Opinion
No. 99-132
September 21, 1999
MEMORANDUM
This Motion to Dismiss arises out of a Petition to Vacate Arbitration Award. Because Petitioners fail to establish any basis for federal subject matter jurisdiction, the Motion is granted.
The Galantes have failed to submit a brief in opposition to Gorski's Motion. Under Civ Rule 7.1(c), such a brief would have been due within fourteen days after service of the motion, otherwise the motion may be granted as uncontested. Gorski has certified that the motion was served on the Galantes on August 17, 1999. Although this Court has granted the motion on its merits, it is noted that this Court would also have been within its discretion to grant the motion as uncontested.
I. INTRODUCTION
This matter stems from a dispute between Respondents Gorski Construction ("Gorski") and Petitioners Anthony and Deborah Galante ("the Galantes") over a failed construction contract. When the Galantes refused payment to Gorski and attempted to renegotiate the contract, Gorski refused renegotiation. In response, the Galantes terminated the contract.In the event of any dispute, the original contract contained a clause which bound the parties to arbitration under the Construction Industry Rules of the American Arbitration Association. In accordance with the contract, Gorski submitted a claim to the American Arbitration Association for damages arising out of nonpayment as well as wrongful termination of the contract. On July 12, 1999, the arbitrators awarded Gorski Construction $470,218.70.
In response, the Galantes filed a Petition to Vacate Arbitration Award under 9 U.S.C. § 10 in this Court. The Galantes allege a number of errors on the part of the arbitration board as its basis for asking this Court to vacate the award, including partiality, misconduct, refusal to hear evidence, inflated recovery, and an unenforceable contract. Gorski then filed this Motion to Dismiss Petition to Vacate Arbitration Award for Lack of Subject Matter Jurisdiction.
II. DISCUSSION
The basis of Gorski's Motion is that the district court lacks subject matter jurisdiction over the matter. While 9 U.S.C. § 10 contains language which authorizes the district court to vacate arbitration awards for all the grounds that the Galantes allege, the Federal Arbitration Act has been held not to create any independent federal subject matter jurisdiction where it does not otherwise exist. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32, 103 S.Ct. 927, 942 n. 32, 74 L.Ed.2d 765 n. 32 (1983). The Supreme Court noted in Moses that the Federal Arbitration Act "creates a body of federal substantive law, . . . yet it does not create any independent federal-question jurisdiction under 28 U.S.C. § 1331." Id.
9 U.S.C. § 10. Same; vacation; grounds; rehearing
(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 application of any party to the arbitration —
(1) Where the award was procured by corruption, fraud or undue means.
(2) Where there was evident partiality or corruption in the arbitrators, or either of them.
(3) 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 any other misbehavior by which the rights of any party have been prejudiced.
(4) 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.
(5) Where an award is vacated and the time within which the agreement required the award to be made has not expired the court may, in its discretion, direct a rehearing by the arbitrators.
Similarly, the United States Court of Appeals for the Third Circuit ("Third Circuit") has held that the Federal Arbitration Act does not confer subject matter jurisdiction where the parties have not alleged any other basis of independent federal subject matter jurisdiction. Kaplan v. First Options of Chicago, 143 F.3d 807, 814 (3d Cir. 1998); Isidor Paiewonsky Assocs., Inc. v. Sharp Properties, Inc., 998 F.2d 145, 153 n. 8 (3d Cir. 1993) (". . . it is well-established that the Federal Arbitration Act cannot supply federal jurisdiction where it does not otherwise exist.")
Prior to the Supreme Court's and the Third Circuit's resolution of the issue, the United States District Court for the Eastern District of Pennsylvania had already ruled similarly in a case which was affirmed without opinion in the Third Circuit: "[s]ubject matter jurisdiction must exist either as a result of diversity of citizenship between the parties, 28 U.S.C. § 1332 (1970), or as a result of federal question jurisdiction, 28 U.S.C. § 1331 (1970), arising under a statute other that the United States Arbitration Act." Litton RCS, Inc., v. Pennsylvania Tpk. Comm'n, 376 F. Supp. 579, 585 (E.D.Pa. 1974), aff'd, 511 F.2d 1394 (3d Cir. 1975).
The parties are both citizens of the Commonwealth of Pennsylvania, precluding any establishment of diversity under 28 U.S.C. § 1332(a), and they have not raised any other federal question pursuant to 28 U.S.C. § 1331. Therefore, this Court lacks federal subject matter jurisdiction over Petitioners' Motion to Vacate the award and as such Respondent's Motion to Dismiss is granted under Fed.R.Civ.P 12(b)(1).
ORDER
AND NOW, this day of September, 1999, upon consideration of Respondent's Motion to Dismiss for Lack of Subject Matter Jurisdiction, (Doc. No. 4), IT IS HEREBY ORDERED that the MOTION is GRANTED, and the Petition to Vacate Arbitration Award (Doc. No. 1)is DISMISSED.