Menorah Insurance v. INX Reinsurance Corp.

                United States Court of Appeals
                    For the First Circuit

                                         

No. 95-1495

               MENORAH INSURANCE COMPANY, LTD.,

                     Plaintiff-Appellee,

                              v.

                 INX REINSURANCE CORPORATION,

                     Defendant-Appellant.

                                         

No. 95-1497

               MENORAH INSURANCE COMPANY, LTD.,

                     Plaintiff-Appellant,

                              v.

                 INX REINSURANCE CORPORATION

                     Defendant-Appellee.

                                      

        APPEALS FROM THE UNITED STATES DISTRICT COURT

               FOR THE DISTRICT OF PUERTO RICO

       [Hon. Jose Antonio Fuste, U.S. District Judge] 

                                         

                            Before

                     Lynch, Circuit Judge,
                                                     
               Campbell, Senior Circuit Judge,
                                                         
                    Watson,* Senior Judge.
                                                      

                                         


Luis  A.  Melendez-Albizu,  Jaime  Sifre  Rodriguez,  and Sanchez-
                                                                              
Betances & Sifre, were on brief for Menorah Insurance Company, Ltd.
                        
Juan  H.  Saavedra  Castro  was   on  brief  for  INX  Reinsurance
                                      
Corporation.

                                         

                      December 26, 1995
                                         

             
*Of  the  United  States  Court of  International  Trade,  sitting  by
designation.

                             -2-           


          LYNCH,   Circuit   Judge.     After  unsuccessfully
                      LYNCH,   Circuit   Judge.
                                              

attempting to invoke arbitration under international business

contracts,  Menorah Insurance  Company  obtained an  $812,907

default judgment in an  Israeli court against INX Reinsurance

Corporation  and then  sought to  enforce the  judgment in  a

Puerto Rican court.  After waiting  a year, and on the eve of

having an exequatur judgment  entered against it, INX removed

the action to the  U.S. District Court for Puerto  Rico under

the Convention on the  Recognition and Enforcement of Foreign

Arbitral  Awards,  implemented  in 9  U.S.C.     201 et  seq.
                                                                         

(1994).1   The  federal  court  found  that  INX  had  waived

arbitration and  remanded.   We affirm  because INX  has both

explicitly and implicitly waived arbitration.

          Under  seven  reinsurance  treaties  between  them,

Menorah,  an  Israeli  company,   and  INX,  a  Puerto  Rican

corporation, agreed  that "all disputes"   between them would

be arbitrated and should be  settled "in an equitable  rather

than  in a strictly legal manner."2  The locus of arbitration

                    
                                

1.  The Convention was opened for signature on June 10, 1958,
330  U.N.T.S. 38,  and is  reprinted in  9 U.S.C.A.    201 n.
(West Supp. 1995).

2.  The  arbitration   clause  presented  by   INX  as  being
representative provides that:

          All disputes which  may arise between the
          two contracting parties with reference to
          the Interpretation or the carrying out of
          this   Agreement   or   to   any   matter
          originating  therefrom  or  in   any  way
          connected  with  the  same,  and  whether

                             -3-
                                          3


was  to be  Tel Aviv, Israel.   Each  side was  to appoint an

arbitrator and  should the two arbitrators  disagree, then an

"Umpire," previously designated by the two arbitrators, would

decide.   There  was a  default provision  of sorts:  "In the

event of either party failing to appoint an umpire within two

months after  arbitration has  been supplied [sic]  for under

the  question  in dispute,  then  in  either  such  case  the

arbitrators and/or umpire shall  be appointed by the chairman

for   the  time   being   of  the   Israeli  Fire   Insurance

Association."

          Menorah made a claim to INX for over $750,000 under

the reinsurance treaties,  to which INX replied  that it owed

no more than $178,000 and intimated that fraud accounted  for

the  $500,000 difference.   After  unsuccessful negotiations,

Menorah,  on July  1, 1992,  informed INX  by letter  that it

would seek  arbitration, asked  INX to assent  to arbitration

and  appoint its arbitrator, said if INX failed to appoint an

                    
                                

          arising before or  after the  termination
          of  notice under this  agreement shall be
          entitled  [sic]  in  an equitable  rather
          than a  strictly legal manner and in such
          cases the parties agree to submit  to the
          decision  of arbitrator, one to be chosen
          by  the  Company  and  the  other  by the
          Reinsurer   and   in    the   event    of
          disagreement between these  two, then  an
          Umpire, who shall have been chosen by the
          said  two  arbitrators previous  to their
          entering   upon    the   reference,   the
          arbitrators   and/or   umpire  shall   be
          managers  or  chief  officials   of  fire
          Insurance and/or reinsurance companies.

