Vespe Contracting Co. v. Anvan Corp., Civ. A. No. 75-3261.

• Decision Date: 23 May 1977
• Docket Number: Civ. A. No. 75-3261.
• Citation: 433 F. Supp. 1226
• Parties: VESPE CONTRACTING CO. v. ANVAN CORPORATION, a Pennsylvania Corporation and Anvan Corporation, an Illinois Corporation and Anarca, a Pennsylvania limited partnership and Anvan Co., an Illinois partnership and Anthony Antoniou, Irene Antoniou and Michael Kahles, Individually and as co-partners trading as Anvan Co., an Illinois partnership.
• Court: U.S. District Court — Eastern District of Pennsylvania

433 F. Supp. 1226

VESPE CONTRACTING CO. v. ANVAN CORPORATION, a Pennsylvania Corporation and Anvan Corporation, an Illinois Corporation and Anarca, a Pennsylvania limited partnership and Anvan Co., an Illinois partnership and Anthony Antoniou, Irene Antoniou and Michael Kahles, Individually and as co-partners trading as Anvan Co., an Illinois partnership.

Civ. A. No. 75-3261.

United States District Court, E. D. Pennsylvania.

May 23, 1977.

COPYRIGHT MATERIAL OMITTED

Louis G. Hill and Allen C. Kessler, Philadelphia, Pa., for plaintiff.

Ira P. Tiger, Charles V. Stoelker, Jr., Philadelphia, Pa., for defendants.

MEMORANDUM AND ORDER

BECHTLE, District Judge.

Presently before this Court are motions by defendants Anvan Corporation of Pennsylvania ("Anvan-Pa."), Anvan Corporation of Illinois ("Anvan-Ill."), and Anarca, a Pennsylvania limited partnership ("Anarca"), to stay proceedings pending arbitration of a contract dispute between plaintiff Vespe Contracting Company ("Vespe") and Anvan-Pa. Also before the Court is a motion by defendants Anvan Company ("Anvan Co."), an Illinois partnership consisting of copartners Anthony Antoniou, Irene Antoniou and Michael Kahles ("individual defendants"), to dismiss for lack of personal jurisdiction and for insufficient service of process pursuant to Fed.R.Civ.P. 12(b)(2) and (5), respectively, or, in the alternative, to stay proceedings pending arbitration of the dispute between Vespe and Anvan-Pa. The jurisdiction of this Court is based upon 28 U.S.C. § 1332(a), and the amount in controversy is alleged to exceed $10,000, exclusive of interest and costs.

A brief procedural history of the dispute between the parties and an outline of the relationships among the defendants are necessary to an understanding of the case. The following facts emerge from the pleadings submitted by the parties: Anvan-Ill. is a corporation organized and existing under the laws of the State of Illinois, and has its principal place of business in the State of Illinois; Anvan-Pa. is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, and has its principal place of business in the State of Illinois; Anvan Co. is an Illinois general partnership and maintains its principal place of business in the State of Illinois; and Anarca is a Pennsylvania limited partnership, and maintains its principal place of business in the Commonwealth of Pennsylvania. Anvan-Pa. is the wholly-owned subsidiary of Anvan-Ill. Anvan Co. and Anarca are general partners. Anthony Antoniou, Irene Antoniou and Michael Kahles are citizens of the State of Illinois and are the general partners of Anvan Co. In addition, Anthony Antoniou is President and a major shareholder of Anvan-Pa. and of Anvan-Ill., and serves individually as a class B limited partner of Anarca. Michael Kahles, in addition to being a general partner in Anvan Co., is Senior Vice-President of Anvan-Ill. and of Anvan-Pa. Vespe is a corporation organized and existing under the laws of the State of New Jersey, and has its principal place of business in New Jersey.

Vespe was hired as a subcontractor to perform the concrete work on the construction of the Holiday Inn at 36th and Chestnut Streets, Philadelphia, Pennsylvania ("the project"), by Anvan-Pa., the general contractor on the project. The subcontract was signed in New Jersey. Anarca is the owner of the land on which the Holiday Inn was erected.

The subcontract between Anvan-Pa. and Vespe was terminated by Anvan-Pa. on February 20, 1975, after Vespe had completed a major portion of the contract. On February 24, 1975, Anvan-Pa. instituted suit against Vespe alleging breach of contract and requesting a temporary restraining order to enjoin Vespe from entering the construction site (Civil Action No. 75-541). The temporary restraining order was granted by this Court on February 24, 1975. On February 28, 1975, Anvan-Pa., after informing Vespe that it would no longer be allowed on the construction site and that Anvan-Pa. would complete the concrete work that Vespe had begun on the project, withdrew the complaint against Vespe. That same day, Vespe filed its original complaint against Anvan-Pa., alleging breach of contract and requesting injunctive relief to prevent Anvan-Pa.'s continuation of the project's concrete work from destroying evidence of the work performed by Vespe under the subcontract, and also requesting appropriate equitable relief (Civil Action No. 75-610).

