Court Opinion

ID: 9447469
Source: CourtListenerOpinion
Date Created: 2023-08-03 22:35:52.88816+00
Date Added: 2024-06-11T17:31:03.511522
License: Public Domain

On Rehearing
ALDRICH, Circuit Judge.
Commonwealth has petitioned for rehearing, alleging that the court has “materially misapprehended” the record, and that it has decided questions on which the district court was to take “further evidence.” It first alleges that we could not decide, meaning should not have decided, whether restoration in specie was required. It points out that some things in fact could not be restored, and that others, not having been acquired from Lummus, did not have to be (Lummus having acted, in purchasing and paying for certain material, as Commonwealth’s agent, and not as a vendor). It adds that the time was not ripe in any event to determine what restoration was called for, and charges the court with having “conclude[d] that restoration of the entire refineries be required.” This is not a correct reading of our opinion. Rather, we decided that Commonwealth was not really pursuing a restitutionary remedy — a deduction there has been no serious attempt to refute — but that the true nature of the action was an endeavor to recover damages while rescinding the arbitration agreement alone. Possibly we did not adequately express our views on the New York lav/. Although we recognize that New York may regard an arbitration clause as falling upon a rescission of the principal agreement, we do not believe that it would carry this to the point of permitting (where the fraud in no way related to it) what in effect would be a true rescission of the arbitration clause only. The petition for rehearing confirms our belief that this is what Commonwealth is seeking.
The next portion of the petition we find somewhat extraordinary. Having, as we pointed out, alleged fraud in the district court in the vaguest and most general of terms, Commonwealth now submits an affidavit as to what, specifically, at least in part, the fraud consisted. Then it submits an affidavit that this particular matter was discovered only in March 1959. It asserts that these affidavits should now be accepted to “preserve the court’s appellate jurisdiction.” There is no explanation why they were not submitted earlier, except some suggestion that the issue of the date of discovery was not ripe. However, Commonwealth’s original brief did not suggest this issue was not ripe, but contended, quite ineffectually, that the record was adequate. We have devoted a sizable portion of the past several months to the complexities of this unusually difficult ease. If we have erred on the record before us, we would wish to reconsider. But we have no desire to consider a new record at this stage. The affidavits will not be received.
Commonwealth’s last contention is that, “Since the Court below was the first court to take hold of this matter and is the only court in which Commonwealth’s claims are pending, the District Court should not stay its own proceedings unless and until Lummas establishes that Commonwealth’s claims are arbitrable under the terms of the arbitration clause.” What Commonwealth has partly in mind is that the arbitration clause excludes the arbitration of “claims or damages for which either party has contracts of insurance protecting their respective interests.” Commonwealth fears that our statement in footnote 1, (“No issue has been raised with respect to the last sentence and we assume it *933has no applicability to the claims here' involved.”), will foreclose it from contending that some of its claims against Lummus are not arbitrable because Lum-mus is protected by insurance. We of course had no such intention. We merely assumed that there was no insurance because no point was made of it. But Commonwealth goes further. It alleges that we also, in effect, decided this issue when we stated that the court below should now stay the proceedings before it, apparently overlooking the last two sentences of the penultimate paragraph of the opinion.
Basically, Commonwealth contends that the court could not stay its proceedings without a motion to that effect by Lummus. It is true that Lummus could have made such a motion as one of the means by which it could compel arbitration. But Lummus already has an action pending in New York to accomplish this very thing. The stay that we indicated is not the equivalent of the stay which would be entered upon a motion for a stay of the action under an arbitration statute. Such a stay would indeed settle all questions of arbitrability. The stay we suggested is based on the belief that there should be no further duplication of litigation in two Federal courts of concurrent jurisdiction. We intimated at the beginning of our opinion that there would have been sound reasons for the court below to have deferred initially to the New York court. Clearly now that certain issues in the case have been decided,* we see no reason for the court below to remain as the court which will supervise whatever arbitration is to be had. Under the terms of the arbitration agreement arbitration will take place in New York. New York law will be controlling. We think that a court in New York should supervise the arbitration.
The petition for rehearing is denied.

 It seems late for Commonwealth to suggest that the general scope of the arbitration clause was not before the court. But we have not decided that some special exception might not exist, of which damage claims covered by insurance ia an obvious example.