Appendix — General Atomic Co. v. United Nuclear Corp.

8. : vourt, U_S.

FILED

82-1104

DEC 80 1982

ALEX :

No. —

IN THE

Supreme Court of the United States

OCTOBER TERM, 1982

GA TECHNOLOGIES INC.,

and GENERAL ATOMIC COMPANY,

Petitioners,

Vv.

UNITED NUCLEAR CORPORATION,

Respondent.

APPENDIX TO PETITION FOR

A WRIT OF CERTIORARI TO THE

SUPREME COURT OF NEW MEXICO

NATHAN LEWIN

(Counsel of Record)

STEPHEN L, NIGHTINGALE

MILLER, Cassipy, LARRocA & LEWIN

2555 M Street, N.W., Suite 500

Washington, DC 20037

(202) 293-6400

JOHN D. Ross

JOHN P, EASTHAM

Ropey, DicKAson, SLOAN, AKIN

& Ross, P.A.

Albuquerque, NM

SetH D. MONTGOMERY

MontTGOMERY & ANDREWs, P.A.

Santa Fe, NM

Attorneys for Petitioners

a SE

PRESS OF BYRON 8. ADAMS PRINTING, INC., WASHINGTON, D.C,

APPENDIX TABLE OF CONTENTS

Page

, ag And Judgment Of The Supreme Court Of

ew Mexico, September 15, 1982 .............. la

B. Opinion, Decision And Judgment Of The District

Court Of The First Judicial District, State Of New

Mexico, County Of Santa Fe, January 9, 1981 ... 20a

C. Order Of The Supreme Court Of New Mexico Deny-

ing Rehearing, October 4, 1982 ...........00006- 36a

. Partial Award (With Protest And Dissent To Partial

cd 56h bs 0eke ctu reweeekcadbbeawitindes 37a

. Final Award Issued In Arbitration On September

DEE Kicadenddeuienbicbdckastipepeekbacces 92a

. Opinion Of The Court In United Nuclear 4 3 v.

American Arbitration Ass’n, No. 78-522 (D.N.M.

OSUEE T, SOVEE cfc cddcreussevhndssdncs cee 152a

. Opinion Of The Court In United Nuclear Corp. v.

General Atomic Co., Civil Nos. 79-329-E and 80-339-

OE Fi, BED Sa nscle sheds ckbmaa tear vekekeess 160a

. Opinion Of The Court In v. Marion Manufac-

turing Co., No. 74-659 (D.S.C. March 11, 1976) .. 166a

la

APPENDIX A

UNITED NUCLEAR CORPORATION,

Plaintiff-Appellee,

v.

GENERAL ATOMIC CoMPANY,

Defendant-Apellant.

No. 13536.

Supreme Court of New Mexico.

Sept. 15, 1982.

Rehearing Denied Oct. 4, 1982.

Rodey, Dickason, Sloan, Akin & Robb, Albuquerque,

Montgomery & Andrews, Seth D. Montgomery, Santa Fe,

Miller, Cassidy, Larroca & Lewin, Howrey & Simon. Wash-

ington, D.C., for defendant-appellant.

Bigbee, Stephenson, Carpenter, Crout & Olmsted, Harry

L. Bigbee, Donnan Stephenson, Santa Fe, for plaintiff-

appellee.

OPINION

EASLEY, Chief Justice.

This complex billion-dollar dispute between United Nuclear

Corporation (UNC) and General Atomic Company (GAC) has

been in and out of numerous forums from coast-to-coast. An

outline of the whole tangled procedural history would fill a

sizeable book. We confine the recitation of facts as closely as

possible to those that are material to a decision on the narrow

issues raised in this, the most recent of two dozen or so times

the case has been considered in our Court.

In this part of the controversy GAC appeals a decision of the

Santa Fe District Court (the Santa Fe court) declaring void a

2a

California arbitration award favorable to GAC, and affirming

the prior judgments favorable to UNC. The issues are:

1. Whether the decisions of the United States Supreme

Court in General Atomic Co. v. Felter, 434 U.S. 12, 98 S.Ct.

76, 54 L.Ed.2d 199 (1977) (Felter I) and General Atomic Co. v.

Felter, 436 U.S. 493, 98 S.Ct. 1939, 56 L.Ed.2d 480 (1978)

(Felter IT) prohibit the Santa Fe court from acting to void the

arbitration award and affirm the prior judgments.

2. Whether the Santa Fe court had jurisdiction to void the

arbitration award made in California under the Federal

Arbitration Act procedures, on the grounds that the arbitra-

tion board had a duty to invoke the doctrine of res judicata and

to give full faith and credit to our previous final decisions on all

the issues raised in the arbitration hearings.

3. Whether the Federal Arbitration Act, 9 U.S.C. Sec-

tions 1-14 (1976), prevents the trial court from voiding the

award.

4. Whether UNC’s claim for supplemental relief is cogniz-

able under the New Mexico Declaratory Judgment Act, Sec-

tions 44-6-1 to -15, N.M.S.A.1978.

GAC contends the Santa Fe court’s decision exceeds its

jurisdiction under federal law, violates the mandates in Felter

I and Felter II, conflicts with the Federal Arbitration Act, and

violates the declaratory judgment rules.

On the other hand, UNC claims that the trial court’s decision

conforms in all details with the mandates in Felter J and Felter

II, UNC further urges that the arbitration award was void

under the doctrine of res judicata since the prior final decisions

of this Court, which were denied certiorari by the United

States Supreme Court, held that there was no agreement to be

arbitrated. These decisions hold that GAC, by its own actions,

forfeited any right to arbitrate and that the dispute was so

enmeshed with antitrust claims as to preclude arbitration.

UNC further defends that the arbitrators exceeded their au-

thority and manifestly disregarded the outstanding final judg-

3a

ments and other applicable law and, moreover, that making

claim for supplemental relief under the Declaratory Judgment

Act was the proper procedure.

In 1975, UNC sued GAC in a declaratory judgment action to

invalidate a uranium contract (1973 Supply Agreement). The

Santa Fe court granted a preliminary injunction restraining

GAC from “filing or prosecuting any other action * * * in any

other forum * * *,” including “arbitration proceedings.” We

note here that the trial court did not restrain GAC from filing a

motion in the Santa Fe court to stay the trial pending arbitra-

tion or from filing a motion to order arbitration. We affirmed

the decision of the trial court. General Atomic Co. v. Felter, 90

N.M. 120, 560 P.2d 541 (1977), rev'd, Felter I. The United

States Supreme Court on accepting the case on certiorari held

that the injunction violated the supremacy clause in that it kept

GAC from seeking relief in federal forums. Felter J.

GAC takes the position that every action taken by the Santa

Fe court and every decision rendered in favor of UNC by this

Court and the United States Supreme Court from the time the

unconstitutonal injunction was entered should be declared void

and of no effect. The argument is that but for the erroneous

restraint GAC could have sought arbitration, and that by the

time the restraint was lifted, the adverse final judgments on

the merits had already been issued.

However, in Felter I the United States Supreme Court

noted that GAC had announced that it desired to defend itself

by impleading UNC in federal lawsuits and federal arbitration

proceedings then being pursued by utility companies, which

were not parties to our case. “This, of course, is something

which GAC has every right to attempt to do under Fed. Rule

Civ.Proc. 14 and the Federal Arbitration Act.” Felter I supra,

434 U.S. at 18, 98 S.Ct. at 79 (emphasis added) (footnote

omitted). The Court held that GAC’s “right to pursue federal

remedies and take advantage of federal procedures and de-

fenses in federal actions” could not be restricted by a state

court. Felter I, supra, at 18-19, 98 S.Ct. at 79, citing Donovan

4a

v. City of Dallas, 377 U.S. 408, 84S.Ct. 1579, 12 L.Ed.2d 409

(1964).

We consider what Felter J did not do, in light of the claims of

GAC that the trial court’s recent decision violated the mandate

in Felter I. The United States Supreme Court did not accept

GAC’s argument that the Santa Fe court had no jurisdiction to

proceed on the merits. In fact, the opinion says that “the case is

remanded to that court for further proceedings not in-

consistent with this opinion.” Felter/, supra, 434 U.S. at 19, 98

S.Ct. at 79.

The whole impact of the opinion is that the Santa Fe court

could not impede the access of GAC to federal forums. Thus,

the Santa Fe court was left free to proceed to address the

merits of the case, as it did. There is no other reasonable

interpretation of the language in Felter J that supports GAC’s

claim that the case precluded the Santa Fe court from making

the most recent decisions.

In the meantime, the Santa Fe court proceeded with the trial

of the case. Twenty-three months after the filing of the com-

plaint and one month into the trial on the merits, GAC moved

to stay the trial, alleging that it had started arbitration

proceedings in San Diego. The Santa Fe court denied the

motion and entered an order enjoining the San Diego arbitra-

tion, stating that enmeshed antitrust issues precluded arbitra-

tion, and that in any event, GAC had waived its right to

arbitrate.

While its appeal on this decision in our Court was pending,

GAC sought mandamus in the United States Supreme Court to

set aside the judgment enjoining arbitration and the judgment

determining that the claims were not arbitrable. The United

States Supreme Court granted the petition but only insofar as

it pertained to the injunction, and held that the Santa Fe court

had done “precisely what we held that it lacked the power todo:

interfere with attempts by GAC to assert in federal forums

what it views as its entitlement to arbitration.” Felter IJ,

5a

supra, 436 U.S. at 496, 98 S.Ct. at 1940 (footnote omitted). The

Court stated further:

Clearly, our prior opinion did not preclude the court from

making findings concerning whether GAC had waived any

right to arbitrate or whether such a right was contained in

the relevant ments. Nor did our prior decision pre-

vent the Santa Fe court, on the basis of such findings, from

declining to stay its own trial proceedings as requested by

GAC pending arbitration in other forums. But, as demon-

strated supra, we have held that the Santa Fe court is

without power under the United States Constitution to

interfere with efforts by GAC to obtain arbitration in

federal forums on the ground that GAC is not entitled to

arbitration or for any other reason whatsoever. GAC, as

we previously held, has an absolute right to present its

claims to federal forums.

Felter II, supra, at 496-97, 98 S.Ct. at 1940-41.

We note what the United States Supreme Court did not do in

Felter II. Although GAC insisted that the Santa Fe court was

without jurisdiction, that all the issues were subject to arbitra-

tion, that there was no waiver, and that the contract was valid,

the United States Supreme Court did not so hold. GAC further

argues that the “rationale” of the Felter opinions from the

United States Supreme Court precludes this Court from giv-

ing any consideration to numerous final judgments on all

issues, and from making any decision whatsoever regarding

GAC’s arbitration rights, and that the Santa Fe court violated

that “rationale” by declaring the arbitration award void.

A fair reading of the two Felter opinions discloses that the

main thrust is that the state court cannot deny GAC “access” to

a federal forum. There are no comments by the United States

Supreme Court bearing on the validity of the substantive

rights asserted, in the event GAC gained access to a particular

forum. Here the substantive rights had all been concluded with

final and binding judgments before the arbitration board hand-

ed down its award.

On appeal to this Court, GAC made the same arguments it is

asserting here, that the mandates of Felter J and Felter II

6a

precluded the state court from deciding that it had jurisdiction,

that the claims were unarbitrable, and that there was a waiver

of arbitration. This Court especially rejected these claims by

GAC after analyzing in considerable detail the bodies of law

from throughout the United States on each of the subject

matters.

We affirmed the decision of the Santa Fe court that the court

had jurisdiction to decide the question of arbitrability of the

issues, that the antitrust issues were so enmeshed in the whole

case that none of the questions were subject to arbitration, and

that the actions of GAC constituted a waiver of its right to

arbitration. United Nuclear Corp. v. General Atomic Co., 98

N.M. 105, 597 P.2d 290, cert. denied, 444 U.S. 911, 100 S.Ct.

222, 62 L.Ed.2d 145 (1979) (our 1979 opinion).

GAC petitioned the United States Supreme Court for cer-

tiorari, contending, among other things, that the erroneous

April 2, 1976 injunction had barred GAC from demanding

arbitration and that the December 27, 1977 judgment, finding

that there were no arbitrable issues as a matter of law and that

GAC had waived its right to arbitrate, violated the Felter case

mandates. GAC’s petition was denied. General Atomic Co. v.

United Nuclear Corp., 444 U.S. 911, 100S.Ct. 222, 62 L.Ed.2d

145 (1979).

At this point the decision on the material issues raised in the

instant proceeding became “graven in stone,” as UNC claims:

1. The Santa Fe court had jurisdiction.

2. Arbitration was totally out of the picture since antitrust

issues are not arbitrable and were inextricably mixed with

other questions.

3. GAC had forfeited its right to arbitration by failing to

take steps to preserve that right.

4. The Felter opinions were not violated by our decisions

on the above issues.

One would think the arguments on these items were set at

rest. Not so. GAC found reasons to assert the same claims

7a

through numerous later proceedings. After GAC’s motion for

stay of proceedings was denied, the Santa Fe court entered an

order imposing sanctions and a default judgment in favor of

UNC against GAC, holding that GAC was guilty of “utmost

bad faith” in refusing to comply with discovery orders. A later

judgment held that the 1973 Supply Agreement was void and

performance thereunder was excused.

On August 29, 1980, this Court affirmed in all material

respects, holding that the 1973 Supply Agreement was void

under the antitrust doctrine of “contract illegality,” and that

its enforcement would violate the public policy of this state.

United Nuclear Corp. v. General Atomic Co., 96 N.M. 155,

200, 629 P.2d 231, 276 (1980), cert. denied, 451 U.S. 901, 101

S.Ct. 1966, 68 L.Ed.2d 289 (1981) (our 1980 opinion).

GAC sought to appeal to the United States Supreme Court

both this Court’s August 29, 1980 judgment and (for the second

time) this Court’s 1979 opinion holding the dispute nonarbitr-

able, again contending that all proceedings after April 2, 1976,

violated the Felter decisions and were void. The appeal was

dismissed, and certiorari was denied. General Atomic Co. v.

United Nuclear Corp., 451 U.S. 901, 101 S.Ct. 1966, 68

L.Ed.2d 289 (1981).

GAC had made application to the American Arbitration

Association (AAA) to arbitrate this dispute in San Diego. On

November 30, 1977, GAC moved the Santa Fe court to stay the

trial that was in progress in order to pursue arbitration. How-

ever, GAC never asked the Santa Fe court or any other court

for an order compelling arbitration pursuant to Section 4 of the

Federal Arbitration Act. Although AAA had announced that it

would hold the arbitration demand in abeyance until final reso-

lution on the arbitrability by an appropriate court, proceedings

were commenced and UNC was directed to appoint its arbitra-

tor. UNC filed suit in the United States District Court for the

District of New Mexico to enjoin arbitration on the basis of the

New Mexico judgment. The complaint was dismissed for lack

of subject matter jurisdiction. United Nuclear Corp. v. Gener-

8a

al Atomic Co., No. Civ. 80-845-HB (D.N.M. Dec. 11, 1980).

UNC proceeded with the arbitration under protest, but with-

drew its arbitrator before a final decision was reached.

In an effort to enjoin the arbitration, UNC sued GAC, the

AAA, and the arbitrators in the United States District Court

for the Southern District of California. That suit was dismissed

for lack of subject matter jurisdiction. Judge Enright stated

that the New Mexico courts were the most appropriate forum

to give effect to the New Mexico judgment, adding: “In

summary, plaintiff appears to have come to the wrong court for

the relief it seeks. The courts of the State of New Mexico have

the primary right and duty to enforce their judgments.”

United Nuclear Corp. v. General Atomic Co., No. 79-329-E,

slip op. at 5 (S.D.Cal. July 9, 1979).

UNC appealed Judge Enright’s decision to the United

States Court of Appeals for the Ninth Circuit. That court

denied UNC’s motion for an injunction and in an order filed

June 6, 1980, held that the validity of the arbitration could later

be reviewed in state court, explaining:

However, there appears to be nothing to prevent appel-

lant from seeking injunctive relief from a state court

— arbitration that has not been compelled by a feder-

court. Cf. General Atomic Co. v. Felter, 436 U.S. 493,

496-97 [98 S.Ct. 1939, 1940-41, 56 L.Ed.2d 480] (1978);

General Atomic Co. v. Felter, 434 U.S. [12] at 18 & n. 11

(98 S.Ct. 76 at 79 & n. 11, 54 L.Ed.2d 199] (1977). Nor does

it appear that ge ma contentions as to the effect of the

judgments of the New Mexico state courts are insulated

from eventual judicial review. Cf. 9 U.S.C. sections 9-11.

United Nuclear Corp. v. General Atomic Co., No. 80-5229 (9th

Cir. June 6, 1980) (order denying emergency motion for an

injunction pending appeal).

On September 10, 1980, after this Court had affirmed the

default judgment against GAC (our 1980 opinion), the two

remaining members of the arbitration panel filed their Final

Award holding against UNC on all material issues and granted

GAC $301,181,635 in damages.

9a

GAC sued for confirmation of the award in the United States

District Court for the Southern District of California. Judge

Enright dismissed GAC’s suit for lack of subject matter

jurisdiction. General Atomic Co. v. United Nuclear Corp., 655

F.2d 968, 969 (9th Cir. 1981), affg No. Civ. 80-1585-E (S.D.

Cal. Oct. 24, 1980), cert. denied, __. U.S. —__., 102 S.Ct.

1449, 71 L.Ed.2d 662 (1982). GAC appealed to the Ninth Cir-

cuit, which affirmed on September 8, 1981. Jd.

UNC petitioned the Santa Fe court for supplemental relief

and asked that the arbitration award be vacated. On motion by

UNC this Court appointed Judge Musgrove to handle further

matters in the case.

