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Mantaline Corp v. PPG Industries

February 7, 2006

MANTALINE CORPORATION, PLAINTIFF,
v.
PPG INDUSTRIES, INC., DEFENDANT.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM OPINION AND ORDER OF COURT

Before the Court for consideration and disposition are two post-arbitration motions: the APPLICATION OF PLAINTIFF TO CONFIRM ARBITRATOR'S AWARD PERTAINING TO MERITS, APPLICATION TO MODIFY ARBITRATION AWARD PERTAINING TO COSTS AND ATTORNEY FEES ASSOCIATED WITH THE ARBITRATION, AND ALTERNATE APPLICATION TO REMAND AWARD TO THE ARBITRATOR PERTAINING TO COSTS AND ATTORNEY FEES ASSOCIATED WITH THE ARBITRATION ("Application") (Document No. 116), and PPG INDUSTRIES, INC.'S MOTION TO VACATE ARBITRATION AWARD ("Motion") (Document No. 117), with brief in support (Document No. 118). The Court heard oral arguments on the motions on January 27, 2006; the parties were represented by counsel who effectively and skillfully argued the issues. Additionally, the issues have been fully briefed, and the matter is ripe for disposition. See Document Nos. 121, 128 & 131. For the reasons which follow, the Application will be granted in part and denied in part, and the Motion will be denied.

Background

The basic facts and procedural history of this case*fn1 are as follows. Plaintiff Mantaline Corporation ("Mantaline") sold window gaskets to defendant PPG Industries, Inc. ("PPG"), which PPG used in the installation of a "curtainwall" window system at an office building constructed in Denver, Colorado, in the 1980s. Glass panels used in the curtainwall window system, which the parties refer to as "spandrels,"*fn2 were coated with a thin metal film and an additional layer of polyethylene film called an "opacifier," which is somewhat analogous to automotive or household window tint. See PPG's Appx., Tab J (PPG's testing report). The installation of the spandrels required the use of "sponge gaskets" and "wedge gaskets," both of which were provided by Mantaline. See PPG appx., tab A. Several years after the building was completed, various cosmetic problems with the spandrels were discovered. See PPG appx., tab G (photos of the problems). Specifically, the spandrels exhibited cracks in the opacifier,*fn3 discoloration of the spandrel's reflective coating, and debonding or bubbling of the opacifier. PPG's appx., tab K, p. 16 (report of Robson Forensic). In 1992 the owner of the office building sued PPG in federal court in Denver, alleging that PPG's spandrels and/or the window gaskets were defective. The lawsuit between the building owner and PPG settled. In 1995 PPG demanded that its indemnification claim against Mantaline be arbitrated pursuant to the terms of its Purchase Order. Mantaline and PPG then spent years in a "battle of the forms" over which party's terms governed the agreement. PPG eventually won the battle before the United States Court of Appeals for the Sixth Circuit. Mantaline Corp. v. PPG Industries, Inc., 225 F.3d 659, 2000 WL 799337, *4 (6th Cir. 2000) (table opinion) (finding that the parties' contract "included the terms of PPG's purchase order providing for indemnification and arbitration of disputes."). The case was subsequently transferred to the Western District of Pennsylvania pursuant to the terms of the Purchase Order. PPG's motion to compel arbitration was granted by Judge Cindrich; that decision was affirmed by our court of appeals. Document Nos. 106 & 114. In April of 2004 PPG filed a demand for arbitration with the American Arbitration Association, and the matter was tried before an arbitrator in Pittsburgh in March of 2005. See Mem. in Supp. of Application at 2.

Two paragraphs of PPG's Purchase Order are at the heart of the issues in dispute. Paragraph 11 of the Purchase Order provides that Mantaline must indemnify PPG "from and against any and all damages, claims, demands, expenses (including reasonable attorneys' fees), losses or liabilities of any nature whatsoever ... and any and all suits, causes of action and proceedings thereon arising or allegedly arising from or attributable to (i) the materials, services or work herein ordered, furnished or from the use thereof; ... or (iii) from any breach or default by [Mantaline] hereunder, excepting when caused by the proximate negligence of [PPG]." Paragraph 13 of the Purchase Order, which requires arbitration of any dispute arising from the Purchase Order, also provides that "[t]he party against which the award is rendered shall assume and pay all costs associated with such arbitration, including but not limited to reasonable attorney's fees incurred by the other party."

