Martin Marietta Aluminum, Inc., a California Corporation v. General Electric Company, a New York Corporation

Martin Marietta Aluminum, Inc. (MMA), brought this action for damages as a result of the breakdown of 12 high voltage rectifier transformers at its aluminum reduction plant. MMA contends that its losses were the result of improper design and manufacture by General Electric Company (GE), which by contract supplied the plant’s high voltage electrical system. The complaint alleged that GE was negligent and was liable for breach of implied and express warranties. An amended complaint added causes sounding in fraud and strict liability.

In its answer, GE denied the charging allegations and raised seven affirmative defenses, including MMA’s failure to comply with a contractual arbitration clause. Following discovery, GE moved for summary judgment on the basis of several of its affirmative defenses. The district court granted the motion solely on the ground that MMA had failed to comply with the contractual provision requiring MMA to seek arbitration prior to instituting suit.

The contract between MMA and GE consisted of a Purchase Order, General Conditions for Procurement of Equipment and three volumes of specifications. Section 24 of the General Conditions provided:

In granting GE’s…