After Judge Enright’s dismissal of its suit, GAC sued for

confirmation of the arbitration awards in the Superior Court of

the State of California, which denied UNC’s motion to dismiss

for lack of in personam jurisdiction. UNC petitioned the Court

of Appeals of the State of California for a writ of mandate, and

that court directed dismissal of the case. United Nuclear Corp.

v. Superior Court, 113 Cal.App.3d 359, 169 Cal.Rptr. 827

(1980), cert denied, 454 U.S. 878, 102 S.Ct. 358, 70 L. Ed.2d 187

(1981). That court held the arbitration clause in the 1973 Sup-

ply Agreement could not furnish the basis for jurisdiction,

since it had been held void by decisions of the New Mexico

courts, which “are entitled to full faith and credit.” Jd. at

360-61, 169 Cal.Rptr. at 828.

The California Supreme Court denied GAC’s motion to en-

join the pending proceedings in the Santa Fe court and denied

GAC’s petition for hearing as to the California Court of

Appeals decision. United Nuclear Corp. v. Superior Court,

No. 4 Civ. 24286 (Cal.Sup.Ct., Feb. 18, 1981) (order denying

hearing). GAC petitioned for certiorari in the United States

Supreme Court to review the California Court of Appeals

decision. GAC asserted that the California court had violated

the supremacy clause and failed to implement the intent of the

two Felter cases. The Supreme Court refused to take the case.

General Atomic Co. v. United Nuclear Corp., 454 U.S. 878,

102 S.Ct. 358, 70 L.Ed.2d 187 (1981).

10a

GAC removed the supplemental proceedings in the Santa Fe

court to the United States District Court for the District of

New Mexico, which held that the removal was improper since

there was no basis for federal subject matter jurisdiction, and

remanded the case to the Santa Fe court. United Nuclear

Corp. v. General Atomic Co., No. Civ. 80-845-HB (D.N.M.

Dec. 11, 1980).

After hearing UNC’s petition for supplemental relief on the

merits, Judge Musgrove affirmed prior decisions in this case

that hold:

1. The contract containing the agreement to arbitrate was

void in its entirety.

2. There are nonarbitrable antitrust issues so entwined

with other issues that arbitration is precluded, even if there

were a valid contract to arbitrate.

3. Assuming, arguendo, that there is a valid contract to

arbitrate and that antitrust issues do not bar arbitration, GAC

still forfeited any rights to arbitration by failing to timely

assert them.

4. The above decisions, any one of which disposes of this

case on the merits, do not conflict with the United States

Supreme Court’s rulings in the Felter cases.

The Santa Fe court concluded also that the arbitrators had

exceeded their jurisdiction and acted in manifest disregard of

the law, and thus, the award was void. GAC appeals to this

Court.

1. Conflicts with Felter I and Felter II.

The United States Supreme Court mandates in Felter J and

Felter II are narrow. They simply prohibit our state courts

from specifically barring GAC’s access to federal arbitration in

order to assert its rights. This cannot be enlarged to mean that

federal arbitration is the exclusive remedy. The express lan-

guage in Felter IJ recognizes the jurisdiction of the Santa Fe

court to pass on the questions of whether there is an arbitrable

lla

contract, a waiver of arbitration, or a right to a stay of trial

pending arbitration. Th decision on these basic issues control

the disposition of this case.

Additionally, the language of the opinions cannot be in-

terpreted to mean that a void arbitration award, which has

been denied confirmation by both state and federal courts in

California, must be validated by our state court even though

numerous final judgments in our courts establish its invalidity.

In this latest proceeding, the Santa Fe court held that the

arbitrators exceeded their authority and manifestly dis-

regarded the law, siating:

By some unfathomable sophistry the two arbitrators con-

cluded that all proceedings in the New Mexico District

Court and the New Mexico Supreme Court after April 2,

1976, were void or to use their words, “coram non judice.”

They reached that conelusion even though there is not the

slightest hint that the United States Supreme Court in-

tended such a result in the prior opinions. [Felter cases. ]

Whether there was a valid contract to arbitrate and whether

there were any arbitrable issues were threshold questions.

There being nothing to arbitrate, there is no substance to

GAC’s main claim that it would have been able to seek arbitra-

tion but for the illegal injunction. The United States Supreme

Court in Felter I] stated that its prior opinion in Felter J “did

not preclude the [Santa Fe] court from making findings con-

cerning whether GAC had waived any right to arbitrate or

whether such a right was contained in the relevant agree-

ments.” Felter II, supra, 436 U.S. at 497, 98 S.Ct. at 1941.

We held in our 1979 opinion that GAC had no right whatsoev-

er to arbitration. This is a final judgment with res judicata

effect. It cannot be collaterally attacked by a claim that the

Santa Fe court’s invalid order had barred federal arbitration.

The lynch-pin is that there was never anything to arbitrate.

The effect of GAC’s argument is that all our decisions on the

merits should be “nullified” because GAC delayed asserting

claims that were patently invalid from the outset. We cannot

accept such convoluted reasoning. We again affirm the trial

court’s decision on this issue.

12a

2. Res Judicata and Law of the Case.

If ever a court decision were etched in bronze, it would be the

one holding that Felter J and Felter I] did not prevent our state

courts from deciding all the material issues in this case. United

Nuclear Corp. v. General Atomic Co., (our 1979 opinion),

supra. Like a yo-yo, this question has been propelled to and fro

innumerable times between lower courts and the United

States Supreme Court. Each time the result has been a rejec-

tion of GAC’s claims. If the doctrines of res judicata and law of

the case still have efficacy under our law, this issue has been

adequately set at rest.

The lengthy history of the prior proceedings in this case

demonstrates that each material issue before us has been

answered, not once, but several times. These final judgments

conclusively establish that the Santa Fe court had jurisdiction

to hold that the contract was void, and thus, there was no

arbitration agreement; that even if there had been a valid

contract to arbitrate, GAC had voluntarily waived its rights;

and that, in any event, none of the disputes were arbitrable

because of enmeshed antitrust issues. Notwithstanding these

prior final judgments, two arbitrators held to the contrary on

each specific issue. However, GAC’s efforts to get the arbitra-

tion award confirmed by California state and federal courts

were rejected all the way to the United States Supreme Court.

These judgments are final.

The doctrine of res judicata is firmly planted in New Mex-

ico’s jurisprudence. When there are identical parties, causes of

action, subject matter, and capacity of the parties, the first

judgment bars relief in a second case. City of Santa Fe v.

Velarde, 90 N.M. 444, 564 P.2d 1326 (1977). The doctrine

applies to a declaratory judgment action. Lamonica v. Bosen-

berg, 73 N.M. 452, 389 P.2d 216 (1964); see also Savage v.

Howell, 45 N.M. 527, 118 P.2d 1113 (1940) (declaratory judg-

ment conclusively declares the preexisting rights of the liti-

gants). It also applies to a judgment entered as a discovery

sanction. Chalmers v. Hughes, 83 N.M. 314, 491 P.2d 531

(1971).

13a

The doctrine of “law of the case” is applicable. See Ute Park

Summer Homes Association v. Maxwell Land Grant Co., 83

N.M. 558, 560, 494 P.2d 971, 973 (1972) (doctrine of law of the

case long recognized in New Mexico). This doctrine holds that

“{i]f an appellate court has considered and passed upon a ques-

tion of law and remanded the case for further proceedings, the

legal question so resolved will not be determined in a different

manner on a subsequent appeal.” Jd. This doctrine controls

even though the first ruling was in error. Gerety v. Demers, 92

N.M. 396, 589 P.2d 180 (1978).

The California Court of Appeals decided that the San Diego

Superior Court had no jurisdictional basis upon which to con-

firm the arbitration award, that the New Mexico Supreme

Court had held the agreement to arbitrate void, and that the

_ latter’s decisions are entitled to full faith and credit. United

Nuclear Corp. v. Superior Court, supra. The United States

Supreme Court denied certiorari. Similar treatment was given

. GAC’s claims in the federal court system, in which they were

rejected all the way to the United States Supreme Court.

These judgments have res judicata effect as to GAC’s claims.

See Napper v. Anderson, Henley, Shields, Bradford & P., 500

F.2d 634 (5th Cir. 1974), cert. denied, 423 U.S. 837, 96 S.Ct. 65,

46 L.Ed.2d 56 (1975); see also Chandler v. O’Bryan, 445 F.2d

1045, 1057 (10th Cir. 1971), cert. denied, 405 U.S. 964, 92 S.Ct.

1176, 31 L.Ed.2d 241 (1972) (when district judge considered all

questions raised on his hearing of removal of state libel suit and

determined that case should be remanded for state court trial,

that decision was res judicata on issue of forum). This holds

true in the face of somewhat conflicting language in decisions

by Judge Bratton and Judge Enright regarding the authority

of the arbitration board to decide the issues of res judicata and

full faith and credit.

GAC has steadfastly maintained that only a court in the

district in which the award is made has jurisdiction to confirm

or vacate the award. GAC has now exhausted all possibilities

for confirmation, according to its theory, and there is no fur-

ther avenue open for UNC to seek to vacate the award.

l4a

The Santa Fe court further held that upon this Court’s

affirmance of the December 27, 1977 judgment, “(t]he issues of

waiver, nonarbitrability and no inconsistency with the United

States Supreme Court decisions were final, the law of the case

res judicata and entitled to full faith and credit. * * *” We

agree and affirm the decision of the trial court.

3. Jurisdiction of the Santa Fe Court to Declare the Arbitra-

tion Award Void.

GAC asserts that the Federal Arbitration Act, 9 U.S.C.

Sections 1-14, controls this action to the exclusion of the laws of

New Mexico and the final judgments of our courts. GAC relies

upon Section 10 of the Federal Arbitration Act to support its

claim:

In either 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. * * *

9 U.S.C. Section 10 (1976).

GAC says this must be read as either a preemptive jurisdic-

tional or venue statute; and in either case only a federal or state

court “in and for the district wherein the award was made,” id.,

can vacate it. By conceding that a state court in the district

where the award is made may vacate it, GAC has weakened its

claim that there must be strict compliance with the statute,

which mentions only “United States” courts.

UNC claims that the section does not mention jurisdiction,

venue or ousting state courts; that it does not mandate that

only the federal court has jurisdictional or venue status to

vacate an award; and thus, UNC urges that the statute does

not preempt the jurisdiction or venue of state courts. UNC

alleges that the section may delimit federal court jurisdiction

but does not delimit state court venue or jurisdiction.

In United Nuclear Corp. v. General Atomic Co., No. Civ.

80-845-HB (D.N.M. Dec. 11, 1980), Judge Bratton held that in

the absence of diversity of citizenship or a federal question the

l5a

federal court did not have subject matter jurisdiction of this

dispute under Section 10 of the FAA. He remanded the case to

the Santa Fe court. In General Atomic Co. v. United Nuclear

Corp., No. Civ. 80-1585-E (S.D.Cal. Oct. 24, 1980), Judge

Enright ruled the same way in an action by GAC under 9

U.S.C. Section 9 to confirm the award. The United States

Court of Appeals for the Ninth Circuit affirmed, stating:

GAC argues that subject matter jurisdiction for con-

firmation of an arbitration award arises from the very

language of section 9. We disagree, however, and feel that

such an interpretation would work great mischief to the

overall scheme of the Arbitration Act. In particular, that

interpretation presents a significant possibility of

eviscerating the clear limits on federal jurisdiction con-

tained in sections 3 and 4. GAC’s expansive interpretation

would mean, for example, that a district court lacking

jurisdiction to compel arbitration under section 4 might

nonetheless threaten to confirm a subsequent ex parte

award under section 9. Such a threat would have a sub-

stantial compulsory effect. We cannot approve an in-

terpretation which would achieve by indirection that

which Congress has clearly forbidden.

General Atomic Co. v. United Nuclear Corp., 655 F.2d 968,

969 (9th Cir. 1981), cert. denied, _ U.S. -__., 102 S.Ct.

1449, 71 L.Ed.2d 662 (1982).

In United Nuclear Corp. v. Superior Court, supra, the

California Court of Appeals ordered dismissal of GAC’s con-

firmation application under 9 U.S.C. Section 9 for lack of

jurisdiction.

UNC urges that the Act does not confer federal jurisdiction

or create the basis for federal question jurisdiction under 28

U.S.C. Section 1331. Numerous federal courts have examined

sections of the Act and have so held. E..g., Commercial Metals

Co. v. Balfour, Guthrie, & Co., 577 F.2d 264 (5th Cir. 1978);

Monte v. Southern Delaware County Authority, 321 F.2d 870

(3d Cir. 1963); Ballantine Books, Inc. v. Capital Distributing

Co., 302 F.2d 17 (2d Cir. 1962); Robert Lawrence Co. v. Devon-

shire Fabrics, Inc., 271 F.2d 402 (2d Cir. 1959), cert. dis-

missed, 364 U.S. 801, 81 S.Ct. 27, 5 L.Ed.2d 37 (1960).

l6a

Subject matter jurisdiction should be determined not with

respect to individual sections of the Act but with respect to the

Act as a whole. See Bernhardt v. Polygraphic Co., 350 U.S.

198, 201, 76 S.Ct. 273, 275, 100 L.Ed. 199 (1965); Robert

Lawrence Co., supra. In discussing this issue, the Court of

Appeals for the Fifth Circuit stated:

The Arbitration Act was enacted as a single comprehen-

sive statutory scheme. To engage in the reasoning the

plaintiff suggests [that Section 2 may be construed to be

me gg of Section 4] would in effect repeal Section 4

of the Act.

Commercial Metals Co. v. Balfour, Guthrie & Co., supra, at

268-269 (citations omitted).

Section 4 of the Act confines jurisdiction to compel arbitra-

tion to courts that would have jurisdiction under 28 U.S.C.

Section 1331, that is, federal subject matter jurisdiction. Ban-

gor and Aroostock R. R. v. Maine Central R. R., 359 F. Supp.

261 (D.D.C.1973); C. Wright, A. Miller & E. Cooper, Federal

Practice and Procedure; Jurisdiction Section 3569 (1975). See

also Hoiness v. United States, 335 U.S. 297, 301-02, 69 S.Ct.

70, 72, 93 L.Ed. 16 (1948); Bainbridge v. Merchants & Miners

Co., 287 U.S. 278, 280, 538 S.Ct. 159, 77 L.Ed. 302 (1932);

Panama R. R. v. Johnson, 264 U.S. 375, 44 S.Ct. 391, 68

L.Ed. 748 (1924).

A congressional intent to establish exclusive jurisdiction in

the feaeral courts is not to be lightly inferred. Dowd Box Co. v.

Courtney, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483 (1962).

Jurisdiction in the state court must be affirmed “where it is not

excluded by express provision, or by incompatibility in its

exercise arising from the nature of the particular case.” Claflin

v. Houseman, 93 U.S. 130, 136, 23 L.Ed. 833 (1876).

Considering Section 10 in light of Hoiness v. United States,

supra, and Bainbridge v. Merchants & Miners Co., supra, it is

apparent that Section 10 relates to venue and not to jurisdic-

tion. Its provisions limit federal court venue but are not appli-

cable to state courts.

17a

The Santa Fe court concluded that the arbitrators had no

jurisdiction to issue an award and that in failing to give full faith

and credit to the New Mexico decisions, the arbitrators acted

in manifest disregard of the law and in excess of their powers.

“Like a contract, an arbitration award that is contrary to law

will not be enforced.” Johns-Manville Sales Corp. v. Interna-

tional Association of Machinists, 621 F.2d 756, 758 (5th Cir.

1980) (footnote omitted). In his book entitled “The Law and

Practice of Commercial Arbitration,” Martin Domke concurs:

A challenge may further be based on the alleged illegal-

ity of the award, on the assertion that the award is

against the public policy of the forum, which prevents its

validity and calls for its elimination even as an uncon-

firmed award. Reasons for such a challenge of the award

may be found, of course, in the unenforceability of the

agreement where the arbitration clause as such cannot be

validly maintained, the violation of price ceiling provisions

or of the Security and Exchange Act, and usurious

transaction.

M. Domke, The Law and Practice of Commerical Arbitration

Section 33.03, at 308 (1968) (footnote omitted).

The public policy of New Mexico demands that our trial

courts enforce final judgments instead of overriding those

judgments with void arbitration awards. Our public policy also

precludes our courts from enforcing arbitration agreements

contained in contracts that the courts find were totally void

from their inception.

The award in this case was further contrary to the law and

against public policy, since the arbitrators ruled on antitrust

issues not subject to arbitration. See United Nuclear Corp. v.

General Atomic Co. (our 1979 opinion), supra.

There is no question about the finality of the judgments of

our courts. When the arbitrators failed to consider these judg-

ments, which were controlling over the disposition of the

issues before the arbitration board, it stands to reason that our

Court must vacate the conflicting award. See Telephone Work-

18a

ers Union v. New Jersey Bell Telephone Co., 450 F. Supp. 284

(D.N.J.1977), aff'd 584 F.2d 31 (8rd Cir. 1978); Garlick Funer-

al Homes, Inc. v. Local 100, Service Employees International

Union, 413 F. Supp. 130 (S.D.N. Y.1976).

4. Applicability of Declaratory Judgment Act.

GAC argues that the relief granted here is not proper under

the Declaratory Judgment Act, Section 44-6-9, N.M.S.A.1978.

It claims that the Santa Fe court considered facts that arose

after the first declaratory judgment was rendered and that

since the relief was not coercive, that section does not apply.

No legal authorities were cited to support these contentions.

Section 9 of the Act provides that supplemental or “further

relief based on a declaratory judgment” may be granted. /d.

Supplemental relief may be based upon subsequent facts. See

Lyle v. Luna, 65 N.M. 429, 338 P.2d 1060 (1959).

The federal Declaratory Judgement Act is similar in all

material respects to ours. At 6A J. Moore, Moore’s Federal

Practice Paragraph 57.10 (2d ed. 1982) it is stated:

An entirely different situation is presented where the

right to coercive relief accrues subsequent to the filing of

the complaint, and thus could not have been previously

aserted. There is here no reason to bar the plaintiff from

seeking coercive remedy, and if the right asserted is ger-

em sod the declaration that sre nen nh pen’ may

y ancillary proceedings for supplemental an -

ther relief under the provisions of 28 USC Section 2202,

which provides:

“Further necessary or proper relief based on a

declaratory judgment or decree may be granted, after

reasonable notice and hearing, against any adverse part

whose rights have been determined by such judgment.

