Bristol Farmers Market and Auction Company and Closeouts, Inc. v. Arlen Realty & Development Corp.

of review in such a standard case whether

there has been an abuse discretion or a constitution, (3)

violation of the proper remedy exists when discretion improperly exercised,

has been I would re-

mand this case review the district

court in accordance with these instructions

and under these standards. Because this is disposition

not the upon by decided ma- jority, I am forced to dissent. Garth, Judge, Circuit dissented and

filed opinion.

BRISTOL FARMERS MARKET AND Closeouts,

AUCTION COMPANY

Inc., Appellants,

ARLEN REALTY & DEVELOPMENT

CORP., Appellee.

No. 78-1197.

United States Court of Appeals,

Third Circuit.

Argued Sept.

Decided Nov. Nesse, Narin Narin, Madeline B.

Stephen Pa., appellants. Chait, Philadelphia, Gelman, Jaffe, Mesirov, Stein, Henry A. Pa., Jamieson, Philadelphia, Cramer & appellee. GIBBONS, HUNTER

Before GARTH, Judges. Circuit OPINION Bristol consented to the subletting of the Bazaar,3 to Bristol but by the HUNTER, III, Judge: Circuit JAMES terms of the agreement, Arlen remained liable to payments. Bristol for the rental and Auction Co. Bristol Farmers Market (Bristol) Closeouts, appeal Inc.1 Litigation commenced between Arlen and refusing to district court decision sublessee, Bristol when Arlen and the Bris- agree- a lease arbitration demanded Bazaar, tol stopped making payments rental lessee, Realty & Devel- by Arlen ment September 1, 24, after 1975.4 On October (Arlen). The district court opment Corp. 1975 Bristol in sued Arlen federal court for press Arlen seeks to in held that the issues rent due. Bristol received a judgment for scope within the of properly are rent owing September 1,1975 through clause, are not barred res March prevailed 1976 and in the appeal judicata, were not waived Arlen’s and to this court.5 prior legal actions. failure to assert them Thus, granted the district court Arlen’s mo- Bristol instituted a second action on June to state a claim tion to dismiss for failure 30, 1976 for rent owing April 1, after 1976. af- granted. can be upon which relief claim, In addition to the rent Bristol con- firm.2 tended that Arlen had violated the lease agreement by failing “stay open” as re-

