United Nuclear Corp. v. General Atomic Co., 13536

• Decision Date: 15 September 1982
• Docket Number: No. 13536,13536
• Citation: 651 P.2d 1277,1982 NMSC 105,98 N.M. 633
• Parties: UNITED NUCLEAR CORPORATION, Plaintiff-Appellee, v. GENERAL ATOMIC COMPANY, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 1277

651 P.2d 1277

98 N.M. 633

UNITED NUCLEAR CORPORATION, Plaintiff-Appellee, v. GENERAL ATOMIC COMPANY, Defendant-Appellant.

No. 13536.

Supreme Court of New Mexico.

Sept. 15, 1982.

Rehearing Denied Oct. 4, 1982.

Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, Montgomery & Andrews, Seth D. Montgomery, Santa Fe, Miller, Cassidy, Larroca & Lewin, Howrey & Simon, Washington, D. C., for defendant-appellant

Bigbee, Stephenson, Carpenter, Crout & Olmsted, Harry L. Bigbee, Donnan Stephenson, Santa Fe, for plaintiff-appellee.

OPINION

EASLEY, Chief Justice.

This complex billion-dollar dispute between United Nuclear Corporation (UNC) and General Atomic Company (GAC) has been in and out of numerous forums from coast-to-coast. An outline of the whole tangled procedural history would fill a sizeable book. We confine the recitation of facts as closely as possible to those that are material to a decision on the narrow issues raised in this, the most recent of two dozen or so times the case has been considered in our Court.

In this part of the controversy GAC appeals a decision of the Santa Fe District Court (the Santa Fe court) declaring void a California arbitration award favorable to GAC, and affirming the prior judgments favorable to UNC. The issues are:

1. Whether the decisions of the United States Supreme Court in General Atomic Co. v. Felter, 434 U.S. 12, 98 S.Ct. 76, 54 L.Ed.2d 199 (1977) (Felter I ) and General Atomic Co. v. Felter, 436 U.S. 493, 98 S.Ct. 1939, 56 L.Ed.2d 480 (1978) (Felter II ) prohibit the Santa Fe court from acting to void the arbitration award and affirm the prior judgments.

2. Whether the Santa Fe court had jurisdiction to void the arbitration award made in California under the Federal Arbitration Act procedures, on the grounds that the arbitration board had a duty to invoke the doctrine of res judicata and to give full faith and credit to our previous final decisions on all the issues raised in the arbitration hearings.

3. Whether the Federal Arbitration Act, 9 U.S.C. Sections 1-14 (1976), prevents the trial court from voiding the award. 4. Whether UNC's claim for supplemental relief is cognizable under the New Mexico Declaratory Judgment Act, Sections 44-6-1 to -15, N.M.S.A.1978.

GAC contends the Santa Fe court's decision exceeds its jurisdiction under federal law, violates the mandates in Felter I and Felter II, conflicts with the Federal Arbitration Act, and violates the declaratory judgment rules.

On the other hand, UNC claims that the trial court's decision conforms in all details with the mandates in Felter I and Felter II. UNC further urges that the arbitration award was void under the doctrine of res judicata since the prior final decisions of this Court, which were denied certiorari by the United States Supreme Court, held that there was no agreement to be arbitrated. These decisions hold that GAC, by its own actions, forfeited any right to arbitrate and that the dispute was so enmeshed with antitrust claims as to preclude arbitration. UNC further defends that the arbitrators exceeded their authority and manifestly disregarded the outstanding final judgments and other applicable law and, moreover, that making claim for supplemental relief under the Declaratory Judgment Act was the proper procedure.

In 1975, UNC sued GAC in a declaratory judgment action to invalidate a uranium contract (1973 Supply Agreement). The Santa Fe court granted a preliminary injunction restraining GAC from "filing or prosecuting any other action * * * in any other forum * * *," including "arbitration proceedings." We note here that the trial court did not restrain GAC from filing a motion in the Santa Fe court to stay the trial pending arbitration or from filing a motion to order arbitration. We affirmed the decision of the trial court. General Atomic Co. v. Felter, 90 N.M. 120, 560 P.2d 541 (1977), rev'd, Felter I. The United States Supreme Court on accepting the case on certiorari held that the injunction violated the supremacy clause in that it kept GAC from seeking relief in federal forums. Felter I.

GAC takes the position that every action taken by the Santa Fe court and every decision rendered in favor of UNC by this Court and the United States Supreme Court from the time the unconstitutional injunction was entered should be declared void and of no effect. The argument is that but for the erroneous restraint GAC could have sought arbitration, and that by the time the restraint was lifted, the adverse final judgments on the merits had already been issued.