(footnote omitted) (emphasis in original).

Moore also explains that the relief need not be coercive and

may be entirely declaratory. Jd.; Restatement (Second) Judg-

ments Section 33 comment ¢ (1980). We conclude that the

supplemental pleadings properly raised contested issues that

called for declaratory relief.

19a

GAC urges that no action should have been taken by the

Santa Fe court prior to the issuance of a mandate in the appeal

to this Court from the August 29, 1980 default ruling. How-

ever, that point was decided by us against GAC after the

matter was specifically considered on September 22, 1980, on

motion by UNC that a trial judge be appointed to hear any

remaining issues. This Court ruled that a judge should be

appointed and thereafter designated one. It is implicit in this

action that this Court held that it was not necessary for a

mandate to issue in the case on appeal before supplemental

relief could be considered. The supplemental proceedings here

come within the rule permitting collateral proceedings neces-

sary to give effect to a judgment pending appeal. Pending

appeal, a trial court retains jurisdiction to enforce an unsuper-

seded judgment. See Section 44-6-9, N.M.S.A. (1978). Pruden-

tial Insurance Co. of America v. Anaya, 78 N.M. 101, 107, 428

P.2d 640, 646 (1967). See E. Borchard, Declaratory Judgments

(2d ed. 1941), at 429.

The judgment of the trial court is affirmed.

IT IS SO ORDERED.

SOSA, Senior Justice, and PAYNE, J., concur.

20a

APPENDIX B

IN THE DISTRICT COURT OF THE FIRST JUDICIAL DISTRICT

STATE OF NEW MEXICO, COUNTY OF SANTA FE

No. 50827

UNITED NUCLEAR Corporation, Plaintiff,

Vv.

GENERAL ATOMIC COMPANY, ET AL, Defendants,

INDIANA & MICHIGAN ELECTRIC

Company, Third-party Defendants.

Opinion

(Filed January 9, 1981)

This matter is before the Court on plaintiff's, United

Nuclear Corp. (UNC), petition for supplemental relief pur-

suant to Section 9 of the New Mexico Declaratory Judgment

Act, Section 44-6-9 N.M.S.A. 1978, and Section 10 of the

Federal Arbitration Act 9 U.S.C. 10 seeking a declaration that

the arbitration proceedings were barred by the earlier

judgments of this Court and vacating the arbitration awards.

Defendant, General Atomic Co. (GAC), filed its response

claiming that this Court lacks jurisdiction, improper venue,

improper service and that the petitions fail to state a claim

upon which relief can be granted.

There is one thing that can be said of this case with a

great deal of certainty. There will be no end until all the issues

are gathered together, presented to and decided by some court

of last resort. For some time the case has been on parallel

courses with the courts on one course and an arbitration panel

on the other. This is the first time the courses have converged

presenting an opportunity for its final trek to appellate

review.

JurispicTion. This Court has had jurisdiction of the par-

ties and subject matter since December 31, 1975. On April 2,

2la

1976, this Court denied GAC’s motion to dismiss this action

for lack of personal jurisdiction. On October 15, 1976, the

New Mexico Supreme Court affirmed. United Nuclear Corp.

v. General Atomic Co., 90 N.M. 97, 560 P2d 161. That issue

was final and became the law of this case. No claim of lack

of subject matter jurisdiction was made since the District

Court is a court of general jurisdiction and the dispute arose

from a contract between the parties. Art. VI, Sec. 13 New

Mexico Constitution. The parties agree that state courts and

federal courts have concurrent jurisdiction under the Federal

Arbitration Act. Commercial Metals Co. v. Balfour, Guthrie

& Co., 577 F. 2d 264 (Sth Cir. 1978). This Court has jurisdic-

tion in this case to apply the Federal Arbitration Act. United

Nuclear Corp. v. General Atomic Co., 93 N.M. 108, 597 P2d

290, certiorari denied, 44 U.S. 911. That is the law of this

case. This Court is bound by that law. The claim of lack of

jurisdiction is without merit.

Venue. This case was originally filed pursuant to the

New Mexico Declaratory Judgment Act, Section 44-6-1 et seq.

N.M.S.A. 1978. A judgment was entered by this Court on

December 27, 1977. Section 8 of the Act mandates the Court .

to grant further relief based on a declaratory judgment when

necessary or proper. Plaintiff has requested this Court for a

declaration determining what, if any, effect the action of the

arbitration panel has on the prior judgment. Venue is nothing

more than the proper location of the forum to hear the case.

It is a general rule that actions must be tried where brought

unless the venue is changed. Peisker v. Chaney, 46 N.M. 159,

123 P2d 726. The same applies to supplementing a judgment

previously entered. Venue is proper for consideration of fur-

ther relief pursuant to Section 44-6-9 N.M.S.A. 1978.

Counsel have cited no cases directly stating that a state

court considering affirmation or vacation of an arbitration

award has to be in the district where the award was made nor

have they cited any cases stating that it does not have to be in

the district where the award was made.

22a

Section 9 of the Federal Arbitration Act dealing with

confirmation of the award states in part —

“If no court is specified in the agreement of the parties

then such application may be made to the United States

Court in and for the district within which such award was

made.”’

Section 10 of the Act dealing with vacation of the award

states in part —

‘In either of the following cases the United States Courts

in and for the district wherein the award was made may

make an order vacating the award —’’

GAC argues that only a court, Federal or State, in the

Southern District of California where the purported arbitra-

tion occurred can affirm or vacate the award. An action was

filed by GAC in the United States District Court for the

Southern District of California to confirm the award. General

Atomic Co. v. United Nuclear Corp., Case No. 80-1585-E

(Sept. 9, 1980). The case was dismissed for lack of subject

matter jurisdiction. The case met the same fate in the United

States District Court in New Mexico, United Nuclear Corp. v.

General Atomic Co., Civ. No. 80-845HB (December 11,

1980). GAC filed an application to confirm the award ir the

Superior Court for San Diego County, California. General

Atomic Co. v. United Nuclear Corp., Case No. 560547. The

Fourth Appellate Division, California Court of Appeals

dismissed the action in the Superior Court. United Nuclear

Corp. v. Superior Court of the State of California for the

County of San Diego, 4 Civ. No. 24286 (December 16, 1980).

Judge Brown dismissed the case for lack of jurisdiction.

Judge Brown also held the prior judgments and decisions of

the New Mexico court were entitled to full faith and credit.

Even if there had been no jurisdiction question that Court

would have stayed the California case until this Court entered

a judgment under the doctrine of forum non conveniens. As

the matter now stands, if GAC’s argument were correct, the

arbitration award would remain in perpetual limbo. In Sec-

23a

tions 9 and 10 of the Federal Arbitration Act the words ‘‘may

be made”’’ and ‘‘may make an order’’ are permissive rather

than mandatory. Had Congress intended to restrict such ac-

tion to a particular locale stronger language would have been

used. Allison, Inc., v. Menikin Storage, Inc., 452 F. Supp.

573 (1878).

The venue of this Court to consider the arbitration award

pursuant to the Federal Arbitration Act is proper.

Service. Service of the petitions requesting supplemental

relief and vacation of the arbitration award was made by

mailing to opposing counsel in conformity with Rule 5 of the

New Mexico Rules for Civil Procedure. The same parties and

same counsel are now as they have been in the past. A

plethora of pleadings have been enchanged in the same man-

ner. GAC used the petitions as a basis for removal of this

case to Federal Court which was then remanded. Counsel was

frank to admit there was no real difference whether the peti-

tions were handed to him by the postman or a marshal. To

hold otherwise would be to elevate form over substance. Ser-

vice was proper in this case.

Farure To State A Cram. GAC argues that the peti-

tions fail to state a claim upon which relief can be granted, tc

the extent that they seek review of the arbitration awards

other than as contemplated by Section 10 of the Federal Ar-

bitration Act.

In considering the motion to dismiss for failure to state a

claim for which relief can be granted, all facts well pleaded

must be accepted as true and the motion may be granted only

when it appears the plaintiff cannot be entitled to relief under

any state of facts provable under the claim. Runyan v.

Jaramillo, 90 N.M. 629, 567 P2d 478.

The petitions clearly state the grounds of the claim for

relief: that the arbitrators exceeded their powers or imperfect-

ly executed them. The petitions also state factual and legal

matters in support of those claims. If the matters pleaded in

the petitions are accepted as true the plaintiff is entitled to the

24a

relief requested. The claim of failure to state a claim is

without merit.

THE ARBITRATION. A petition for a declaratory judgment

on a contract between UNC and GAC was filed in this Court

on December 31, 1975. On December 27, 1977, this Court

entered a decision and judgment denying GAC’s motion to

stay proceedings and declared that GAC had waived any right

it may have had to arbitration; that the issues of New Mexico

antitrust violations were not arbitrable; that all other issues

were so intertwined with the antitrust issue none were ar-

bitrable. An interlocutory appeal was taken by GAC. On May

7, 1979, in United Nuclear Corp. v. General Atomic Co., 93

N.M. 105, 597 P2d 290, the New Mexico Supreme Court af-

firmed the judgment as to waiver and nonarbitrability and

held that the trial court’s decision and judgment were not in-

consistent with the two United States Supreme Court deci-

sions, General Atomic Co. v. Felter, 434 U.S. 12 and 436

U.S. 493, arising out of this case. The United States Supreme

Court denied certiorari. General Atomic Co. v. United

Nuclear Corp., 444 U.S. 911.

On May 18, 1978, the New Mexico Supreme Court issued

a mandate to this Court for such further proceedings as may

be proper.

The issues of waiver, nonarbitrability and no inconsisten-

cy with the United States Supreme Court decisions were final,

the law of the case, res judicata and entitled to full faith and

credit by all other courts and forums. In Ealy v. McGahen, 37

N.M. 246, 21 P2d 84 (1933) the New Mexico Supreme Court

in discussing res judicata stated the following:

‘Final judgments are conclusive as to the claim or de-

mand in controversy as to the parties in the suit and

those in privity with them, not only as to every matter

which was offered to sustain or defeat the claim or de-

mand, but as to any other admissible matter which might

have been offered for that purpose. Public policy requires

that there be an end to litigation and that rights once

25a

established by a final judgment shall not again be

litigated in any subsequent proceeding.”’

The very essence of GAC’s motion to stay proceedings in

this court was its claim that there was an agreement between

the parties to arbitrate the dispute. The Court declared GAC

had waived any right to arbitration. The legal effect of thai

. declaration was that any agreement to arbitrate no longer ex-

isted; it vanished, disappeared.

On April 4, 1978, this Court entered a judgment declar-

ing the contract between UNC and GAC to be void and unen-

forceable. That judgment was affirmed by the New Mexico

Supreme Court on August 29, 1980. United Nuclear Corp. v.

General Atomic Co., N.M. . That judgment is

final, res judicata, and entitled to full faith and credit until

and unless reversed by the United States Supreme Court. At

least from April 4, 1978, there was no contract. There was no

agreement to arbitrate.

Following this Court’s denial of GAC’s motion to stay

proceedings, GAC initiated arbitration proceedings. GAC did

not petition a court to compel arbitration, since there was no

doubt UNC had refused to arbitrate, but requested the

American Arbitration Association for arbitration. Other than

by implication in its motion to stay proceedings in this court,

GAC has never petitioned a court to compel arbitration. At

GAC’s request the American Arbitration Association started

arbitration proceedings. UNC under protest appointed an ar-

bitrator and participated in the preliminary proceedings until

it became apparent that a majority of the arbitrators would

not be bound by the New Mexico judgments and decisions.

UNC withdrew from any further participation. The arbitrator

appointed by UNC later filed a dissent to the action by the

other arbitrators and resigned. The two remaining arbitrators

then proceeded to do what the United States Supreme Court

had refused to do — review and reverse the New Mexico

Supreme Court decision of May 7, 1979. Congress has the

power to constitute tribunals inferior to the United States

Supreme Court. However, Congress by enacting the Federal

26a

Arbitration Act did not intend nor would it have the power to

create a tribunal superior to or even co-equal with the United

States Supreme Court. By some unfathomable sophistry the

two arbitrators concluded that all proceedings in the New

Mexico District Court and the New Mexico Supreme Court

after April 2, 1976, were void or to use their words, ‘‘corom

non judice.’’ They reached that conclusion even though there

is not the slightest hint that the United States Supreme Court

intended such a result in the prior opinions. General Atomic

Co. v. Felter, 434 U.S. 12 (Felter 1) and 436 U.S. 493 (Felter

Il).

The United States Supreme Court decisions were quite

straightforward: a state court cannot deny a party access to

federal forums. At the time of Felter II, the United States

Supreme Court had before it the judgment of this Court

declaring that GAC had waived its right to arbitration and

that the issues were not arbitrable. The only fault the

Supreme Court found with the judgment was the one part

which interfered with GAC’s right of access to a federal

forum. At the time GAC petitioned the United States

Supreme Court for a Writ of Certiorari, General Atomic Co.

v. United Nuclear Corp., 444 U.S. 911, that Court had before

it the decision of the New Mexico Supreme Court affirming

the judgment declaring waiver and nonarbitrability and the

holding there was no inconsistency with the prior decisions of

the United States Supreme Court in this case. Certiorari was

denied. Common sense and respect for the United States

Supreme Court dictates that had the Court believed all action

in the New Mexico courts was void after April 2, 1976, they

would have said so. To make the interpretation the arbitrators

did would place the United States Supreme Court in a posi-

tion of playing capricious games with the lower courts and

litigants. This Court absolutely refuses to believe the United

States Supreme Court would indulge in such conduct.

There is a vast difference between a right of access to a

forum and a right to the relief sought in that forum. Neither

of the parties could be denied access to the Federal District

27a

Court for Southern California or New Mexico or the state

court in California. However, having access did not carry with

it the right to the relief sought as evidenced by the rather has-

ty empty handed exit. GAC’s right of access to the arbitration

forum did not, under the facts of this case, carry any rights to

the relief sought.

On April 4, 1978, this Court entered a judgment declar-

ing the contract between UNC and GAC to be void and unen-

forceable. From April 4, 1978, there was nothing to arbitrate.

The arbitrators were aware of that judgment. On August 29,

1980, the New Mexico Supreme Court affirmed the judgment.

The arbitrators were aware of that decision. Undaunted the

arbitrators made a purported award on September 10, 1980,

in favor of GAC. If not before, at least after April 4, 1978,

all action taken by the two arbitrators was corom non judice.

Considering the totality of the action of the arbitrators,

the judgments and decisions of the New Mexico Courts and

the opinions of the United States Supreme Court an in-

escapable conclusion appears. The two arbitrators simply did

not agree with the results reached by the New Mexico courts.

They chose to ignore the courts and reach their own results.

Such action at best was a heedless disregard for the fun-

damental principles of American jurisprudence.

By failing to give full faith and credit to the valid final

judgments and decisions of the New Mexico courts which

were res judicata as to these parties the arbitrators exceeded

their powers. At least after the judgment of this Court, which

was affirmed by the New Mexico Supreme Court, declaring

there was no contract between the parties to arbitrate, the

only powers in the arbitrators was to dismiss the proceedings.

The arbitrators so imperfectly executed their powers that a

mutual, final and definite award upon the subject matter was

not made.

Plaintiff UNC is entitled to the relief requested in its peti-

lions,

28a

Some courts involved in this case have commented on the

enormous costs for discovery and attorneys’ services. There

also have been enormous costs to the taxpayers in furnishing

facilities, personnel from bailiffs to judges and mountains of

paper logistics in the many courts this case has visited.

Therefore this fervent prayer: Appellate Court, affirm, reverse

or modify, but please do not remand.

/s/ JAMES W. MuSGROVE

James W. Musgrove

District Judge

Filed in Open Court

January 9, 1981

29a

IN THE DISTRICT COURT OF THE FIRST JUDICIAL DISTRICT

STATE OF NEW MEXICO, COUNTY OF SANTA FE

No. 50827

UNITED NUCLEAR Corporation, Plaintiff,

Vv.

GENERAL ATomic ComPANY, et al, Defendants,

INDIANA & MICHIGAN ELECTRIC COMPANY,

Third-party Defendants.

Decision

(Filed January 9, 1981)

This matter came before the Court on plaintiff’s petitions

for supplemental relief pursuant to the New Mexico

Declaratory Act and the mandate of the New Mexico Supreme

Court and to vacate the arbitration award pursuant to the

Federal Arbitration Act.

The Court for its decision makes the following findings

of fact and conclusions of law.

Findings Of Fact

1. On December 31, 1975, plaintiff, United Nuclear

Corp. (UNC) filed an action for a declaratory judgment in-

volving a contract between UNC and defendant, General

Atomic Co. (GAC).

2. On April 2, 1976, this Court entered a judgment deny-

ing GAC’s motion to dismiss for lack of personal jurisdiction.

3. On October 15, 1976, the New Mexico Supreme Court

affirmed the judgment entered April 2, 1976, as to personal

jurisdiction, United Nuclear Corp. v. General Atomic Co., 90

N.M. 97. No further appeal was taken.

30a

4. On November 29, 1977, GAC filed with the American

Arbitration Association a demand for arbitration of the same

dispute with UNC.

5. On November 30, 1977, GAC filed a motion to stay

proceedings in this Court pending arbitration of the dispute.

6. On December 27, 1977, this Court entered a decision

and judgment denying the motion to stay proceedings and

declared that GAC had waived any right to arbitration, that

the issues of violations of New Mexico antitrust laws were not

arbitrable and that all other issues were so entertwined with

the antitrust issues, none were arbitrable.

7. On May 7, 1979, the New Mexico Supreme Court af-

firmed this Court’s decision and judgment of December 27,

1977, United Nuclear Corp. v. General Atomic Co., 93 N.M.

105 and also held there was no inconsistency between the

United States Supreme Court decisions, General Atomic Co.

v. Felter, 434 U.S. 12 and 436 U.S. 493.

8. On October 9, 1979, the United States Supreme Court

denied certiorari to review the New Mexico Supreme Court

opinion referred to in Finding No. 7, General Atomic Co. v.