FACTS quired by section 102.6 Arlen requested lessee) (as (as lessor) Bristol Arlen and the claim be withdrawn from the rent April dated agreement entered into an action and submitted instead to arbitration. premises Moreover, lease of provided 1970. It for the Bristol consented. Arlen specifi- operation cally in a center for refused to “supermarket raise its de- fense,” term com- department store. The declaring discount to press intention “defense,” and was to terminate issue in April, menced arbitration. By this Ar- June 1974 the len March 1985. On claims that Bristol had an obligation to the Lease ties executed an Amendment under the lease to maintain a Subletting Agreement. and Consent in the shopping prevailed center. Bristol Closeouts, property (E.D.Pa. 28, 1976), aftd, 1. Inc. is the owner June Development Corp. Realty leased to Arlen & Closeouts, designated Inc. had Bristol Farmers provides: 6. Section 102 of the lease Market and Auction Co. as the landlord. agrees 50,000 TENANT that no less than diversity. jurisdiction 2. Federal is based on square feet of the Demised Premises shall be U.S.C. § adequately manned, stocked and available for the pub- transaction of business with the partnership. general 3. Bristol Bazaar was a lic no less than the number of maximum largest single Farm- of Bristol shareholder hours which are made available for transac- Woldow, ers Mark M. Market and Auction public tion of by Kleins, business with the S. in Bristol Bazaar. He interest held a 22/2% Guys, Korvette’s, Two Mangel’s Modell’s and largest single was also the shareholder forty (40) in an area of miles from the de- Closeouts, Inc., and director and was officer premises mised in the Commonwealth D. Wol- of both Bristol and dow, Robert Closeouts. Pennsylvania permitted law, but in no Closeouts, President and a director event no less hours than the maximum num- Inc., in Bristol interest also owned 22‘/2% by any ber of compa- business hours utilized Bazaar. market, rable farmers’ discount mart or type same operation or similar of retail as operations 4. Bristol Bazaar terminated will be conducted TENANT in the De- space on December 1975 and the subleased mised Premises within the aforesaid demised January possession relinquished to Arlen on area, law, permitted by if and in no event less thirty (30) than hours each week for business public; transactions with the and Auction Co. v. Bristol Farmers Market Realty Development Corp., No. 75- appeal rent action second which cannot Bristol Bazaar, alleged limitation assert any court declared The district this court.7 or [sic] liability. rent the first decided issues were [THIRD ISSUE:]Is Arlen entitled to recover mar ket? except judicata thus res were action from the dif Landlord the damages. computation ference between rental value of the demised prem operating actions for ises with an brought two additional Bristol super adjacent market thereto and terms, obtaining judg- subsequent rent the rental value of de first, which court on the district ment with a mised vacant the second settling appealed, was not adjacent super judgment. before [CLAIM OR RELIEF SOUGHT:]If obligated r Arlen is to pay e damages e rent De- filed a 1976 Bristol December On reason Landlord to. in actions the Federal Court, of wheth- the issue mand for Arbitration then Arlen is entitled to an by failing er Arlen breached against award the Landlord store in department a to maintain discount for each of the months cov 21,1976 judgments On December center. ered of the any in an amount to equal Arbitration cover- for Arlen filed a Demand difference between are of which issues, three the last ing four rental of the value demised Subsequently, subject appeal. of this operating with an premises and 27, 1977, filed the same without supermarket Arlen January operating ad counterclaim as defense three issues jacent th commenced proceeding the arbitration for its own Demand withdrew Bristol and action brought this Bristol

