UNITED STATES, ETC. v. STC Const. Co.

• Decision Date: 31 May 1979
• Docket Number: Civ. A. No. 77-2961.
• Citation: 472 F. Supp. 1023
• Parties: UNITED STATES of America for the Use of DUO METAL AND IRON WORKS, INC. v. S. T. C. CONSTRUCTION COMPANY et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

472 F. Supp. 1023

UNITED STATES of America for the Use of DUO METAL AND IRON WORKS, INC. v. S. T. C. CONSTRUCTION COMPANY et al.

Civ. A. No. 77-2961.

United States District Court, E. D. Pennsylvania.

May 31, 1979.

Steven Warm, Willingboro, N. J., for plaintiff.

Kenneth M. Cushman, Robert A. Prentice, Philadelphia, Pa., for Ins. Co. of North America.

Norman E. Lehrer, Duffield & Lehrer, Philadelphia, Pa., for S. T. C. Construction Co.

MEMORANDUM AND ORDER

NEWCOMER, District Judge.

The motion of S.T.C. Construction Company to compel arbitration and to stay the Court's proceedings is DENIED.

On August 26, 1978, plaintiff Duo Metal and Iron Works, Inc. (Duo Metal) filed a complaint against S.T.C. and the Insurance Company of North America (I.N.A.) under the provisions of the Miller Act, 40 U.S.C.A. § 270a, et seq. On October 3, 1977, S.T.C. answered the complaint and filed a counterclaim against Duo Metals. On March 12, 1979, S.T.C. filed a motion for an order to compel arbitration of the matters in dispute and to stay the civil proceedings. In view of the extensive discovery which has been conducted, with S.T.C.'s active participation, as well as the lengthy time span from the filing of the complaint to the motion to compel arbitration, the granting of this motion would prejudice the interests of the remaining parties. The Court holds that S.T.C. has waived its contractual right to have disputes arising out of this construction contract settled by arbitration.

Under federal law, 9 U.S.C.A. § 1, et seq., arbitration is a favored policy for the resolution of disputes in the commercial context; hence, waiver of the contractual right to arbitration "is not to be lightly inferred . . .." Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2nd Cir. 1968). Following the rule established in Carcich, supra, Gavlik Construction Co. v. H. F. Campbell Co., 526 F.2d 777 (3d Cir. 1975) requires a showing of prejudice to parties opposing the motion for arbitration in order to establish waiver. The Gavlik Court stated:

"Recent cases have only found waiver where the demand for arbitration came long after the suit commenced and when both parties had engaged in extensive discovery. Id., at 783."

Respondent I.N.A. bases its waiver argument in part upon S.T.C.'s answering the Duo Metals complaint and asserting a counterclaim, without raising arbitration as a defense or requesting a stay of the civil proceedings. Invoking the legal process and later insisting upon arbitration may be inconsistent, but this is not determinative of the waiver issue. Gavlik, supra, 526 F.2d at 783. Still, S.T.C. did not assert its right to arbitration until nineteen months after commencement of this suit, and during this period the parties have engaged in extensive discovery. S.T.C. has answered interrogatories propounded by defendant I.N.A. and plaintiff Duo Metals, and it has produced many documents. Also, S.T.C. has taken a sworn deposition of Salvatore Cocivera, an officer of Duo...