The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Knorr Brake Corporation ("Knorr Brake") originally sued
Harbil, Inc. ("Harbil") and P.E.P. Industries, Ltd. ("P.E.P.")
for rescission, breach of contract and injunctive relief based
on their alleged breach of an agreement (the "Agreement")
between Knorr Brake and Harbil.*fn1 This Court entered a
preliminary injunction against Harbil and P.E.P. Harbil has
now moved to vacate that injunction, to stay these proceedings
and to compel arbitration under the Agreement. For the reasons
stated in this memorandum opinion and order, Harbil's motion
to vacate the preliminary injunction is denied, but its
motions for a stay (except for any necessary enforcement of
the preliminary injunction itself) and to compel arbitration
Knorr Brake filed its Complaint December 8, 1981. This Court
entered a December 9 temporary restraining order against
Harbil and P.E.P. and promptly (on December 14 and 18)
conducted a hearing on Knorr Brake's motion for a preliminary
injunction. At the December 14 hearing Harbil's counsel moved
orally for a stay pending arbitration pursuant to Agreement
Any dispute arising pursuant to this Agreement
shall be submitted to arbitration by the American
Arbitration Association, and in accordance with
their rules and procedures, and interpreted under
the laws of the State of New York.
Ruling on that motion was reserved pending resolution of the
motion for preliminary injunction (Dec. 14, 1981 Tr. 10).
This Court's January 28, 1982*fn2 memorandum opinion and
order ("Opinion I") reflected its findings of fact and
conclusions of law, as required by Fed.R.Civ.P. ("Rule")
52(a), granting Knorr Brake's preliminary injunction motion.
Next the preliminary injunction itself was issued February 22,
contemporaneously with a supplemental memorandum opinion.
On that same day Harbil filed its Answer and a
Counter-Complaint against Knorr Brake and its corporate
parent, Knorr-Bremse GmbH ("Knorr-Bremse") (collectively
"Knorr"). Harbil's Answer did not raise the arbitration issue
by affirmative defense or otherwise.
In August Harbil filed its First Amended Counter-Complaint,
together with a motion to join additional counterdefendants
and a motion to continue ruling on Knorr's Rule 12(b)(6)
— Rule 56 motion. This Court established a briefing schedule
for the first of those motions and took the second under
This Court's October 27 memorandum opinion and order denied
Harbil's motion to join additional counter-defendants and
struck Count V of the First Amended Counter-Complaint.
550 F. Supp. 476 (N.D.Ill. 1982). As a sequel to that episode this
Court's January 20, 1983 memorandum opinion and order
(556 F. Supp. 484, at 487-88) granted Knorr's motion for an
assessment under 28 U.S.C. § 1927 against Harbil's original
counsel in the amount of "the excess costs, expenses, and
attorneys' fees reasonably incurred" by Knorr because of
Harbil's joinder motion.
On January 14, 1983 Harbil's newly-retained counsel filed
the present motion, contending:
1. Agreement ¶ 7 clearly encompasses the dispute
between Knorr Brake and Harbil. Jan. 14 Mem. 5-7.
2. Harbil has not waived its right to
arbitration. Id. at 7-8.
3. Section 3 of the Federal Arbitration Act,
9 U.S.C. § 3 ("Section 3"),*fn4 and applicable case
law so limit this Court's jurisdiction over this
arbitrable dispute that even the preliminary