Arbitration. counter- of Arlen’s the arbitration I. corresponding three issues and claims. The A. by Arlen in requested claims for relief are: proceeding arbitration begin fundamental of assertion that is a matter “arbitration the Landlord’s failure Does ISSUE:] [FIRST required to contract and party cannot be to maintain a supermarket he any dispute which submit to arbitration adjacent in the immediately United Steel agreed has not so to submit.” ma- constitute the Lease breach of Navigation terial workers Warrior & Gulf dated 2,1970? April 1347, 1353, 4 363 Arlen’s rent duty pay OR [CLAIM Accord, (1960). Wiley John L.Ed.2d 1409 the Landlord RELIEF completely Sons, Livingston, Inc. v. 376 U.S. Landlord’s relieved SOUGHT:] (1964); Hussey L.Ed.2d S.Ct. to maintain failure super- Furnace Divi market operation Metal Division v. Lectromelt prem- adjacent ises to the demised 1972) sion, (3d (decid premises. law). Further, the Pennsylvania ed under failure the Landlord’s Does ISSUE:] [SECOND ascertaining “whether court is limited to institute or exhaust any making party seeking arbitration against Bristol Ba- remedies a material zaar constitute governed by the claim which on its face is Subletting and of the breach contract. . . The . courts Agreement Assumption weighing have no business the merits executed other documents v. Ameri grievance.” United Steelworkers connection therewith? Manufacturing can of Arlen is relieved duty OR any [CLAIM rent to the Landlord RELIEF pay 4 L.Ed.2d S.Ct. of the failure reason SOUGHT:] Thus, is con our role in the first instance to institute Landlord determining the issues as- whether fined to against exhaust remedies affd, (E.D.Pa. Co. Auction Dec. Market and Farmers Bristol Corp., Development Realty & 76- No. Therefore, Arlen in arbitration are within on the serted contract. we hold that the ambit the arbitration clause. issues submitted arbitration do not involve of rent” and as a result are “item[s] are in sections provisions arbitration precluded arbitration by lease: 2001 and 2002 of the 2002 of the lease. Section 2001: issue, If any dispute, except difference or B. forth shall at any set time hereinafter Having decided that the terms of respect obligation raised with the lease specifically do not exclude Lease, such dis- arbitration, issues from we must now deter pute, or issue shall difference be sub- mine come within the they whether terms mitted to the American Arbitration Asso- clause. general pro arbitration It Philadelphia, Pennsylvania ciation vides that “any dispute, difference or issue board of three arbitration arbitra- respect any obligation . with tors whose and/or award determination ” Lease under this shall be sub binding shall upon be final and (emphasis mitted to arbitration supplied). ties . and hereto . no award from Bristol contends that the three issues raised appealable, such shall be ex- by Arlen for do not arise “under cept in the of fraud. event Lease,” agreed upon hence are sub Section 2002: jects part As obliga our No item of rent or additional rent shall tion to determine whether the claims are subject arbitration previ- of unless properly arbitration, referable to this court ously paid, . will not order arbitration where “there is no Bristol reasons maintaining that resolution of the basis for matters is- that the . sues in will have arise agree Arlen’s favor the ultimate out of or in with the connection Arlen, effect of relieving either ment.” Necchi Sewing dis- v. Necchi Machine charge setoff, 693, (2d or its Sales obligations. Corp., from rental 348 697 F.2d Cir. Hence, denied, 892, us to cert. urges regard Bristol 383 86 Arlen’s U.S. S.Ct. 15 (1966). Further, submitted involving issues as L.Ed.2d 664 of court will “item[s] not order patently rent” a “frivolous or specifically excluded from baseless claim” to National R.R. section 2002. arbitration. Pas senger R.R., Corp. v. Pac. Missouri F.2d however, note, We that the three (8th 1974). Accord, Cir. Hamilton presses allege issues Arlen independent obli Life Ins. Republic Co. v. National Life Ins. gations running from Bristol to Arlen. For Co., (2d 1969). 