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March 3, 1995


(Jefferson Circuit Court, CV-94-2929). William J. Wynn, Trial Judge.

Released for Publication July 5, 1995.

Maddox, Justice. Shores, Houston, Kennedy, Ingram, and Cook, JJ., concur.

The opinion of the court was delivered by: Maddox



This petition for a writ of mandamus relates to an action pending in the Jefferson County Circuit Court. The petition presents two questions: first, whether Jefferson County is a proper venue for an action involving claims arising out of a construction project at a wood pulp processing plant in Monroe County; and second, whether the pendency of a prior declaratory judgment action in Monroe County involving the same parties in the Jefferson County action requires that this Jefferson County action be dismissed. The petitioner seeks a writ of mandamus directing the Jefferson Circuit Court to dismiss the action pending there.

We hold 1) that Jefferson County is not a proper venue for this action, and 2) that the declaratory judgment action pending in Monroe County is a prior pending action within the meaning of § 6-5-440, Ala. Code 1975, and that the Jefferson County action is barred. We therefore grant the writ.

In 1990, Parsons and Whittemore Alabama Pine Construction Corporation (hereinafter called "P&W"), a Delaware corporation, entered into a contract with B.L. Montague Company ("Montague"), under which Montague undertook to design and construct a chip conveyor system for the woodyard at P&W's mill in Claiborne, Alabama. The contract between P&W and Montague provided that any disputes or claims between the parties would be arbitrated in Birmingham, Alabama.

Montague subsequently entered into a subcontract with Paragon Builders, Inc. ("Paragon"), under which Paragon undertook to assemble the structural steel and other components of the chip conveyor system according to the design furnished by Montague. Paragon and Montague's subcontract also contained an arbitration provision.

Various problems and delays arose during the construction of the chip conveyor, and Paragon gave notice to Montague of its complaints and of the additional costs that could be incurred; Montague notified P&W of these complaints. After construction was completed, Paragon submitted claims to Montague, seeking to recover the excess costs it had incurred. Montague submitted these claims to P&W, but both Montague and P&W denied responsibility for the excess costs. Paragon then demanded arbitration with Montague under the provisions of its contract, and Montague, in turn, sought arbitration with P&W, claiming indemnity for the damages claimed by Paragon. The American Arbitration Association ("AAA") granted a request by Montague to consolidate the two arbitration proceedings, which were then set to take place in May 1994 in the city of Birmingham. P&W retained a Birmingham law firm to represent it in the arbitration proceedings.

In January 1994 Montague informed all parties and the AAA that it was going out of business and that it would not participate in the arbitration. Paragon and Montague then entered into a "pass-through" agreement under which Montague permitted Paragon to proceed against P&W in Montague's name. Counsel for P&W then asked the AAA to dismiss P&W from the proceedings, on the grounds that P&W had no arbitration agreement with Paragon. The AAA denied this request, but did agree to limit the arbitration proceeding to only those portions of Paragon's claims that Montague could have presented to P&W.

On April 20, 1994, P&W sued in the Circuit Court of Monroe County, seeking injunctive relief and a judgment declaring that it was not obligated to arbitrate with Paragon and that the pass-through agreement violated the P&W-Montague contract. The Monroe County Circuit Court entered a preliminary injunction in favor of P&W on May 12, 1994, barring Paragon from proceeding against P&W in Montague's name. Paragon subsequently undid the "pass-through" agreement with Montague and proceeded against Montague alone in the May 1994 arbitration; the arbitration board awarded Paragon damages from Montague for its claim.

On April 21, 1994, (the day after the Monroe County action was filed) Paragon filed an action against P&W in the Circuit Court of Jefferson County; that action sought monetary damages for its excess costs. P&W moved to dismiss the Jefferson County action, or, in the alternative, to transfer it to Monroe County, which P&W claimed was the proper venue. The trial Judge refused P&W's motion, stating in its order:

"Both parties had voluntarily agreed to arbitration and to venue (as to said arbitration) in Jefferson County. This agreement to arbitrate concerned disputes that had arisen prior to the filing of the subject action and, ...

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