                             -4-
                                          4


arbitrator, Menorah would ask that one  be appointed for INX,

and that if  INX failed  to assent, then  Menorah would  feel

"free  to  pursue  all  other  legal  and  judicial  measures

available."    INX  responded  promptly  that  it  would  not

arbitrate, that its financial  condition was precarious,  and

that even  if ordered  to arbitrate, its  financial condition

would preclude it from doing so.  

          On September  10, 1992,  Menorah filed suit  in Tel

Aviv against INX.  Although actually served, INX chose not to

respond or contest, and  default judgment was entered against

it for $812,907, interest at an annual rate of 11%, costs and

attorneys' fees.   INX did not pay nor did  it seek to remove

the default.

          On September  2, 1993, Menorah filed  an exequatur3

action  in  the Superior  Court in  San  Juan to  enforce the

judgment.   INX moved to dismiss, claiming for the first time

that  the  controversies  between   the  parties  had  to  be

arbitrated.   On August 8, 1994, the court denied the motion,

finding that INX had waived arbitration  and that the Israeli

judgment was valid, and ordered INX to answer.  INX answered,

again claiming arbitration, and counterclaimed that Menorah's

                    
                                

3.  "Exequatur"  refers to  an action  to execute  a judgment
from another  jurisdiction.   See Seetransport Wiking  Trader
                                                                         
Schiffahrtsgesellschaft   MBH  &  Co.  v.  Navimpex  Centrala
                                                                         
Navala, 29 F.3d 79, 81-82 (2d Cir. 1994). 
                  

                             -5-
                                          5


failure to submit the exequatur action  to arbitration was in

breach of its contractual duty of good faith.  On October 14,

1994,  the Superior Court issued  an order to  show cause why

the  petition  for  exequatur  should  not  be  granted.   In

response, INX removed the action to the federal court under 9

U.S.C.   205.4 

          The federal  court remanded  the case on  March 15,

1995,  finding  that  INX  had  waived  arbitration  and  the

remaining claims were not  subject to the federal arbitration

scheme.    Now, over  three  years  after Menorah's  original

request for arbitration  was refused and after the  travel of

this matter  internationally through three  different courts,

                    
                                

4.  Section 205 provides:

          Where the subject matter  of an action or
          proceeding  pending  in  a   State  court
          relates  to  an arbitration  agreement or
          award falling under  the Convention,  the
          defendant or  the defendants may,  at any
          time  before  the  trial thereof,  remove
          such action or proceeding to the district
          court  of  the   United  States  for  the
          district and division embracing the place
          where   the   action  or   proceeding  is
          pending.   The  procedure for  removal of
          causes  otherwise  provided by  law shall
          apply, except that the ground for removal
          provided in this  section need not appear
          on the  face of the complaint  but may be
          shown in the  petition for removal.   For
          the purposes of  Chapter 1 of this  title
          any  action  or proceeding  removed under
          this section  shall  be deemed   to  have
          been  brought in  the  district court  to
          which it is removed.   

                             -6-
                                          6


INX asks us to reverse the district court and send the matter

to arbitration. 

          Review  of  a  district  court's  determination  of

waiver of arbitration is plenary.  See Commercial Union  Ins.
                                                                         

Co. v. Gilbane  Bldg. Co., 992 F.2d 386, 390 (1st Cir. 1993);
                                     

Leadertex,  Inc. v.  Morganton Dyeing  & Finishing  Corp., 67
                                                                     

F.3d 20, 25  (2d Cir. 1995).  "[T]he  findings upon which the

[legal]  conclusion  [of  waiver]  is   based  are  predicate

questions of fact, which may not be overturned unless clearly

erroneous."  Price v. Drexel Burnham  Lambert, Inc., 791 F.2d
                                                               

1156, 1159 (5th Cir. 1986).  

          In the increasingly  international business  world,

the  use  of  arbitration   agreements  may  be  particularly

important to avoid the

          uncertainty [that] will almost inevitably
          exist  with  respect   to  any   contract
          touching two or more countries, each with
          its own substantive laws and conflict-of-
          laws  rules.    A  contractual  provision
          specifying  in advance the forum in which
          disputes shall  be litigated and  the law
          to  be applied  is, therefore,  an almost
          indispensable precondition to achievement
          of  the  orderliness  and  predictability
          essential  to any  international business
          transaction.

