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BROWNKO INTL., INC. v. OGDEN STEEL CO.

July 7, 1983

BROWNKO INTERNATIONAL, INC. Plaintiff, against OGDEN STEEL COMPANY and LEONARD J. BUCK & CO., INC., Defendants; LEONARD J. BUCK & CO., INC., Plaintiff, against AMERASIA INDUSTRIAL, INC., BROWNKO INTERNATIONAL, INC., MORRIS BROWN, EDWARD RASKO, OGDEN STEEL COMPANY, LURIA BROTHERS & COMPANY, INC., OGDEN METALS, INC., OGDEN AMERICAN CORPORATION, OGDEN CORPORATION, AMSURCO, INC., and NICHOLAS GIORDANO, Defendants.


The opinion of the court was delivered by: HAIGHT

MEMORANDUM OPINION AND OTHER

HAIGHT, District Judge:

The motions in limits addressed in the parties' most recent briefs are resolved as follows:

 (1) The Andec/Buck Arbitration Award.

 Buck wishes to place in evidence the Andec/Buck arbitration award rendered against Buck, the judgment entered thereon, and proof of Buck's payment. Buck contends as to the America/Brownko interests ("Brownko"), the award is binding upon them, so that they are "barred from relitigating the award of arbitrators." Reply brief at 3. As to Ogden, Buck contends that the award and evidence of payment, while not binding on Ogden, are "relevant to and admissible on the issue of Buck's damages." Main brief at 15.

 There is no merit to Buck's contention that Brownko is bound in this litigation by the Andec/Buck arbitration award. The only authorities cited for the proposition is the New Jersey vouching-in statute, N.J.S.A. 12A:2-607(5)(a), and a New Jersey case which considered vouching-in procedures. U.S. Wire & Cable Corp. v. Ascher Corp., 34 N.J. 121, 167 A.2d 633 (1961). They furnish no guidance in this case. The statute and the case contemplate that the vouched-in defendant does nothing in response to a timely demand. In those circumstances he is bound by the result. Nothing of the sort happened here.

 What happened here is that Buck sent Brownko, under date of September 11, 1975, a written "Demand for Consolidation of Within Arbitration with Pending No. 1310 0847 75" before the American Arbitration Association ("AAA"). That identifying number refers to the arbitration demand made pursuant to AAA rules by Andec against Buck. Buck sought in its demand for consolidated arbitration damages against Brownko measured by "such sums as may be assessed against Buck" in the arbitration initiated by Andec. Buck regarded Brownko as required to arbitrate its claim by virtue of the arbitration clause contained in the Buck/Brownko contract, as well as by the provisions of the letter agreement dated June 27, 1974 between Buck, Brownko and Andec.

 Brownko neither acquiesced in nor ignored Buck's demand for consolidated arbitration before the AAA. Instead, it commenced a proceeding pursuant to NYCPLR § 7503(b) in the New York State Supreme Court, to stay the arbitration demanded against it by Buck. The state court judge issued a temporary stay of arbitration.Buck then removed the proceeding to this Court, where it was assigned to Judge Pollock. 75 Civ. 4858-MJP.

 At about the same time Brownko commenced an action in New York Supreme Court against Ogden, seeking a declaratory judgment inter alia that, if Brownko was held obligated to arbitrate with Buck, Ogden would be bound by any award rendered by the arbitrators in favor of Buck and against Brownko.

 Thus procedural machinery had been set in motion which, if pressed to a conclusion, might have resulted in a consolidated arbitration before the AAA, with all parties concerned bound by the result. It is a pity that this did not transpire. This protracted litigation and its attendant uncertainties would have been avoided.

 In point of fact, however, Buck saw fit not to press its claim for a consolidated arbitration with Brownko. On August 31, 1976, counsel for Brownko and Buck appeared before Judge Pollock and executed a consent stipulation which put an end to Buck's effort to compel consolidated arbitration. That order reads that it is:

 "ORDERED that the motion to stay attempted arbitration be and the same hereby is granted and arbitration is permanently stayed, by consent of the parties. This case is thus terminated."

 While no further documentation is furnished in the motion papers in respect of Brownko's suit in state court against Ogden, presumably it was mooted by Buck's capitulation before Judge Pollock. In the absence of any further demand by Buck that Brownko participate in the Andec/Buck arbitration, that arbitration went forward between only those two parties. Andec ultimately received an award against Buck in the amount of $1,021,834.32.

 In these circumstances, there is no basis in law or in equity to hold that Brownko is now bound in any way whatsoever by the Andec/Buck arbitration award. Buck tried to involve Brownko in those proceedings, but Brownko resisted, and eventually Buck consented to haul down its flag. To hold that Brownko is now bound by the results of the arbitration would make a mockery of the prior proceedings in the case, including Buck's informed consent to the permanent stay of the consolidated arbitration which Buck had demanded.

 I come then to the second question under this general heading. That is what use, if any, may legitimately be made of the Andec/Buck arbitration award in this litigation, which will require a jury to sort out the relative rights and obligations as between Buck, Brownko, and Ogden.

 I conclude that the amount of the arbitration award granted to Andec against Buck can play no legitimate part in the trial of this case. Nor can the judgment entered upon the award; nor can evidence of Buck's payment of the award. It logically follows that the arbitrators may not testify as to the manner in which disputes were resolved or the amount of the award calculated. Counsel will not be permitted to refer to the arbitration award, in ...


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