408 F.2d Cir. obligations, breach of these Arlen seeks monetary damages or excuse from its obli Arlen’s first third issues sub gation to pay rent. Bristol would have us mitted for super arbitration relate to its preclude read section arbitration market argues defense. Bristol most stren any time its lessee claims monetary uously relief. that no of the lease requires clause However, reading such a would cause what supermarket Bristol to maintain a in the appears on its to be face a minor exception shopping center. lack of any explicit The for virtually requirement rent” to subsume plus integration “item[s] clause8 general clause. Bristol, We renders, cannot supermar according to reading believe that this the arbitration ket frivolous patently defense a claim which provisions was intention of the parties is subject not cannot and we impose refuse to that agree. construction v. United Warrior & Steelworkers integration provides: 8. The clause written matter not contained in this instru- ment shall have force or effect. This Agreement. Entire any way lease shall not be modified or This instrument contains the entire and except by writing terminated executed only agreement parties, between and no parties. all representations prior oral statements or or 582-83, Co., merely give not Bristol a Navigation clause does first Gulf rather, (1960) supermarket; option establish 4 L.Ed.2d from any Arlen prohibiting arbitrate it that order to is absolute cautions “[a]n duty It may undertaking. is the unless it be said food store should not be denied court, arbitrator, weigh the that the arbitration not the positive with assurance interpretation court determines of an claim once the susceptible clause merits the arbitration dispute. Doubts is within claim that covers asserted F. Co. H. Construction clause. Gavlik coverage.” in favor should be resolved (3d Foundry Accord, Engineering Campbell United supermarket 1975). Engineering We hold that as Employees United issues one and 481-2 claims as Arlen’s Foundry embodied in three, is a basis sufficient they under the determining that arise re explicit The lack of an clause agreement.10 lease maintain a quiring Bristol fatal issue which Bristol in the center to Ar Arlen’s second seeks to asserts that attempts issues one and from arbitration len’s to arbitrate Arlen 1104(a)(1) prohibits Bristol committed a material breach three. Section by failing a su lease its remedies using the to exhaust from demised Bazaar, market, sublessee, Bristol before grocery store permarket, against food market,9 June terms, On By proceeding against the clause Arlen. meat Bristol; executed an Amend places 1974 Bristol and explicit no Subletting certain activities. and Consent ment Lease prohibits Arlen that Bristol directs However, interpreta Agreement. susceptible it is Section directly from correspond payments Bris intended receive rental tion rights against Arl su to maintain a tol Bazaar retain ing obligation Bristol but “positive say We cannot assur- shopping center. en.11 permarket beyond By going provides: a determination whether 1104(a)(1)of the 9. Section lease obligation under the the claim relates to an on TENANT. Restrictions (a) obligation deciding no in lease and that such agrees for with LANDLORD TENANT exists, the has moved to the merits fact dissent the and other occu- benefit LANDLORD dispute, thereby exceeding pants of the our function the Demised which TENANT, part in this case. Premises are a that its succes- assigns, sub-tenants, or sors and aires, concession- hypothetical dispute states that a The dissent holding by, through or those or under is a “su- over whether “convenience store” them, may not the use Demised Premises permarket” under section is differ- following: the clearly ent from the case before us and would market, (1) Supermarket, grocery food be referable to to see the arbitration. We fail store, market, (except meat or as hereinafter Judge The distinction. difference on which expressly storage permitted) for the thereof hypothetical the focuses between Garth (in ing sales), retail for the offer- connection with express the this case is that lease contains an foods, any food for sale for the sale of against “supermarket” prohibition undertak- meats, fruits, stuffs, groceries, produce, provisions, by ings hypothetical Arlen. But in both the seafoods, vegetables, dairy or deli- case, the ex- and in our the issue whether products. catessen obligations. implies press language additional Garth, dissent, apparently Judge in would language compel Though does not in terms to submit claim arbitration