Commerical v. Gilbane

• Court: Court of Appeals for the First Circuit
• Decided: May 12, 1993
• Docket: 92-1904
• Status: Published

Opinion

USCA1 Opinion

United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 92-1904

                         COMMERCIAL UNION INSURANCE COMPANY,

                                Plaintiff, Appellant,

                                          v.

                              GILBANE BUILDING COMPANY,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                  [Judge Edward F. Harrington, U.S. District Judge]

                                 ____________________

                                        Before

                               Torruella, Circuit Judge,
                                          _____________
                            Bownes, Senior Circuit Judge,
                                    ____________________
                              and Stahl, Circuit Judge.
                                         _____________

                                 ____________________

            Michael P. Duffy, with  whom Bert J. Capone, John J. O'Connor, and
            ________________             ______________  ________________
        Peabody & Arnold, were on brief for appellant.
        ________________
            Peter B. Krupp, with  whom Thomas R. Murtagh, Joseph P.  Crawford-
            ______________             _________________  ____________________
        Kelly, and Mintz,  Levin, Cohn, Ferris, Glovsky and  Popeo, P.C., were
        _____      _____________________________________________________
        on brief for appellee.

____________________

                                     May 11, 1993
                                 ___________________

STAHL, Circuit  Judge.  In this  appeal, plaintiff-
                             ______________

            appellant   Commercial   Union   Insurance   Company   ("CU")

            challenges  the district court's summary denial of its motion

            to   stay  defendant-appellee   Gilbane  Building   Company's

            ("Gilbane") counterclaim pending arbitration.  Finding  error

            in the district court's decision, we reverse.

                                          I.
                                          I.
                                          __

                                  Factual Background
                                  Factual Background
                                  __________________

                      During  the latter half  of the 1980's,  Gilbane, a

            general contractor,  entered into thirteen  subcontracts with

            Thames Valley  Steel Corporation ("TVS"),  a structural steel

            subcontractor, under which  TVS agreed to  perform structural

            steel  work  for  Gilbane on  thirteen  separate construction

            projects in Massachusetts and Rhode Island.  On each project,

            CU  acted as  surety for  TVS,  issuing various  performance,

            labor, and material bonds guarantying TVS's proper completion

            of  its  obligations.     As  such,  each  of  the   thirteen

            construction  projects   was  governed  by   at  least  three

            contracts: (1)  the prime  contract between  Gilbane and  the

            individual  owner; (2)  the subcontract  between  Gilbane and

            TVS; and (3) CU's performance bond. 

                      In  1990, TVS  ceased  doing  business  and,  as  a

            result,  defaulted on  its  obligations  under  each  of  the

            thirteen  subcontracts.  Disputes  then arose between  CU and

            Gilbane  concerning CU's obligations as the guarantor of TVS'

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                                          2

performance  on  these projects.    On  August  16, 1991,  CU

            commenced this diversity action against Gilbane alleging that

            Gilbane wrongfully  withheld  contract balances  owed  CU  in

            connection   with  the   completion   of  the   first  twelve

            construction  projects.  In  its answer, Gilbane  denied CU's

            allegations  and also brought  a two-count counterclaim.   In

            Count  I  of  its  counterclaim,  Gilbane  alleged  that,  in

            relation to the thirteenth construction project, TVS breached

            the terms of its subcontract by failing to perform in  a good

            and workmanlike manner, and that CU breached the terms of its

            performance bond by  failing to correct TVS' work.   In Count

            II,  Gilbane charged that  CU committed unfair  and deceptive

            trade practices in violation of Mass. Gen. Laws Ann. ch. 93A,

               2 and 11 (West  1984 and Supp. 1992) (hereinafter referred

            to   simply  as  "ch.  93A"),  and  unfair  claim  settlement

            practices in  violation of Mass.  Gen. Laws Ann. ch.  176D,  

            3(9) (West 1987 and Supp.  1992), by failing "to effectuate a

            prompt, fair and equitable settlement of Gilbane's claims . .

