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TEPPER REALTY CO. v. MOSAIC TILE CO.

September 20, 1966

TEPPER REALTY COMPANY and Tepper's Plainfield, Inc., Plaintiffs,
v.
MOSAIC TILE COMPANY, Mosaic Building Products, Inc., and F. H. Sparks Co., Inc., Defendants



The opinion of the court was delivered by: MACMAHON

MacMAHON, District Judge.

 Defendants Mosaic Tile Company (Mosaic) and Mosaic Building Products, Inc. (Building Products), by separate applications, move pursuant to Section 3 of the Federal Arbitration Act, 9 U.S.C. § 3, for orders staying trial of this action pending arbitration.

 The complaint asserts two "causes of action," the first for breach of two written contracts and breach of warranty, and the second, alternatively, for negligence in the performance of the contracts. In the first contract (Complaint, Exhibit A) between the defendant Building Products and plaintiff Tepper Realty Company (Tepper Realty), *fn1" Building Products agreed to supply exterior wall paneling for installation on a building owned by Tepper Realty and occupied as a department store by Tepper's Plainfield, Inc. (Tepper's). In the second contract (Complaint, Exhibit B), defendant F. H. Sparks Co., Inc. (Sparks) agreed to install the paneling for Tepper Realty.

 Plaintiffs oppose the motions asserting (1) that there is no arbitration agreement in existence, (2) that, even if there is, there are triable issues of fact as to whether defendant Mosaic and plaintiff Tepper's are parties to the arbitration agreement which must be resolved by the court before the action is stayed, and (3) that, in any event, Tepper's negligence claim should not be stayed.

 Jurisdiction is grounded on diversity, and the Federal Arbitration Act is invoked on the conceded interstate nature of the transaction.

 Arbitration is, of course, a creature of contract. *fn2" The initial issue on these motions is whether an arbitration agreement exists. *fn3"

 There is no dispute that a document (Complaint, Exhibit C) which is labeled "Specification For New Store Fronts For Tepper's Store, West Front Street & Somerset Street, Plainfield, New Jersey, Charles H. Detwiller, Jr., Architect," contains a clause which reads:

 
"Arbitration. Should disagreement arise under the Contract the Owner and the Contractor shall each appoint an arbitrator and the two arbitrators shall jointly select a third arbitrator. The decision of a majority of such three arbitrators shall be binding on all parties concerned."

 There is a sharp dispute, however, as to whether this arbitration clause of the Detwiller specifications was an integral part of the contracts upon which this action is based. Plaintiffs, opposing the motions, now contend that there was no agreement to arbitrate. They assert that the specifications were not incorporated into either of the contracts and were not even annexed to the first one. They make no claim of fraud, misrepresentation, or deceit. Defendant Mosaic asserts that the specifications were an integral part of the contracts. Fortunately, we find that the documents annexed to the complaint as Exhibits A, B, and C speak for themselves.

 It is clear that the supply contract between plaintiff Tepper Realty and defendant Building Products (Complaint, Exhibit A) provides that Building Products agrees to supply exterior panels to Tepper Realty for installation on the store front of Tepper's in Plainfield, New Jersey, in accordance with designated drawings and specifications which expressly include "preliminary drawings as prepared by Charles H. Detwiller, Jr., Architect, specifications of said Charles H. Detwiller, Jr. * * * all of which said instruments are annexed hereto. * * *" The second contract (Complaint, Exhibit B) between plaintiff Tepper Realty and defendant Sparks for installation of the panels contains identically the same provisions as the first, and there is no dispute that the Detwiller specifications were annexed to the second contract.

 We think it self-evident that the label on the specifications of Charles H. Detwiller, Jr., leaves no room for doubt that the specifications referred to as annexed to the first contract are indeed the same Detwiller specifications annexed to the second. Whatever doubt there might be on that question is vanished by Fogarty's statement that the Detwiller specifications were in fact annexed to the first contract. That averment stands uncontradicted. Without more, we think this is sufficient to make the Detwiller specifications and the arbitration clause which they contain an integral part of the contracts between the parties. But, if more is needed, it is supplied by plaintiffs' own complaint (para. 9) which states: "Copies of said agreements and of the specifications referred to in said agreements are annexed hereto, marked Exhibits A, B and C, respectively, and made part of this complaint. * * *" Moreover, the very first paragraph of the specifications, which plaintiffs allege are the ones "referred to in said agreements," provides that:

 
"These Specifications together with the Drawings and the Contract, including any supplements or amendments thereto shall be considered as the 'Contract Documents' and shall be considered as one document with each supplementing and clarifying the others."

 In the face of the complaint and the express provisions of the written contracts, plaintiffs' contention that there is no arbitration agreement simply because the parties to the agreements did not choose to express an arbitration clause in the body of their contracts or resort to the rubric of incorporating the specifications by express reference is untenable. The question is not whether the parties, like the scrivener of old, followed some talismanic formula, but whether they manifested a mutual intent to arbitrate disputes arising out of the contracts, and it is plain on the immutable facts that they did.

 We turn then to plaintiffs' contention that there are triable issues respecting whether plaintiff Tepper and defendant Mosaic were parties to the contracts which must be resolved by the court ...


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