166 F.3d 308 (6th Cir. 1998), 96-2287, Andersons, Inc. v. Horton Farms, Inc.

Docket Nº:Plaintiff-Appellee (96-2287; 97-1010/2133),
Citation:166 F.3d 308
Party Name:The ANDERSONS, INC., an Ohio Corporation, Plaintiff-Cross/Appellant (96-2353),
Case Date:December 17, 1998
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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166 F.3d 308 (6th Cir. 1998)

The ANDERSONS, INC., an Ohio Corporation,

Plaintiff-Cross/Appellant (96-2353),

Plaintiff-Appellee (96-2287; 97-1010/2133),

v.

HORTON FARMS, INC., a Michigan Corporation,

Defendant-Appellant (96-2287; 97-1010/2133),

Rodney Horton, individually, Defendant-Cross/Appellee (96-2353).

Nos. 96-2287, 96-2353, 97-1010 and 97-2133.

United States Court of Appeals, Sixth Circuit

December 17, 1998

Argued Feb. 5, 1998.

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Anthony P.A. Patti (argued and briefed), Angela L. Jackson, Bruce T. Wallace (briefed), Hooper, Hathaway, Price, Beuche & Wallace, Ann Arbor, Michigan, for Appellant.

Stephen S. Muhich (argued and briefed), David G. Hagens (briefed), Dykema Gossett, Grand Rapids, Michigan, for Appellee.

James Roland Wierenga (argued and briefed), David & Associates, Grand Rapids, Michigan, for Cross/Appellee.

Timothy John Smith, Marc L. Fleischaker, Nancy S. Appel, Arent, Fox, Kentner, Plotkin & Kahn, Washington, DC, for Amicus Curiae.

Before: CONTIE, BATCHELDER, and MOORE, Circuit Judges.

BATCHELDER, Circuit Judge.

Defendant/Appellant Horton Farms, Inc. ("Horton Farms") appeals the district court's decisions compelling it to arbitrate contract disputes with Plaintiff/Appellee/Cross-Appellant The Andersons, Inc. ("The Andersons"), striking its counterclaims, and confirming the eventual arbitration award. The Andersons cross-appeals the district court's order finding that Rodney Horton was not individually liable on the contracts in question and granting summary judgment in his favor. For the reasons that follow, we AFFIRM the district court in all respects. 1

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I.

Rodney Horton is a Michigan corn farmer and the President of Horton Farms, a Michigan corporation engaged primarily in the business of purchasing, selling, and hauling feed corn. The Andersons is a multi-division/location agri-business firm headquartered in Maumee, Ohio, in the business of originating, merchandising, conditioning, and storing grain and grain products, and other agri-businesses. For more than fifteen years, Horton Farms has done business with and maintained an account with The Andersons; 2 Mr. Horton has never had an individual account with The Andersons.

Underlying this dispute are nine grain-delivery contracts. Each contract was negotiated over the telephone, and the parties orally agreed to all of the necessary terms, including price, quantity, commodity, quality, projected date of delivery, and place of delivery. The Andersons followed up these discussions by sending written "Purchase Contract[s] and Confirmation[s]" addressed to Horton Farms, which Mr. Horton signed and returned.

Listed on the top of the page of each contract is the name "Horton Farms Inc," followed by Horton Farms' address. Each contract contains the customer number 53945; according to The Andersons' own records, the customer name attached to that customer number is "Horton Farms, Inc." Each contract has a line designated "Seller Signature & Confirmation;" five of the nine contracts are signed by "Rodney Horton, Pres.," while the remaining four are signed by "Rodney Horton." The signature of "Arman Hartung" or no signature at all appears above a line designated "Buyer Signature & Confirmation" on each contract. At the bottom of each contract appears the language, "This is an agreement between RODNEY HORTON and ARMAN HARTUNG." 3 Above that line, there is another statement printed in small type reading: "This is an agreement between SELLER and THE ANDERSONS, an Ohio limited partnership ("Buyer"), by the Andersons Management Corp., its sole general partner. The seller acknowledges confirmation of this purchase by buyer, as noted above, and both parties accept the additional terms on the reverse hereof." In the notes section of Contract No. 16260 is the statement "ROBERT HORTON'S CONTRACT--BUYER IS DAVID AZKOUL"; Contract No. 16261 says "RODNEY HORTON'S CONTRCT [sic]." 4

Attached to each contract is a single page containing two distinct sections: "STANDARD PURCHASE CONTRACT TERMS" and "FLEX/CONVERTIBLE CONTRACT TERMS." A statement on the front page of each contract incorporates these terms. The Standard Terms section includes the following language:

Both parties agree:

a. this transaction is made in accordance with the Grain Trade Rules of the National Grain & Feed Association and the parties will be bound thereby; and

b. any disputes or controversies arising out of this contract shall be arbitrated by the National Grain & Feed Association, pursuant to its arbitration rules.