            . ."

                      In response to Gilbane's  counterclaim, CU filed  a

            reply denying any liability in connection with the thirteenth

            project and  amended its  complaint to  add a  count alleging

            that Gilbane committed  unfair and deceptive trade  practices

            in  violation of ch. 93A  by withholding an undisputed amount

            "solely in order  to gain leverage with respect  to a dispute

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                                          3

arising in  connection with  a different project."   At  that

            time,  CU also  filed  a  third-party  complaint  against  L.

            Antonelli  Iron Works and  The Thompson and  Lichter Company,

            Inc., both of whom had  entered into subcontracts with TVS to

            perform  certain services  in connection with  the thirteenth

            construction project.  In that complaint, CU alleged that the

            third-party  defendants were  liable to  CU  for any  amounts

            Gilbane  might  recover  against   CU  on  Count  I  of   its

            counterclaim.

                      On November 6, 1991, CU filed the instant motion to

            stay Gilbane's counterclaim pending arbitration, arguing that

            the  counterclaim  was  subject  to  an  express  arbitration

            agreement.1  Gilbane  opposed the motion to  stay, contending

            that  the  counterclaim  was not  subject  to  an arbitration

            agreement, and  in the  alternative, that  CU had waived  its

            right to arbitrate by filing the instant lawsuit.  On May 18,

            1992, the  district court entered a margin order denying CU's

            motion to stay.  CU appeals from that decision.

                                         II.
                                         II.
                                         ___

____________________

            1.  We think  it important to  emphasize that Count I  of the
            counterclaim  concerns   only  the   thirteenth  construction
            project.  The other twelve  projects, which are the basis for
            the complaint  by CU against  Gilbane, are not  implicated in
            the counterclaim.  The counterclaim, therefore, can be viewed
            as separate  and distinct from  the complaint  brought by  CU
            against  Gilbane.   Neither  party  has  suggested  that  the
            dispute as to  the twelve other construction  projects, which
            form   the  basis  for   CU's  complaint,  be   submitted  to
            arbitration.

                                         -4-
                                          4

Discussion
                                      Discussion
                                      __________

                      Although  not  raised  by  the  parties,  we  first

            explain the  basis of our appellate jurisdiction.   Section 3

            of the Federal  Arbitration Act ("FAA") contains  a procedure

            by  which parties  to  an arbitration  agreement  may file  a

            motion  to  stay  the  trial  of  arbitrable  claims  pending

            arbitration.   See 9 U.S.C.A.    3 (West 1970).   Pursuant to
                           ___

            that section of the statute,  a district court must grant the

            stay "upon  being satisfied that the issue  involved . . . is

            referable to  arbitration under  such an agreement  . .  . ."

            The FAA further provides that  "[a]n appeal may be taken from

            . . . an order . . . refusing a stay under  section 3 of this

            title .  . . ."  9 U.S.C.A.    16(a)(1)(A) (West Supp. 1992).

            As CU is  appealing from a denial  of a motion to  stay under

            section  3   of  the   FAA,  we   therefore  have   appellate

            jurisdiction.

            A.  Arbitrability
            A.  Arbitrability
            _________________

                      The  arbitrability of  this  dispute turns  on  the

            interpretation  of contractual terms, a question of law which

            we can determine  in the first instance.   See, e.g., Fashion
                                                       ___  ____  _______

            House, Inc. v.  K Mart Corp., 892  F.2d 1076, 1083  (1st Cir.
            ___________     ____________

            1989).

            1.  Relevant Contract Language
            1.  Relevant Contract Language
            ______________________________

                      Gilbane's counterclaim is  based upon CU's  alleged

            breach  of its  performance bond  on  the thirteenth  project

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                                          5

("the  Performance Bond").   Thus, the arbitrability  of this

            counterclaim depends upon  whether there is language  in that

            contract  subjecting  disputes  between  Gilbane  and  CU  to

            arbitration.  

