded that:

TAMS/AFFA as a joint venture, not as a corporate moassesseh, entered into this contract with Tehran-Berkeley. This is so because TAMS/AFFA's October, 1975 registration as a moassesseh occurred many months after it entered into the contract, in August, 1975. Though the technicality of registration would not control if there were more substantive evidence of the parties' intent, such evidence is lacking here. The course of dealing evidence that TAMS presents, correspondence addressed and payments made to "TAMS/AFFA," the contract's reference to "two parties," is quite compatible with Tehran-Berkeley's claim that it thought that it was dealing with the joint venture TAMS/AFFA.

The district court ordered TAMS to arbitrate the dispute. In so ruling, the court "express[ed] no view on the effect of the Iranian government's expropriation, or on the necessity of joining as a party the other partner, AFFA, as these issues are now properly before the arbitrator."

TAMS thereafter brought this appeal.

Discussion

Before considering the merits, we must decide what law to apply to this case. The Tehran-Berkeley Contract does not specify the law which is to govern the agreement, and neither party has briefed or argued the issue. Iranian law could apply, since the contract was executed and performed in that country. The parties'...