United Nuclear Corp., 444 U.S. 911.

9. On April 4, 1978, this Court entered a judgment

declaring the contracts between UNC and GAC were null,

void, unenforceable and of no effect whatever.

10. On August 29, 1980, the New Mexico Supreme Court

affirmed this Court’s judgment of April 4, 1978. United

Nuclear Corp. v. General Atomic Co., N.M.

11. Under protest UNC named an arbitrator and par-

ticipated in the preliminary proceedings of arbitration until

March 29, 1979.

12. On March 29, 1979, the arbitration panel announced

it would not give full faith and credit to the New Mexico

judgments and decisions. UNC withdrew from further par-

ticipation. Thereafter the arbitrator appointed by UNC

resigned.

3la

13. Shortly after the entry of same this Court’s decisions

and judgments of December 27, 1977 and April 4, 1978 and

the New Mexico Supreme Court opinions of May 7, 1979 and

August 29, 1980 were furnished the arbitrators.

14. On September 10, 1980, the two remaining arbitrators

issued an arbitration award in favor of GAC. Jn The Matter

of An Arbitration Between General Atomic Company and

United Nuclear Corporation, No. 73-10-0078-77.

15. The United States District Court for the Southern

District of California has dismissed GAC’s application and

motion to confirm the arbitration award for lack of jurisdic-

tion. General Atomic Co. v. United Nuclear Corp. Case No.

80-1585E.

16. The United States District Court for the District of

New Mexico has declined to assist in the confirmation of the

arbitration award or to interfere with this Court’s proceedings

on the petitions filed herein. United Nuclear v. General

Atomic Co., Case No. Civ. 80-845-HB.

17. GAC’s application to confirm the arbitration award

filed in the State Court of California has been dismissed by

the California Court of Appeals.

18. GAC has never petitioned any court to compel

arbitration.

19. No court has ever ordered arbitration of the dispute

between UNC and GAC.

20. The United States Supreme Court opinions in General

Atomic Co. v. Felter, 434 U.S. 12, and 436 U.S. 493 held

only that this court could not deny nor interfere with GAC’s

right of access to the federal forum.

Conclusions Of Law

1. This Court has personal and subject matter jurisdiction

in this cause for the purpose of granting supplemental relief

under the New Mexico Declaratory Judgment Act and the

Federal Arbitration Act.

32a

2. The venue in this Court is proper for granting sup-

plemental relief under the New Mexico Declaratory Judgment

Act.

3. The venue in this Court is proper for vacating the ar-

bitration award pursuant to the Federal Arbitration Act.

4. This Court’s decision and judgment of December 27,

1977, declaring that GAC had waived its right to arbitration

and that the issues were not arbitrable is a valid final judg-

ment. The judgment is res judicata as to these parties and has

been since December 27, 1977. The judgment is entitled to full

faith and credit by all courts and forums.

5. The opinion of the New Mexico Supreme Court

holding that there was no inconsistency between the United

States Supreme Court decisions and the judgment of this

Court is the law of this case. It is res judicata as to these par-

ties and is entitled to full faith and credit.

6. The judgments of this Court of April 4, 1978, and

May 17, 1978, are valid final judgments, declaring the con-

tracts between the parties to be null, void and unenforceable.

7. At least as of April 4, 1978, there was no agreement

between the parties to arbitrate their dispute.

8. The arbitrators had no jurisdiction to issue an award

in the purported arbitration.

9. In failing to give {ull faith and credit to the judgments

and decisions of this Court and the New Mexico Supreme

Court the arbitrators acted in manifest disregard of the law.

10. The arbitrators exceeded their powers.

11. The arbitrators so imperfectly executed their powers

that a mutual, final and definite award was not made.

12. Plaintiff is entitled to a supplemental judgment of

this Court declaring that the judgment of December 27, 1977

is not affected by the purported award of the arbitrators

because the action of the arbitrators was illegal, void and of

no effect.

33a

13. Plaintiff is entitled to a judgment of this Court

vacating the purported award of the arbitrators as provided

by Section 10 of the Federal Arbitration Act.

All requested findings of fact and conclusions of law not

adopted herein are hereby refused.

/s/ James W. MusGRove +

James W. Musgrove

District Judge

Filed in Open Court

January 9, 1981

34a

IN THE DISTRICT COURT OF THE FIRST JUDICIAL DISTRICT

STATE OF NEW MEXICO, COUNTY OF SANTA FE

No. 50827

UNITED NUCLEAR CorPORATION, Plaintiff,

Vv.

GENERAL ATOMIC ComPANY, et al, Defendanis,

INDIANA & MICHIGAN ELECTRIC

Company, Third-party Defendants.

Judgment

(Filed January 9, 1981)

This matter came before the Court on plaintiff's petitions

for supplemental relief pursuant to Section 9 of the New Mex-

ico Declaratory Act and to vacate the arbitration award pur-

suant to Section 10 of the Federal Arbitration Act. The Court

having considered the matters presented, having heard argu-

ment of counsel and having entered its decision, which by

reference is made a part of this judgment, finds the plaintiff is

entitled to the relief requested.

It Is THEREFORE ORDERED AND DECLARED that the action

of the arbitration panel and the purported award issued by the

arbitration panel in /n The Matter of An Arbitration Between

General Atomic Company and United Nuclear Corporation,

No. 73-10-0078-77, American Arbitration Association is il-

legal, void and of no effect on the judgment entered by this

Court on December 27, 1977, and plaintiff is still entitled to

all the rights, benefits and relicf granted by that judgment.

It Is FURTHER ORDERED, ADJUDGED AND DECREED that

the arbitrators in In The Matier of An Arbitration Between

General Atomic Company and United Nuclear Corporation,

No. 73-10-0078-77 having exceeded their powers and having

35a

so imperfectly executed their powers that a mutual, final and

definite award upon the subject matter was not made, the

award is hereby vacated and held for naught.

/s/ James W. MUusGROVE

James W. Musgrove

District Judge

Filed in Open Court

January 9, 1981

36a

APPENDIX C

IN THE SUPREME COURT OF

THE STATE OF NEW MEXICO

Monday, October 4, 1982

NO. 13,536

UNITED NUCLEAR CORPORATION,

Plaintiff-Appellee,

v.

GENERAL ATOMIC COMPANY,

Defendant-Apppellant.

This matter coming on for consideration by the Court upon

Motion of Appellant for Rehearing, and the Court having con-

sidered said motion and brief of counsel and now being

sufficiently advised

NOW, THEREFORE, IT IS ORDERED that Motion of

Appellant for rehearing is hereby denied.

ATTEST: A TRUE COPY

/s/ ROSE MARIE ALDERETE

Clerk of the Supreme Court

of the State of New Mexico

37a

APPENDIX D

AMERICAN ARBITRATION ASSOCIATION

No. 73-10-0078-77

In THe Matrer Or AN ARBITRATION BETWEEN GENERAL

Atomic Company (GAC)

AND

UntTep NUCLEAR CorPoRATION (UNC)

PARTIAL AWARD

(Received November 14, 1979)

AMERICAN ARBITRATION SAN DiEGO

RES JUDICATA, FULL FAITH AND CREDIT

WAIVER OF ARBITRATION

This arbitration is conducted under the auspices of the

American Arbitration Association pursuant to a demand for

arbitration filed by General Atomic Company (GAC) upon

United Nuclear Corporation (UNC) on November 29, 1977.

The arbitration clause is as follows:

In the event that any disputes, which may arise bet-

ween the parties during the course of this Agreement,

cannot be mutually resolved, either party may elect to

submit such disputes to arbitration in accordance with the

Rules of the American Arbitration Association. Upon

notice of such election, each party shall designate one

member of the arbitration panel and the designees shall

choose an impartial third member who shall chair the

panel.

The panel shall hear and consider the position of each

party and shall equitably resolve the dispute by a deter-

mination based on the terms and conditions of this

38a

Agreement. Such determination shall be final and binding

on both parties and judgment upon the award rendered

by the Arbitrators may be entered in any Court having

jurisdiction thereof.

Under that clause GAC has designated Willard Wirtz as

its arbitrator and UNC has designated Julian Levi as its ar-

bitrator. Those designees chose Walter V. Schaefer as the im-

partial third member and chairman of the panel. It should be

noted at the outset that at the first arbitration hearing each of

the party designated arbitrators stated his intention to be com-

pletely impartial with respect to any determinations made by

the panel. It should also be noted that UNC is participating in

this arbitration under protest.

To an unusual degree, the outcome of this arbitration

depends not only upon the terms of the contract and the con-

duct of the parties thereunder but also upon the significance

of several judgments of the Supreme Court of the United

States, the Supreme Court of New Mexico and the United

States District Court for New Mexico, as well as other judicial

decisions. A summary of prior events and proceedings is

essential to an understanding of the issues that now confront

the arbitration panel.

GAC is a partnership composed of Gulf Oil Corporation

(Gulf) and Scallop Nuclear, Inc. (Scallop). (There were

references at a hearing before the Panel on March 26, 1979,

to a change in the relationship of the partners. Whatever may

be the internal effect of that change, it can not alter the rights

and liabilities of the partnership with respect to third persons.)

UNC owns uranium deposits in New Mexico and is engaged

in mining and milling uranium and the fabrication of uranium

into fuel.

Between 1966 and May of 1971 UNC entered into long

term agreements with four utilities to supply them with large

quantities of uranium concentrates and with finished nuclear-

reactor fuel. In the summer of 1971 UNC and Gulf formed a

jointly owned corporation known as Gulf United Nuclear

Fuels Corporation (GUNF). UNC owned 43% of the stock of

39a

GUNF, and Gulf owned 57%. By what is known as the 1971

Supply Agreement, UNC then assigned its agreements with

the utilities to GUNF, and agreed to supply GUNF with the

uranium necessary to perform those contracts. UNC retained

its mining and milling properties and facilities, but transferred

its fabrication facilities to GUNF. Thereafter, in 1973 Gulf

purchased UNC’s interest in GUNF which became a wholly

owned subsidiary of Gulf. UNC and GUNF then entered into

the agreement which is the subject of this arbitration, which is

referred to as the 1973 Supply Agreement. That agreement

replaced the 1971 Supply Agreement.

GUNF was then merged into Gulf and in 1974 Gulf

transferred to GAC the agreements with the utilities and the

rights and obligations under the 1973 Supply Agreement, as

well as the physical facilities of GUNF.

The price of uranium began to increase sharply during

and after 1973 and it has continued to rise at least until the

commencement of the hearings in this arbitration. Until the

summer of 1975 UNC continued to deliver uranium pursuant

to the 1973 supply agreement.

In 1975 UNC ceased to make deliveries, and on August

8, 1975, UNC brought an action in Santa Fe District Court

against GAC, Gulf and Scallop. The complaint alleged that

the 1973 supply agreement was void as a result of Gulf and

GAC’s fraud, economic coercion, breach of fiduciary duties

and violations of the New Mexico antitrust act. The complaint

also sought relief on the ground that performance of its long

term agreements had become commercially impractical. The

defendants removed the action to the United States District

Court on diversity grounds. UNC then voluntarily dismissed

its action on December 31, 1975.

On the same day UNC instituted another action in the

Santa Fe County District Court. The complaint was identical

with that filed in the earlier action, except that diversity of

citizenship was eliminated because Gulf and Scallop were not

named as defendants in the second action.

40a

GAC filed motions to dismiss. On March 15, 1976, at the

request of UNC, the trial judge entered a temporary restrain-

ing order, and on April 2, 1976 a temporary injunction,

directed to GAC and its partners. The injunction stated:

“This injunction prohibits the institution or prosecution of

ordinary litigation, third party proceedings, cross-claims, ar-

bitration proceedings or any other method or manner of in-

stituting actions, claims or demands relating to the subject

matter of this lawsuit, or including United Nuclear Corpora-

tion as a party thereto.’’ On April 14, 1976 the New Mexico

Supreme Court granted an alternative writ of prohibition stay-

ing ‘‘the enforcement of the injunction’’. On June 15, 1976,

however, that court, without opinion, quashed the alternative

writ as improvidently granted. GAC sought a writ of cer-

tiorari to review that judgment of the Supreme Court of New

Mexico. UNC opposed the allowance of certiorari on the

theory that the judgment was based upon adequate state

grounds.

The Supreme Court of the United States issued a

memorandum order on November 29, 1976 (429 U.S. 973, 50

L.Ed. 2d, 581, 97 S.Ct. 479), which stated that the petition

for writ of certiorari to the Supreme Court of New Mexico

was granted and the judgment of that Court was vacated and

the cause remanded to the Supreme Court of New Mexico to

consider whether the judgment was ‘‘based upon Federal or

State grounds or both.’’ Pursuant to that mandate the

Supreme Court of New Mexico rendered its further opinion

on February 21, 1977. (560 Pac.2d. 541.) The Court there

held that the New Mexico trial court had inherent equity

power to issue an injunction restraining the parties to a suit

before it from instituting further proceedings concerning the

same subject matter.

The case was brought again to the Supreme Court of the

United States, which granted certiorari and on October 31,

1977 reversed the judgment of the Supreme Court of New

Mexico and remanded the case to that Court for ‘‘further

proceedings not inconsistent with this opinion.’’ The Chief

4la

Justice and six Associate Justices concurred in the per curiam

opinion. Mr. Justice Blackmun would not have disposed of

the case summarily but would have granted certiorari and

heard argument. Mr. Justice Rhenquist dissented. General

Atomic Co. v. Felter, 434 U.S. 12, 54 L.ed. 2d 199.

While the authority of the Santa Fe trial court to enjoin

federal arbitration and judicial proceedings was being deter-

mined in the United States Supreme Court, activity had con-

tinued in the trial court. On April 5, 1976, UNC had filed an

amended complaint which added a count alleging that a 1974

supply agreement between GAC and UNC was also invalid

because of economic coercion; on May 5, 1976, GAC had

answered the amended complaint and filed a counterclaim,

and there had been extensive discovery. (Whether GAC had

waived its right to arbitrate by any action it took in this case

or in other proceedings will be subsequently discussed.)

The case had been set for trial in the Santa Fe court on

October 31, 1977. That was the day on which the Supreme

Court of the United States entered its judgment reversing the

Santa Fe court’s injunction and holding:

**We conclude that the New Mexico Supreme Court’s

distinction is un-tenable and that the injunction is in

direct conflict with that decision and the Supremacy

Clause of the Constitution.’’ (Emphasis supplied. The

decision referred to is Donovan v. Dallas, 337 U.S. 408

(1964).)

On November 3, 1977 GAC made an oral motion to

vacate the injunction. UNC opposed the motion. Its attorney

suggested that UNC might file a petition for rehearing, and

urged the court to wait for the mandate of the Supreme Court

of New Mexico. He stated: ‘‘We need the injunction more

than ever.’’ By agreement the motion to vacate was continued

until November 6, 1977, and on that date it was denied. The

injunction remained in effect and the trial proceeded while the

formal mandates were making their way back from the

Supreme Court of the United States to the Supreme Court of

New Mexico, and from that court to the Santa Fe court.

42a

When the mandate got back to Santa Fe, the court

modified its injunction on November 28, 1977. On November

29, 1977, GAC filed its demand for arbitration, and on the

following day moved to stay proceedings in the Santa Fe

court. On December 6, 1977, UNC moved for an order stay-

ing the arbitration and submitted proposed findings and con-

clusions and a proposed partial final judgment.

On December 16, 1977, the Santa Fe court adopted the

proposed findings of fact and conclusions: of law concerning

the “issue of arbitration’’ which had ‘‘been submitted for

summary determination on December 6, 1977.’’ On the basis

of those findings and conclusions the court entered its ‘‘par-

tial final judgment’’ which stayed ‘‘until the further order of

the court,’’ the present arbitration proceeding, as well as

other arbitration proceedings in North Carolina and Illinois.

The order also contained the following provisions:

‘Provided, however that this Partial Final Judgment

shall not, in and of itself, operate to preclude Defendant

General Atomic Company from asserting claimed federal

rights in appropriate judicial proceedings.

It Is FURTHER ORDERED, DECLARED, DETERMINED AND

ADJUDICATED that Defendant General Atomic Company

has no right to arbitrate any issue in the aforesaid ar-

bitration proceedings or pending herein against Plaintiff,

United Nuclear Corporation.”’

By a separate order of December 16, 1977, entered in ac-

cordance with the following finding,

**22. On November 28, 1977, GAC declared in open

court that it intended to pursue relief under the Federal

Arbitration Act and requested the court to stay the trial

of this case pending resolution of those matters. The

court declined to stay proceedings.”’

the court denied GAC’s motion to stay the trial.

Subsequently, on December 27, 1977, the court entered

another ‘“‘partial final judgment,’’ which again denied GAC’s

motion to stay proceedings. This latter order was apparently a

43a

formal step regarded as necessary or desirable to put the

previous order refusing to stay the trial into appropriate form

for an interlocutory appeal. It was accompanied by findings

and conclusions which were identical with those that accom-

panied the December 16, 1977 order. Neither set of findings

and conclusions, and neither ‘‘partial final judgment’’ men-

tioned the judgment of the Supreme Court of the United

States, which had determined that the injunction that restrain-

ed GAC from seeking federal arbitration was in violation of

the Supremacy Clause of the Constitution.

On March 3, 1978, GAC filed a motion in the Supreme

Court of the United States for leave to file a petition for an

original writ of mandamus directing the Santa Fe court to

vacate its orders of December 16, 1977, and December 27,

1977, on the ground that they violated the mandate of the

Supreme Court of the United States in General Atomic v.

Felter, 54 L.Ed. 2d 199.