Scherk  v.  Alberto-Culver Co.,  417  U.S.  506, 516  (1974).
                                          

These  same interests  motivated  this country  to adopt  and

implement the  Convention, under which this  case was removed

to federal court:

                             -7-
                                          7


          The  goal  of  the  Convention,  and  the
          principal  purpose   underlying  American
          adoption and implementation of it, was to
          encourage the recognition and enforcement
          of  commercial arbitration  agreements in
          international contracts and to  unify the
          standards   by    which   agreements   to
          arbitrate   are  observed   and  arbitral
          awardsareenforcedinthesignatorycountries.

Id. at 520 n.15.
               

          Against  this backdrop  of a  strong United  States

policy  favoring  arbitration,  INX  essentially   makes  two

arguments.   The district court  erred, it says,  in deciding

that it  waived arbitration in  the events of  1992.  In  any

event, INX says, it now has the right to have the question of

the enforceability of the  Israeli judgment, including  INX's

counterclaim, determined by an arbitrator.

          The district court did not  err on either the facts

or the law.  The explicit waiver came when INX was invited to

arbitrate in July 1992.  INX  expressly declined.  It is  not

saved from  that  declination by  the fact  that Menorah  had

offered  in the  July 1,  1992 letter  to have  an arbitrator

appointed for INX.   That offer too was declined and INX said

it  was  both unwilling  and  unable  to  participate in  the

arbitration.5  

                    
                                

5.  INX  claims  the  agreement  required  an  arbitrator  be
                                                     
appointed  for it  if it declined  to do  so.   The language,
hardly  a model of clarity, does not so directly provide, and
easily could have done so were that the intent. 

                             -8-
                                          8


          The implicit waiver  came from INX's entire  course

of conduct.  This court has repeatedly held that "parties may

waive their right to arbitration and present their dispute to

a  court."   Caribbean Insurance  Services, Inc.  v. American
                                                                         

Bankers  Life Assurance Co., 715 F.2d 17, 19 (1st Cir. 1983).
                                       

In  Caribbean,  we  found  waiver where  the  party  claiming
                         

arbitration delayed doing  so until six  months after it  was

sued  and it had entered a stipulation  for a speedy trial in

exchange  for a  "reprieve from  a likely  contempt finding."

Id. at 20.   In Jones Motor Co. v.  Chauffeurs, Teamsters and
                                                                         

Helpers  Local Union  No. 633,  671 F.2d  38, 43  (1st Cir.),
                                         

cert.  denied, 459  U.S. 943  (1982), we  found waiver  where
                         

eleven months  of litigation occurred before  arbitration was

first raised, saying:

          [T]o   require   that   parties   go   to
          arbitration despite their having advanced
          so  far  in   court  proceedings   before
          seeking   arbitration   would  often   be
          unfair, for it would effectively  allow a
          party sensing an adverse court decision a
          second chance in another forum.

That  sentiment applies here.   In Gutor Int'l  AG v. Raymond
                                                                         

Packer  Co.,  493 F.2d  938, 945  (1st  Cir. 1974),  we found
                       

waiver  where a  party unconditionally  submitted part  of an

arbitrable matter to the courts, but later attempted to  take

advantage of  the arbitration clause when  the opposing party

counterclaimed.    Cf.  Raytheon  Co.  v.  Automated Business
                                                                         

Systems,  Inc.,  882 F.2d  6,  8 (1st  Cir.  1989) (defendant
                          

                             -9-
                                          9


waived issue of  whether it  consented to  issue of  punitive

damages being  submitted to arbitration by  delaying and then

raising it  in desultory manner  on first day  of arbitration

and not pursuing it). 

          It  has been the rule in this Circuit that in order

for plaintiffs  to prevail on  "their claim  of waiver,  they

must  show prejudice."    Sevinor v.  Merrill Lynch,  Pierce,
                                                                         

Fenner  &  Smith,  Inc., 807  F.2d  16,  18  (1st Cir.  1986)
                                   

(finding  no   prejudice  where  defendants   explicitly  and

promptly raised arbitration as  a defense to a  suit); accord
                                                                         

Commercial Union, 992 F.2d  at 390.  Because there  was ample
                            

prejudice  here, as  the  district court  found,  we have  no

reason  to reconsider whether to  apply the litmus  test of a

showing  of  prejudice to  establish  waiver  or to  apply  a

totality of circumstances test,  as other circuits have done.

