Del E. Webb Const. v. Richardson Hosp. Authority, No. 86-1570

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore CLARK, Chief Judge, POLITZ, and HIGGINBOTHAM; PATRICK E. HIGGINBOTHAM
Citation823 F.2d 145
PartiesDEL E. WEBB CONSTRUCTION, Plaintiff-Appellee-Cross-Appellee, v. RICHARDSON HOSPITAL AUTHORITY, Defendant-Cross-Plaintiff-Appellee Cross- Appellant, v. L.D.W.A./BUFORD AND WORK, INC., Cross-Defendant-Appellant Cross-Appellee. RAY BOYD CONSTRUCTION SYSTEMS, COMPANY, Plaintiff-Appellant, v. DEL E. WEBB CONSTRUCTION, Defendant-Third Party Plaintiff-Appellee, v. RICHARDSON HOSPITAL AUTHORITY, Third Party Defendant-Appellee.
Docket NumberNo. 86-1570
Decision Date03 August 1987

Page 145

823 F.2d 145
DEL E. WEBB CONSTRUCTION, Plaintiff-Appellee-Cross-Appellee,
v.
RICHARDSON HOSPITAL AUTHORITY,
Defendant-Cross-Plaintiff-Appellee Cross- Appellant,
v.
L.D.W.A./BUFORD AND WORK, INC., Cross-Defendant-Appellant
Cross-Appellee.
RAY BOYD CONSTRUCTION SYSTEMS, COMPANY, Plaintiff-Appellant,
v.
DEL E. WEBB CONSTRUCTION, Defendant-Third Party Plaintiff-Appellee,
v.
RICHARDSON HOSPITAL AUTHORITY, Third Party Defendant-Appellee.
No. 86-1570.
United States Court of Appeals,
Fifth Circuit.
Aug. 3, 1987.
Rehearing Denied Sept. 1, 1987.

Page 146

Ritta A. Miller, William Charles Bundren, Jackson, Walker, Winstead, Cantwell & Miller, Dallas, Tex., for L.D.W.A./Buford & Work, Inc.

Richard Gary Thomas, Dallas, Tex., for Ray Boyd Const. Systems.

Ben L. Krage, Kasmir, Willingham & Krage, Dallas, Tex., for Del E. Webb.

Kip M. Kugler, Joe F. Canterbury, Jr., Dallas, Tex., for Richardson Hosp. Authority.

Appeals from the United States District Court for the Northern District of Texas.

Before CLARK, Chief Judge, POLITZ, and HIGGINBOTHAM, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This appeal is from a district court order compelling arbitration, pursuant to the Federal Arbitration Act, 9 U.S.C. Secs. 1-14, of a contract arising from the expansion and renovation of the Richardson Medical Center. The Richardson Hospital Authority, the owner of the medical center, and L.D.W.A./Buford & Work, Inc., the architect on the project, argue that the Federal Arbitration Act is inapplicable because the construction project is not a "transaction involving commerce," 9 U.S.C. Sec. 2; that the general contractor, Del E. Webb Construction, did not comply with the contractual prerequisites for demanding arbitration; and that Webb waived arbitration by substantially invoking the litigation process. In addition, LDWA argues that the district court improperly consolidated LDWA's claims in the arbitration between the Authority and Webb. We conclude that the Federal Arbitration Act governs this case, that the arbitrator must decide whether Webb satisfied the contractual prerequisites of demand, that the district court erred by ordering consolidated arbitration, and that the district court failed to address LDWA's waiver contention.

I

In October 1981, the Richardson Hospital Authority contracted with LDWA, an architect, to supervise the expansion and renovation of the Richardson Medical Center. The contract was a standard form agreement between owner and architect prepared by the American Institute of Architects

Page 147

and provided that all disputes arising from the agreement shall be arbitrated.