unless supermarket, neither does Bristol to maintain a it address whether a “convenience express imposing lease an contained clause store” is a fully obligation agree parties. on one of the situations, “supermarket.” In it would be both clause, we can- that under the arbitration interpret contract and to for make the merits arbitrator dispute it re- not refer a to arbitration unless decision. “any obligation parties lates to this under to Lease and 11. Section 3 of Amendment However, no does, Lease.” we see reason Agreement provides: Subletting Consent believe, apparently the dissent that as accept implied obligations Landlord and shall rental Owner intended to exclude payments performance Tenant’s obli- arbitration. Arlen’s claim that construed, gations directly agreement, implies properly from the an obli- the Lease however, Sublessee, being supermarket. gation it that understood on Bristol to maintain a arbitration clause does not ties and could not be in anee” that the raised dispute. Libbey-Owens-Ford cover this United Steelworkers Bristol also Galt v. cites Co., 363 Navigation Warrior (7th 1967), & Gulf U.S. Cir. Glass 4 L.Ed.2d 1409 80 S.Ct. in dicta which court noted that the issue of 3 addresses Section judgment legal proceeding in a would among the three payment judicata res subsequent arbitration. agreement, does not state whether Bris but helpful Neither case is to Bristol. The initially against tol must proceed Bristol prior three rent actions that decided dispute Bazaar for the rent due. Since the owing rent was due and Bristol. The in Arlen’s second issue submitted arbi duty defense and the of Bris- lease, tration arises under the we hold that tol to against exhaust Bristol its remedies presents a case for resolution on the against Bazaar Arlen proceeding before merits the arbitrator. were not before court.12 Since the is- sues Arlen seeks assert II. judi- have previously not been decided Bristol also contends that the issues action, cial Clemons and Galt are not au- raised Arlen are barred from arbitration thority for claim the issues Bristol’s judicata. res had Bristol instituted are barred from arbitration the doctrine prior against three rent actions Arlen and of judicata. res suit, judgments obtained each. In this necessary Bristol that a predicate asserts Bristol also contends the issues holdings the district court’s Arlen seeks to assert in arbitration are com rental pulsory cases was that had counterclaims under Rule 13 complied Bristol in all Civil respects Thus, with the Federal Rules of Procedure. dis terms the lease. trict Bristol claims that court felt that the alleging Arlen’s issues issues would have counterclaims; compulsory breaches of were been lease determined does prior appear the district court in the rent actions. contest that A assertion. compulsory counterclaim not raised in the R.R., Bristol cites Clemens Central subsequent first action is litiga barred in denied, F.2d 825 cert. Pickard, tion. Southern Construction Co. v. U.S. 21 L.Ed.2d S.Ct. L.Ed.2d 31 (1969), There, controlling. involuntarily (1962); Republic Cleckner v. Van and Stor retired railroad employees sought manda age (5th n.3 tory injunction requiring railroad however, follow, It does not that the employees arbitrate whether were enti claim also consideration in is barred from tled to severance A pay. prior case be subsequent proceedings. arbitration parties tween the that they same had held prior were not. This court ruled that the favor strong public policy of arbi- judgment judicata was res between the supports tration In Local conclusion.13 here, acceptance payment perform- the of said nor did we consider the which extent to by panel by ance an arbitration be Landlord and Owner or the execu- would bound Ar- len’s failure to raise tion of those claims at trial. shall instrument not be construed ruled did not have the liability or intended as a waiver of Tenant’s right prior such arbitrate claims to the rent Owner, to Landlord and or a release of Ten- action, especially in view of the tardiness of Lease, ant from its under the ex- stay. (App. 129a) Arlen’s motion to at cept payment perform- to the extent such appeal This court affirmed Bristol’s by ance been have made Sublessee. second rent on action November 1977 with- proceeding, At the second Arlen reserved opinion. out Bristol Farmers Market and