The opinion of the court was delivered by: DUFFY
This action was originally commenced in New York State Supreme Court, New York County, by the plaintiff, Fairfield-Noble Corporation (hereinafter referred to as "Fairfield"), charging the defendants with breach of contract and warranty in the sale of certain fabrics. Thereafter, the defendants, Pressman-Gutman Co.
and Pressman-Gutman Co., Inc. (hereinafter collectively referred to as "Pressman" or "defendant"), removed the action to this Court and have filed the instant petition for an order staying this action and compelling arbitration pursuant to the Federal Arbitration Act, (the "Act"), 9 U.S.C. §§ 1-14. Fairfield is a corporation organized under the law of New York where it has its principal place of business. Pressman is a Pennsylvania corporation with its principal place of business in the state of Pennsylvania. Jurisdiction is based upon diversity of citizenship, 28 U.S.C. § 1332, and § 4 of the Act.
The instant complaint charges that certain fabric ordered from defendant was defective in that it did not possess the proper composition, various dye lots were mismatched and in general did not correspond to the fabric samples upon which the orders were based. As a result, plaintiff seeks 1.1 million dollars in damages including $ 500,000 for alleged loss of reputation and good will.
The facts relevant to the determination of the instant petition are as follows:
In January, 1978, the defendant, through its salesmen, displayed samples of its product to the plaintiff. Thereafter, on January 23rd, the defendant shipped 20 yards of brown Orkney fabric to the plaintiff as a sample. (Defendant's Exhibit A). Then, on February 3rd and 15th, an additional 70 yards of Orkney fabric were ordered by plaintiff and shipped by defendant. (Defendant's Exhibits B, C). The conceded purpose of these relatively small purchases was to enable the plaintiff a garment manufacturer, to closely inspect the fabric prior to ordering the large quantity of the fabric necessary to manufacture its garments. The plaintiff also ordered 60 additional yards of the Orkney fabric which were to be shown to plaintiff's customers. (Defendant's Exhibit D). Based upon its customers' reactions to these samples and plaintiff's own inspection thereof, the plaintiff agreed to order a portion of its fabric requirements from the defendant.
The only document to be exchanged concerning this bulk purchase, and indeed a key document herein, was defendant's order form dated February 3, 1978. (Defendant's Exhibit F). The form, called a "blanket order" reserved 15,000 yards of "unassorted" Orkney fabric for the plaintiff and granted plaintiff an option to reserve an additional 15,000 yards of "unassorted" fabric, which was to be exercised on or before February 21st. In addition, the order provided that the plaintiff was to specify the quantity and color of a given order drawn against the reserved and optioned yardage four to five weeks prior to taking delivery thereof. Thereafter, the fabric was to be "assorted" and delivered by the defendant to one of plaintiff's many New York plants.
The blanket order also contained the following provisions:
Contract acknowledgement : This contract embodying the terms on the face and reverse side hereof confirms the agreement to buy and sell the goods herein described and is hereby acknowledged by the parties to be correct. It shall become binding and enforceable against the Buyer either (a) when signed or accepted in writing by the Buyer or its agent or broker, or (b) when signed and delivered by the Seller to the Buyer unless the Buyer gives the Seller written notice of objection to its contents within ten days after receipt hereof; or (c) when Buyer has paid for or accepted delivery of the whole or any part of the goods herein described.
The terms hereof shall control regardless of whether or when the Buyer has submitted or sent its own manifold or purchase order. No modification of this contract shall become effective unless in writing signed by the parties. Any assortments or shipping instructions, whether oral or written, involving the above described goods, and irrespective of any terms or provisions thereof, shall be deemed subject to all of the terms and provisions of this contract unless otherwise agreed in writing by the parties.
ARBITRATION. Any controversy or claim arising out of this contract, any interpretation thereof or breach thereof shall be settled by arbitration in the City of New York before the American Arbitration Association under the Rules of the General Arbitration Council of the Textile Industry then obtaining. The parties consent to the jurisdiction of the Supreme Court of the State of New York, or of any other court of proper jurisdiction, for all purposes including enforcement of the arbitration agreement and proceedings and entry of any judgment on any award and further contend that any process or notice of motion may be served either personally or by mail outside the State of New York, provided a reasonable time for appearance is allowed.
There were six quantity and color assortments drawn against the yardage initially reserved and the additional yardage as to which plaintiff exercised its option. The first assortment occurred on February 17, 1978 and was evidenced by an exchange of order forms. The defendant's order form contained the identical "Contract acknowledgement" and "Arbitration" clauses contained in the blanket order. The plaintiff's, entitled "Fabric Purchase Order," contained the following provisions:
This order may be accepted only by timely shipment of the goods ...