Later, the Authority signed two contracts with Del E. Webb Construction, the general contractor on the project. Both contracts included American Institute of Architects document A201 entitled, "General Conditions of the Contract for Construction," which also provided for arbitration of all disputes arising from the contract documents.

The parties had a number of disagreements during construction, including who should bear the costs of construction delays. The parties were unable to resolve their differences, and Webb sued in the United States District Court for the Northern District of Texas, seeking damages or arbitration of its claims. The Authority counterclaimed and joined LDWA and the bonding companies as third-party defendants. LDWA filed a counterclaim against Webb. Webb then filed a motion to compel arbitration, which the district court granted. Meanwhile, Ray Boyd Construction Systems Co., a subcontractor, sued Webb in the same district court, and the court consolidated the two proceedings. 1

On June 27, 1986, the district court vacated its orders to compel arbitration and to consolidate, ordering the parties to submit evidence regarding Webb's compliance with the contractual prerequisites for arbitration. After reviewing the evidence, the district court granted Webb's motion to compel arbitration and ordered "that all third-party claims arising out of the primary suit shall be settled in the same arbitration action." The Authority and LDWA appeal.

II

The Authority and LDWA argue that the district court erred in holding that the Owner-Contractor contract is governed by the Federal Arbitration Act. 2 An arbitration clause is subject to the Federal Arbitration Act if the arbitration clause is part of a valid written contract "evidencing a transaction involving commerce." 9 U.S.C. Sec. 2. In Mesa Operating Ltd. Partnership v. Louisiana Interstate Gas Corp., 797 F.2d 238 (5th Cir.1986), we explained the reach of the Act:

Citizens of different states engaged in performance of contractual operations in one of those states are engaged in a contract involving commerce under the FAA. Such a contract necessitates interstate travel of both personnel and payments. Commerce under the FAA is not limited to interstate shipment of goods ... but includes all contracts "relating to interstate commerce."

Id. at 243 (quoting Prima Paint v. Flood & Conklin Mfg. Co., 388 U.S. 395, 401 n. 7, 87 S.Ct. 1801, 1805 n. 7, 18 L.Ed.2d 1270 (1967)).

The district court found the Federal Arbitration Act applicable, noting that

[i]n this case, the contract involved persons from different states; employees of the plaintiff traveled interstate; the interstate mails were used to facilitate the work of the plaintiff's subcontractors; and materials used in the construction of the defendant's facilities were manufactured and moved in interstate commerce.

The Authority and LDWA do not dispute that the construction project involved some interstate commerce. Rather, they argue that there must be substantial interstate contacts. The Authority and LDWA contend that Webb did not show substantial interstate activity because all construction occurred in Texas, Webb maintained an office in Texas to supervise the construction of several Texas projects, and Webb issued payroll checks in Texas. However, we are persuaded that in the light of Mesa,

Page 148

the district court's findings support its conclusion that the contracts relate to interstate commerce, a standard that implements the strong federal policy favoring arbitration. See Societe Generale de Surveillance, S.A. v. Raytheon European Management & Sys. Co., 643 F.2d 863, 867 (1st Cir.1981) ("[T]he courts have held that the term "commerce" in this provision of the Act refers to interstate or foreign commerce and is to be broadly construed.")
III
A

LDWA argues that the district court erred in compelling LDWA to participate in the arbitration between Webb and the Authority. LDWA contends that it was not a party to the arbitration agreement between Webb and the Authority and did not consent to arbitration.

The district court, rejecting LDWA's argument, noted:

In p 7.9.1, the contract provides that an arbitration action shall include the owner and the contractor, "and any other persons substantially involved in a common question of fact or law, whose presence...