Auc- supermarket stating the defense intend- Realty Development Corp., tion v. Co. Arlen & ed to opin- raise the issue in In 566 F.2d 1168 below, court, ion this suit the district which See, g., e. Seaboard Line v. Coast R.R. Na- actions, had also the tried earlier rental noted: Passenger Corp., (5th R.R. tional 554 F.2d 657 suit, In the 1977); second rent we did not Corp. Millard, consider Hanes Cir. App.D.C. v. arbitrability the (1976); of the claims Arlen raises 531 F.2d 585 Gavlik Con- Electric, Inc., tration, goal avoiding multiple Thompson litiga- the IBEW v. G. P. fact, (9th judicial the union filed In 363 F.2d 181 tion is still achieved.14 the em- economy which will time grievances for arbitration be enhanced since court compulsory counter- ployer expended proving asserted were need not be the coun- legal Thus, a action. The em- pending claims to we that neither the terclaim. hold union had lost the ployer judicata claimed that the of res nor the rules of doctrine failing by right grievances the prevents arbitrate the arbi- compulsory counterclaims action. The judicial them in the by raise pressed the Arlen. tration of issues issues, though the Ninth Circuit held that under Rule compulsory counterclaims III. proceed- were in the arbitration not barred three Arbitration of the issues submitted could, ing: “If disputing one by They Arlen will not arise enjoined. be alleging grievance a filing complaint a contemplated the lease as scope agreement for arbi- outside the precluded by are arbitration clause and tration, by-pass arbi- opponent force his rent.” specific exclusion “item[s] as to con- and assert counterclaims tration Further, are the issues not barred arbitrable, the desired otherwise troversies judicata arbitration res and related doc- agree- of arbitration purpose intent and trines. The decision of district court effectively Id. ments could be frustrated.” will be affirmed. Trucking Cf. Association at 185. California Corcoran, (N.D. 74 F.R.D. 545-6 GARTH, Judge, dissenting: Circuit Cal.1977) allowed (employer should agree I the conclusions reached to circumvent of issues which arbitration save one. In majority respects agreed to all employer has arbitrate holds suit). majority Part filing Though Thompson opinion, mere B. of its as which collective bar- issues involved that the First and Third arbitration under reasoning (see agreement, equally Maj. gaining Arlen has demanded 1218) Op. at applicable here. are arbitrable matters under (the 2001 of the lease Moreover, com policy behind provision). holding, majority, so In compulso pelling the to raise his defendant my opinion, has strained the arbitration ry or have it barred from sub counterclaim beyond contemplation cause far court to sequent litigation is “to enable the agreement of lease. action, settle all related claims in one there involve has Issues One and Three what by avoiding multiplicity of liti wasteful supermarket be known as “the gation arising single from a trans come to claims Bristol, Wright A. contends that as action or occurrence.” C. defense.” Arlen Miller, landlord, lease to obligated Practice and Procedure was under the Federal adja- maintain a at 37 Where claim § judicial Arlen’s, which if cent to that its failure to do so would be barred raised in breach of the pressed action instead a basis for arbi- constituted material lease.1 Campbell one defendant] F. F.2d than forum. has [The struction Co. H. stead- (3d 1975). fastly sought 777 to its . . Cir. arbitrate claim . responsible multiplicity not or is for the by Any multiplicity been created 14. here has circuity problems by party [the asserted Bristol, has, the Arlen. Arlen from arbitration], seeking enjoin to beginning, sought to all have issues resolved 1. failure to maintain Arlen claims that Bristol’s language Libbey- The of Galt v. supermarket adjacent premises it on relieved (7th Owens-Ford Glass 376 F.2d 716 and, duty pay in the or of its to rent in addition 1967) is Cir. instructive: alternative, damages in the entitled to enjoin proper if Even it were ... of its amount of in the value the difference multiplicity, prevent arbitration to this is not op- supermarket leasehold with and without appropriate an de- case to do so. Here [the erating adjacent premises. de- For further pressing against its is claim fendant] [the party seeking more arbitration] 1222