                      Although  the  Performance  Bond  has  no  language

            dealing   with  arbitration,   it  does   contain   a  clause

            incorporating the  subcontract between Gilbane and  TVS ("the

            Subcontract"), which, in turn, has a clause incorporating the

            prime  contract  between   Gilbane  and  the  owner   of  the

            thirteenth project ("the  Prime Contract").  It is  the Prime

            Contract that contains  the arbitration clause.   That clause

            reads as follows:

                           All  claims,   disputes  and   other
                      matters in  question arising  out of,  or
                      relating to this Agreement or the  breach
                      thereof,  .  .  .  shall  be  decided  by
                      arbitration   in   accordance   with  the
                      Construction  Industry Arbitration  Rules
                      of the  American Arbitration  Association
                      then   obtaining   unless   the   parties
                      mutually agree otherwise.  This agreement
                      to   arbitrate   shall   be  specifically
                      enforceable    under    the    prevailing
                      arbitration law by a three-member panel.

                      The  Subcontract,  which  was  drafted by  Gilbane,

            contains a  clause  incorporating certain  provisions of  the

            Prime Contract:

                           [Gilbane] shall be bound to [TVS] by
                      the  terms of  this  agre[e]ment, to  the
                      extent   that  the   provisions  of   the
                      contract documents between  the owner and
                      [Gilbane] apply  to the work of  [TVS] as
                      defined in  this agreement[.]   [Gilbane]
                      shall   assume  toward   [TVS]  all   the

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                                          6

obligations and responsibilities that the
                      owner, by those documents, assumes toward
                      [Gilbane].    [Gilbane]  shall  have  the
                      benefit  of  all  rights,  remedies,  and
                      redress against [TVS] which the owner, by
                      those documents, has against [Gilbane]. .
                      . .2

                      Finally,  the   Performance  Bond   has  a   clause

            incorporating the  Subcontract by reference:  "Whereas, [TVS]

            has by written  agreement . . . entered  into a [S]ubcontract

            with [Gilbane] . . . which [S]ubcontract is by reference made

            a part hereof . . . ."

            2.  Relevant Law
            2.  Relevant Law
            ________________

                      In  deciding  whether  a  chain  of   incorporation

            rendering  Gilbane's  counterclaim arbitrable  exists  within

            these three contracts,  we are mindful of  the strong federal

            policy  favoring  arbitration  agreements,  a  policy   which

            requires us to resolve  "any doubts" concerning arbitrability

            in favor of arbitration.  See Moses H. Cone Memorial Hosp. v.
                                      ___ ____________________________

            Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).   See also J
            _____________________                              ___ ____ _

            & S  Constr. Co., Inc. v. Travelers Indem. Co., 520 F.2d 809,
            ______________________    ____________________

            810 (1st Cir.  1975) (construing incorporation language  in a

            subcontract  broadly  in  light   of  "the  policy   favoring

            arbitration").  This  policy applies "whether the  problem at

            hand is the  construction of the contract  language itself or

____________________

            2.  The subcontract  defines "contract documents"  to include
            "the  agreement  between   the  owner   and  [Gilbane],   the
            conditions  of the agreement between the owner and [Gilbane],
            general   conditions,   supplementary,  special   and   other
            conditions . . . ."

