Davidson County v. Ground Improvement ( 1996 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DAVIDSON COUNTY, a Body Politic,
Plaintiff-Appellee,
v.
No. 95-2176
GROUND IMPROVEMENT TECHNIQUES,
INCORPORATED, a Florida corporation,
Defendant-Appellant.
DAVIDSON COUNTY, a Body Politic,
Plaintiff-Appellant,
v.
No. 95-2264
GROUND IMPROVEMENT TECHNIQUES,
INCORPORATED, a Florida corporation,
Defendant-Appellee.
Appeals from the United States District Court
for the Middle District of North Carolina, at Salisbury.
James A. Beaty, Jr., District Judge.
(CA-94-746-4)
Argued: March 6, 1996
Decided: April 24, 1996
Before RUSSELL, WILLIAMS, and MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Steven Roger Schooley, HOLLAND & KNIGHT,
Orlando, Florida, for Appellant. Joe Earl Biesecker, WILSON, BIE-
SECKER, TRIPP & SINK, Lexington, North Carolina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
This is a diversity action involving a dispute over a construction
contract between Ground Improvements Techniques, Inc. ("GIT"), a
Florida corporation with its principal place of business in Pennsylva-
nia, and Davidson County, a body politic and governmental subdivi-
sion in North Carolina. Upon examining and interpreting the
construction contract, the district court denied GIT's petition to stay
litigation and compel arbitration, Davidson County's motion to stay
any impending arbitration, and denied Davidson County's motion to
remand the case to Davidson County Superior Court. Pursuant to 9
U.S.C. § 16(a)(1), we exercise interlocutory jurisdiction over the dis-
trict court's order denying GIT's petition to stay litigation and compel
arbitration. Reviewing de novo the district court's interpretation and
construction of the contract, see Nehi Bottling Co., Inc. v. All-
American Bottling Corp., 8 F.3d 157, 162 (4th Cir. 1993), we affirm.
We dismiss Davidson County's cross-appeal for lack of jurisdiction
because the order denying Davidson County's motion to remand is
interlocutory and not immediately appealable. 28 U.S.C. § 1291.
I.
On December 22, 1993, Davidson County and GIT entered into a
standard construction contract. After GIT began construction, David-
2
son County accused GIT of non-performance. The contract required
that disputes be referred to the engineer before proceeding to any
form of dispute resolution. Initially, Exhibit GC-A of the contract,
entitled "Dispute Resolution Agreement" (¶¶s 16.1-16.7), permitted
submitting those disputes resolved by the engineer to the American
Arbitration Association ("AAA") for arbitration. The parties, how-
ever, modified and personalized the standard contract with "Supple-
mentary Conditions," which specifically deleted Exhibit GC-A from
the contract. Supplementary Conditions section, Article 16, SC 16.1
stated: "Exhibit GC-A has been deleted."
Nonetheless, in late October 1994, GIT formally demanded that the
parties proceed to arbitration. In support of its demand, GIT cited the
deleted arbitration clause (Exhibit GC-A) and other minor references
to arbitration within the contract.1 Davidson County responded that
the Supplementary Conditions' specific deletion of the arbitration
requirement superseded all references to arbitration in the General
Conditions.
On December 15, 1994, Davidson County filed an action in the
Davidson County Superior Court against GIT for breach of contract,
alleging that GIT had failed to complete the project as required by the
construction contract. The following day, Davidson County obtained
an ex parte temporary restraining order from Davidson County Supe-
rior Court forbidding GIT from proceeding to arbitration. GIT
removed the case to the United States District Court for the Middle
District of North Carolina under the court's diversity jurisdiction. 28
U.S.C. § 1441. On January 9, 1995, GIT filed a petition to stay litiga-
tion and compel arbitration pursuant to 9 U.S.C.§§ 3 and 4.2 The next
day GIT requested that the AAA continue administrating the arbitra-
tion proceedings. On January 27, Davidson County filed a motion for
an immediate stay of any impending arbitration and demanded a jury
trial in district court pursuant to 9 U.S.C. § 4.
_________________________________________________________________
1 GIT cites the mere use of the word "arbitration" in the Table of Con-
tents of General Conditions, the Index to General Terms and a number
of paragraphs in support of their contention that the contract mandated
arbitration.
2 Title 9 of the United States Code codifies the Federal Arbitration Act.
3
On May 5, the district court entered its Memorandum Opinion and
Order refusing to compel arbitration and granting Davidson County's
motion to stay any impending arbitration. It denied Davidson Coun-
ty's motion to remand the case to Davidson County Superior Court.
Although the district court acknowledged our preference for arbitra-
tion, it also recognized our reticence to compel arbitration when the
contract contains an unambiguous clause not to compel arbitration.
See Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co., 867 F.2d
809, 812 (4th Cir. 1989). After finding that GIT and Davidson County
bargained at arm's-length for both the contract and the supplementary
conditions deleting arbitration, the district court concluded it could
not compel the parties to arbitrate without an express agreement to
arbitrate. As to Davidson County's motion to remand the controversy
to Davidson County Superior Court, the district court found the con-
tract contained a valid choice-of-law provision, under which the dis-
trict court was an appropriate forum for resolving the dispute.
II.
GIT contends its contract with Davidson County mandated arbitra-
tion. We disagree.
The Federal Arbitration Act does not confer a right to compel arbi-
tration of any dispute at any time; instead it confers only the right to
obtain an order directing that arbitration proceed in the manner pro-
vided for in the parties' agreement. Volt Information Sciences, Inc. v.
