Court Opinion

ID: 1004510
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:42:20.838686+00
Date Added: 2024-06-11T11:07:16.961005
License: Public Domain

FILED:   May 29, 2001
                           UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                           No.   01-1677

VULCAN CHEMICAL TECHNOLOGIES,    INCORPORATED;
VULCAN MATERIALS COMPANY,
                                             Plaintiffs-Appellees,

     versus

PHILLIP J. BARKER, d/b/a Sabra Asia,
                                                 Defendant-Appellant.

                          O P I N I O N

     This day came Vulcan Chemical Technologies, Inc. and Vulcan

Materials Company, the plaintiffs, and Phillip J. Barker, the

defendant, for hearing upon a motion to stay pending appeal an

order of the district court filed May 24, 2001 which enjoined

Barker from “pursuing this matter in any other court in any

jurisdiction until this [district] court rules on the petitioner’s

[Vulcan’s] petition to vacate the arbitration award.”

     The arbitration award grew out of a distribution agreement

dated March 1, 1995 between Rio Linda Chemical Company, Inc. and

Phillip J. Barker, granting Barker an exclusive distributorship for

Rio Linda for certain of Rio Linda’s chemical products in the
nations of Japan, South Korea, the People’s Republic of China, and

Taiwan. Rio Linda was purchased by Vulcan Materials Company, Inc.,

which renamed it Vulcan Chemicals Technologies, Inc., and for our

purposes, Vulcan Chemicals is a wholly-owned subsidiary of Vulcan

Materials.

       On April 14, 1999, Barker sued Rio Linda, Vulcan Chemicals,

and Vulcan Materials in the Superior Court for the County of

Sacramento, California, claiming breach of contract against Vulcan

Chemicals and that Vulcan Materials, as the alter-ego of Vulcan

Chemicals, was also responsible.         Barker was and is a citizen and

resident   of   California,   and   at    that   time   Vulcan   Chemicals’

principal place of business was California.

       On July 29, 1999, the Vulcan defendants moved the California

Superior Court for a stay of the action or its dismissal and for an

order compelling arbitration pursuant to the California Arbitration

Act.    Cal. Code Civ. Pro. § 1280, et seq.

       On December 3, 1999, the Superior Court for the County of

Sacramento entered its order compelling arbitration of the case and

staying the action pending completion of arbitration.            This order

recited that Barker opposed the participation of Vulcan Materials

on the ground that it was not a party to the contract, but was a

party to the action only on an alter-ego theory.                 The order

recites, “[S]ince defendant Vulcan Materials agrees to participate

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in the arbitration and to be bound by the arbitrator’s decision,

this is a moot point.”

     Pursuant to that order, extensive arbitration hearings were

held, all in California, and I note that the contract between

Barker   and   Rio   Linda   provides   that   the   arbitration   be   in

Sacramento, California or another mutually acceptable California

location and will be final and binding.        Arbitration followed, the

arbitrator being a retired California Superior Court judge, and I

am told by the attorneys there were 26 days of hearings, 22

witnesses, and over 1,000 exhibits, the record of the arbitration

having almost 29,000 pages.

     On December 22, 2000, an interim award was issued by the

arbitrator, and on March 21, 2001, the final award was mailed to

the parties by the arbitrator.      On April 5, 2001, Barker filed a

petition in the Superior Court for the County of Sacramento to

confirm the award.     Section 1228.4 of the California Code Civil

Procedure provides that a period of 10 days must elapse from the

service of the award to the filing of the petition, and service of

process rules add an additional five days to the waiting period.

So April 5, 2001 was the first day that Barker could file his

petition to confirm with the California Superior Court.        As noted,

Barker’s petition to confirm the award was filed on April 5, 2001.

In the meantime, on March 23, 2001, the Vulcan defendants filed a

petition to vacate in the United States District Court for the

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Western District of Virginia at Big Stone Gap.                      This petition

claimed diversity jurisdiction under 28 U.S.C. § 1332 (1993) and a

cause of action under the Federal Arbitration Act, 9 U.S.C. § 10

(1998), to vacate an award.

     Also in the meantime, on April 16, 2001, the Vulcan defendants

had removed to the United States District Court for the Eastern

District of California the petition of Barker to confirm his award.

The California district court remanded that matter to the state

court by order entered May 10, 2001, and on that same day the

Vulcan defendants filed their petition in the Sacramento County

Superior Court to vacate the award, a hearing on which, I am told,

was set for June 11, 2001, but has since been changed.