                                         -7-
                                          7

an  allegation  of  waiver,  delay,  or  a  like  defense  to

            arbitrability."  Moses H. Cone, 460 U.S. at 25.
                             _____________

                      In a  remarkably  similar case,  the Sixth  Circuit

            held that  a chain of  incorporation running through  a prime

            contract,  a  subcontract, and  a  performance bond  rendered

            disputes  under the  performance bond  subject  to the  prime

            contract's arbitration  clause.   Exchange Mut.  Ins. Co.  v.
                                              _______________________

            Haskell Co., 742 F.2d 274, 275-76  (6th Cir. 1984).  Like the
            ___________

            Performance Bond at issue here, the bond in that case did not

            itself  contain an arbitration  clause.  Rather,  the bond in

            Haskell incorporated the subcontract by reference, (employing
            _______

            incorporation  language  almost  identical  to that  involved

            here), which,  in turn,  incorporated the  prime contract  by

            reference.  Id.  The incorporation clause in that subcontract
                        ___

            read  as follows:   "Subcontractor  hereby  assumes the  same

            obligations   and  responsibilities   with  respect   to  his

            performance under  this Subcontract, that  Contractor assumes

            towards Owner with respect to his  performance on the [prime]

            [c]ontract."   Id.  at 275.   The  prime contract  in Haskell
                           ___                                    _______

            contained an arbitration provision  almost identical to  that

            in the Prime Contract at issue here.  Id.  
                                                  ___

                      Without reference  to the federal  policy requiring

            it  to construe  any  doubts in  favor of  arbitrability, the

            Sixth Circuit  nevertheless reasoned  that the  incorporation

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                                          8

language  in the performance  bond and subcontract  was broad

            enough to include the prime contract's arbitration agreement:

                           Here,    the    performance     bond
                      specifically referred to and incorporated
                      the   subcontract.      The   subcontract
                      provides  that the  same obligations  and
                      responsibilities apply in the subcontract
                      as apply in  the [prime] contract.   And,
                      finally,  the  [prime]  contract provides
                      that there is a duty to arbitrate.  Thus,
                      the  performance  bond   incorporates  by
                      reference     the     subcontract,    the
                      subcontract incorporates by reference the
                      [prime] contract[,] and hence[,] the duty
                      to arbitrate.

            Id. at 276 (relying on J & S Constr., 520 F.2d at 810).
            ___                    _____________

                      If  anything,  the  language  in  the   Subcontract

            incorporating the terms of the Prime Contract is even broader

            than  that in  the  Haskell  subcontract.    The  Subcontract
                                _______

            provides that, to the extent the Prime Contract (with all its

            attendant conditions)  applies to  the work  of TVS,  Gilbane

            "shall   assume   toward  [TVS]   all  the   obligations  and
                                              ___

            responsibilities" that the owner assumed toward Gilbane under

            the  Prime  Contract.   (Emphasis  added).    The Subcontract

            further  states that "[Gilbane] shall have the benefit of all

            rights,  remedies, and redress against [TVS] which the owner,

            by [the  contract documents],  has against  [Gilbane]."   The

            parties  do not  dispute that  one of  the obligations  which

            Gilbane assumed toward the owner under the Prime Contract was

            to  submit  all disputes  arising  out  of  the  contract  to

            arbitration.  Nor do they dispute that the bundle of "rights,

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                                          9