Board of Trustees of the Leland Stanford Junior Univ., 489 U.S. 468,
474-75 (1989). Thus, we examine the construction contract to estab-
lish whether the parties were bound themselves to arbitrate.
Rainwater v. National Home Insurance Co., 944 F.2d 190, 192 (4th
Cir. 1991).
Initially, the contract before us was a standard construction con-
tract, which the parties amended and particularized to suit their
unique needs by including "Supplementary Conditions." Prior to the
Supplementary Conditions, Article 16 of the standard contract, Dis-
pute Resolution," outlined that Exhibit GC-A, Dispute Resolution
Agreement" would detail the specific resolution mechanisms agreed
upon by the parties. Article 16 stated:
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If and to the extent that [Davidson County] and [GIT] have
agreed on the method and procedure for resolving disputes
between them that may arise under the Agreement, such dis-
pute resolution method and procedure, if any shall be as set
forth in Exhibit GC-A, "Dispute Resolution Agreement," to
be attached hereto and made a part hereof. If no such agree-
ment on the method and procedure for resolving such dis-
putes has been reached . . . [Davidson County] and [GIT]
may exercise such rights or remedies as either may other-
wise have under the Contract Documents or by laws or regu-
lations in respect of any dispute.
And Exhibit GC-A, whose text encompassed ¶¶s 16.1 - 16.7, con-
tained an arbitration agreement. Exhibit GC-A stated that:
All claims, disputes and other matters in question between
Davidson County and GIT arising out of or relating to the
Contract Documents or the breach thereof . . . will be
decided by arbitration in accordance with the construction
Industry Arbitration Rules of the AAA . . . This agreement
so to arbitrate and any other agreement or consent to arbi-
trate entered into in accordance herewith as provided in
Article 16 will be specifically enforceable under the prevail-
ing law of any court having jurisdiction.
But Article 16, SC-16 of the Supplementary Conditions expressly
deleted Exhibit GC-A from the contract. Notwithstanding the dele-
tion, GIT argues that SC-16.1's language--"Exhibit GC-A has been
deleted"--deleted only Exhibit GC-A's title caption, "Dispute Reso-
lution Agreement," and not the text following the title. This argument
is manifestly without merit; it is inconceivable that SC-16 did not
delete both the title and the text of Exhibit GC-A. In fact, deleting
Exhibit GC-A from the contract also deleted any other references to
arbitration within the contract, because when an individual paragraph
utilized the word arbitration, it was done so with respect to arbitration
as permitted by Exhibit GC-A. Thus, once Exhibit GC-A was deleted
from the contract, Article 16 of the General Conditions dictated alter-
native dispute resolution mechanisms. Article 16 instructs that absent
the incorporation of an arbitration agreement in Exhibit GC-A, the
parties can pursue their contract claims through court litigation.
5
By arguing that neither "Exhibit GC-A" nor the other minor refer-
ences to arbitration were physically redacted from the contract, GIT
attempts to create a loophole through which it could compel arbitra-
tion. The references GIT cites, however, never affirmatively bound
the parties to arbitration. Furthermore, they were"technically" deleted
by the contract's Supplementary Conditions. As the district court
found, the parties intent was clear--they expressly chose not to arbi-
trate. Thus, we affirm the district court's order denying compelled
arbitration.
III.
GIT argues, alternatively, that if arbitration was not mandated as
a matter of law, then the plain language of 9 U.S.C.§ 4 of the Federal
Arbitration Act required the district court to enter an order empanel-
ing a jury to resolve the construction contract's"arbitrability." We
disagree with GIT's construction of this statute.
Title 9, section 4 of the United States Code provides:
If the making of the arbitration agreement or the failure,
neglect or refusal to perform the same be in issue, the court
shall proceed summarily to trial thereof. . . . Where such an
issue is raised, the party alleged to be in default may . . .
demand a jury trial of such issue, and upon such demand the
court shall make an order referring the issue or issues to a
jury.
Accordingly, if the making of the arbitration agreement is in issue
within the meaning of 9 U.S.C. § 4, the district court must proceed
summarily to a trial by jury.
Neither the "making of the arbitration agreement" nor "the failure,
neglect, or refusal to perform" can be in issue within the meaning of
9 U.S.C § 4. We have already held that the district court correctly
found that the bargained-for contract between GIT and Davidson
County unambiguously precluded arbitration as a means of dispute
resolution between the parties. A party cannot make arbitrability "in
issue" merely by alleging that the parties' intended to arbitrate dis-
6
putes when there is clear evidence to the contrary. Section 4 would
have been available here if an arbitration provision existed in the par-
ties' construction contract, or if the contract was silent as to dispute
resolution. Because GIT and Davidson County expressly precluded
arbitration as a dispute resolution mechanism, GIT cannot legiti-
mately claim that arbitrability is in issue. Accordingly, the Federal
Arbitration Act does not mandate a jury trial in this instance.
IV.
On cross-appeal, Davidson County contends that the district court
erred in not remanding the case to the Davidson County Superior
Court. We conclude that we do not have jurisdiction to review the dis-
trict court's interlocutory order denying remand.
We exercise statutory jurisdiction over final orders, 28 U.S.C.
§ 1291, and certain interlocutory orders. 28 U.S.C. § 1292. "It is, of
course, beyond question that an order of a district court denying a
motion to remand, standing alone, is not a final order appealable
under 28 U.S.C. § 1291." Three J Farms, Inc. v. Alton Box Board Co.,
609 F.2d 112, 114 (4th Cir. 1979).
V.
For the foregoing reasons, the memorandum and order of the dis-
trict court is
AFFIRMED.
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