While the case was again making its way to the Supreme

Court of the United States, the proceeding before the Santa

Fe court was continuing, and on March 2, 1978, the Santa Fe

court entered a ‘‘Sanctions Order and Default Judgment’’

which ordered the striking of GAC’s answer and

counterclaim. That order was entered pursuant to Rule 37 of

the New Mexico Rules of Civil Procedure for failure to

comply with discovery orders. On April 4, 1978 the Santa Fe

Court entered its Declaratory Judgment as to the issues

between UNC and GAC. That order stated:

**A. The 1973 Uranium Supply Agreement executed on

September 12, 1973, as of June 30, 1973 between United

Nuclear Corporation, Gulf Oil Corporation and Gulf

United Nuclear Fuels Corporation is null, void, unen-

forceable and of no effect whatever and performance

thereunder is excused.

B. The Uranium Concentrates Agreement between

United Nuclear Corporation and General Atomic Com-

pany dated June 28, 1974 is null, void, unenforceable and

of no effect whatever and performance thereunder is

excused.

dda

C. General Atomic Company is obligated to indemnify

and save United Nuclear Corporation harmless from any

and all claims, causes of action, liabilities, obligations,

damages, costs and expenses arising out of, or in any way

connected with or relating to the latter’s failure to deliver

or perform under the aforesaid 1973 Uranium Supply

Agreement or any other contract with an electric utility

company covered by or related to said agreement.

D. General Atomic Company’s defenses to United

Nuclear Corporation’s First Amended Complaint, as set

forth in its Answer and in the Pre-trial Order, should be,

and is hereby, stricken and held for naught.

E. General Atomic Company’s Counterclaim against

United Nuclear Corporation and each and every count

thereof, as stated in said Counterclaim and in the Pre-

trial Order should be, and is hereby, stricken and held

for naught.”’

On May 17, 1978, the Santa Fe court entered its final

judgment on damage issues in favor of UNC and against

GAC.

On May 30, 1978, the Supreme Court of the United

States issued its opinion and judgment in the original man-

damus action. (436 U.S. 493, 56 L.ed.2d 480). The per curiam

opinion stated:

‘Petitioner has filed a motion for leave to file a peti-

tion for a writ of mandamus and requests that a writ of

mandamus issue io the District Court for the First

Judicial District, Santa Fe County, N.M., directing the

court to vacate two orders on the ground that they

violated this Court’s mandate in General Atomic Co. v.

Felter, 434 US 12, 54 L Ed 2d 199, 98 S Ct 76 (1977)”’

‘In that opinion we held that under the Supremacy

Clause of the United States Constitution the Santa Fe

court lacked power to enjoin General Atomic Company

(GAC) from filing and prosecuting in personam actions

against United Nuclear Corporation (UNC) in federal

45a

court. Upon remand, the Santa Fe court modified its in-

junction ‘to exclude from its terms and conditiors all in

personam actions in Federal Courts and all other matters

mandated to be excluded from the operation of said

preliminary injunction by the opinion of the Supreme

Court, dated October 31, 1977,’ Shortly thereafter, GAC

filed a demand for arbitration with UNC of issues grow-

ing out of the 1973 uranium supply agreement around

which the litigation between the parties revolves. This de-

mand, filed with the American Arbitration Association,

relied upon the Federal Arbitration Act, . . . and the ar-

bitration clause of the 1973 agreement.’’

* * *

‘Finally, GAC requested the Santa Fe court to stay its

own trial proceedings with respect to issues subject to

these arbitration demands. UNC, in addition to opposing

this motion, also asked the court to stay the arbitration

proceedings.

On December 16, 1977, the Santa Fe court issued a

decision in which it concluded that GAC had waived any

right to arbitration with UNC which it might have had

because it failed to demand arbitration in a timely man-

ner and that neither the Duke nor Commonwealth

Agreements gave GAC any right to demand arbitration

with UNC. On the basis of these conclusions, Judge

Felter filed the following order staying the arbitration

proceedings:

* * *

‘*In its order of December 16, 1977, the Santa Fe court

has again done precisely what we held that it lacked the

power to do: interfere with attempts by GAC to assert in

federal forums what it views as its entitlement to arbitra-

tion. Clearly, our prior opinion did not preclude the

court from making findings concerning whether GAC

had waived any right to arbitrate or whether such a right

was contained in the relevant agreements. Nor did our

46a

prior decision prevent the Santa Fe court, on the basis of

such findings, from declining to stay its own trial pro-

ceedings as requested by GAC pending arbitration in

other forums. But, as demonstrated supra, we have held

that the Santa Fe court is without power under the

United States Constitution to interfere with efforts by

GAC to obtain arbitration in federal forums on the

ground that GAC is not entitled to arbitration or for any

other reason whatsoever. GAC, as we previously held,

has an absolute right to present its claims to federal

forums.”’

* * *

“‘A litigant, who, like GAC, has obtained judgment in

this Court after a lengthy process of litigation, involving

several layers of courts, should not be required to go

through that entire process again to obtain execution of

the judgment of this Court. In light of the prior pro-

ceedings in this matter, it is inconceivable that upon re-

mand from this Court the Santa Fe court was free to

again impede GAC’s attempt to assert its arbitration

claims in federal forums. Because the Santa Fe court has

refused or failed to comply with the judgment of this

Court, petitioner’s motion for leave to file a petition for

a writ of mandamus is granted. Assuming as we do that

the Santa Fe court will now conform to our previous

judgment by promptly vacating or modifying its order of

December 16, 1977 to the extent that it places any restric-

tion whatsoever upon GAC’s exercise of its right to

litigate arbitration claims in federal forums, we do not at

present issue a formal writ of mandamus.”’

In the following footnote the Supreme Court explained

why it did not order the Santa Fe court to vacate or modify

its order of December 27, 1977:

‘We do not read the December 27, 1977, order as re-

stricting GAC from pursuing its arbitration claims in

other forums. Consequently there is no occasion to

disturb it.’’

47a

The main thrust of the opinion of the Supreme Court of

the United States is that under the Supremacy Clause of the

federal Constitution the New Mexico trial court lacked power

— and therefore was without jurisdiction — to enjoin GAC

from presenting its claim to arbitration to a federal arbitra-

tion panel. The Court squarely held that by its December 16,

1977 order ‘‘the Santa Fe Court has again done precisely what °

we held that it lacked power to do: interfere with attempts by

GAC to assert in federal forums what it views as its entitle-

ment to arbitration.”’ And the Court further pointed out

“that the Santa ['e Court is without power under the United

States Constitution to interfere with efforts by GAC to obtain

arbitration in federal forums on the ground that GAC is not

entitled to arbitration or for any other reason whatsoever.

GAC, as we previously held, has an absolute right to present

its claims to federal forums.’’

Problems of interpretation of the opinion, however, have

resulted from the following two sentences:

“Clearly, our prior opinion did not preclude the court

from making findings concerning whether GAC has

waived any right to arbitrate or whether such a right was

contained in the relevant agreements. Nor did our prior

decision prevent the Santa Fe Court, on the basis of such

findings, from declining to stay its own trial proceedings

as requested by GAC pending arbitration in other

forums.”’

On the basis of these two sentences UNC argues that the

Supreme Court has decided that the Santa Fe court had

jurisdiction to determine whether GAC had any right to ar-

bitrate and if it did, whether that right had been waived.

UNC also argues that the Supreme Court has determined that

the Santa Fe court proprerly refused to stay its own trial pro-

ceedings pending arbitration.

There is a surface plausibility to these contentions, but

they will not withstand analysis in the light of the procedural

posture of the case before the Supreme Court of the United

States and the limitations upon that Court’s jurisdiction in an

original action of mandamus.

The issuance of such a writ to compel obedience is a

prior mandate of the Supreme Court of the United States is

an extraordinary remedy, and under the Supreme Court’s pro-

cedural and jurisdictional rules, the mandamus petition filed

by GAC could present to the Court only the question of com-

pliance with the Supreme Court’s prior mandate. (See

Supreme Court Rule 31(3).) It could not properly bring before

that Court any matters that were not embraced within that

prior determination.

In applying those rules the Supreme Court recently stated

in Helstoski v. Meanor, 61 L.ed 2d 30, 33 (June, 1979.):

*‘Almost a hundred years ago this Court explained,

‘The general principle which governs proceedings by man-

damus is that whatever can be done without the employ-

ment of that extraordinary writ, may not be done with it.

It lies only when there is practically no other remedy.’ Ex

parte Rowland, 104 U.S. 604, 617 (1882) (Emphasis add-

ed). More recently we summarized certain considerations

for determining whether the writ should issue;

‘Among these are that the party seeking issuance of

the writ have no other adequate means to attain the

relief he desires, and that he satisfy ‘‘the burden of

showing that [his] right to issuance of the writ is

‘clear. and indisputable’.’’ Moreover, it is important

to remember that issuance of the writ is in large part

a matter of discretion with the court to which the

petition is addressed.’ Kerr v. United States District

Court, 426 U.S. 394, 403 (1976) (citations omitted.)’’

This is what the Supreme Court had in mind when it pointed

out that “‘clearly’’ its prior determination had not expressed

any judgment whatsoever with respect to the questions of

GAC’s right to arbitrate, its waiver of that right, or the

authority of the Santa Fe court to stay its own trial pro-

ceedings. Since those questions had not even been determined

49a

by the Santa Fe court when the Supreme Court’s prior opini-

on was announced, it is obvious that they were not embraced

within the prior judgment of the Supreme Court. Consequent-

ly, they could not be determined by that Court in the original

action for mandamus which was pending before it. And as the

Supreme Court of the United States pointed out in its foot-

note 2 (56 L.Ed. 485) the Supreme Court did not disturb the

Santa Fe Court’s order of December 27, 1977 because it did

not regard that order as restricting GAC from pursuing its ar-

bitration claims in other forums.

On July 31, 1978 UNC instituted an action in the United

States District Court for the District of New Mexico seeking

to enjoin the American Arbitration Association from pro-

ceeding with the present arbitration. In addition to injunctive

relief the Complaint sought a declaratory judgment that the

AAA had no right to proceed with the pending arbitration or

to force UNC to participate in it. The Complaint recited the

institution of UNC’s action against GAC in the Santa Fe

court, the removal of that case and its subsequent dismissal

by UNC. It alleged the institution of the second action in the

Santa Fe court, the filing of arbitration demands by GAC on

November 30, 1977, and the December 16, and December 27,

1977 orders of the Santa Fe Court. Concerning the judgment

of the Supreme Court of the United States which was handed

down on May 30, 1978, the Complaint stated:

“On May 30, 1978 the U.S. Supreme Court issued its

opinion holding that the December 16, 1977 Judgment

was in error, and also holding that the Santa Fe County

District Court had the power to make the findings of

fact, conclusions of law and enter the Partial Final Judg-

ment of December 27, 1977.

The Complaint further alleged that on January 12, 1978

the AAA had suspended the present arbitration and on July

26, 1978 had notified UNC that it was lifting the suspension

and at the same time directed UNC to appoint an arbitrator.

The Complaint further alleged the entry of the April 4, 1978

50a

Final Judgment of the Santa Fe Court and stated that it was

pending on appeal in the Supreme Court of New Mexico.

Count I of the Complaint alleged that the judgments of

the Santa Fe Court were res judicata and that they barred and

collaterally estopped any attempts by the AAA to proceed

with arbitration. Count I also asserted that any ‘‘arbitration

proceeding instituted by the AAA would deprive UNC of the

right to receive full faith and credit for the December 27, 1977

and April 4, 1978 judgments of the Santa Fe County District

Court guaranteed to it by Article IV Section One of the Con-

stitution of the United States. Moreover, any attempt by the

AAA to proceed with arbitration would violate the Federal

Arbitration Act, 9 USC §1 ef seq.’

Count II of the complaint sought a temporary restraining

order as well as a preliminary injuaction and tendered a bond

to secure the payment of any damages suffered by AAA if the

temporarv restraining order should subsequently be found to

be wrongfully entered.

Count III sought damages in a large amount ‘‘which may

exceed $1,000,000’’ as a result of AAA proceeding with the

arbitration. That Count also sought expenses which ‘‘may ex-

ceed the sum of $50,000.”

Count IV consisted of a detailed description of events

which took place with respect to the actions instituted by

UNC in the Santa Fe court and the orders and pleadings in

those cases. It alleged that as a result of the discovery orders

entered by that Court UNC has incurred tremendous expendi-

tures of time, effort and money in the preparation of the case

for trial on the merits and bas been prejudiced by GAC’s

failure ‘‘to timely demand arbitration’ and that UNC would

be irreparably injured if arbitration were ordered.’’ It also

alleged that GAC was in default and had voluntarily and in-

tentionally relinquished any rights it may have had to ar-

bitrate. Court IV further alleged:

“The arbitration clause contained in Article XVII of the

1973 Supply Agreement is limited in scope to those issues

5la

which may be resolved by an application of the terms and

conditions of the 1973 Supply Agreement. Claims of

fraud, antitrust, commercial impracticability or other

claims extrinsic to the contract may not be arbitrated.

Count IV further alleged that GAC had failed to elect to

proceed with arbitration within a reasonable time and that

any right it may have had to do so had lapsed. UNC prayed

for a declaration that the AAA had no right to proceed with

any arbitration.

Before the United States District Court UNC argued that

its Complaint should not be dismissed for want of an in-

dispensable party — GAC — and argued that UNC had no

alternative forum. It stated:

‘There is one factor mentioned in Rule 19(b) that

UNC believes to be controlling. That is:

‘whether the Plaintiff will have an adequate remedy

if the action is dismissed for nonjoinder.’

This portion of Rule 19(b) requires a court to consider

whether the plaintiff can sue effectively in other forums

where better joinder would be possible. Provident

Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102

(1968); Pennwalt Corp. Inc. v. Train, supra.

UNC has no other forum available to vindicate its

rights. The May 30, 1978 opinion of the U.S. Supreme

Court held that a state court may noi enjoin arbitration

which has been invoked under the Federal Arbitration

Act. Only a federal court may do so. Thus UNC has no

alternative remedies available to it.

To this argument the American Arbitration Association

responded:

“The Third factor to consider is whether the Plaintiff

will have an adequate remedy if the action is dismissed,

The obvious answer is arbitration, which Plaintiff volun-

tarily agreed to utilize in the 1973 Agreement with GAC.

All of the issues including those of waiver of the right to

52a

arbitrate could be raised and adjudicated by the ar-

bitrators. Prima Paint Corp. v. Flood & Conklin, 388

U.S, 395, 18 L.ed2d 1270 (1967) The alternative forum

need not be judicial. See Tewa Tesuque v. Morton, 498

F.2d 240 (1974), Cert. denied. 420 U.S, 962, 43 L.ed.2d

440 (1975) where the court held that a New Mexico

Pueblo tribal council afforded an adequate forum,

thereby warranting dismissal of the Complaint.”’

In his Memorandum Opinion dismissing the case for

want of jurisdiction, Judge Bratton stated:

“UNC has argued that there is no alternative forum,

and that only a federal court can enjoin these arbitration

proceedings. The AAA, on the other hand, argues that

the arbitration panel itself can entertain the questions of

res judicata and full faith and credit. This alternative ap-

pears to be an acceptable one. The language of the ar-

bitration clause in the disputed contract appears broad

enough to allow the arbitrators to hear this issue, and the

AAA has itself acknowledged that it will consider the

question. Though UNC would then have to go to arbitra-

tion to determine the initial propriety of the arbitration

forum, their arguments would in fact be heard and con-

sidered. The inconvenience and cost to UNC of this route

does not outweigh the prejudice to GAC if this action

continues in its absence. The fact that the alternative

forum is non-judicial does not seem relevant. The Tenth

Circuit has previously approved consideration of a non-

judicial forum, Tewa Tesuque v. Morton, 498 F.2d 240

(10th Cir. 1974), cert. denied 420 U.S. 962, and arbitra-

tion is a recognized arena for the settlement of disputes.’’

After its motion for reconsideration and for an injunc-

tion pending appeal had been denied by the Federal District

Court, UNC appealed to the United States Court of Appeals

for the 10th Circuit. Subsequently, it voluntarily dismissed

that appeal.

After the termination of that litigation, the present ar-

bitration panel was designated. UNC designated its arbitrator

53a

under protest. Preliminary hearings were held on December

13, 1978, and January 25 and 26, 1979. Thereafter, in accord-

ance with the instructions of the panel, each party filed an in-

itial statement, followed by a reply statement.

GAC’s initial statement of position before the arbitration

panel described the 1973 Supply Contract, alleged breach of

that contract by UNC, and the remedies for that breach. It

also discussed the scope of discovery to be permitted in this

arbitration, and the significance of the disqualification of

UNC's counsel by the United States Court of Appeals for the

Seventh Circuit. (Westinghouse Electric Corp. v. Gulf Oil

Corp., 588 F2d 221 (1978).

In its first statement of position UNC described certain

issues relating to the basic arbitrability of the UNC-GAC

dispute under the caption: ‘‘Preliminary Issues’’. It stated that

these issues must be resolved before consideration can be

given to further proceedings relating to the merits. The

preliminary issues so specified by UNC are:

B. The December 27, 1977 Partial Final Judgment is

Entitled to ‘‘Full Faith and Credit’’ and Prohibits

Arbitration in the UNC-GAC Disputes.

C. The Partial Final Judgment of December 27, 1977 is

Res Judicata and Bars further Proceedings Herein.

D. The April 4, 1978 Final Declaratory Judgment is En-

titled to Full Faith and Credit; is Res Judicata and

Bars Arbitration,

E. There is no Agreement Extant by Which UNC and

GAC Agreed to Arbitrate.

F. GAC Made no Timely Election to Arbitrate the

Issues It Attempts to Raise Herein, and Arbitration

is Accordingly Barred.

G. GAC Never Gave Timely Notice to UNC of any

Purported Election to Arbitrate the Issues Hereof.

H. GAC Lost its Right to Elect to Arbitrate.

5da

1. GAC Has Waived its Right to Arbitration.

Antitrust Issues Are Not Arbitrable.

K. Any Remaining Issues are So Intertwined with An-

titrust Issues That None Can Be Arbitrable.

L. The Arbitration Clause of The 1973 Supply Agree-

ment is Narrow and Allows Few Issues to be Ar-

bitrated.

M. As A Matter of Comity The Arbitration Should Not

Proceed Until GAC’s Two Appeals Are Resolved.