Included under the Flex/Convertible Terms are these provisions:

The Andersons and Seller warrant that the commodities represented under this contract will be tangibly exchanged. Seller further warrants that the total net position outstanding for delivery shall not at

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any time exceed the total quantity owned, or expected to be owned, by the Seller.

The delivery point may, at a fee to the Seller, be amended only by prior mutual agreement between The Andersons and Seller. The delivery period may be amended only by prior mutual agreement between The Andersons and Seller, and subject to The Anderson's sole discretion.

....

At no time will the contract features to the flex/convertible contract be anything other than a pricing mechanism on cash commodity commitments. All futures exchange positions utilized are for hedging purposes of The Andersons only, and not for Seller's account. 5

(emphasis added). Mr. Horton avers that The Andersons never discussed with him either the arbitration clause or the National Grain & Feed Association ["NGFA"] rules. 6 The Andersons do not dispute this.

In the last few months of 1995, a dispute over fees arose, and Horton Farms refused to deliver corn to The Andersons. 7 On January 16, 1996, The Andersons canceled all outstanding contracts; they requested the NGFA to arbitrate the dispute and paid the required $1500 fee. Horton Farms refused to sign the arbitration contract or to pay the $1500 fee. The Andersons then filed a complaint in federal court, seeking to compel arbitration of their damages claim against both Horton Farms and Rodney Horton in his individual capacity. Horton Farms responded with a counterclaim against The Andersons alleging breach of contract and seeking recision. After cross-motions and a hearing, the district court granted summary judgment in favor of Mr. Horton in his individual capacity and against Horton Farms and in favor of The Andersons to compel arbitration, and granted the Andersons' motion to strike Horton Farms' counterclaim. Horton Farms appealed (Case No. 96-2287), and The Andersons cross-appealed (Case No. 96-2353).

The district court then entered an order granting The Andersons' motion to enforce the judgment and denying Horton Farms's motion to stay arbitration pending the outcome of its appeal, and Horton Farms appealed that order (Case No. 97-1010). A panel of this court subsequently denied Horton Farms' request for a stay of arbitration pending appeal, and on May 28, 1997, the arbitrators awarded damages and attorney fees to The Andersons. After this court denied Horton Farms' request for a stay of enforcement of the arbitration award pending appeal, the district court entered judgment denying Horton Farms' motion for summary judgment vacating the arbitration award, and instead confirming the award in the amount of $271,030.44, with interest of $57.68 per diem until paid and $6,551.26 in attorneys' fees and costs. Horton Farms timely appealed the confirmation order. (Case No. 97-2133). The appeals have been consolidated for our consideration.

II.

We review de novo a district court's grant of summary judgment. Holbrook v. Harman Automotive, Inc., 58 F.3d 222, 225 (6th Cir.1995). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment

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as a matter of law." FED.R.CIV.P. 56(c).

Although the most important issue for our consideration is discussed in the next section of this opinion, as an initial matter, we agree with the district court that, contrary to the contention of The Andersons, under Michigan law, Rodney Horton did not sign any of the nine contracts in his individual capacity. Cf. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995) (courts apply state-law principles that govern the formation of contracts to decide whether parties agreed to arbitrate a matter) (citations omitted). The Andersons' brief summarizes its argument thus: (1) under Michigan law, an officer or agent of a disclosed corporation can incur individual liability on a contract; (2) where any uncertainty exists as to the capacity in which such officer or agent signed the contract, parol evidence is admissible to resolve the ambiguity; (3) because Rodney Horton signed some of the nine contracts at issue using the designation "Pres.," and signed the others without any designation, there is uncertainty as to the capacity in which Horton signed each of the contracts; (4) therefore parol evidence is admissible to demonstrate that Horton signed all of the contracts in his individual capacity. We are not persuaded by this bootstrapping.

In Michigan, as in most states, the parol evidence rule is both a rule of evidence and a rule of substantive law. Salzman v. Maldaver, 315 Mich. 403, 24 N.W.2d 161, 165 (Mich.1946). And, as in most states, in Michigan, where the contract is clear and unambiguous on its face, the parol evidence rule operates to preclude the introduction of evidence dehors the contract that would vary or contradict...

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