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Martik Brothers, Inc. v. Kiebler Slippery Rock

April 20, 2009

MARTIK BROTHERS, INC., PLAINTIFF,
v.
KIEBLER SLIPPERY ROCK, LLC, DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

MEMORANDUM OPINION

Introduction

Before the Court are plaintiff Martik Brothers, Inc.'s ("Martik's) Petition to Confirm an Arbitration Award (doc. no. 1-2), and defendant Kiebler Slippery Rock, LLC's ("Kiebler's") Motion to Vacate or in the Alternative to Modify Arbitration Award (doc. no. 10). After careful consideration of the petition to confirm and answer thereto, the motion to vacate, the memorandum of law in support and opposition to the motion to vacate and the respective supporting materials, the Court will grant the petition to confirm, and will deny the motion to vacate.

Petition to Confirm Award Removed to Federal Court

On November 7, 2008, following two days of hearings on August 22 and October 22, 2008, a three member panel of AAA arbitrators issued a unanimous Award of Arbitration for Martik against Kiebler in an amount in excess of $2.1 million as the unpaid balance due Martik pursuant to two contracts for construction of buildings and site work at the Slippery Rock Quadrangle near Slippery Rock, Pennsylvania, plus interest, penalties and attorneys fees and costs. The arbitration was conducted pursuant to the Construction Industry Arbitration Rules of the American Arbitration Association.

Martik, a Pennsylvania corporation with principal place of business in Pennsylvania, filed its petition to confirm an arbitration award in the Court of Common Pleas of Washington County pursuant to the Pennsylvania common law arbitration statute, 42 Pa.C.S. § 7342(b), which provides for confirmation of an arbitration award after 30 days in the absence of objection by the non-prevailing party. On December 30, 2008, Kiebler, an Ohio corporation with principal place of business in Ohio, filed a Notice of Removal of the petition to confirm claiming diversity of citizenship jurisdiction, 28 U.S.C. § 1332, and federal question jurisdiction, 28 U.S.C. § 1331, pursuant to 28 U.S.C. § 1441(a). Kiebler claims federal question jurisdiction under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., because the two contracts involved interstate commerce, triggering the FAA.

Motion to Vacate or Modify

Threshold Issue

Initially, Martik argues that the motion to vacate is untimely under the Pennsylvania Uniform Arbitration Act, because Kiebler filed no objections within 30 days as required thereby, 42 Pa.C.S. § 7342(b), and that this is not an FAA case because the construction contracts at issue do not "involve commerce."*fn1 "Commerce" is defined by the FAA, insofar as relevant to this case, as "commerce among the several States . . . ." 9 U.S.C. § 1. If the Court agrees with Kiebler that the arbitration agreements involve interstate commerce and that, therefore, the FAA applies, Kiebler's motion to vacate is timely. 9 U.S.C. § 12 ("Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered.").

The agreements to arbitrate in this case do not specify whether the Pennsylvania or the Federal arbitration act applies. Under the FAA, the word commerce is construed as conferring the "broadest permissible exercise of Congress' Commerce Clause power." Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 53 (2003), citing Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 273-274 (1995). The Court agrees with Kiebler that the construction contracts between an Ohio and a Pennsylvania company for construction of buildings in Pennsylvania are contracts "involving commerce." See Monte v. Southern Delaware County Auth., 321 F.2d 870 (3d Cir. 1963) (construction contract for a large project may be found to involve commerce and fall within the scope of the FAA even if the project contemplated by the contract is located entirely within one state, since the presence of other interstate elements in the performance of the contract such as delivery of materials traveling in interstate commerce, satisfies the jurisdictional prerequisite). Accordingly, the FAA applies, and Kiebler's motion to vacate is timely.

Grounds for Vacating or Modifying Arbitration Award

Section 10 of the FAA sets forth the grounds for vacating an arbitration award as follows:

(a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the ...


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