Diskin v. J.P. Stevens & Co., Inc.

• Decision Date: 22 January 1988
• Docket Number: No. 87-1234,87-1234
• Citation: 836 F.2d 47
• Parties: 5 UCC Rep.Serv.2d 323 Ben DISKIN d/b/a Mass. State Mfg. Co., Plaintiff, Appellant, v. J.P. STEVENS & CO., INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 47

836 F.2d 47

5 UCC Rep.Serv.2d 323

Ben DISKIN d/b/a Mass. State Mfg. Co., Plaintiff, Appellant, v. J.P. STEVENS & CO., INC., Defendant, Appellee.

No. 87-1234.

United States Court of Appeals, First Circuit.

Submitted Sept. 18, 1987.

Decided Dec. 31, 1987.

Rehearing Denied Jan. 22, 1988.

Ben Diskin, on brief, pro se.

Gary R. Greenberg, P.C., Goldstein & Manello, Boston, Mass., Kurt J. Wolff, and Otterbourg, Steindler, Houston & Rosen, P.C., New York City, on brief, for defendant, appellee.

Before BOWNES, BREYER and SELYA, Circuit Judges.

PER CURIAM.

The appellant, who appears pro se, appeals from the district court's order granting appellee's motion for a stay of the court proceedings pending arbitration pursuant to 9 U.S.C. Sec. 3. The district court's decision is reported. See Diskin v. J.P. Stevens & Co., 652 F.Supp. 553 (D.Mass.1987). At the outset, we consider whether the order is immediately appealable.

A stay issued under section 3 of the Arbitration Act is normally not appealable since it qualifies as neither "final" under 28 U.S.C. Sec. 1291 nor as an "injunction" under 28 U.S.C. Sec. 1292(a)(1). See, e.g., Hartford Financial Systems v. Florida Software Systems, Inc., 712 F.2d 724 (1st Cir.1983), and cases cited therein. Nonetheless, an important exception to this rule is embodied in the well-established Enelow-Ettelson doctrine. This exception provides Having established that this court has jurisdiction over the appeal, we now move to the relevant underlying issues. Appellant Ben Diskin, d/b/a Mass. State Manufacturing Co., is a manufacturer of women's clothing. In December 1984, Diskin traveled to the New York offices of appellee J.P. Stevens & Co., Inc., where Diskin selected, ordered, and tendered full payment by check for a quantity of flannel to be delivered by Stevens at some point in the future. On the back of the check, appellant indicated that his tender was "In full payment for 290 pcs. flannel as per contract...." Appellant also requested that Stevens send him a sample of the fabric for further evaluation. The record shows that Stevens subsequently sent Diskin a copy of its confirmation and standard sales contract--which contained quantity and price terms as well as a clause indicating that the document would become a contract between the parties if the buyer received and retained it for ten days without issuing a written objection. ² The terms of the confirmation specifically provided for resort to arbitration in the event of a dispute between the parties. The district court found that appellant received and retained the form without signing or objecting to it.

                that if the underlying suit which is stayed pending arbitration is legal rather than equitable in nature, the stay order will be appealable under 28 U.S.C. Sec. 1292(a)(1).  Id. at 726.    See also Ettelson v. Metropolitan Life Insurance Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176 (1942);  Enelow v. New York Life Insurance Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440 (1935).  The original complaint filed by the plaintiff-appellant is quite clearly legal in that he seeks money damages relating to contractual issues. 1   So, the district court's order granting a stay of proceedings pending arbitration is properly appealable under the Enelow-Ettelson exception
                

In mid-January 1985, appellant received the sample of cloth which he had requested from Stevens and, finding it unsatisfactory, responded by letter dated January 24, 1985 to Stevens. Appellant expressed his dissatisfaction with the sample, and remarked that his "interests are stopped for re-evaluation...." The record shows that appellant refused to assort ³ or give delivery instructions with respect to the ordered goods for a number of months, after which time appellee unilaterally decided to ship the goods to a warehouse to be held for the account of appellant.