N. UNC Is Not a Party To Any Contract With GAC

Which Provides For Arbitration.

O. Alternatively, GAC is Not the Legal Representative

and Successor of Any Party to the 1973 Uranium

Supply Agreement.

UNC’s second statement of position reiterated its protest

against the ‘‘very existence of this arbitration’’ and any of its

proceedings. UNC therefore refused to file any further state-

ment addressing its preliminary issues, its discovery demands

or its defenses to GAC’s claim, and stated:

This Second UNC Statement of Position addresses the

true ‘preliminary issues’’ i.e., whether judgments of the

Santa Fe District Court in Case No. 50827 are res

judicata as to all issues in this proceeding and whether

the Panel must accord those judgments ‘‘full faith and

credit’’ as required by the Constitution of the United

States. The other issues identified as relating to ar-

bitrability are subsumed and merged into the Santa Fe

judgments and are also res judicata in this proceeding.

Consequently, except as specifically noted herein, UNC

respectfully declines to address the other matters raised in

the Panel’s February 5 memorandum to the parties. To

do so would expose UNC to an unacceptable risk that it

may waive a position otherwise available to it. Any con-

sideration of arbitration other than to dismiss or in-

definitely stay the arbitration pending final appellate

_—

55a

review of the Santa Fe judgments deprives UNC of con-

stitutional rights it cannot relinquish.

UNC does address, in detail, the res judicata and ‘‘full

faith and credit’’ issues below. Those issues are not in-

tertwined with any other conceivable issue in this arbitra-

tion and must be determined independently of and before

all other issues. To continue further with this arbitration

without a determination of the very issues which would

moot further proceedings prejudices UNC and denies it

the protection of the Constitution. Therefore, UNC

respectfully submits that the Panel must decide, as soon

as possible, the issues of res judicata and ‘‘full faith and

credit.”’

UNC’s position concerning res judicata, collateral estop-

pel and full faith and credit focuses upon the December 27,

1977, March 27 and April 4, 1978 judgments of the Santa Fe

court. The December 27, 1977 judgment which refused to stay

the trial on the ground that GAC had waived its rights to ar-

bitration was affirmed by the Supreme Court of New Mexico

on May 7, 1979, and GAC’s petition for certiorari to review

that judgment has been denied by the Supreme Court of the

United States. (48 U.S. Law Week 3236, October 7, 1979) The

other judgments of the Santa Fe court are pending upon ap-

peal in the Supreme Court of New Mexico. They do not

directly bear upon GAC’s right to Federal arbitration or the

Santa Fe court’s jurisdiction to prevent the exercise of that

right. We agree with UNC’s contention that the unreversed

judgment of a New Mexico trial court has the same effect by

way of res judicata and collateral estoppel, and is entitled to

the same degree of full faith and credit, as is a judgment of

the Supreme Court of New Mexico. The denial of a petition

for certiorari by the Supreme Court of the United States car-

ries no implication or inference concerning that Court’s view

of the merits of the case. See, e.g. Hughes Tool Co. v.

T.W.A., 409 U.S. 353, 34 L.ed 2d 577.

UNC’s position rests upon the basic principle that the

judgment of a court having jurisdiction of the parties and the

56a

subject matter is res judicata and entitled to full faith and

credit even though it is erroneous. For that principle it relies

upon and cites many authorities. The basic principle is sound.

It is not, and indeed could not, be disputed. Nor is it disputed

that the Santa Fe court initially had jurisdiction of the parties

and the subject matter. UNC therefore concludes: ‘‘The

judgments in Case No. 50827 are entitled to ‘full faith and

credit’ and therefore bar arbitral consideration of all GAC

claims in this proceeding.’’

The difficulty with this conclusion is that it ignores the

judgment of the Supreme Court of the United States which

squarely held on October 31, 1977, that the Santa Fe court’s

injunction against arbitration was ‘‘in direct conflict with the

Supremacy Clause of the Constitution.’’ It also ignores the

second judgment of the Supreme Court of the United States,

entered on May 30, 1978, which reiterated the conclusion that

the Santa Fe court was ‘without power under the United

States Constitution to interfere with efforts by GAC to obtain

arbitration in federal forums on the ground that GAC is not

entitled to arbitration or for any other reason whatsoever.”’

UNC contends that because the Supreme Court of the United

States did not vacate the December 27, 1977 judgment of the

Santa Fe court, it affirmed the jurisdiction of that court to

proceed with the trial and to enter its subsequent judgments.

For this position it relies upon the two sentences in the

Supreme Courts May 30, 1978 opinion which have already

been discussed. For the reasons we have stated, we are unable

to concur in UNC’s interpretation of those sentences.

The authorities cited by UNC and the arguments it ad-

vances simply do not address the unique full faith and credit

question which this matter presents: What effect is to be given

to a judgment entered by a state court after it has unlawfully

barred a litigant from pursuing the federal remedy to which

he is entitled?

57a

In Kalb v. Feuerstein, 308 U.S. 433, 440 (N.2) 1940, the

Supreme Court made this observation:

‘“‘That a State court before which a proceeding is com-

petently initiated may — by operation of supreme Federal

law — lose jurisdiction to proceed to a judgment

unassailable on collateral attack is not a concept

unknown to our Federal system.’’

In the exercise of its power under the Commerce Clause

of the Constitution of the United States, Congress enacted the

Federal Arbitration Act, which gives parties the right to agree

to submit to arbitration their disputes arising under contracts

involving interstate commerce. The Supreme Court of the

United States has twice held that the Santa Fe court exceeded

its jurisdiction and violated the Supremacy Clause of the Con-

stitution when it prevented GAC from exercising that right by

its injunction.

In Gordon v. Longest,, 16 Peters 97, 10 L.ed. 900 (1842)

a circuit court in Kentucky denied the defendant’s motion to

remove the action to the Federal court although the action

was between citizens of different states and the declaration

alleged that the requisite jurisdictional amount was involved.

After the circuit court refused to allow removal, it proceeded

with the trial before a jury. There was a verdict for the plain-

tiff, and judgment was entered on the verdict. The Court of

Appeals of Kentucky affirmed. The Supreme Court of the

United States reversed, holding:

“The defendant was entitled to a right under the law of

the United States; and, on the facts of the case, the judge

had no discretion to withhold that right. No objection

can be made to the form of the application, nor to the

facts on which it was founded. This being clear, in the

language of the above act, it was the duty of the State

court to “to proceed no further in the cause.’’’’ And

every step subsequently taken, {fn the exercise of a

jurisdiction in the case, whether in the same court or in

the Court of Appeals, was coram non judice.

o * *

58a

One great object in the establishment of the courts of

the United States and regulating their jurisdiction was to

have a tribunal in each State, presumed to be free from

local influence, and to which all who were non-residents

or aliens might resort for legal redress. But this object

would be defeated if a State judge, in the exercise of his

discretion, may deny to the party entitled to it a removal

of his cause.

A more summary remedy might have been pursued by

the defendant than the one which this court can now give

to him. But the cause being brought before us through

the Supreme Court of the State, we reverse the judgment

of affirmance by that court, and direct the cause to be

remanded, with instructions that it shall be transmitted to

the Circuit Court of the State, which shall be directed to

enter an allowance of the petition of the defendant for

the removal of the cause to the Circuit Court of the

United States for the District of Kentucky, nunc pro

tunc.”’

It is not only State coucts that are required to honor the

Congressional policy in favor of permitting parties to con-

tracts involving interstate commerce to choose to submit their

disputes to arbitration instead of litigation. In Evans v. Hud-

son Coal Co., 165 Fed 970 (CA3, 1948), the court held that a

motion for a stay pending arbitration asserted a defense of

lack of jurisdiction of the subject matter authorized by FRCD

Rule 12(b) (1). The court stated:

‘Rule 12(b) (1) will authorize the defendant to make

an application for a stay pending arbitration if, as a mat-

ter of law, the issues presented by the instant suit are

referable to arbitration. The pertinent language of Rule

12(b) (1) provides that a defense of “‘lack of jurisdiction

over the subject matter’’, at the option of the pleader,

may be asserted ‘“‘by motion’’. If the issues presented by

the instant suit are referable to arbitration, the court

below, other conditions of the Arbitration Act being met,

must grant the stay and hold its hand until arbitration be

59a

completed. It is thus, pending arbitration, deprived of

jurisdiction of the subject matter.’’

And in Harper Sibley v. Tandy Corporation, 543 F.2d

540, (CAS, 1976) the federal district court had entered a

substantial judgment on a jury verdict in favor of the plaintiff

after a trial that consumed 14 days and involved 22 witnesses

and more than 100 documentary exhibits. The Court of Ap-

peals reversed that judgment on the ground that the defend-

ant’s timely motion ‘‘to have the contract claims submitted to

arbitration and to have the federal securities law claims stayed

pending arbitration’? should have been allowed. The court

said:

‘The parties, by their agreement, committed the resolu-

tion of contractual disputes to arbitration. Both the

policy behind the United States Arbitration Act and con-

siderations of judicial economy required that Parker’s

contractual claims be submitted to arbitration and that

the federal securities law claims be stayed pending the

outcome of those proceedings.’’

When the foregoing authorities are applied to the present

case, the conclusion is inescapable that the Santa Fe Court

lacked jurisdiction to proceed after it had unlawfully issued its

injunction which prohibited GAC from exercising its Federal

remedy. The lack of jurisdiction to issue the injunction ap-

pears ‘‘on the face of the judgment roll.’’ Unless judgments

of the Supreme Court of the United States are to be treated as

meaningless gestures, the subsequent proceedings of the Santa

Fe court were, in the language of the Supreme Court, ‘‘coram

non judice,’’ and they are not entitled to full faith and credit.

It is the Panel’s determination thai all proceedings in the

Santa Fe court following the entry of its illegal injunction

restraining GAC from exercising its coiitractual right to ar-

bitrate were coram non judice and that no subsequent pro-

ceedings in that court or elsewhere reinvested that court with

jurisdiction over the controversy which is the subject of this

arbitration. Those subsequent proceedings are therefore not

res judicata and they are not entitled to full faith and credit.

* * *

60a

WAIVER

In our consideration of UNC’s contention that GAC has

waived its right to arbitration, we focus upon the conduct of

GAC prior to the invalid order of April 2, 1976. GAC at once

attacked that order, and pursued the attack until the order

was finally set aside. In the meantime, the Santa Fe court pro-

ceeded with the New Mexico litigation. GAC had no alter-

native. Its failure to defend in that proceeding would have

risked default judgment, and any further move toward ar-

bitration would have invited contempt proceedings. When the

barrier of the April 2 order was ultimately removed by the

Supreme Court of the United States, GAC moved immediate-

ly on November 30, 1977, to take this controversy to arbitra-

tion. So whatever occurred between April 2, 1976 and

November 30, 1977, while GAC was vindicating its contrac-

tual right to arbitrate by ‘‘a lengthy process of litigation,

through several layers of courts’ could not legitimately be

viewed as constituting waiver by GAC of that right.

The facts underlying UNC’s claim that GAC had by its

actions prior to April 2, 1976, waived its right to arbitrate are

not disputed. The factual record and the arguments of the

parties based upon the undisputed facts have been presented

to the Panel in documents submitted by the parties in other

proceedings which have been incorporated in the Panel record

by reference. In considering this issue we shall first state the

facts which are relied upon to establish waiver and then

discuss their significance.

The first action brought by UNC in the Santa Fe court

named GAC and its constituent partners as defendants. It was

filed in the Santa Fe court August 8, 1975, and was removed

by the defendants to the United States District Court. After

UNC’s motion to remand had been argued, UNC voluntarily

dismissed the case on December 31, 1975. On the same day

UNC filed its second complaint in the Santa Fe court. This

complaint was identical with the first except that this one did

not name as defendants the partners who owned GAC, thus

apparently eliminating diversity jurisdiction in the federal

6la

court. No answer had been filed in that proceeding before it

was voluntarily dismissed by UNC and although GAC had

obtained extensions of time within which to respond to the

complaint, the motions for those extensions asserted that time

was necessary to determine whether to seek arbitration.

In the second action in the Santa Fe court GAC filed

several motions: a motion to disqualify a particular judge; a

motion to dismiss for want of personal jurisdiction; a motion

to dismiss for failure to join indispensable parties and a mo-

tion for an order extending the time within which to answer

and to answer interrogatories that had been served with the

complaint. The first motion to dismiss asserted that it was

filed ‘‘without waiving its right to demand arbitration on all

causes and issues raised by UNC herein,’’. The other motions,

with the exception of the motion to disqualify, and for exten-

sion of time were accompanied by reservations of the right to

arbitrate.

On March 12, after UNC had filed an application in the

Santa Fe court for a default judgment on the ground that

GAC had not answered UNC’s interrogatories, a written

agreement was signed wherein GAC agreed to answer the in-

terrogatories within twenty days. Nothing was said in that

agreement about reserving arbitration rights. UNC then

withdrew its application for a default judgment.

During the period prior to the issuance of the injunction

against arbitration, GAC also filed an interpleader action in

‘the United States District Court for the District of New Mex-

ico. The complaint in the interpleader action contained the

following reservation:

‘The filing and prosecution of this suit is not intended

to or deemed to be a waiver of plaintiffs’ rights to have

arbitration under one or more of the agreements

hereafter described as the UNC Agreements or the 1973

Uranium Supply Agreement, except as to those issues

that are within the jurisdiction of and are actually and

directly determined by this court.”’

62a

The defendants were UNC and electric public utilities which

had entered into agreements with UNC or GUNF for the pur-

chase of uranium concentrate for use in nuclear reactors in

generating plants. The action was dismissed in the District

Court and the Tenth Circuit Court of Appeals affirmed

(General Atomic Co. v. Duke Power Co. 553 F.2d. 53

(1957). The affirmance was based upon lack of jurisdiction in

that GAC was not being subjected to conflicting claims by

two or more defendants which arose out of the same obliga-

tion of the plaintiff, and that GAC was therefore not a

stakeholder in the federal interpleader sense even though it

stood to be subjected to conflicting decisions which might

hold GAC liable to the utilities and UNC not liable to GAC.

On March 15, 1976 UNC sought and obtained from

Judge Felter a ten-day temporary restraining order prohibiting

GAC from instituting suit or filing a third party complaint

against United Nuclear involving ‘‘any of the subject matters

of this suit.’’ Hearing on UNC’s application for a preliminary

injunction was set to be held within ten days.

On or about March 20, counsel for GAC wrote to UNC

counsel ‘‘advising plaintiff that Duke Power Company had

demanded arbitration with GAC and that GAC mighi seek to

require plaintiff’s participation if plaintiff chose not to par-

ticipate.’” (See UNC’s August 6, 1976, Application for

Default Judgment.) In what was apparently the same connec-

tion, GAC included in its March 23 response to UNC’s March

15 motion for a preliminary injunction, this statement: ‘‘In

order to protect its interest and to avoid inconsistent results, it

will probably be necessary for GAC to implead or otherwise

joint UNC in some or all of the actions involving the power

companies. .. .”” This prospect was discussed in considerable

detail at a March 24 hearing before Judge Felter on the ap-

plication for a preliminary injunction. Counsel for defendant

confirmed that GAC, ‘‘unless restrained by your Honor, may

well take some action in North Carolina te make them OUN-

Co a party to the arbitration where we are already a par-

ty... .’’ (Hearing Transcript, pp. 37-38.) UNC counsel stated

63a

to Judge Felter (Transcript, pp. 17-18): ‘*. .. I don’t know in

how many unknown places in arbitration and other pro-

ceedings UNC will be expected to appear. ... So I ask that

the order be expanded under any proceedings, including an

arbitration proceeding.”’

In response to UNC’s request, the preliminary injunction

stated:

“It is therefore ordered that General Atomic Company

.. + Oiso hereby preliminarily enjoined and prohibited

from filing or prosecuting any other action or actions

against United Nuclear Corporation in any other forum

relating to any rights, claims or the subject matter of this

action. This injunction prohibits the institution or pro-

secution of ordinary litigation, third party proceedings,

crossclaims, arbitration proceedings or any other method

or manner of instituting or prosecuting actions, claims or

demands relating to the subject matter of this lawsuit, or

including United Nuclear Corporation as a party... .”’

Since the first action filed by UNC was voluntarily

dismissed after it had been removed to the federal court, we

do not regard anything that occurred during the pendency of

that action as significant insofar as waiver of arbitration is

concerned. To the extent that what took place in that action is

at all relevant the conduct of GAC in that action clearly in-

dicates its preference for a federal rather than a state forum,

as well as its desire not to waive its right to arbitrate.

Again, in the second action filed in the Santa Fe court

GAC clearly indicated, in its first substantive motion, its

desire not to waive its right to arbitrate. That position was

reiterated on numerous occasions. We do not regard as essen-

tial that a formal reservation of the right to arbitrate in every

procedural step be taken in the course of that action. There is

no doubt that GAC’s reservations were adequate to inform

UNC of its consideration of an arbitration panel as an alter-

native forum and there could be no possible claim of surprise

on the part of UNC. Indeed, it was precisely because UNC

64a

anticipated that GAC would resort to arbitration that it re-

quested the injunction prohibiting GAC from doing so.

The interpleader action filed by GAC in the federal

district court indicated a desire for a federal forum and par-

ticularly for a forum before which both UNC, as the seller to

GAC and the utilities as the ultimate purchasers from GAC

might be brought so that the possibility of conflicting

judgments could be avoided. And in the interpleader action it

was specifically stated that if the federal district court ac-

cepted jurisdiction over this entire controversy, GAC would

abandon its contractual right to arbitration; and equally

specifically that this right was being preserved if the court

should decline jurisdiction. Closely comparable situations have

been presented in a number of other cases. In General

Guaranty Insurance Co. v. New Orleans General Agency,

Inc., (427 F.2d 824, Sth Cir. 1970.) the defendant in an action

for alleged breach of contract responded to plaintiff’s com-

plaint by answering and at the same time filing a counterclaim

that depended on impleading a third party. Recognizing that

the interpleader action might or might not be permitted, the

defendant expressly reserved its right to arbitrate under its

contract with plaintiff if the interpleader suit should be

denied. The Fifth Circuit heid that the defendant had acted

properly in reserving its right to arbitration under the contract

if its attempted interpleader action was unsuccessful. In

Gavlik Construction Co. v. H. F. Campbell Co. v. The

Wickes Corp., 526 F.2d 777 (3rd Cir. 1975) the court approv-

ed the district court finding in Gavlik Construction Co. v. H.

