Texas Eastern Transmission Corporation v. Barnard

• Decision Date: 15 December 1960
• Docket Number: No. 14057.,14057.
• Citation: 285 F.2d 536
• Parties: TEXAS EASTERN TRANSMISSION CORPORATION, Appellant, v. R. L. BARNARD, T. T. Barnard and Lenora Barnard, Dillard R. Douglas and Wingate E. Douglas, Billy Perry Patterson, Lorena Perry Patterson, and Shirley Patterson, W. C. Clay, and Jimmy P. Evans, Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

285 F.2d 536 (1960)

TEXAS EASTERN TRANSMISSION CORPORATION, Appellant, v. R. L. BARNARD, T. T. Barnard and Lenora Barnard, Dillard R. Douglas and Wingate E. Douglas, Billy Perry Patterson, Lorena Perry Patterson, and Shirley Patterson, W. C. Clay, and Jimmy P. Evans, Appellees.

No. 14057.

United States Court of Appeals Sixth Circuit.

December 15, 1960.

Joseph E. Stopher, Louisville, Ky., (Joseph E. Stopher, A. J. Deindoerfer, Boehl Stopher Graves & Deindoerfer, Louisville, Ky., and Henry H. Bramblet, Mt. Sterling, Ky., on the brief), for appellant.

William C. Clay, Jr., Clay & Edwards, Mt. Sterling, Ky., for appellee.

Before McALLISTER, Chief Judge, and MILLER and WEICK, Circuit Judges.

McALLISTER, Chief Judge.

Appellant, an interstate pipe-line company, entered into a contract with appellee owners of real estate, for a right-of-way over the latter's property for the purpose of constructing a pipe-line thereon, and repairing and inspecting it. The contract provided that in case of differences between the parties, any controversy between them should be submitted to arbitration; that if either party should demand arbitration, and the other party should fail and refuse to designate an arbitrator within thirty days after written request therefor, then the arbitrator designated by the party requesting arbitration should have the right to make an ex parte determination.

Appellees, on August 7, 1958, following claims of damage to their property as a result of excavations by the pipeline company, made a written request for arbitration and gave notice of such request to appellant company, which received the notice on August 11, 1958. Appellees did not, however, publicly designate or identify the arbitrator they had chosen until thirty days had expired after the date of their request. After receiving the notice of request for arbitration, appellant delayed naming an arbitrator or replying to the request, while awaiting further notice from appellees indicating the name of the arbitrator they had selected. Appellant did not thereafter receive any notice from appellees identifying their arbitrator. However, on September 12, 1958, appellant company received notice from E. A. Crooks, informing it that he was the arbitrator for appellees, and that he would hear the controversy on September 16, 1958, four days thereafter. This notice had been mailed to appellant within three days of the expiration of the thirty-day period provided for designation of arbitrator by the party receiving notice of request for arbitration — in this case, appellant company.

On the same day on which it had received notice from E. A. Crooks that he had been appointed arbitrator for appellees, and that he would hear the controversy four days thereafter, appellant company notified appellees of its appointment of Henry L. Jones as its arbitrator, and stated that Mr. Jones would meet with the arbitrator for appellees at the time and place specified by him for the purpose of designating a third arbitrator, such designation of a third arbitrator being provided for in the agreement for arbitration. On the day following appellant's designation of its arbitrator and its offer to meet with the arbitrator of appellees in order to appoint a third arbitrator, counsel for appellees informed appellant that appellant's letter appointing its arbitrator came too late. At the time that counsel for appellees sent this letter refusing to consider appellant's appointment of its arbitrator, the thirty-day period for such selection by appellant had expired only seven days before. Appellees' arbitrator, however, had not, at that time, proceeded to hear the controversy, and, according to his notice to appellant, was not going to do so for another three days, that is, on September 16, 1958. Appellant immediately proceeded to prepare a complaint in the District Court under Section 4 of the United States Arbitration Act, Title 9 U.S.C.A. § 1 et seq., seeking an order that the arbitration proceed as appellant claimed, in accordance with the contract of arbitration, rather than ex parte, as resolved upon by appellees.

However, appellees' arbitrator, on September 16, 1958, proceeded to hear and dispose of the controversy without any participation therein by appellant's arbitrator, or by appellant's arbitrator and a third arbitrator, whom appellant wanted to appoint in agreement with appellees' arbitrator. On the same day, by order dated September 16, 1958, and subscribed and sworn to on September 17, 1958, appellees' arbitrator adjudged appellant to be liable for damages caused to appellees in the amount of $81,233.63 with interest at 6% to run from September 16, 1958, until paid.

At the hearings by the sole arbitrator, counsel for appellant company appeared and protested the procedure adopted by appellees as arbitrary and further objected to the holding of the hearing on the grounds, among others, that appellees, in giving notice of the arbitration, had failed to name their own arbitrator; that Mr. Crooks, as appellees' arbitrator, had failed to notify appellant of the hearing on September 16, 1958, in time to permit adequate preparation by appellant; and that appellees had refused to permit appellant to appoint its arbitrator. Mr. Crooks, undeterred by these arguments, overruled all objections and proceeded to the hearing as above set forth. Appellant, accordingly, refused, at that time, to recognize the validity of the proceeding and declined to participate in the hearing, to avoid the charge, that might be made in the future, that it had waived the claimed irregularities.

After the findings of Mr. Crooks were made, appellant amended the complaint it had filed prior to the hearing before the sole arbitrator, seeking an order directing the arbitration to proceed in accordance with the agreement, instead of before a single arbitrator. In the amendment to its complaint, appellant set forth the proceedings held by Mr. Crooks, and sought to vacate them for various reasons, among them that Mr. Crooks refused to permit it to appoint an arbitrator; in failing to notify it of the hearing in time to permit adequate preparation; in further refusing to permit, or to conduct, the arbitration in accordance with the terms of the arbitration agreement; and in conducting the hearing under the conditions above mentioned.

In answer to the amended complaint, appellees moved to dismiss, and upon motion by both parties for summary judgment, the District Court denied appellees' motion to dismiss, and both motions for summary judgment. Thereafter, upon submission of the case on the pleadings, affidavits, and exhibits accompanying them, the District Court filed an opinion and, in a judgment in...