On May 16, 2005, the Award of Arbitrator was issued. PPG's appx., tab L. After a succinct discussion of the background of the case and the evidence presented, the Arbitrator made the following finding:

It is clear to the arbitrator that there were various physical conditions and chemical reaction (sic) that had an impact on the opacifier that resulted in the described failures. There was considerable speculation, particularly by the experts that appeared for the Respondent, as to what those conditions were and what role they played in the failures. However, the arbitrator, due to the lack of field measurements and/or additional first hand testimony does not feel that he can say with any reasonable degree of certainty what actually caused the failures. Therefore, the arbitrator cannot say that it is more likely than not that the sulfur found in the wedge gaskets or any other physical characteristic of the wedge gasket was the cause of the complained of failure of the spandrels. As a result of this finding the arbitrator must deny [PPG's] claim for indemnification.

Award at 5.

In accordance with paragraph 13 of the Purchase Order, the Arbitrator awarded Mantaline $15,000 in attorney's fees. This amount appears to be an estimate because the Arbitrator found that "[t]here was no evidence presented [by Mantaline] as to what constitutes reasonable attorneys' fee (sic)." Award at 5. The Arbitrator's ruling on attorney's fees apparently took Mantaline by surprise; in their post-arbitration brief Mantaline explicitly requested that it be permitted to submit an application for attorney's fees and expenses in the event that the Arbitrator ruled in its favor. Application, exh. 4. at 15. Additionally, because the Purchase Order required that costs be paid by the losing party, the Arbitrator ordered that PPG pay the administrative fees of the American Arbitration Association ($8,500), as well as the Arbitrator's compensation ($12,650). Award at 5. The Arbitrator also ordered that PPG pay Mantaline the sum of $2,650, which sum Mantaline had already advanced to the American Arbitration Association. Finally, the Arbitrator stated that his Award was "in full settlement of all claims and counterclaims submitted to this Arbitration," and that "[a]ll claims not expressly granted herein are hereby, denied." Award at 5.

Standard of Review

At the outset it is helpful to distinguish between vacating the award, on the one hand (which PPG requests), and modifying or correcting it, on the other (which Mantaline requests). The standards for each requested action are not identical, but, as a general matter, a Court has little discretion to disturb an arbitration award. The Honorable Joy Flowers Conti recently summarized the basic principles:

When parties move to confirm or vacate an arbitration award, the court's function in confirming or vacating a commercial arbitration award is severely limited. If the parties have clearly agreed to arbitrate, the courts will set aside arbitral verdicts only in very unusual circumstances, and there is a strong presumption in favor of the arbitration award.

Daugherty v. Washington Square Securities, Inc., 271 F. Supp. 2d 681, 685-86 (W.D. Pa. 2003) (citations omitted).

Under the Federal Arbitration Act, 9 U.S.C. § 1 et seq., a court may vacate a arbitration award under limited circumstances:

(a) Where the award was procured by corruption, fraud, or undue means.

(b) Where there was evident partiality or corruption in the arbitrators, or either of them.

(c) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.

(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

9 U.S.C. § 10. The Third Circuit has also recognized additional, non-statutory bases upon which a reviewing court may vacate an arbitrator's award under the FAA. See generally Tanoma Mining Co. v. Local Union No. 1269, 896 F.2d 745, 749 (3d Cir.1990) (recognizing that an award may be set aside if it displays "manifest disregard for the law"); Swift Indus., Inc. v. Botany Indus., Inc., 466 F.2d 1125, 1134 (3d Cir.1972) (noting that an arbitrator's award must meet the test of fundamental rationality). Finally, if a District Court decides to vacate an arbitration award, under certain circumstances the Court can remand the matter to arbitration. See 9 U.S.C. ยง 10(e) ("Where an ...


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