Under the terms of the arbitration clause Whether a controversy is is a arbitrable (see 1218), matter arbi- Maj. Op. at this is question which the court must determine trable if it concerns “on the basis of the contract entered into In cases parties.”6 analogous the

any dispute, issue, to the difference or . one, present this the respect any obligation of the Court and Court Lease, Appeals for have held ties this the Circuit Second decide whether each that the courts must Hence, obliga- if an the issue involves is the issue submitted to arbitration within party may tion of a under this lease the In terms of the arbitration clause. Interna- jurisdiction arbitrator’s be invoked. Teamsters, 249 tional Brotherhood of Local majority acknowledges The that nowhere v. Pennsylvania Western Motor Carriers any express in the is require- lease there Association, (3d 574 the F.2d 783 Cir. obligation ment or that Bristol maintain a contract between the limited the center.2 It jurisdiction labor-management of a commit- notes, however, 1104(a)(1) that section disputes tee to involving “inadvertent (see Maj. n.9) Op. prohib- lease at 1218-1219 bona fide errors.” This that Court held tenant, Arlen, using its the premis- whether such errors had occurred was a operation es the of a supermarket. Al- judicial threshold issue for determination. though majority recognizes the this The then interpreted Court the contractual provision lease, “by terms,” re- term “errors” exclude from solely obligations lates of Arlen as all impracticality claims based economic on tenant distinct from practice, or on industry longstanding landlord,3 of Bristol as the it nonetheless dispute therefore held was not concludes that “is suscep- arbitrable. The conclusion that it Court’s tible of interpretation that the parties must determine each case whether the intended corresponding obligation on predicate contractual has Bristol to a supermarket.”4 maintain I apposite present been satisfied is agree cannot analysis, with this because it case:7 court’s responsibility determine “whether party seeking the jurisdiction arbitration is Since the arbitrator making a claim which on its face one is contractually granted parties, governed by agreement.”5 question particular as to whether a Three; Op. dispute lineation Maj. concerning of issues seniority One and see “a to be at 1217. granted employees transferred when one car- purchased operating rier the real estate Maj. Op. 2. at equipment 1219. of another. The labor contract authority that case conferred a Joint Com- 3. Id. at controversy 1219-1220. mittee to decide the ‘[in] Employer event that the busi- absorb[ed] 4. Id. at 1219. ness of another . . carrier.’ 396 F.2d jurisdiction, at 34. Joint Committee’s therefore, Corp. hinged Telephone Telegraph International on whether there been had Workers, ‘absorption’ Local Int’l. such Union Elec. of business. On review (3d 1961). F.2d 330-31 Cir. See also But court did not defer to the Committee’s determination, Corp., subjected ler Prods. Co. v. Unistrut rather but com- (7th 1966). jurisdictional ‘full, mittee’s decision broad Moore, Humphrey review.’ Id. at 38. See n.8, Refining 6. Atkinson v. Sinclair 84 S.Ct. (1964).” L.Ed.2d 370 L.Ed.2d (1962); Teamsters, (footnotes omitted). see also Int’l. Bhd. of F.2d at 788 Local Both Bie- Ass’n, judicial 249 v. Pa.W. Motor ski Carriers and Teamsters involved review of labor-management decisions committees. However, Court Teamsters treated the part jurisdiction Id. The Court relied in issue of the Bieski v. committee’s as no dif- Forwarding arbitrability Eastern ferent a Automobile F.2d from 396 determination of in a (3d compel 32 Cir. That case was suit to described or an arbitration. 574 involving Teamsters as F.2d at 786-87.