See Metz v. Merrill  Lynch, Pierce, Fenner & Smith,  Inc., 39
                                                                     

F.3d 1482, 1489 (10th Cir. 1994) (applying a "totality of the

circumstances"  test for  the determination of  waiver, where

prejudice was but  one factor);   S+L+H S.p.A. v.  Miller-St.
                                                                         

Nazianz, Inc., 988 F.2d 1518, 1527 (7th Cir. 1993). 
                         

          Ignoring  its  failure  to appear  in  the  Israeli

action,6  INX characterizes  its  delay  of  over a  year  in

                    
                                

6.  INX asserts  that its inaction during  the proceedings in
Israel was justified by  its desire to preserve its  right to
challenge the  jurisdiction of the  Israeli court.   But  INX
voluntarily  entered  into  reinsurance  agreements  with  an
Israeli  corporation that specified Tel  Aviv as the site for

                             -10-
                                          10


seeking arbitration as insufficient to show prejudice.  There

is  no per  se  rule that  a  one  year delay  is  or is  not
                          

sufficient to support waiver.  Cf. J & S Constr. Co., Inc. v.
                                                                      

Travelers Indem. Co., 520 F.2d 809 (1st Cir. 1975)  (thirteen
                                

month delay and participation in  discovery was not enough to

constitute a showing of prejudice).  The period of delay here

was  not  one in  which  information useful  to  the ultimate

resolution  of  the   dispute  was  being  procured   through

discovery.    Cf.  Cabinetree  of  Wis.,  Inc.  v.  Kraftmaid
                                                                         

Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir. 1995) (explaining
                           

that delay alone  is not automatically a source  of prejudice

and that on occasion  it can comprise time the  parties spend

in  determining information  they would  need in  arbitration

anyway).   INX chose not to invoke arbitration from July 1992

until  October 1993 and Menorah bore  the costs of proceeding

to  try to  obtain the sums  it thought  owed.   See Van Ness
                                                                         

Townhouses v. Mar  Indus. Co.,  862 F.2d 754,  759 (9th  Cir.
                                         

1988) (waiver  found where  party made conscious  decision to

delay  demand   for  arbitration  while  continuing  to  seek

judicial determination  of arbitrable claims).   There was no

error in  the district court's finding  that Menorah incurred

                    
                                

any  arbitration proceedings.   In  the commercial  context a
forum selection  clause,  even one  for arbitration,  confers
personal jurisdiction on the courts of the chosen forum.  See
                                                                         
Unionmutual Stock  Life Ins.  Co. of Am.  v. Beneficial  Life
                                                                         
Ins. Co., 774 F.2d 524, 527 (1st Cir. 1985).
                    

                             -11-
                                          11


expenses as a  direct result of  INX's dilatory behavior  and

that that was prejudice enough.

          INX  suggests that  the  question of  arbitrability

should be decided  in the first  instance by the  arbitrator.

As  to that  and to  INX's  argument that  the  issue of  the

enforceability  of  the  Israeli   judgment  must  itself  be

arbitrated,  we are guided by  First Options of Chicago, Inc.
                                                                         

v. Kaplan,  115 S.  Ct. 1920  (1995).   There, the court  was
                     

faced  with  the question  of who  has  the primary  power to

decide  whether parties  agreed  to arbitrate  the merits  of

their dispute.  Id. at 1923.  Here, we face a variant of that
                               

question -- who has  the primary power to decide  whether the

parties agreed to arbitrate the issue of enforceability of  a

default  judgment following  failure  to  arbitrate under  an

arbitration clause.  That  question is appropriate because it

is  conceivable   that   parties  could   decide  that   such

enforceability   disputes   are   subject   to   arbitration.

"[A]rbitration  is simply  a matter  of contract  between the

parties; it is a  way to resolve those  disputes -- but  only

those disputes -- that  the parties have agreed to  submit to

arbitration."7  Id. at 1924.
                               

                    
                                

7.  There is precedent that,  as a matter of law,  actions to
enforce  foreign  money   judgments,  even  those  confirming
arbitration awards, are not preempted by the Convention.  See
                                                                         
Island Territory  of Curacao  v. Solitron Devices,  Inc., 489
                                                                    
F.2d  1313, 1319 (2d Cir.  1973), cert. denied,  416 U.S. 986
                                                          
(1974).  We think, however, the better rule here is to follow
First  Options.   See  also  Mastrobuono  v. Shearson  Lehman
                                                                         

                             -12-
                                          12


          So we apply the  First Options rule: "Courts should
                                                    

not assume that the parties agreed to arbitrate arbitrability

unless there  is 'clear and unmistakable'  evidence that they

did  so." Id. (citations omitted).   There is  nothing in the
                         

agreement between  INX and  Menorah clearly stating  that the

question of  arbitrability of judgments should  be decided by

an arbitrator.  Thequestion is onefor resolution by thecourt.