On August 25, 1986, appellant filed suit against Stevens, seeking judgment in the amount of his original payment of $151,380 plus interest and costs. Appellee moved for a stay of proceedings pending arbitration. Its motion was allowed by the district court. See Diskin, supra, 652 F.Supp. at 558-60.

In granting appellee's motion for a stay pending arbitration, the district court concluded that an enforceable contract between the parties had indeed been formed, id. at 555-57, and that appellant was bound by the arbitration clause contained in appellee's written confirmation. Id. at 558-59. The parties do not dispute the district court's application of New York law. ⁴

CONTRACT FORMATION

With respect to contract formation, appellant contends that the totality of the In ascertaining the existence of an enforceable contract, the district court concluded that appellant had failed to object to appellee's written confirmation, and was therefore bound by the terms set forth therein pursuant to New York Uniform Commercial Code Sec. 2-207(1) and (2). Appellant contests this finding, arguing that his January 1985 letter to appellee, which expressed his disappointment with the fabric sample he had received, was in fact an objection to the terms of appellee's confirmation form, thereby precluding the possibility of contract formation. We find this argument to be completely unconvincing. First, appellee's confirmation required objection within 10 days of receipt by appellant: there is no indication that appellant complied with this requirement. Moreover, it was reasonable for the district court to conclude that the vague language of Diskin's letter was insufficient to constitute an objection to the contract as a whole, or to any of its terms. Additionally, appellant's contention that his dissatisfaction with the fabric sample precluded contract formation (or somehow nullified the agreement) is unsupported by the evidence. There is simply no indication that the agreement of the parties was in any way contingent upon appellant's acceptance or rejection of the fabric sample. In fact, we note that appellant accepted and used the fabric sample to manufacture garments before rejecting it as being unsatisfactory.

                parties' dealings were intended only as preliminary negotiations, performed in contemplation of a contract to be formed at a later time.  After a careful review of the record, we conclude that the evidence defies appellant's assertion.  The district court correctly found that a binding contract had been formed between the parties.  We need not recapitulate the district court's thorough discussion of this issue.    See Diskin, supra, at 556-57
                

THE ARBITRATION CLAUSE

The appellant received and retained the confirmation form containing the arbitration clause, but neither signed the form nor objected contemporaneously to its contents. The district court found that, under the circumstances, the confirmation operated as appellee's acceptance of the original offer to purchase embodied in the tender of appellant's check for $151,380. Id. at 556-57. ⁵ The district court also found that the arbitration agreement was binding. Id. at 558-59. Appellant now contends that his failure to sign the form or otherwise explicitly agree to the arbitration clause prevents him from being bound by it. This contention brings into play Sec. 2-207 of the Uniform Commercial Code. Section 2-207(1) states that:

... a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon....

Although additional terms will generally be considered only as proposals for addition to the contract, "[b]etween merchants [the additional] terms become part of the contract unless: ... (b) they materially alter it." U.C.C. Sec. 2-207(2)(b). If the additional term is "such as to materially alter the original bargain, [it] will not be included unless expressly agreed to by the other party." U.C.C. Sec. 2-207, Official Comment 3.

When assessing the materiality of an arbitration clause, one must start with the premise that, under New York law, "it is clear that an arbitration clause is a material addition which can become part of a contract only if it is expressly assented to by both parties." Matter of Marlene Inds. Corp. (Carnac Textiles), 45 N.Y.2d 327, 334, 380 N.E.2d 239, 242, 408 N.Y.S.2d 410, 414 (1978) (citations omitted). Marlene was a textile case involving an exchange of conflicting forms between buyer and seller. The state's highest court found that the seller's attempted addition of an arbitration clause was a material alteration which was not binding on the buyer absent an express assent to the provision. In Marlene, as here, the buyer simply received and retained the seller's form without signing it or otherwise assenting to the arbitration clause. In reaching its conclusion, the court observed the longstanding rule in New York that, in the absence of an...