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65 practice notes
  • U.S. v. Stein, No. SI 05 Crim. 0888(LAK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • September 6, 2006
    ...Life Ins. Corp. v. Lincoln Nat'l Life Ins. Corp., 873 F.2d 281, 282 (11th Cir.1989); Del E. Webb Constr. v. Richardson Hosp. Auth., 823 F.2d 145, 150 (5th Cir.1987), abrogated on other grounds as recognized in Pedcor Mgmt. Co., Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc., ......
  • Blue Cross of California v. Superior Court, No. B122446
    • United States
    • California Court of Appeals
    • October 6, 1998
    ...of United Kingdom v. Boeing Co. (2d Cir.1993) 998 F.2d 68, 74; Del E. Webb Const. v. Richardson Hosp. Authority Page 789 (5th Cir.1987) 823 F.2d 145, 150; American Centennial Ins. v. National Cas. Co. (6th Cir.1991) 951 F.2d 107, 108; Baesler v. Continental Grain Co. (8th Cir.1990) 900 F.2d......
  • Discover Bank v. Superior Court, No. B161305.
    • United States
    • California Court of Appeals
    • January 14, 2003
    ...Corp. v. Lincoln Nat. Life Ins. Corp. (11th Cir. 1989) 873 F.2d 281, 282; Del E. Webb Const, v. Richardson Hosp. Authority (5th Cir. 1987) 823 F.2d 145, 150; Weyerhaeuser Co. v. Western Seas Shipping Co. (9th Cir. 1984) 743 F.2d 635, 637; but see New England Energy Inc. v. Keystone Shipping......
  • Arbitration between Trans Chem. Ltd. and China Nat., Civil Action No. H-95-4114.
    • United States
    • U.S. District Court — Southern District of Texas
    • July 7, 1997
    ...of Columbia and any State or Territory or foreign nation...." 9 U.S.C. § 1. 145. Del E. Webb Constr. v. Richardson Hosp. Authority, 823 F.2d 145, 147-48 (5th Cir.1987) (rejecting the "substantial" contacts test in favor of "relating to" test in order to "implement[] the strong federal polic......
  • Request a trial to view additional results
65 cases
  • U.S. v. Stein, No. SI 05 Crim. 0888(LAK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • September 6, 2006
    ...Life Ins. Corp. v. Lincoln Nat'l Life Ins. Corp., 873 F.2d 281, 282 (11th Cir.1989); Del E. Webb Constr. v. Richardson Hosp. Auth., 823 F.2d 145, 150 (5th Cir.1987), abrogated on other grounds as recognized in Pedcor Mgmt. Co., Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc., ......
  • Blue Cross of California v. Superior Court, No. B122446
    • United States
    • California Court of Appeals
    • October 6, 1998
    ...of United Kingdom v. Boeing Co. (2d Cir.1993) 998 F.2d 68, 74; Del E. Webb Const. v. Richardson Hosp. Authority Page 789 (5th Cir.1987) 823 F.2d 145, 150; American Centennial Ins. v. National Cas. Co. (6th Cir.1991) 951 F.2d 107, 108; Baesler v. Continental Grain Co. (8th Cir.1990) 900 F.2d......
  • Discover Bank v. Superior Court, No. B161305.
    • United States
    • California Court of Appeals
    • January 14, 2003
    ...Corp. v. Lincoln Nat. Life Ins. Corp. (11th Cir. 1989) 873 F.2d 281, 282; Del E. Webb Const, v. Richardson Hosp. Authority (5th Cir. 1987) 823 F.2d 145, 150; Weyerhaeuser Co. v. Western Seas Shipping Co. (9th Cir. 1984) 743 F.2d 635, 637; but see New England Energy Inc. v. Keystone Shipping......
  • Arbitration between Trans Chem. Ltd. and China Nat., Civil Action No. H-95-4114.
    • United States
    • U.S. District Court — Southern District of Texas
    • July 7, 1997
    ...of Columbia and any State or Territory or foreign nation...." 9 U.S.C. § 1. 145. Del E. Webb Constr. v. Richardson Hosp. Authority, 823 F.2d 145, 147-48 (5th Cir.1987) (rejecting the "substantial" contacts test in favor of "relating to" test in order to "implem......
  • Request a trial to view additional results

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