1223 necessarily depends Corp. between the never existed Sales dispute is arbitrable agreed to submit parties on “whether the But this is not sufficient Necchi. Ludwig Ho- specific the to arbitration.” within dispute the arbitrable render them Fletcher, v. Manufacturing Co. nold clause of the meaning [405 of the F.2d at 1125 n.2. 1123], supra, 405 F.2d the that requires which agreement, Mine Gateway Coal Co. United See with of or in connection matter arise out 368, 374, Workers, S.Ct. the than argeement rather that [sic] reviewing (1974). Thus a 38 L.Ed.2d 583 the working relationship between first instance examine court must the ties.10 e., predicate (i. the con- jurisdictional the applying principles In the set out provision) purports require tract which case, present Necchi Teamsters and dispute a to arbitration. the submission of analysis be starting for our must point The to ascertain whether court does so compact. of Sec- terms the arbitration controversy that the intended triggers arbitration tion 2001 of the lease scope the arbi- be included within the . or issue any “if dispute, difference tration clause. respect to raised shall at time Cir for the Second Appeals The Court of this any obligation of view in Necchi adopted cuit has similar then, Teamsters Lease . . ..” Under Sewing Machine Sales S.p.A. v. Necchi question this Court which threshold 1965), cert. (2d F.2d 693 Corp., 348 lease could is whether the must determine 892, 15 denied, 909, 86 383 U.S. S.Ct. reasonably be construed arbitrator which (1966), L.Ed.2d case “obligation” to main- impose on Bristol the that majority opinion. In has relied in its center. tain “ ‘the acknowledged case, the court that must, relies com- majority opinion, as it The ” “ liberally federal is to ‘construe policy’ of the 1104(a)(1) lease pletely on section ”8 Notwithstanding clauses.' question in favor Arlen. deciding this that claims policy, court held which that, acknowledges on its majority The any provision not founded “[were] face, provision creates agreement” . were not arbitrable.9 it also Tenant, Significantly, for the Arlen. agreement in Necchi distributorship , terms, . acknowledges “[b]y that “matters, dis provided for arbitration obligations on Bris- explicit places no [it] arising out of or putes disagreements 11 Indeed, tol.” is entitled agreement between connection with” the makes no ref- “Restrictions on Tenant” parties. demanded ar The distributor the land- duties erence whatsoever had bitration of its claims that Necchi majority concludes Nonetheless, lord. obligations under failed to meet various infer from the that the arbitrator could opinion their contract. The court in the landlord on the tenant restriction Justice) held that Judge (now Marshall supermarket. promised to maintain had ex upon claims founded which were not result, in provisions may part, were not press contract This conclusion of the arbi- terms misapprehension arbitrable. The Court concluded (see occasions agreement. On three tration many It is true that undoubtedly majority 1221), the 7 Maj. matters to in items Op. referred at an issue is arbitrable under concludes that to be arbitra- claims held not [the the lease section 2001 if it “arises under would not have if the exclu- arisen ble] How- supplied). distributorship arrangement agreement.” (Emphasis had sive S.p.A. Sewing Mach. Sales 9. 348 F.2d at 698. Necchi Necchi 8. 1965), quoting, Corp., (2d v. Terminal Painting Corp. Metro Industrial Id. Cir.), Construction denied, cert. Op. Maj. at 1219. L.Ed.2d ever, mind, section 2001 was drawn more narrow- our task has been relatively rendered ly majority implies. than the It does not simple by parties. We can look provide disputes for arbitration of all “aris- agreed what have ing under” or “in connection with” the beyond lease. We cannot look the confines lease. It confines arbitration to those dis- lease, precludes because Article XXV putes “obligation which concern an doing Looking only us from so. under this Lease.” If the intentions of the instrument, impossible any written it is for honored, agreement are be be would interpretation to derived which this Court must scrutinize Arlen’s claim to impose implied— obligation express an — upon determine it is founded an whether supermarket. Bristol to This maintain obligation the lease. of Bristol under This so, being follows that majority has not done. defense is not arbitrable. me, that, To it is evident no matter how I am my mindful that if views were to construed, the lease is a restriction on Arlen prevail, necessarily would dispute be cannot obligation create an I Bristol. fragmented judicial and into arbitral fora. (see observe Maj. Op. that Article XXV at However, Supreme Court has resolved n.8) obligations limits policy favoring that the liberal construction ties to those which have set been out in agreements does not extend writing. 1104(a)(1) Because section is limit- to requiring party “to submit to arbitra- “by ed obligations terms” any dispute tion agreed which he has not so Tenant, any “corresponding obligation on to Accordingly, submit.” it is clear to me the landlord” necessarily would be based a party agreed only where has to arbi- an oral understanding external to the writ- disputes concerning obligations trate However, ten instrument. Article XXV ex- lease, and where his are pressly negates any the effect of such “oral expressly limited to those set forth Hence, representation.” statement or sec- writing, required may he to arbitrate 1104(a)(1) tion together read with Article on an predicated obligation claim which is XXV cannot support jurisdiction arbitral in which in the lease. In appear does this case. circumstances, these the arbitrator is with- The majority however, jurisdiction out suggests, dispute. sec- resolve the tion interpreted by should be I so much of the would therefore reverse arbitrator I and not this Court. am district court’s as refuses order accord with this conclusion. But we are not “supermarket de- Arlen’s dealing here with mere interpretation of a fense,” I and would remand for further as, substantive provision of contract proceedings before the district court. instance, we would be if the issue were whether a small convenience store consti- “supermarket”

tuted a meaning within the

of section 1104(a)(1). contrast, By the dis-

pute between Bristol and Arlen concerns obligation existence to maintain a

supermarket, and the arbitration clause re-

quires us to determine whether Arlen’s

claim is founded on obligation of the

landlord under the lease. International Teamsters,

Brotherhood of Local 249 v. Pennsylvania

Western Motor Carriers Asso-

ciation, my F.2d 783 To Navigation Co., USW v. Warrior & Gulf 4 L.Ed.2d 1409

Case Details

Case Name: Bristol Farmers Market and Auction Company and Closeouts, Inc. v. Arlen Realty & Development Corp.

Court Name: Court of Appeals for the Third Circuit

Date Published: Nov 20, 1978

Citation: 589 F.2d 1214

Docket Number: 78-1197

Court Abbreviation: 3rd Cir.