remedies,  and redress"  given  the  owner  under  the  Prime

            Contract included the right to  submit all claims relating to

            that contract to arbitration.  Accordingly, we find that  the

            Subcontract bound  Gilbane to arbitrate  disputes relating to

            the work  of TVS.3   Because the Performance  Bond explicitly

            incorporated  by reference the  terms of the  Subcontract, we

            further find that  Gilbane and CU similarly  bound themselves

            to  submit disputes  arising under  the  Performance Bond  to

____________________

            3.  In  support of  its contention  that the language  in the
            Subcontract  should be read  narrowly, Gilbane points  to the
            clause  in that  contract  expressly  granting  Gilbane  "the
            benefits of all  rights, remedies, and redress  against [TVS]
            which  the  owner,  by  [the  Prime  Contract],  has  against
            [Gilbane]."    Because  the Subcontract  does  not  contain a
            parallel  clause expressly granting  TVS "the benefit  of all
            rights,  remedies,  and redress"  under  the Prime  Contract,
            Gilbane contends that  the parties did not intend  for TVS to
            have the same right  to subject disputes under this  contract
            to arbitration.  We do not agree.
                 First, this argument  ignores the immediately  preceding
            clause which states  that Gilbane "shall assume  toward [TVS]
            all the obligations  and responsibilities that the  owner, by
            [the Prime Contract],  has against [Gilbane]."   As explained
            above, we  interpret this clause  to impose upon  Gilbane the
            duty  to arbitrate  "all  disputes  relating  to  [the  Prime
            Contract],"  an obligation  assumed by  the  owner under  the
            Prime Contract.   Second, adopting Gilbane's  cramped reading
            of this language would run  counter to the clearly enunciated
            federal policy  of interpreting  "any doubts"  in contractual
            language in favor of arbitration.  Moses H. Cone, 460 U.S. at
                                               _____________
            24-25.   Finally, because Gilbane drafted the subcontract, we
            construe  any ambiguities in that  contract against it.  See,
                                                                     ___
            e.g., LFC Lessors,  Inc. v. Pacific Sewer  Maintenance Corp.,
            ____  __________________    ________________________________
            739 F.2d 4, 7 (1st Cir. 1984).  

                                         -10-
                                          10

arbitration.  To  the  extent that  the  district  court held

            otherwise, we reverse.4

B.  Waiver
            B.  Waiver
            __________

                      Gilbane alternatively  contends that,  even if  the

            counterclaim  is arbitrable, CU waived its right to arbitrate

            that  claim based  upon its  pretrial  participation in  this

            lawsuit.  This contention we find meritless.

                      In  deciding  this  issue,  we  first  discuss  the

            appropriate  standard of  review.    As  the  district  court

            decided the arbitrability  question by margin order,  we have

            no  predicate factual  findings to  review.   In fact,  it is

            possible that the  district court did not  reach the question

            of waiver but decided against  CU solely on the basis of  its

____________________

            4.  To support its position that the district court's refusal
            to grant the  stay was correct, Gilbane relies  upon a series
            of cases which,  it asserts, stand  for the proposition  that
            prime  contract provisions  unrelated  to  the  work  of  the
            subcontractor  are  not  incorporated  by  reference  into  a
            subcontract.   See Washington  Metro. Area  Transit Auth.  v.
                           ___ ______________________________________
            Norair Eng'g  Corp., 553 F.2d  233, 235-36 (D.C.  Cir. 1977);
            ___________________
            John W.  Johnson, Inc. v.  Basic Constr. Co., Inc.,  429 F.2d
            ______________________     _______________________
            764,  774-75 (D.C. Cir. 1970);  United States v. Fryd Constr.
                                            _____________    ____________
            Corp., 423  F.2d 980,  983-84 (5th  Cir.), cert.  denied, 400
            _____                                      _____  ______
            U.S. 820 (1970); United States Steel Corp.  v. Turner Constr.
                             _________________________     ______________
            Co., 560 F. Supp. 871, 873-74 (S.D.N.Y. 1983).  None of these
            ___
            cases, however, involved the  incorporation of an arbitration
            clause.  Indeed, in  one of the cases relied upon by Gilbane,
            the   court   explicitly    distinguished   cases   involving
            arbitration clauses  as invoking the  "congressional policies
            favoring arbitration  . .  . ."   See Washington  Metro., 553
                                              ___ __________________
            F.2d at 236.  In  light of Haskell, a case on all  fours with
                                       _______
            this one, we find Gilbane's  reliance upon this line of cases
            unpersuasive. 

                                         -11-
                                          11

interpretation  of the contractual  language.  In  any event,

            the  facts  concerning  CU's  pretrial participation  in  the

            lawsuit are undisputed.  As  a result, the question of waiver

            is one  of  law, and  we review  it  de novo.   See  Page  v.
                                                 __ ____    ___  ____

            Moseley,  Hallgarten, Estabrook & Weeden, Inc., 806 F.2d 291,
            ______________________________________________

            294 n.2 (1st Cir. 1986),  overruled on other grounds sub nom.
                                      _________ __ _____ _______ ___ ____

            Shearson/American  Express, Inc.  v.  McMahon,  482 U.S.  220
            ________________________________      _______

            (1987).  