Anvan responded by filing a motion to stay proceedings pending arbitration of the contract dispute. In its response to Anvan's motion, Vespe conceded that, if there were an agreement to arbitrate, the parties would be bound to submit their disputes to arbitration. However, Vespe argued that there was no binding arbitration agreement. In Vespe Contracting Co. v. Anvan Corp., 399 F.Supp. 516 (E.D.Pa.1975), this Court held that Anvan-Pa. and Vespe were contractually bound to submit their dispute to arbitration. Due to the fact that evidence of the alleged breach of contract was "disappearing," we permitted discovery to continue until arbitrators were selected. Id. at 522.

Before arbitrators were selected, Vespe voluntarily withdrew the action against Anvan-Pa., without prejudice, pursuant to Fed.R.Civ.P. 41(a)(1)(i). Vespe filed the instant action on November 13, 1975.

In the present action, in addition to naming Anvan-Pa., Vespe also named Anvan-Ill., Anarca, Anvan Co. and the individuals as defendants. The complaint alleges three causes of action, in addition to the cause of action alleged in Civil Action No. 75-610, against the various defendants. Count I of the complaint alleges breach of contract by Anvan-Pa. and states facts identical to those in its first breach of contract action. The relief requested, however, is for monetary damages rather than for injunctive relief. Count II alleges that all of the defendants combined, conspired, arranged and agreed to erect the project in such a manner as to avoid payment to, and to defraud, subcontractors, including Vespe. Count II also outlines specific overt acts which were committed in Pennsylvania, in furtherance of the conspiracy.¹ Finally, Count II states that the express purpose, motive and intention of the conspiracy was to defraud subcontractors of payments for work performed on the project, and that each defendant had that intention and understood that each coconspirator shared that intention.

Count III charges that Anvan-Ill. operated Anvan-Pa. as its instrumentality and alter ego for the express purpose of avoiding payment to, and defrauding, subcontractors and that Anvan-Pa. is in fact without sufficient funds to pay subcontractors. Count IV names as defendants Anarca, Anvan Co., and the individual defendants and alleges that Anarca contractually agreed to provide Anvan-Pa. with sufficient funds to pay the subcontractors on the project. Based on its allegations of the contract between Anarca and Anvan-Pa., and of the fact that Anarca did not provide Anvan-Pa. with sufficient funds to pay subcontractors, Vespe seeks damages from the defendants named in Count IV on a third-party beneficiary theory.

The first issue we must decide is whether the addition of parties and causes of action abrogates the basis for this Court's decision in Vespe Contracting Co. v. Anvan Corp., supra. We hold that it does not. The allegations of law and fact in Count I are identical to those alleged in Vespe's original complaint. The sole difference is the form of relief requested. However, the mere fact that monetary rather than equitable relief is requested does not alter the conclusion that Anvan-Pa. and Vespe are contractually bound to submit their dispute to arbitration. This Court is bound to enforce the contractual obligations of the parties. John Ashe Associates, Inc. v. Envirogenics Co., 425 F.Supp. 238, 241-242 (E.D.Pa.1977). Accordingly, Vespe and Anvan-Pa. will be ordered to proceed to arbitration on Count I, in accordance with this Court's opinion in Vespe Contracting Co. v. Anvan Corp., supra.

The second issue presented is whether the proceedings pertaining to Counts II through IV should be stayed pending arbitration of Count I by Vespe and Anvan-Pa.² We hold that they should not be stayed. The controversy between Vespe and Anvan-Pa. has been pending since February of 1975. The interests of justice will best be served by a prompt resolution of the issues. Furthermore, although arising out of facts concerning the building of the project, the cause of action alleged in Count I is factually and legally separate and distinct from those causes of action alleged in Counts II through IV. The parties will not be prejudiced by the simultaneous disposition of the arbitration and judicial proceedings. Accordingly, the motion to stay proceedings in Counts II through IV pending arbitration of Count I will be denied.

Finally, we must determine whether the motions of Anvan Co. and of the individual defendants to dismiss for lack of personal jurisdiction and for insufficient service of process, pursuant to Fed.R.Civ.P. 12(b)(2) and (5), respectively, should be granted.

Defendants were served in accordance with Pennsylvania's Long Arm Statute, 42 Pa.C.S.A. § 8301 et seq. (Supp.1976-1977) ("Long Arm Act"),³ as authorized by Fed.R.Civ.P. 4(e).⁴ Defendants make no arguments in support of their motion to dismiss for insufficient service of process pursuant to Fed.R.Civ.P. 12(b)(5). The procedure pursuant to which the defendants were served⁵ conforms to the requirements of this Commonwealth for service of process upon nonresident defendants.⁶ The motion to dismiss for insufficient service of process will, therefore, be denied.⁷

Defendants' motion to dismiss for lack of in personam jurisdiction, Fed.R.Civ.P. 12(b)(2), raises three issues: (1) whether the Long Arm Act applies only to corporations (§§ 8301, 8302) and to individuals (§§ 8303-8305) and not to partnerships; (2) whether...