F. Campoell Co., 389 F. Supp. 551 (W.D. Pa 1975) that the

filing of a third-party complaint in an attempt to consolidate

pending ections was “‘certainly not waiver but ... a pro-

cedurally sound attempt to achieve a desired result.’’ (389 F.

Supp. at p. 553).

There are two elements in the present case either of which

precludes a finding of waiver of GAC’s contractual arbitra-

tion right on this record as it stood on April 2, 1976. First,

there had been no answer filed to UNC’s complaint. In

65a

Chatham Shipping Co. v. Fertex Steamship Corp., 352 F.2d

291, 293 (2d Cir. 1965). Judge Friendly summarized the

general rule which has subsequently been applied repeatedly,

even to alleged waiver by a party plaintiff: ‘“The cases are

altogether clear that the mere filing of an action for damages

on a contract does not preclude a subsequent change of mind

in favor of arbitration therein provided . . .: the earliest point

at which such preclusion may be found is when the other par-

ty files an answer on the merits. The Belize, 25 F. Supp. 663,

664 (S.D. N.Y. 1938).’’

There is also the general rule that neither a plaintiff’s nor

a defendant’s participation in judicial proceedings will be

found to have waived a contractual right to arbitration unless

such participation has prejudiced the other party. Careich v.

Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir. 1968) ‘‘It is

not ‘inconsistency’ but the presence or absence of prejudice

which is determinative of the issue’’ of waiver. Hart v. Orian

Insurance Co., 453 F.2d 1358 (10th Cir. 1971); Shinto Shipp-

ing Co., Ltd v. Fibrex & Shipping Co., Inc., 572 F. 2d 1328

(9h Cir. 1978). Although UNC claims prejudice to its posi-

tion in GAC’s March 12 agreement to answer UNC’s inter-

rogatories, resulting in UNC’s withdrawal of its motion for a

default judgment, this clearly did not constitute the ‘‘substan-

tial prejudice’ which is consistently held to be a necessary in-

gredient of a waiver finding.

The four cases described by UNC in its brief as suppor-

ting its waiver claim are all cases in which a party first

asserted, or at least pressed meaningfully, its contractual ar-

bitration right only after plaintiff's complaint had been

answered in a judicial proceeding; in three of the four there

had also been preceding combinations of counterclaims,

discovery procedures, and arguments and hearings in court on

the merits of the controverted issues. The Belize, 25 F.Supp.

663 (E.D.N.Y. 1938); American Locomotive Co. v. Gyro Pro-

cess Co., 185 F.2d 316 (6th Cir. 1950); Cornell & Co. v.

Barber & Ross Co., 360 F.2d 512 (D.C. Clr. 1966); Weight

66a

Watches of Quebec Ltd. v. Weight Watchers International

Inc., 398 F. Supp. 1057 (E.D.N.Y. 1975).

It is the Panel’s determination that GAC has not waived

its right to arbitration.

~ * +

The Panel will advise the parties through the offices of

the American Arbitration Association regarding further pro-

ceedings in this case.

/s/ WatTeR V. SCHAEFER

/s/ WILLARD WIRTZ

67a

AMERICAN ARBITRATION ASSOCIATION

No. 73-10-0078-77

IN THE MATTER OF AN ARBITRATION BETWEEN GENERAL

Atomic Company (GAC)

AND

UNITED NUCLEAR CORPORATION (UNC)

Protest And Dissent To Partial Award

Res Judicata, Full Faith And Credit

Waiver Of Arbitration

November 9, 1979

This Protest and Dissent to the ‘‘Partial Award’’ in this

matter:

— Continues the protest heretofore made and

throughout asserted by United Nuclear Corporation,

Respondent, that these proceedings are altogether

improper and illegal.

— Preserves the protest heretofore made that the ‘‘Par-

tial Award’’ has been improperly promulgated con-

trary to fair and proper procedure and in disregard

of the rights of the undersigned as a designated ar-

bitrator in this proceeding.

— Asserts the ‘‘Partial Award ’’ in form and substance

to be in manifest error and disregard of law in that it

arrogates powers, prerogatives, and privileges to the

arbitrators contrary to fundamental law and public

policy, is incomplete and lacking fundamental ra-

tionality, and is highly negligent in misrepresentation

or neglect of admitted facts and rulings of courts in

proceedings of utmost relevance herein.

68a

Contrary to assertions of the ‘‘unique full faith and credit

question which this matter presents’’, (Partial Award Pg. 25)*

and ‘‘problems of interpretation of the Supreme Court opin-

ion’ (Partial Award Pg. 13), this matter is altogether plain

and straightforward.

The United States Supreme Court in Felter I immediately

reached the issue and its decision:

*‘General Atomic Company (GAC) challenges the validity

of an injunction issued by a New Mexico state court

restraining it from filing and prosecuting actions against

United Nuclear Corporation (UNC) in federal court. We

reverse because under Donovan v. City of Dallas, 377

U.S. 408, 84 S.Ct. 1579, 12 L.Ed.2 409 (1964), it is not

within the power of state courts to bar litigants from fil-

ing and prosecuting in personam actions in the federal

courts.’’ (98 S.Ct. 76)

The judgment of the Supreme Court accordingly was:

“The judgment of the New Mexico Supreme Court is

reversed and the case is remanded to that court for fur-

ther proceedings not inconsistent with this opinion.’’ (98

S.Ct. 79)

Nothing suggests the New Mexico state court’s admitted

jurisdiction (Partial Award Pg. 24) had been forfeited and the

court had become ‘‘coram non judice’’.

Felter II came before the United States Supreme Court as one

of three proceedings instituted by GAC, all in March 1978.

Full details as to the three proceedings, Nos. 77-1236,

77-1237, 77-1269, are provided in Appendix 1, attached.

* References are to Partial Award, P.A. or Schaefer, Pg. :

United Nuclear Corporation — UNC; General Atomic Company —

' GAC; Gulf Oil Company — Gulf; Felter 1 — (GAC v. Felter, 434

U.S. 12; 98 S.Ct. 76; 54 L.Ed.2 199 (1977); Felter I1 — (GAC v.

Felter, 436 U.S. 493; 98 S.Ct. 1939; 56 L.Ed.2 480 (1978); Judge

Edwin L. Felter now Justice Edwin L. Felter of the New Mexico

Supreme Court.

69a

Suffice it to say:

No. 77-1236 was a Petition for Certiorari to review an

order of the Supreme Court of New Mexico entered

January 11, 1978 denying a Writ of Prohibition to an

order entered by Judge Felter on November 18, 1977 re-

quiring the identification of the ‘‘Canadian documents’’.

No. 77-1237 was a motion of GAC for Leave to File a

Petition for Mandamus requiring Judge Felter to vacate

the orders of December 16, 1977 staying federal arbitra-

tion proceedings and December 27, 1977 declining to stay

trial proceedings in New Mexico District Court pending

prosecution of federal arbitration on the grounds that

rights of arbitration had been waived by GAC and the

issues were not subject to arbitration since they were in-

tertwined with violations of the New Mexico State anti-

trust laws.

No. 77-1269 was a Petition for Certiorari to review an

order of the Supreme Court of New Mexico on March 2,

1978 denying GAC’s application for original mandamus

and prohibition to the entry of a sanctions order and

default judgment entered by Judge Felter on March 2,

1978.

All three proceedings were held ‘‘in tandem on a conference

list’’. The briefs filed by the parties dealt with the con-

solidated issues and accordingly the United States Supreme

Court was fully aware that the docket in the New Mexico

state courts included two final orders then pending on appeal

to the New Mexico Supreme Court.

On May 15, 1978, the United States Supreme Court denied

certiorari in 77-1236, The Canadian Documents, and in

77-1269 The Sanctions Order and Default Judgment.

Parenthetically, 77-1269 has now been fully briefed and

argued before the Supreme Court of New Mexico as Case No.

11988 and No. 12052, consolidated, and awaits decision.

On May 30, 1978, in Felter II, the United States Supreme

Court granted Leave to File Mandamus against the December

70a

16 order staying arbitration but refused mandamus as to the

December 27 order declining to stay trial proceedings pending

arbitration.

The December 27 order was thereafter reviewed by the New

Mexico Supreme Court in Case No. 11775 and affirmed on

May 7, 1979, NA. , 597 P.2d 290, and cer-

tiorari denied by the Unit: d States Supreme Court on October

9, 1979 in Case No. 79-190.

Felter II is easily understood against this background. There,

the United States Supreme Court directed that the order of

December 16, 1977 be vacated or modified:

“to the extent that it places any restriction whatsoever

upon GAC’s exercise of its right to litigate arbitration

claims in federal forums.’’ 436 U.S. at 497; 98 S.Ct. at

1941

However, as to the issues of arbitrability and waiver, the

Supreme Court said:

“Clearly our prior opinion did not preclude the court

from making findings concerning whether GAC had

waived any right to arbitrate or whether such a right was

contained in the relevant agreements nor did our prior

decision prevent the Santa Fe Court on the basis of such

findings from declining to stay its own trial proceedings

as requested by GAC pending arbitration in other

forums.’’ id.

“*Preclude’”’ is successor to the old common law plea of

precludi non, ‘‘the commencement of a replication to a plea

in bar, by which the plaintiff says that . . . he ought not to be

barred from having and maintaining his aforesaid action.’’

The modern preclude, accordingly, is to prohibit or prevent.

(Black’s Law Dictionary 1060 (Sth ed. 1979)

Thus, the United States Supreme Court, with full knowledge

of the record in the New Mexico courts, declined to interfere

with the pending judicial review by the New Mexico Supreme

Court of the December 27, 1977 order, plainly saying its prior

Tla

opinion did not prevent the Santa Fe court, on the basis of its

findings as to waiver and inarbitrability, from declining to

stay its own trial proceedings.

The commentator in 54 L.Ed.2 925 had no problem in inter-

preting Felter II:

‘“‘And in General Atomic Co. v Felter (1978, US) 56

L.Ed.2 480, 98 S.Ct. 1939, the Supreme Court granted a

corporation’s motion for leave to file a petition to man-

damus a state court with regard fo its order staying

federal arbitration proceedings by the petitioner against

another corporation, on the ground that the order

violated the mandate of the Supreme Court in a prior

decision in which the Supreme Court had held that under

the supremacy clause of the Federal Constitution (Article

VI, clause 2), the state court lacked the power to enjoin

the petitioner from filing and prosecuting in personam

actions in the federal courts. The stay order in question

was made after the state court, on remand following the

Supreme Court’s earlier decision in the case, had

modified its injunction to exclude from its terms and con-

ditions all in personam actions in federal courts and all

other matters mandated to be excluded from the opera-

tion of the injunction by the Supreme Court’s opinion.

Noting that the state court as not precluded by the

Supreme Court’s prior decision from making findings

concerning whether the petitioner had waived any right to

arbitrate or whether such a right was contained in a rele-

vant agreement between the petitioner and the second

corporation, and that the state court was not prevented,

on the basis of such findings that it might make, from

declining to stay its own trial proceedings pending ar-

bitration in other forums, the Supreme Court ruled

nonetheless that the state court was without power to in-

terfere with the petitioner’s efforts to obtain arbitration

in federal forums. The Supreme Court, however, declined

to issue a formal writ of mandamus, assuming that its

previous judgment would be obeyed by the state court by

72a

promptly vacating or modifying its order staying arbitra-

tion proceedings to the extent that it placed any restric-

tion whatever on the applicant’s exercise of the right to

litigate arbitration claims in federal forums.”’

The elaborate explanation in the ‘‘Partial Award’’ that the

preclude paragraph must be understood as defining postural

procedural limits of mandamus (Partial Award Pgs. 13 et

seq.) is patently wrong, unnecessary, and oblique.

If the panel had carefully read Donovan v. City of Dallas,

377 U.S. 408 (1963), they would have learned the issue before

the court was only the power of the state court to enjoin an

action in federal court:

‘*Early in the history of our country a general rule was

established that state and federal courts would not in-

terfere with or try to restrain each other’s proceedings.

That rule has continued substantially unchanged to this

time. An exception has been made in cases where a court

has custody of property, that is, proceedings in rem or

quasi in rem. In such cases this Court has said that the

state or federal court having custody of such property has

exclusive jurisdiction to proceed. Princess Lida v.

Thompson, 305 U.S. 456, 465-468. In Princess Lida this

Court said ‘‘where the judgment sought is strictly in per-

sonam, both the state court and the federal court, having

concurrent jurisdiction, may proceed with the litigation at

least until judgment is obtained in one of them which

may be set up as res judicata in the other.’’ Id., at 466.

See also Kline v. Burke Construction Co., 260 U.S. 226.

It may be that a full hearing in an appropriate court

would justify a finding that the state-court judgment in

favor of Dallas in the first suit barred the issues raised in

the second suit, a question as to which we express no o-

pinion. But plaintiffs in the second suit chose to file that

case in the federal court. They had a right to do this, a

right which is theirs by reason of congressional enact-

ments passed pursuant to congressional policy. And

whether or not a plea or res judicata in the second suit

73a

would be good is a question for the federal court to

decide. While Congress has seen fit to authorize courts of

the United States to restrain state-court proceedings in

some special circumstances, it has in no way relaxed the

old and well-established judicially declared rule that state

courts are completely without power to restrain federal-

court proceedings in in personam actions like the one

here.”’

Donovan recognized that even though the injunction was in-

valid the Texas court retained jurisdiction.

‘“‘Whether the Texas court would have punished peti-

tioners [respondents here] for contempt had it known

that the restraining order petitioners violated was invalid,

we do not know. However, since that question was

neither considered nor decided by the Texas court, we

leave it for consideration by that court on remand. We

express no opinion on that question at this time.’’

In fact, the return of the Donovan fine subsequently was by

order of the Court of Civil Appeals of Texas, 384 S.W.2 724

(1964).

GAC argued this precise issue without success before the New

Mexico Supreme Court in the appeal from the December 27

order, 597 P2d. 290 at 309.

**§. Inconsistency of Proceedings

[33] GAC claims that the actions of the trial court were

inconsistent with the holdings of the U. S. Supreme

Court in General Atomic Co. v. Felter, 434 U.S. 12, 98

S.Ct. 76, 54 L.Ed.2d 199 (1977). This bears on the

district court’s determination not to stay the trial on the

grounds that GAC had waived its right to arbitrate and

that the New Mexico antitrust claims were not arbitrable

as a matter of law.

In General Atomic, the Supreme Court ruled that, ‘‘it is

not within the power of state courts to bar litigants from

filing and prosecuting in personam actions in the federal

74a

courts.’’ 434 U.S. at 12, 98 S.Ct. at 76. The district court

then modified its April 2, 1976 injunction to exclude

from its terms and conditions all in personam actions in

federal courts ‘‘and all other matters mandated to be ex-

cluded from the operation of said preliminary injunction

by the Opinion of the United States Supreme Court,

dated October 31, 1977.”’

The district court had jurisdiction over the arbitration

controversy under the Federal Arbitration Act, at least up

to approximately sixty days into the trial of the case on

the merits, when GAC made demand for arbitration and

moved for a stay in the proceedings. When GAC sought

a stay the trial court had the obligation to determine

whether the issues involved in the suit were referable to

arbitration under the agreements, and whether ‘‘the ap-

plicant for the stay is not in default in proceeding with

such arbitration. .. .’”’ 9 U.S.C. §3. The trial judge made

these determinations in favor of UNC. There is nothing

in the Supreme Court’s decision that prohibits this type

of disposition since it comports with the federal statutes.

[34] There was nothing in the amended injunction which

prohibited GAC from demanding arbitration in the case

to be conducted in any location, so long as an application

was made to the district court to stay the pending trial.

The Federal Arbitration Act prevented GAC from pro-

ceeding with arbitration without an order from Judge

Felter. 9 U.S.C. §3.

Furthermore, in General Atomic Co. v. Felter, 436 U.S.

493, 496-97, 98 S.Ct. 1939, 58 L.Ed.2d 480 (1978), decid-

ed after argument in this case, the Court observed:

“Clearly, our prior opinion did not preclude the court

from making findings concerning whether GAC had

waived any right to arbitrate. . . . Nor did our prior deci-

sion prevent the Santa Fe court ... from declining to

stay its own trial... .’’”’

Elemental research and simple due care would have

demonstrated that it was the responsibility of Justice Felter to

75a

determine arbitrability. The panel is aware that diversity of

citizenship was lacking between the parties until sometime in

1979; the ‘‘Partial Award’’ contains pages discussing the Brat-

ton decision which determined federal court jurisdiction lack-

ing. (Partial Award, Pg. 15 et seq.)

With minimum effort, the panel could have found Commer-

cial Metals v. Balfour, Guthrie, & Co. Ltd. (577 F.2d 264,

CCAS (1978). In Commercial, as here, diversity of citizenship

did not exist. There, as here, the state court was able as well

as required to apply the United States Arbitration Act.

‘*[6] It is clear that the state courts are entirely able, as

well as required, to apply the United States Arbitration

Act and compel arbitration pursuant to ihe Act if the

statutory requisites are present. Coastal States Gas Pro-

ducing Co. v. Producing Properties, 203 F.Sup. 956

(S.D.Tex.1962). Indeed, at the request of the parties, we

allowed the parties to communicate to the Court, after

oral argument, in regard to ongoing state proceedings in

which an order compelling arbitration has been sought. It

appears to us that the state court is conscientiously fulfill-

ing its duty in deciding the applicability of the Federal

Arbitration Act, although, of course, we are not at liber-

ty to speculate as to the correctness of such a determina-

tion. We refuse to allow every arbitration agreement con-

cerning a maritime transaction or one involving interstate

and foreign commerce to come within the jurisdiction of

our district courts through an indirect method that was

directly prohibited by Congress. We join the other courts

which have considered the matter, and have required an

independent jurisdictional basis, Robert Lawrence Com-

pany v. Devonshire Fabrics, Inc., suprs; Amalgamated

Ass’n, Etc. v. Southern Busline, supra; Warren Bros. Co.

v. Community Bldg. C. of Atl., inc. 386 F.Supp. 656

(M.D.N.C. 1974); C.P. Robinson Const. Co. v. National

Corp. for Hous. Part., 2775 F.Supp. 446 (M.D.N.C.

