Woermann Const. Co. v. Southwestern Bell Telephone Co., 61815
| Decision Date | 09 February 1993 |
| Docket Number | No. 61815,61815 |
| Citation | 846 S.W.2d 790 |
| Court | Missouri Court of Appeals |
| Parties | WOERMANN CONSTRUCTION COMPANY, Plaintiff-Respondent, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Defendant-Appellant. |
Christian A. Bourgeacq, St. Louis, for defendant-appellant.
Leritz, Plunkert & Bruning, P.C., Joseph L. Leritz, James C. Leritz, St. Louis, for plaintiff-respondent.
Defendant Southwestern Bell Telephone Company (Southwestern Bell), appeals a final order of the Circuit Court of the City of St. Louis granting the application of plaintiff, Woermann Construction Company (Woermann), under section 435.355.2, RSMo 1986, to stay an arbitration proceeding commenced by appellant. The dispositive issue on appeal is whether the Federal Arbitration Act pre-empts the Missouri Arbitration Act because the subject matter of the contract in dispute "involves commerce." Reversed and remanded.
The facts of the case are not in dispute. On March 20, 1986, Woermann entered into a contract with Southwestern Bell to renovate Southwestern Bell's data center located in St. Louis, Missouri. Part of the contract required that Woermann install an electrical bus duct in a vault under the sidewalk fronting the data center. Pursuant to the contract, Woermann installed the bus duct. In March of 1989, an explosion occurred in the bus duct. The explosion was apparently caused by water leaking into the duct.
On July 24, 1991, Southwestern Bell commenced an arbitration proceeding against Woermann pursuant to a mandatory arbitration clause contained in the contract. Woermann moved to stay the arbitration claiming the arbitration clause invalid under Missouri law in that it did not conform to the mandatory requirements of section 435.460, RSMo 1986. The arbitration clause in the construction contract provides:
7.9.1 All claims, disputes and other matters in question between the Contractor and the Owner arising out of, or relating to, the Contract Documents or the breach thereof; shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association unless the parties mutually agree otherwise. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.
7.9.2 Notice of the demand for arbitration shall be filed in writing with the other party to the Owner-Contractor Agreement and with the American Arbitration Association, and a copy shall be filed with the Architect.
7.9.3 Unless otherwise agreed in writing, the Contractor shall carry on the Work and maintain its progress during any arbitration proceedings, and the Owner shall continue to make payments to the Contractor in accordance with the Contract Documents.
On December 21, 1991, the trial court applied Missouri law to the dispute and granted the stay of arbitration. The trial court based its decision to apply the Missouri Arbitration Act on the local nature of the construction contract performed by a Missouri corporation for a Missouri corporation in Missouri. This appeal followed the final order to stay the arbitration.
Missouri law clearly renders the arbitration provision in the contract invalid. The Missouri Arbitration Act, sections 435.350-.470, RSMo 1986, enacted by the Missouri legislature in 1980, requires contracts containing arbitration provisions conform to its requirements. Section 435.460, RSMo 1986 provides:
Each contract subject to the provisions of sections 435.350 to 435.470 shall include adjacent to, or above, the space provided for signatures a statement, in ten point capital letters, which read substantially as follows: "THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES."
Without the ten point notice, the arbitration provision will not be enforced. Hefele v. Catanzaro, 727 S.W.2d 475, 476-77 (Mo.App.1987). This rule is not contained in the Uniform Arbitration Act and is peculiar to Missouri. Id. at 477.
The language required by the Missouri Arbitration Act is not required by the Federal Arbitration Act. All that is required under the Federal Arbitration Act is language sufficient for an ordinarily written contract. Bunge Corp. v. Perryville Feed & Produce, 685 S.W.2d 837, 839 (Mo. banc 1985). As such, the arbitration provision contained in the contract is invalid under Missouri law but valid under federal law. The issue presented is whether the Federal Arbitration Act pre-empts the Missouri act under the circumstances of this case.
Bunge, 685 S.W.2d at 839. The Federal Arbitration act applies to contracts between parties that "involve commerce." 9 U.S.C. § 2. The act defines "commerce" as "commerce among the several states ..." Id. at § 1. The federal courts have construed the meaning of "involving commerce" broadly. A contract comes under the Federal Arbitration Act so long as it simply relates to interstate commerce. Del E. Webb Const. v. Richardson Hosp. Authority, 823 F.2d 145, 147 (5th Cir.1987); Mesa Operating Ltd. Partnership v. Louisiana Interstate Gas Corp., 797 F.2d 238, 243 (5th Cir.1986). The relationship to commerce need not even be substantial. Del E. Webb, 823 F.2d at 147. A contract involves commerce under the Federal Arbitration Act in situations where large quantities of materials are purchased from suppliers in other states. Starr Elec. Co. v. Basic Const. Co., 586 F.Supp. 964, 966 (M.D.N.C.1982). Further, contracts to be performed within one state have been found to involve commerce when the contracting parties are from different states; the U.S. postal system is used; or the materials are transported over state borders. Mesa, 797 F.2d at 243; Ideal Unlimited Services v. Swift-Eckrich, Inc., 727 F.Supp. 75, 76 (D.P.R.1989).
A recent decision in the Western District of this court held that a construction contract between two Missouri parties for construction in Missouri involved interstate commerce where employees crossed state lines and the material was shipped from out of state....
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