                      In deference to the  policies favoring arbitration,

            "courts have  stated  that  `waiver  is  not  to  be  lightly

            inferred,  and mere delay in seeking arbitration without some

            resultant prejudice to  a party cannot carry the  day.'"  See
                                                                      ___

            id. at 293 (quoting  Rush v. Oppenheimer & Co., 779 F.2d 885,
            ___                  ____    _________________

            887  (2d Cir.  1985)).   See also  Sevinor v.  Merrill Lynch,
                                     ___ ____  _______     ______________

            Pierce, Fenner & Smith, Inc., 807 F.2d 16, 19 (1st Cir. 1986)
            ____________________________

            ("In  order  for  plaintiffs  to prevail  on  their  claim of

            waiver, they must show prejudice.");  J & S Constr., 520 F.2d
                                                  _____________

            at  809-10 (upholding district  court's finding of  no waiver

            where there had been "no showing of prejudice"). 

                      Although  Gilbane made no claim below that it would

            be prejudiced  by a stay  of its counterclaim, it  asserts on

            appeal that it would suffer  prejudice on two bases: (1) that

            it could  not properly "defend"  Count I (the  contract claim

            for  amounts  allegedly owed  CU  on twelve  of  the thirteen

            construction  projects) and  Count II  (CU's  ch. 93A  claim)

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                                          12

without its  counterclaim; and  (2) that it  would be  forced

            into duplicative litigation.  We discuss these contentions in

            turn.  

                      Gilbane first argues that it would suffer prejudice

            from  having to  defend  against Count  I  of CU's  complaint

            without its  counterclaim.   Accepting this contention  would

            require, in essence, a finding that the thirteen construction

            projects are factually inseparable.   This is simply not  the

            case.   Suppose, for instance, that the counterclaim proceeds

            to arbitration  and is  decided in Gilbane's  favor.   Assume

            further that  the underlying lawsuit  results in an  award to

            CU.  Under that scenario,  the arbitration award could act as

            a stipulated  setoff from the  amount awarded CU  in district

            court.5    We are  unable  to  imagine  a scenario  in  which

            Gilbane would suffer  prejudice from having to defend Count I

            of  CU's  complaint  in the  underlying  lawsuit  without its

            counterclaim.   Nor has  Gilbane outlined  such a  scenario.6

____________________

            5.  We note that  Gilbane's attorney conceded as  much during
            oral argument.

            6.  Gilbane  also  argues   that,  because  it   pleaded  the
            substance  of its counterclaim  as an affirmative  defense in
            its  answer  to  the  complaint, it  should  be  permitted to
            litigate  the substance  of  that  claim  in  the  underlying
            action.  Whether  we characterize the substance  of Gilbane's
            claim as  a "counterclaim"  or a  "setoff defense,"  however,
            makes no difference  for the purposes of  determining whether
            Gilbane  will theoretically be prejudiced by severing it from
                                           __________
            the  underlying lawsuit.  Second, and more important, Gilbane
            is, in our opinion, relying upon creative pleading to make an
            end run around an arbitration  agreement.  We have previously
            rejected a  party's reliance upon procedural  gamesmanship to

                                         -13-
                                          13

We therefore  find unpersuasive  its belated  contention that

            one might exist.

