JUDITH A. MILLER, PLAINTIFF-APPELLEE,
v.
AAACON AUTO TRANSPORT, INC., DEFENDANT-APPELLANT
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The court held that a district court has the authority to vacate a stay pending arbitration if conditions have changed or if the stay was improvidently granted, but factual findings are needed to determine if vacating the stay was proper in this case.
Defendant sought and was granted a stay pending arbitration. The district court later vacated this stay sua sponte, stating the purpose of arbitration…
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PER CURIAM:
Defendant seeks review of the district court’s order of April 13, 1976, vacating a prior stay entered pursuant to 9 U.S.C.A. § 3.1 Defendant contends that the district court, once having entered a stay pending arbitration, was without authority to vacate the stay sua sponte. Defendant further argues that even if it had such authority, the court abused its discretion.
The district court’s order granting the stay was equivalent to an injunction. Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 452, 55 S.Ct. 313, 79 L.Ed. 583 (1934); Jos. L. Muscarelle, Inc. v. American Timber & Trading Co., Inc., 404 F. 2d 467 (5th Cir. 1968). An injunction may be modified or dissolved in the discretion of the court when conditions have so changed that it is no longer needed or is rendered inequitable. Milk Wagon Driver’s Union v. Meadowmoor Dairies, Inc., 312 U.S. 287, 298, 61 S.Ct. 552, 85 L.Ed. 836 (1941); Central Hanover Bank & Trust Co. v. Callaway, 135 F. 2d 592, 595 (5th Cir. 1943); Jones v. Mississippi Valley Barge Line Co., 107 F.Supp. 157 (W.D.Pa.1952). Accordingly, cases have held vacation of a stay proper where the defendant seeking the stay hindered the progress of arbitration or where the parties had not concluded the proceedings within the time specified by the court. See Nederlandse Erts-Tankersmaatschappij, N. V. v. Isbrandtsen Co., 339 F. 2d 440 (2d Cir. 1964); Cargo Carriers v. Erie & St. Lawrence Corp., 105 F.Supp. 638 (W.D.N.Y.1952).
From the record on appeal, we are unable to discern whether plaintiff or defendant, or both, were responsible for the delay in instituting arbitration proceedings. The district court simply stated that the purpose of arbitration — to provide a speedy, efficient means to resolve the dispute between the parties — had not been accomplished. Had the failure of arbitration been caused by plaintiff’s dilatory tactics, vacating the stay may have been improper, since plaintiff would be profiting from her own wrongdoing. Had defendant been at fault, however, vacating the stay could well be appropriate, since defendant originally sought the stay.
Of course, the district court would always have authority to set aside a stay improvidently granted. 4A C.J.S. Appeal & Error § 659 (1957). Once being satisfied, however, “that the issue involved in such suit or proceeding is referable to arbitration under such an agreement,” the district court seems to be required by § 3 to, upon application, “stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.” 9 U.S.C.A. § 3. See Tenney Engineering, Inc. v. United Electrical Radio & Machine Workers Local 437, 207 F. 2d 450, 454 (3d Cir. 1953); cf. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Warren Bros. Co. v. Cardi Corp., 471 F. 2d 1304, 1309 (3d Cir. 1973).
Accordingly, the case is remanded to the district court to resolve the factual issues that have been asserted on this appeal and to reconsider the vacation of its stay in light of the foregoing authorities.
REMANDED.
. 9 U.S.C.A. § 3:
Stay of proceedings where issue therein referable to arbitration
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the' stay is not in default in proceeding with such arbitration.
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Authorities Cited
- Isbell Enters., Inc. v. Citizens Cas. Co. OF NEW York, 431 F.2d 409 (5th Cir. 1970)
- Prima Paint Corp. v. Flood & Conklin MFG. Co., 388 U.S. 395 (U.S. 1967)
- Shanferoke Coal & Supply Corp. v. Westchester Serv. Corp., 293 U.S. 449 (U.S. 1935)
- Milk Wagon Drivers Union OF Chicago v. Meadowmoor Dairies, Inc., 312 U.S. 287 (U.S. 1941)
- Tenney Eng'g, Inc. v. United Elec. Radio & Mach. Workers OF Am., 207 F.2d 450 (3d Cir. 1953)
- Nederlandse Erts-Tankersmaatschappij, N.V. v. Isbrandtsen Co., Inc., 339 F.2d 440 (2d Cir. 1964)
- Warren Bros. Co. v. Cardi Corp., 471 F.2d 1304 (1st Cir. 1973)
- Cent. Hanover Bank & Tr. Co. v. Callaway, 135 F.2d 592 (5th Cir. 1943)
- JOS. L. Muscarelle, Inc. v. Am. Timber & Trading Co., Inc., 404 F.2d 467 (5th Cir. 1968)