However, in Felter I the United States Supreme Court noted that GAC had announced that it desired to defend itself by impleading UNC in federal lawsuits and federal arbitration proceedings then being pursued by utility companies, which were not parties to our case. "This, of course, is something which GAC has every right to attempt to do under Fed.Rule Civ.Proc. 14 and the Federal Arbitration Act." Felter I, supra, 434 U.S. at 18, 98 S.Ct. at 79 (emphasis added) (footnote omitted). The Court held that GAC's "right to pursue federal remedies and take advantage of federal procedures and defenses in federal actions" could not be restricted by a state court. Felter I, supra, at 18-19, 98 S.Ct. at 79, citing Donovan v. City of Dallas, 377 U.S. 408, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964).

We consider what Felter I did not do, in light of the claims of GAC that the trial court's recent decision violated the mandate in Felter I. The United States Supreme Court did not accept GAC's argument that the Santa Fe court had no jurisdiction to proceed on the merits. In fact, the opinion says that "the case is remanded to that court for further proceedings not inconsistent with this opinion." Felter I, supra, 434 U.S. at 19, 98 S.Ct. at 79.

The whole impact of the opinion is that the Santa Fe court could not impede the access of GAC to federal forums. Thus, the Santa Fe court was left free to proceed to address the merits of the case, as it did. There is no other reasonable interpretation of the language in Felter I that supports GAC's claim that the case precluded the Santa Fe court from making the most recent decisions.

In the meantime, the Santa Fe court proceeded with the trial of the case. Twenty-three months after the filing of the complaint and one month into the trial on the merits, GAC moved to stay the trial, alleging that it had started arbitration proceedings in San Diego. The Santa Fe court denied the motion and entered an order enjoining the San Diego arbitration, stating that enmeshed antitrust issues precluded arbitration, and that in any event, GAC had waived its right to arbitrate.

While its appeal on this decision in our Court was pending, GAC sought mandamus in the United States Supreme Court to set aside the judgment enjoining arbitration and the judgment determining that the claims were not arbitrable. The United States Supreme Court granted the petition but only insofar as it pertained to the injunction, and held that the Santa Fe court had done "precisely what we held that it lacked the power to do: interfere with attempts by GAC to assert in federal forums what it views as its entitlement to arbitration." Felter II, supra, 436 U.S. at 496, 98 S.Ct. at 1940 (footnote omitted). The Court stated further:

Clearly, our prior opinion did not preclude the court from making findings concerning whether GAC had waived any right to arbitrate or whether such a right was contained in the relevant agreements. Nor did our prior decision prevent the Santa Fe court, on the basis of such findings, from declining to stay its own trial proceedings as requested by GAC pending arbitration in other forums. But, as demonstrated supra, we have held that the Sante Fe court is without power under the United States Constitution to interfere with efforts by GAC to obtain arbitration in federal forums on the ground that GAC is not entitled to arbitration or for any other reason whatsoever. GAC, as we previously held, has an absolute right to present its claims to federal forums.

Felter II, supra, at 496-97, 98 S.Ct. at 1940-41.

We note what the United States Supreme Court did not do in Felter II. Although GAC insisted that the Santa Fe court was without jurisdiction, that all the issues were subject to arbitration, that there was no waiver, and that the contract was valid, the United States Supreme Court did not so hold. GAC further argues that the "rationale" of the Felter opinions from the United States Supreme Court precludes this Court from giving any consideration to numerous final judgments on all issues, and from making any decision whatsoever regarding GAC's arbitration rights, and that the Sante Fe court violated that "rationale" by declaring the arbitration award void.

A fair reading of the two Felter opinions discloses that the main thrust is that the state court cannot deny GAC "access" to a federal forum. There are no comments by the United States Supreme Court bearing on the validity of the substantive rights asserted, in the event GAC gained access to a particular forum. Here the substantive rights had all been concluded with final and binding judgments before the arbitration board handed down its award.

On appeal to this Court, GAC made the same arguments it is asserting here, that the mandates of Felter I and Felter II precluded the state court from deciding that it had jurisdiction, that the claims were unarbitrable, and that there was a waiver of arbitration. This Court especially rejected these claims by GAC after analyzing in considerable detail the bodies of law from throughout the United States on each of the subject matters.

We affirmed the decision of the Santa Fe court that the court had jurisdiction to decide the question of arbitrability of the issues, that the antitrust issues were so enmeshed in the whole case that none of the questions were subject to arbitration and that the actions of GAC constituted a...