                      Gilbane also asserts that it would suffer prejudice

            by  having  to defend  against  Count  II of  CU's  complaint

            without  its  counterclaim.   Again,  Gilbane  has  failed to

            provide an example of how it might be prejudiced.  It appears
                                  ___

            to  be  arguing,   instead,  that  it  would   be  judicially

            inefficient to litigate  CU's ch. 93A claim in  one forum and

            Gilbane's ch.  93A claim in  another.7  While Gilbane  may be

            correct,   we  fail  to   see  how  any   resulting  judicial

            inefficiency would prejudice  Gilbane.8   Cf.  Page, 806 F.2d
                                                      ___  ____

____________________

            avoid the  dictates of an arbitration agreement.   Cf. Hilti,
                                                               ___ ______
            Inc. v. Oldach,  392 F.2d 368,  373 n.2 (1st Cir.  1968) ("If
            ____    ______
            arbitration  defenses could be foreclosed [by creative use of
            the joinder rules], the  utility of such agreements  would be
            seriously compromised.").  We do so again today.

            7.  At one point  in its brief, Gilbane states  that it would
            "be at risk  of inconsistent verdicts .  . . ."   Gilbane has
            not,   however,  offered   either  an  explanation   of  this
            perfunctory assertion or an example of a scenario in which it
            could occur.   As such,  we do not  address it further.   See
                                                                      ___
            United States v. St. Cyr,  977 F.2d 698, 701 (1st Cir.  1992)
            _____________    _______
            (reiterating well settled rule in this circuit that arguments
            adverted to on appeal in "a perfunctory manner, unaccompanied
            by some developed argumentation," are deemed waived) (quoting
            Ryan v.  Royal Ins. Co.  of America,  916 F.2d 731,  734 (1st
            ____     __________________________
            Cir. 1990)). 

            8.  In  any event, considerations  of judicial efficiency are
            not  a  sufficient  basis on  which  to  affirm  the district
            court's denial  of the  motion to stay.   See,  e.g., Seguros
                                                      ___   ____  _______
            Banvenez, S.A. v. S/S Oliver  Drescher, 761 F.2d 855, 862 (2d
            ______________    ____________________
            Cir. 1985) (holding that a  court "may not refuse to grant  a
            stay [of a claim pending arbitration] based on considerations
            of  judicial economy");  Surman  v.  Merrill  Lynch,  Pierce,
                                     ______      ________________________
            Fenner &  Smith, 733 F.2d  59, 63 (8th Cir.  1984) (similar);
            _______________
            Dickinson  v. Heinold Sec.,  Inc., 661 F.2d  638, 644-45 (7th
            _________     ___________________

                                         -14-
                                          14

at  294-95 (finding  no prejudice  despite plaintiffs'  claim

            that compelled arbitration  would force them to  "restart the

            entire [pretrial preparation] process before a  new tribunal"

            almost two years after complaint was filed).  

                      Gilbane  also argues that it would suffer prejudice

            by  having  to  litigate  the  same  facts  in  two  separate

            proceedings, and having "to incur increased costs as a result

            of having to proceed in two  arenas."  This argument rests on

            the  faulty premise that  litigation of the  counterclaim and

            CU's underlying  claims  would require  the  adjudication  of

            "identical  factual and legal  issues." See supra  pp. 11-12.
                                                    ___ _____

            Moreover,  any  added  costs  that  Gilbane  would  incur  to

            arbitrate its counterclaim were bargained for by Gilbane.  As

            such, Gilbane's  final attempt to  persuade us  that it  will

            suffer undue prejudice falls well short of the mark.

                                         III.
                                         III.
                                         ____

                                      Conclusion
                                      Conclusion
                                      __________

                      In  sum, we  find  that Gilbane's  counterclaim was

            subject to an express agreement to arbitrate, and that CU did

            not waive its right to arbitrate that claim.  Accordingly, we

            reverse the district  court's denial of  CU's motion to  stay

            Gilbane's  counterclaim pending  arbitration  and remand  for

            proceedings consistent with this opinion.

                      Reversed and remanded.  No costs. 
                      Reversed and remanded.  No costs.
                      _________________________________

____________________

            Cir. 1981) (similar).

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