          We  also  agree   with  the  district  court   that

arbitration of the enforceability  of the Israeli judgment is

not required.   "[G]iven the  principle that a  party can  be

forced  to arbitrate  only those  issues it  specifically has

agreed  to submit  to arbitration,"  id. at  1925, we  do not
                                                    

interpret  the  silence of  the  agreement on  this  point to

create a right of arbitration.  And if the agreement could be

read for such an implication, INX has nevertheless waived its

right to arbitrate enforceability of the judgment. 

          The  law does not  lend itself to  INX's claims and

ultimately,  the strong  policy reasons  favoring arbitration

and  underlying  the  adoption  of the  Convention  would  be

undercut,  not  served,  by  acceptance  of  INX's  position.

Arbitration clauses  were not meant  to be another  weapon in

the  arsenal  for imposing  delay  and costs  in  the dispute

                    
                                

Hutton,  Inc., 115 S. Ct. 1212, 1216 (1995) (issue of whether
                         
arbitrator may award punitive damages "comes down to what the
contract has  to say about the  arbitrability of petitioners'
claim for punitive damages"). 

                             -13-
                                          13


resolution  process.    Underlying  the policy  of  enforcing

contracts to  arbitrate is  a belief that  where parties  can

agree  to a  mutually optimal  method and  forum for  dispute

resolution, it serves the interests of efficiency and economy

to allow them to do so.  Cf. Mitsubishi Motors Corp. v. Soler
                                                                         

Chrysler-Plymouth, Inc.,  473 U.S.  614, 633 (1985);  Glass &
                                                                         

Allied Workers  Int'l Union, Local 182B  v. Excelsior Foundry
                                                                         

Co.,  56 F.3d  844, 848  (7th Cir.  1995) ("Arbitration  is a
               

service sold in a  competitive market.  The rules  adopted by

the sellers  are presumptively efficient.");  see also Steven
                                                                  

Shavell,   Alternative   Dispute   Resolution:  An   Economic
                                                                         

Analysis,  24  J.  Legal  Stud.  1,  8-9  (1995)  (a  central
                    

rationale for  encouraging parties to contract  for their own

method of dispute resolution is that they are likely to agree

to the most efficient forum to serve their needs).   

          In  the context  of  international  contracts,  the

opportunities for increasing the cost, time and complexity of

resolving disputes are magnified  by the presence of multiple

possible fora, each with its own different substantive rules,

procedural schematas,  and legal  cultures.  This  is fertile

ground for manipulation and mischief, and acceptance of INX's

arguments  would lead  to  the very  problems the  Convention

sought  to   avoid.     Cf.   Elizabeth  Warren,   Bankruptcy
                                                                         

Policymaking in  an Imperfect World,  92 Mich.  L. Rev.  336,
                                               

348-49   (1993)  (Differences  among  legal  systems  provide

                             -14-
                                          14


incentives  for "nonproductive strategic behavior" as debtors

attempt to take advantage  of opportunities presented in ways

that  are wasteful  and  drive up  costs.).   "The  intention

behind   such  [arbitration]  clauses,  and  the  reason  for

judicial enforcement of  them, are not to  allow or encourage

parties to proceed, either  simultaneously or sequentially in

multiple forums."  Cabinetree, 50 F.3d at 390.  
                                         

          Neither  efficiency  nor  economy  are   served  by

adopting  INX's arguments.  The  scenario here --  in which a

party  knowingly opts out of the arbitration for which it has

contracted (even  if driven by looming  insolvency8), sits on

its  hands while  a default  judgment is  entered against  it

after service, refuses to pay, requires an enforcement action

be filed  against it,  and only  then cries  "arbitration" --

undermines  both  the   certainty  and  predictability  which

arbitration agreements  are meant to foster.   Cf. Mitsubishi
                                                                         

Motors,  473  U.S.  at  631  (Courts  should  avoid  inviting
                  

"'unseemly  and mutually destructive jockeying by the parties

to secure tactical litigation  advantages. . . .   [It would]

damage the  fabric of  international commerce and  trade, and

imperil the  willingness and ability of  businessmen to enter

                    
                                