1974); Bangor and Aroostock R. Co. v. Maine Central R.

Co., supra; Coastal States Gas Producing Co. v. Produc-

76a

ing Properties, supra, and have refused to fragment the

Arbitration Act. Robert Lawrence Company v. Devon-

shire Fabrics, Inc., supra; Bengor and Aroostock R. Co.

v. Maine Central R. Co., supra; Coastal States Gas Pro-

ducing Co. v. Producing Properties, supra.’’ (577 F.2 264

at 269 (1978))

It will be noted hereafter state courts do pass upon federal

rights and those findings are thereafter, as here, entitled to

full faith and credit and res judicata.

On remand of 77-1237, the matter came before the New Mex-

ico Supreme Court in Case No. 11775 on June 21, 1978

whereupon Mr. Justice Payne asked John Eastham, Esq.,

counsel to GAC:

**Justice Payne: But they didn’t decide that the Santa Fe

Court has no power to determine if there iad been a

waiver of that right?

Mr. Eastham: They did not determine that the December

27th Order, which went into waiver, was or was not

proper. That is definitely before you gentlemen:”’

The ‘‘coram non jucide’’ argument was made fully in the sup-

plemental briefs as it was made thereafter in the Petition and

brief for Certiorari to the United States Supreme Court. On

May 9, 1979 the New Mexico Supreme Court affirmed the

December 37, 1977 order in a full opinion of twenty-three

pages, N.M. , 597 P.2d 290. This court found

not only that GAC had waived its right to arbitrate but that

the issues of violations of the New Mexico anti-trust lav.s

were intertwined with all other issues and not subject to ar-

bitration. id 309.

The decision was clearly stated in U..S. Law Week 43 L.W.

3236, (Partial Award, Pg. 23) which appeared at the time the

T7a

United States Supreme Court denied GAC’s Petition for

Certiorari:

“Arbitration — No. 79-190 General Atomic Co. v.

United Nuclear Corp. — Ruling below (NM Sup.Ct.,

5/7/79):

Federal Arbitration Act, 9 U.S.C. §3, mandates that

court in which case is pending and in which stay is re-

quested for arbitration has jurisdiction to determine

whether movant is ‘‘in default and proceeding with such

arbitration’; thus state court, rather than arbitration

panel, could decide whether party had waived its rights to

arbitration; court will take into consideration all material

facts to determine whether party to uranium supply con-

tracts containing arbitration caluse defaulted on its

obligation to make timely demands for arbitration and

stay of state-court proceedings and thus waived its rights;

substantial evidence supports finding that contracting

party, which waited until complex, multi-party, multi-

issue litigation in which it was involved was within days

of final solution at trial level when it first made demand

for arbitration, was in default and thus waived its right

to arbitration; enforcement of state antitrust laws by

courts rather than by arbitrators is entirely consistent

with congressional intent, since state and federal antitrust

acts serve to protect same societal interest, and since

Federal Arbitration Act itself provides that aribtration

agreements in contracts involving commerce are en-

forceable ‘‘save upon such grounds as exist at law 9r in

equity for the revocation of any contract.”’

Compare the ‘‘Partial Award’’ summary of the May 7, 1979

Decision of the New Mexico Supreme Court:

“*The December 27, 1977 judgment which refused to stay

the trial on the ground that GAC had waived its rights to

arbitration was affirmed by the Supreme Court of New

Mexico on May 7, 1979, and GAC’s petition for cer-

tiorari to review that judgment has been denied by the

78a

Supreme Court of the United States.’’ (Partial Award,

Pg. 23) ;

The error in this summary, particularly after citation to U. S.

Law Week, is astounding, negligent, and wholly malignant.

The ‘‘coram non judice’’ argument is confined entirely to

waiver.

“So whatever occurred between April 2, 1976 and

November 30, 1977, while GAC was vindicating its con-

tractual right to arbitrate by ‘‘a lengthy process of litiga-

tion, through several layers of courts’’ could not

legitimately be viewed as constituting waiver by GAC of

that right.’’ (Partial Award, Pg. 29)

Non-arbitrability of the issues in this proceeding because of

the New Mexico anti-trust law has been asserted by UNC

from the inception of the controversy between the parties.

Conclusions of fact 9 and 11 and conclusions of law 7 and 8

of the New Mexico District Court Order of December 27,

1977 found anti-trust issues inarbitrable and all issues in the

case so intertwined that none could be submitted to

arbitration.

The May 7, 1979 Decision of the New Mexico Supreme Court

specifically considered these issues at length and affirmed

these conclusions.

The Petition for Certiorari filed by GAC in the United States

Supreme Court a*signed these rulings as grounds for granting

the Writ.

The ‘‘Partial Award’’ of the panel enumerates these issues as

preliminary and before the panel. Nevertheless, the ‘‘Partial

Award’’ does not consider or even mention these issues at all.

— The res judicata claim of UNC included the anti-

trust and intertwinement issues as the panel was fully

aware. It is altogether improper and in manifest

disregard of law for the res judicata claim to be con-

sidered or determined dehors these matters.

79a

— The facts and law relating to the anti-trust and inter-

twinement issues existed prior to the institution of

this litigation, prior to the April 2, 1976 injunction,

were in no way affected by that injunction, and can-

not be reached by any ‘‘coram non jud.ce’’ con-

sideration. ,

— The public policy of New Mexico is that issues aris-

ing under the New Mexico anti-trust statutes and in-

tertwined matters are to be determined by courts and

net by privately paid per diem arbitrators, 597

P.2d.290 at 311. This fundamental policy is now

disregarded by the panel in its wholly invalid asser-

tion of jurisdiction.

— The “Partial Award’’ denying res judicata and full

faith and credit without consideration of the anti-

trust and intertwinement issues is not only in-

complete and lacking fundamental rationality but is

in manifest disregard of law and contrary to public

policy. In fact, any lawyer for any party in this pro-

ceeding undertaking to argue the res judicata issue

would be guilty of gross malpractice if he were to ig-

nore the anti-trust and intertwinement issues.

The direct decisions described involving the precise parties and

issues now appearing and asserted before the arbitration panel

are cavalierly noted and dismissed with the comment that the

Denial of Certiorari carries:

‘no implication or inference concerning that court’s view

of the merits of the case’’ (Partial Award Pg. 23).

On June 6, 1979, N. Lewin, Esq., counsel to GAC, wrote to

the panel concerning the May 7, 1979 Supreme Court of New

Mexico Decision; he stated:

“GAC will be filing a Petition for a Writ of Certiorari

with the Supreme Court of the United States to obtain

review of the New Mexico Supreme Court’s recent deci-

sion. Because the New Mexico decision rests on fun-

damental errors of federal statutory and constitutional

80a

law, we are confident that it will be reversed. The time it

takes to secure such reversal should not, however, be

utilized to delay rulings by this Panel on ‘‘preliminary’’

issues which have long been ripe for decision or to

postpone further sessions going to the merits. If this ar-

bitration is now delayed while the validity of the New

Mexico decision is being contested by GAC in the

Supreme Court of the United States, the effect will be the

same as if Judge Felter’s stay order of December 16,

1977, and his injunction against arbitration of April 2,

1976 — both vacated summarily by the United States

Supreme Court — were still operative.’’ (Appendix 3 at-

tached)

This arbitrator has been particularly interested in hearing the

views of the parties as to the three events which occurred

subsequent to the March hearings before the panel:

— The affirmance on May 7, 1979 by the New Mexico

Supreme Court of the December 27 order of Judge

Felter,

— The determination by Judge Enright permitting the

filing of the amended complaint in San Diego

District Court on August 31, 1979.

— The Denial of Certiorari by the United States

Supreme Court on October 9, 1979.

Unfortunately, upon objection, this opportunity has been

denied.

While it is true that the Denial of Certiorari by the United

States Supreme Court does not create stare decisis, the basic

fact is that as between the parties the decision of the New

Mexico Supreme Court remains in full force and effect.

Grossgold v. Supreme Court of Illinois, 557 F.2d. 122,

CCA7, 1977 at 124,:

**The Illinois Supreme Court, which is fully competent to

pass on federal constitutional questions, has passed upon

this constitutional question, and its decision became final

8la

when the Supreme Court of the United States denied cer-

tiorari. Since the Illinois Supreme Court was bound to

pass on the constitutional question posed by the pardon,

the court’s denial of Grossgold’s petition for reconsidera-

tion necessarily implied that the constitutional question

was being decided against the plaintiff. Consequently,

there was no arguable constitutional ‘‘deprivation’’ upon

which Section 1343 could operate to provide subject mat-

ter jurisdiction. The doctrine of res judicata bars any fur-

ther litigation of this question.

* * *

We conclude that plaintiff pursued his proper remedy in

the Supreme Court of Illinois and subsequently in the

Supreme Court of the United States and is bound by the

adverse result.’ 557 F.2d. 122 at 125

Brown v. Allen, 344 U.S. 443; 73 S.Ct. 397, often cited for

the proposition that the denial of certiorari ‘‘imports no ex-

pression of opinion upon the merits of a case’’ went further,

however, to describe the effect as between the parties:

‘‘But denial of certiorari marks final action on state

criminal proceedings. In fields other than habeas corpus

with its unique opportunity for repetitious litigation, as

demonstrated in Dorsey v. Gill, 80 U.S. App.D.C. 9, 148

F.2d 857, see 7 F.R.D.313, the denial would make the

issues res judicata.”’

Another inexcusable error in the ‘‘Partial Award’’ occurs in

its assertion:

‘The other judgments of the Santa Fe court are pending

upon appeal in the Supreme Court of New Mexico. They

do not directly bear upon GAC’s right to federal arbitra-

tion or the Santa Fe court’s jurisdiction to prevent the ex-

ercise of that right.’’ (Partial Award, Pg. 23)

The ‘‘other judgment”’ is the sanctions order finding the 1973

Supply Agreement under which the right of arbitration is

asserted void and unenforceable. (Partial Award, Pgs. 9 et

seq.)

82a

Inherent in the ‘‘Partial Award’’ analysis are:

1. Assumption of a non-existent arbitrable right of

judicial review of a judgment and decree entered by

a state court, affirmed by the court of last resort of

that state after full briefing, argument, and review,

and to which the United States Supreme Court,

again after full briefing, has denied certiorari. This

ennoblement is undertaken by an arbitration panel

consisting of paid per diem private citizens, acting on

its own behalf, appointed by private corporations

acting pursuant to a private contract; thus setting up

what one panei member tastefully referred to as the

‘private jurisprudential system’’ or ‘‘second system

of jurisprudence’. (San Diego Transcript of Pro-

ceedings, March 28, 1979, Pg. 253).

This pretension of authority is breathtaking. In Rooker v.

Fidelity Trust Co., 263 U.S. 413 at 414; 44 S.Ct. 149 (1923),

plaintiffs filed a Bill in Equity in U. S. District Court for the

District of Indiana seeking

“to have a judgment of a circuit court in Indiana which

was affirmed by the Supreme Court of the state declared

null and void.’’

There as here, an attempt at direct review by the Supreme

Court of the United States had failed. Mr. Justice Van

Deventer, speaking for a unanimous court, affirmed a decree

dismissing the complaint:

“It affirmatively appears from the bill that the judg-

ment was rendered in a cause wherein the circuit

court had jurisdiction of both the subject matter and

the parties, that a full hearing was had therein, that

the judgment was responsive to the issues, and that it

was affirmed by the Supreme Court of the state on

an appeal by the plaintiffs. 131 N.E. 769. If the con-

stitutional questions stated in the bill actually arose

in the cause, it was the province and duty of the

state courts to decide them; and their decision,

83a

whether right or wrong, was an exercise of jurisdic-

tion. If the decision was wrong, that did not make

the judgment void, but merely left it open to reversal

or modification in an appropriate and timely ap-

pellate proceedings. Unless and until so reversed or

modified, it would be an effective and conclusive ad-

judication. Elliott v. Peirsol, P Pet. 328, 340, 7

L.Ed. 164; Thompson v. Tolmie, 2 Pet. 157, 169, 7

L.Ed. 381; Voorhees v. Bank* of United States, 10

Pet. 449, 474, 9 L.Ed. 490; Cornett v. Williams, 20

Wall. 226, 249; Ex parte Harding, 120 U.S. 782, 7

S.Ct. 780, 30 L.Ed. 824. Under the legislation of

Congress, no court of the United States other than

this court could entertain a proceeding to reverse or

modify the judgment for errors of that character.’’

(Emphasis provided)

Thus, this arbitration panel pretends to authority which no

court of the United States, other than the United States

Supreme Court possesses.

The extent of this unwarranted pretension is shown in the

‘Partial Award’ itself. Pages 29-37 of the ‘‘Partial Award’’

consider the identical problem of waiver dealt with at length

in the opinion of the New Mexico Supreme Court. See 597

P.2d. 290 at 299 et seq.

The ‘‘second jurisprudence’’ doctrine suggests a further in-

teresting alternative. In Deane Hill Country Club, Inc. v. City

of Knoxville, 379 F.2d 321, CCA6, 1967, Cert. Denied 389

U.S. 991, plaintiffs filed an action in the U. S. District Court

challenging an annexation proceeding previously sustained in

state court and affirmed by the state Supreme Court. Again,

as here, certiorari was denied by the United States Supreme

Court. The 6th Circuit Court of Appeals affirmed the

dismissal of the complaint saying:

“State courts are competent to decide questions arising

under Federal Constitution. Federal courts do not pro-

vide a forum in which disgruntled parties can relitigate

federal claims presented to and decided by state courts.”’

84a

Apparently ‘‘second jurisprudence’’ is more hospitable in pro-

viding a forum ‘‘in which disgruntled parties relitigate federal

claims presented to and decided by state courts.”’

The panel, in fact, proceeds beyond the position asserted by

counsel for GAC. In Durfee v. Duke, 375 U.S. 106; 84 S.Ct.

242, (1963), the court considered the requirement of full faith

and credit and concluded at Pg. 149:

‘There emerges the general rule that a judgment is entitl-

ed to full faith and credit — even as to questions of

jurisdiction — when the second court’s inquiry discloses

that these questions have been fully and fairly litigated

and finally decided in the court which rendered the

original judgment.”’

At San Diego, before this panel, counsel for GAC was asked

what application he saw for Durfee v. Duke (San Diego

Transcript, March 28, 1979, Pg. 222):

“Mr. Lewin: In addition to the fact that Durfee versus

Duke involved a jurisdictional determination that had

been approved by the Highest Court of the State and for

which no Petition for Certiorari had been filed. In other

words, a parallel. Jf UNC were here and this state court

injunction had been affirmed by the New Mexico

Supreme Court, and the Supreme Court of the United

States had denied certiorari, then we'd agree, Durfee ver-

sus Duke would be applicable. \t would say that the state

judge had jurisdiction to issue his order.’’ (Emphasis sup-

plied)

The “private jurisprudential system’’ makes no distinction

between direct and collateral attack upon a judgment. Cer-

tainly a pretense by a private arbitration panel to void a judg-

ment of a court of last resort of one of the sovereign states

must appear collateral unless it be claimed that by some

unknown arcane process state and federal constitutions had

been amended to confer appellate judicial status upon this

private entity. Otherwise, Gordon v. Longest, (16 Peters 97),

Evans v. Hudson, 165 Fed 970 (CA3, 1948), and Harper v.

85a

Tandy, 543 F.2d 540, (CAS, 1976), all involving direct review,

are inapplicable.

Stoll v. Gottlieb, 305 U.S. 165; 83 L.Ed 104 (1938), reads

directly on the point. There the federal court in a corporate

bankruptcy proceeding discharged an individual from liability

under his guarantee of a corporate obligation. The bond-

holder subsequently sued in the municipal court in Chicago.

Municipal court held for the bondholder on the basis that the

federal court had no jurisdiction. The Appellate Court re-

versed and its judgment was in turn reversed by the Supreme

Court of Illinois. The United States Supreme Court reversed

saying:

“That a former judgment in a state court is conclusive

between the parties and their privies in a Federal court

when entered upon an “tually contested issue as to the

jurisdiction of the court over the subject matter of the

litigation, has been determined by this Court in Forsyth

v. Hammond. The respondent, Caroline M. Forsyth,

sought by injunction in the Federal court to forbid the

City of Hammond from collecting taxes on certain lands,

annexed to the city by an earlier state court decree. The

city contended that the earlier decree was decisive, the

respondent that it was void because the enlargement of a

city was a matter of legislative, not judicial, cognizance.

Without determining the issue whether annexation itself is

a function solely of the legislature. this Court upheld the

contention of the city on the ground that the respondent

had taken an appeal to the Supreme Court of Indiana

from the earlier decree of the trial court against her in

the annexation proceedings, and had in that appeal at-

tacked the validity of the decree on the ground of lack of

jurisdiction. ‘Having litigated a question in one compe-

tent tribunal and been defeated, can she litigate the same

question in another tribunal, acting independeatly, and

having no appellate jurisdiction? The question is not

whether the judgment of the Supreme Court would be

conclusive as to the question involved in another action

86a

between other parties, but whether it is not binding be-

tween the same parties in that or any other forum.”’

Also see Moore’s Federal Practice, (2d ed. 1975)60.25(2) at

296.

The law of this case itself as made by the parties demonstrates

the inapplicability of Kalb v. Feuerstein, 438 U.S. 433 (1940).

In the actions brought by UNC in federal district court in

New Mexico and again initially in the federal district court for

the Southern Distric

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