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Continental Group Inc. v. NPS Communications Inc.

decided: April 21, 1989.

THE CONTINENTAL GROUP, INC., PETITIONER-APPELLANT,
v.
NPS COMMUNICATIONS, INC., AND NPS CORPORATION, RESPONDENTS-APPELLEES



Appeal from judgment of the United States District Court of the Southern District of New York (Keenan, J.) confirming an award of arbitrators; appellant challenges the district court's refusal to enter a money judgment against appellee NPS Corporation as guarantor of contractual performance of appellee NPS Communications, Inc. Affirmed.

Author: Haight

HAIGHT, District Judge:

Petitioner-appellant, The Continental Group, Inc. ("CGI") appeals from an amended order and judgment of the United States District Court for the Southern District of New York, John F. Keenan, Judge, confirming an arbitration award in CGI's favor and directing respondent-appellee NPS Communications, Inc. ("Communications") to pay CGI $2,819,668 plus interest. The focus of CGI's appeal is the district court's refusal also to enter judgment for that amount against respondent-appellee NPS Corp. ("Corp."), Communications' parent and guarantor of its performance of the underlying contract.

BACKGROUND

CGI owns and operates a telecommunication system. By written agreement dated February 22, 1982 Communications bought from CGI the right to use a portion of that system. The first paragraph of that agreement reads as follows:

Agreement made this 22nd day of February 1982, between The Continental Group, Inc. ("CGI"), a New York Corporation, having its principle [sic] office at One Harbor Plaza, Stamford, Connecticut, 06904, and NPS Communications, Inc., A New Jersey Corporation ("Manager"), having its principal offices at 200 Park Ave., New York, N.Y., a subsidiary of NPS Corp. ("NPS"), a Delaware Corporation, having its principle [sic] office at 1 Harmon Plaza, Secaucus, New Jersey, 07904.

The agreement recites in detail the rights and obligations of CGI and Communications, the latter referred to throughout as "Manager."

Paragraph 6 of the agreement contains an arbitration clause. It provides:

Any disagreement between the Manager and CGI with respect to the interpretation of this agreement or the obligation of the parties hereunder, including Dispute as defined in paragraph 5, shall be determined by arbitration. Such arbitration shall be conducted, upon request of either the Manager or CGI, before three arbitrators (unless the Manager and CGI agree to one arbitrator) designated by the American Arbitration Association and in accordance with the rules of such Association. The arbitrators designated and acting under this agreement shall make their award in strict conformity with such rules and shall have no power to depart from or change any of the provisions thereof. The expense of arbitration proceedings conducted hereunder shall be borne equally by the Manager and CGI. All arbitration proceedings shall be conducted in the City of Stamford, Connecticut.

Paragraph 19 provides:

Performance of this agreement by NPS Communications, Inc. is guaranteed by NPS Corp.

The agreement concludes with this recitation:

IN WITNESS whereof, the parties hereto have set their hands and seals the day and year first above written.

Officers of Communications, Corp. and CGI thereupon added their signatures, in that order.

During performance of the contract a disagreement arose. CGI claimed Communications owed about $3,000,000 for services CGI provided to Communications during 1982 and 1983. CGI's counsel sent Communications and Corp. a notice of intention to arbitrate dated November 1, 1983. The "nature of dispute" contained in the notice read:

The amount owed by the respondents to the claimant for charges incurred by the respondent NPS Communications, Inc. in accordance with the fee schedule set forth in the parties agreement of February 22, 1982. Performance of the ...


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