     I   am    further    told     by    the   attorneys   that   the     California

Superior Court, at Vulcan’s instance, has continued a hearing on an

application of Vulcan to stay the action in the Sacramento Superior

Court and has set that matter for 9:00 a.m. Pacific time today, May

29, 2001 (E.D.T.). Hearing on the merits, apparently on the motion

to confirm the award and to vacate the award, has been set for

tomorrow, May 30, 2001, at 2:00 p.m. Pacific time.                  At the time of

this writing, the parties find themselves in the peculiar position

that Barker has been forbidden to attend the California hearings,

but the Vulcan defendants are free to attend those hearings, and

doubtless they will attend.               I am told, and believe, that one

reason   for    this     anomaly    is    the   current    motion    to    stay   the

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injunction issued by the district court in the Western District of

Virginia.

       28 U.S.C. § 2283 provides that a federal court “may not grant

an injunction to stay proceedings in a State court except as

expressly authorized by act of Congress, or where necessary in aid

of its jurisdiction, or to protect or effectuate its judgments.”

Thus, the order of the district court complained of should not have

been issued pursuant to § 2283 unless, with an exception recognized

by that statute, this being an action in personam rather than in

rem.

       I am of opinion that the very best case the Vulcan defendants

can make on appeal is doubtful, for the following reasons:

       A number of the cases apply § 2283 under a first-filed rule so

that a proceeding which has been commenced in a state court at the

time of the federal injunction more nearly receives the protection

of the statute than does a state proceeding filed after the federal

action.   In the case at hand, Barker sued the Vulcan defendants on

April 9, 1999.      It is in that same case that the order to

arbitrate, at the instance of the Vulcan defendants, was entered.

And it is in that same case that the current proceedings in the

California courts are being adjudicated.      Section 1292.6 of the

California Code of Civil Procedure Code provides that after a

petition has been filed involving arbitration, the court in which

such petition was filed retains jurisdiction to determine any

                                  5
subsequent petition involving the same controversy and that any

subsequent petition must be filed in the same proceeding.            Section

1293 of that same Code provides that an agreement made in the State

providing for arbitration within the State “shall be deemed a

consent of the parties thereto to the jurisdiction of the courts of

this State to enforce such agreement.”         Barker was and is a citizen

of California, and at the time the contract was made, Vulcan

Chemicals was also a citizen of California.          That is shown by the

order of the district court referred to, remanding Vulcan’s removal

of the petition to confirm to the California State courts, so there

is no reason to believe that both § 1292.6 and § 1293 should not

apply in this proceeding.

       Along the same line is the case of Towers v. Roscoe-Ajax, 258

F. Supp. 1005 (S.D. Cal. 1966), holding that the confirmation of an

arbitration award is not a separate proceeding under the California

Arbitration Act, which is the statute involved here.          The case of

Brock v. Kaiser Foundation, 13 Cal. Rptr. 2d, 678 (Ct. App. 1992)

also   holds   the   jurisdiction    of   an   arbitration   court    to   be

continuing.

       So far as any first-filed rule or any derivation of it is a

ground of decision in this case, I am of opinion that Barker is the

beneficiary of that rule.           He filed first, and his case yet

continues in full force and virtue in the courts of California.            In

that respect, I note, especially, that the Vulcan defendants, on

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May 10, 2001, filed a motion, pending at the time of the district

court’s injunction, and which is yet pending, in the Superior Court

of Sacramento County, to vacate the award, the same motion which is

pending here.

     Our research discloses only one case in a court of appeals on

the same facts.        It is the case of Diniaco v. Colvin, No. 88-3802

(6th Cir. 1988), which is referred to in 865 F.2d 1269 as an

unpublished opinion.          That case affirmed the holding of a district

court   which,   on     the    same   facts   present   here,   had   dismissed

Diniaco’s request for an injunction to prevent a State court from

reducing an arbitration award to judgment.              I think that § 2283

applies   and    the    case    of    Atlantic   Coastline   Railway    Co.   v.

Brotherhood of Locomotive Engineers, 398 U.S. 281, 297 (1970),

should control this case.            Although on different facts, that case

recited the rule that “Any doubts as to the propriety of a federal

injunction against State court proceedings should be resolved in

favor of permitting the State courts to proceed in an orderly

fashion to finally determine the controversy. The explicit wording

of § 2283 itself implies as much and the fundamental system of a

dual system of courts reads inevitably to that conclusion.”                   398

U.S. at 297.

     Despite the fact that the federal district court in the

Western District of Virginia may have jurisdiction to vacate the

award, as did the Superior Court of Sacramento County, California,

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it should not have issued its injunction because of 28 U.S.C. § 2283.

     I have entered an order today staying the order of the

district court appealed from.

                                       /s/
                                  H. E. Widener, Jr.
                             United States Circuit Judge

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