Opinion ID: 1436064
Heading Depth: 1
Heading Rank: 20

Heading: John F. Harkins Co.

Text: Lloyd's asserts that we have rejected the rule proposed by Century in John F. Harkins Co. v. Waldinger Corp., 796 F.2d 657 (3d Cir.1986). In John F. Harkins, a construction case involving a dispute between a primary contractor and a subcontractor, the question was whether the primary contractor and subcontractor intended the terms of the principal contract between the project manager and primary contractor, including the principal contract's restrictive arbitration clause, to govern the terms of the subcontract between the primary contractor and the subcontractor, where the subcontract included a broader arbitration clause but incorporated the general contract's obligations. The principal contract between the project manager and the primary contractor addressed arbitration of disputes, providing for arbitration only of those disputes named in the contract as arbitrable: [i]n any case in which it is provided by the terms of this contract that any specific dispute or specific payment to be made shall be determined by arbitration, such arbitration shall be conducted [in a certain manner]. Id. at 660-61. Elsewhere, the principal contract provided for arbitration only of disputes over written change orders: [i]n case of disagreement as to the amount to be paid or allowed [under a written change order], the Contractor shall promptly comply with the order and the amount shall be determined by arbitration as herein provided. Id. at 661. In contrast to the principal contract, the subcontract between the primary contractor and the subcontractor contained a broadly worded arbitration clause providing that [a]ll disputes ... arising hereunder shall be subject to arbitration. ... Id. at 660. The subcontract also included a section referring to the principal contract. This section provided that the subcontractor's work and materials used shall be in strict accordance with the [principal] CONTRACT DOCUMENTS. Id. It also provided that SUBCONTRACTOR shall be bound by all provisions of these documents and also by the applicable provisions of the PRINCIPAL CONTRACT to which the CONTRACTOR is bound, and to the same extent. ... Id. Reviewing for clear error, we upheld the district court's interpretationwhich was based on the provisions' language and on extrinsic evidence that included an unopposed affidavit stating that the parties intended the subcontract's shall be bound section to limit the subcontractor's rights against the primary contractor to those of the primary contractor against the project managerthat the parties intended the subcontract to incorporate the principal contract's more restrictive arbitration clause. Id. at 659-62. Under this interpretation, we upheld the district court's decision that arbitration must be enjoined because the dispute did not fall within that clause's scope. Lloyd's reads John F. Harkins as a basis for rejecting Century's distinction between the effects of incorporated arbitration clauses that specify the parties to whom they apply and those lacking such restrictions. Considering the case's standard of review and its facts, however, John F. Harkins does not support Lloyd's's interpretation. But neither does it compel a result based solely on an arbitration clause's specifying by name the parties to which it applies, because, as seen in John F. Harkins, a second agreement's incorporating language may affect the application of that clause to new parties. The result depends on the parties' intent.