8.  Ordinarily  in  a  dispute  between  on-going  commercial
players  "reputational" costs serve to soften inclinations to
obtain an advantage  in a single dispute.  But  where a party
is  in financial distress,  these reputational  checks become
far  less effective. Cf. Ronald J.  Gilson, Value Creation by
                                                                         
Business  Lawyers: Legal Skills and Asset Pricing, 94 Yale L.
                                                             
J. 239, 289-90 (1984).

                             -15-
                                          15


into international commercial agreements.'") (quoting Scherk,
                                                                        

417  U.S.  at 516-17);    see  also  Gilmore v.  Shearson/Am.
                                                                         

Express  Inc., 811  F.2d  108, 112  (2d  Cir. 1987)  (parties
                         

should  not  be  permitted  to  use  a  delayed  assertion of

arbitration  as a "tactic in  a war of  attrition designed to

make the  litigation too  expensive for  plaintiff"); Allied-
                                                                         

Bruce Terminix Cos. v. Dobson, 115 S. Ct. 834, 841 (1995) (in
                                         

interpreting  the  Federal Arbitration  Act court  notes that

Congress intended to help parties avoid costs and delay).

          The order remanding this case to the Superior Court

of Puerto  Rico  is also  appropriate,  under either  of  two

alternative interpretations of the  Convention.  Section  205

allows  removal if  the subject matter  of the  [state] court

action "relates  to an  arbitration agreement  . .  . falling

under the  Convention," and it  is arguable, though  far from

certain, that an action to enforce a default judgment where a

defense  is that the parties agreed to arbitrate is an action

"relating  to an  arbitration  agreement."   If  the case  is

viewed as being  properly removed  on the basis  of both  the

plaintiff's enforcement action and the counterclaim, then the

finding of  waiver ultimately  removed the basis  for federal

jurisdiction.9

                    
                                

9.  Menorah   argues   that   this   court   lacks  appellate
jurisdiction  because the district  court's remand  order was
based on  a  determination  of  its lack  of  subject  matter
jurisdiction over  the  removed case  and  that 28  U.S.C.   
1447(d)  (1994) bars the review of such a determination.  See
                                                                         

                             -16-
                                          16


          If, on the other hand, the removal was based on the

counterclaim alone,  the  pendent claim  could  be  remanded.

Principles of pendent jurisdiction allowed the district court

to exercise its discretion and relinquish jurisdiction over a

removed  case where all the federal claims were gone and only

pendent  exequatur claims remained.  See  28 U.S.C.   1367(c)
                                                    

(1994); Carnegie-Mellon  Univ. v. Cohill, 484  U.S. 343, 348-
                                                    

52,  355 n.11 (1988); Rodriguez  v. Comas, 888  F.2d 899, 904
                                                     

n.20 (1st  Cir.  1989).   Since  this case  had been  in  the

Commonwealth's courts for  over a year  prior to its  removal

and was on the  verge of resolution, the court's  exercise of

discretion  to  remand  the pendent  claims  was particularly

appropriate.

          The district  court's order  remanding the  case to

the  Superior Court  of  Puerto Rico,  so that  the exequatur

                    
                                

Things Remembered,  Inc. v. Petrarca, 64  U.S.L.W. 4035, 4036
                                                
(U.S. Dec. 5, 1995).       Menorah   also  argues   that  the
district court  erred in granting removal  of the proceedings
in  the first place.  Since Menorah easily wins an affirmance
on  the substantive issue of waiver, we decline to decide the
jurisdictional issues raised  by it.  See Norton  v. Mathews,
                                                                        
427  U.S.  524, 528-33  (1976)  (where merits  can  be easily
resolved  in favor  of  the party  challenging  jurisdiction,
resolution of complex jurisdictional inquiry may be avoided);
Lambert v. Kysar, 983  F.2d 1110, 1118 n.11 (1st  Cir. 1993);
                            
Rhode Island Hosp. Trust  Nat'l Bank v. Howard Communications
                                                                         
Corp., 980 F.2d 823, 829 (1st Cir. 1992).  INX in turn argues
                 
that there is no jurisdiction to hear Menorah's argument that
the case was improperly removed to federal court.  Because we
do  not  reach those  arguments,  we  need  not address  that
jurisdictional issue either.

                             -17-
                                          17


action may proceed, is affirmed.  Double costs are awarded to
                                                                         

Menorah.
                   

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                                          18