969 F.3d 660 (6th Cir. 2020), 20-3119, Bay Shore Power Co. v. Oxbow Energy Solutions, LLC

Docket Nº:20-3119
Citation:969 F.3d 660
Opinion Judge:CLAY, Circuit Judge.
Party Name:BAY SHORE POWER COMPANY, Plaintiff-Appellant, v. OXBOW ENERGY SOLUTIONS, LLC, Defendant-Appellee.
Attorney:Gregory J. Phillips, Nicholas J. Secco, Trevor G. Covey, James E. von der Heydt, BENESCH FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, Ohio, for Appellant. John P. Gilligan, Daniel M. Anderson, ICE MILLER LLP, Columbus, Ohio, Derek R. Molter, ICE MILLER LLP, Indianapolis, Indiana, for Appellee.
Judge Panel:CLAY, J., delivered the opinion of the court in which MOORE, J., joined. MURPHY, J. (pp. 667-75), delivered a separate dissenting opinion. MURPHY, Circuit Judge, dissenting.
Case Date:August 13, 2020
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 660

969 F.3d 660 (6th Cir. 2020)

BAY SHORE POWER COMPANY, Plaintiff-Appellant,

v.

OXBOW ENERGY SOLUTIONS, LLC, Defendant-Appellee.

No. 20-3119

United States Court of Appeals, Sixth Circuit.

August 13, 2020

Appeal from the United States District Court for the Northern District of Ohio at Toledo. No. 3:17-cv-01982-Jeffrey James Helmick, District Judge.

Page 661

ON BRIEF:

Gregory J. Phillips, Nicholas J. Secco, Trevor G. Covey, James E. von der Heydt, BENESCH FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, Ohio, for Appellant.

John P. Gilligan, Daniel M. Anderson, ICE MILLER LLP, Columbus, Ohio, Derek R. Molter, ICE MILLER LLP, Indianapolis, Indiana, for Appellee.

CLAY, J., delivered the opinion of the court in which MOORE, J., joined. MURPHY, J. (pp. 667-75), delivered a separate dissenting opinion.

OPINION

CLAY, Circuit Judge.

In 1998, Oxbow Energy Solutions ("Oxbow") entered into a long-term supply contract to provide limestone to Bay Shore Power Company ("Bay Shore"). In 2014, Oxbow breached the agreement and Bay Shore initiated arbitration proceedings to vindicate its rights under the contract. After Bay Shore prevailed, it filed the instant action to confirm the arbitration award and recover its attorneys' fees. The district court granted summary judgment for Oxbow, finding that the contract provides that both parties are to bear their own attorneys' fees with no possibility of recovery by the prevailing party. For the reasons that follow, we disagree with the district court's reasoning and REVERSE its judgment.

BACKGROUND

In 1998, Bay Shore entered into a Limestone Supply Agreement ("LSA") with Oxbow to provide limestone with certain chemical characteristics. The parties agreed to resolve any disputes that might arise according to specified "Dispute Resolution Procedures." R. 7-1, LSA, PageID # 50. These procedures are listed in Annex A of the LSA, under a section entitled "Definitions and Interpretation." Id. at 53, 56-58.

Page 662

The procedures provide that if informal negotiations between the parties and mediation attempts fail, then any dispute shall be settled by binding arbitration. The parties further agreed that following arbitration any party could appeal "to any State or Federal court of competent jurisdiction sitting in Cleveland, Ohio on the basis that the panel has made a mistake of law or the panel's finding or award is against the weight of evidence or is beyond the power or jurisdiction of the panel." Id. at 58.

In 2013, the supplier of limestone that Oxbow was providing to Bay Shore raised the price of its product. As a result, it was no longer profitable for Oxbow to provide that limestone to Bay Shore under the contract price and so, by early 2014, without Bay Shore's permission, Oxbow began to provide lower quality limestone. The inferior limestone posed a danger to Bay Shore's equipment. The limestone was necessary for the proper functioning of a Circulating Fluidized Bed boiler, a critical piece of equipment at Bay Shore's electrical power plant. Bay Shore subsequently agreed to pay— under protest— a price in excess of that permitted by the LSA for adequate limestone. After private negotiations and mediation failed in 2015, Bay Shore invoked the Dispute Resolution Procedures and filed a demand for arbitration in 2016.

In 2017, a three-member arbitration panel ruled in favor of Bay Shore. The panel unanimously held that Oxbow had breached the LSA by refusing to provide limestone at the agreed-upon price, and awarded Bay Shore nearly $5 million in damages, costs, and interest. The arbitration panel did not, however, award attorneys' fees to Bay Shore. It determined that the provision of the Dispute Resolution Procedures that empowered the panel to "assess the costs of the arbitration ... against any party as the panel shall determine" expressly "denies it the jurisdiction to award attorneys' fees." R. 7-4, Arb. Award, PageID # 99.

Bay Shore then filed an "Application to Confirm Arbitration Award and to Award Attorneys' Fees" in federal district court. R. 1, Application, PageID # 1. In response to a joint motion from the parties, the court confirmed the panel's award and ordered Oxbow to pay it immediately, which Oxbow did. The parties then filed cross-motions for summary judgment on the attorneys' fees issue. The district court ruled for Oxbow, determining that the LSA did not permit the prevailing party to recover its attorneys' fees from the non-prevailing party.

According to the district court, mutually conflicting provisions in the LSA barred recovery of attorneys' fees. One provision in the Dispute Resolution Procedures (subsection (b)(iv)) reads: (iv) Binding Nature. Any decision rendered by the arbitrators pursuant to any arbitration shall be final and binding upon the parties hereto, and judgment may be entered upon it in accordance with Applicable Law in any court of competent jurisdiction, including award of damages or injunctive relief, and may, in the discretion of the panel, assess the costs of the arbitration (including reasonable fees and expenses of the members of the panel) against any party as the panel shall determine ( but excluding attorneys' fees which shall be borne by each party individually ).

R. 7-1, LSA, PageID # 57-58 (emphasis added). The provision immediately following this one appears to be in conflict because it grants the prevailing party a right to attorneys' fees. That clause (subsection (b)(v)) provides: (v) Costs and Expenses. The prevailing party in any arbitration or court proceedings shall be reimbursed by the other

Page 663

party for all costs, expenses and charges, including, without limitation, reasonable attorneys' fees, incurred by said prevailing party.

Id. at 58. To add another complication, a third provision— located in the "Miscellaneous" article of the LSA— also indicates that the prevailing party is entitled to an award of its attorneys' fees: Section 15.7. Attorneys' Fees. If legal advice or assistance is obtained to enforce any provision of this Agreement and a final determination of a court of competent jurisdiction is made, the prevailing party shall recover from the non-prevailing party all reasonable attorneys' costs, expenses and fees incurred in connection therewith.

Id. at 50.1

The district court held that there was no "meeting of the minds" on whether the non-prevailing party should reimburse the prevailing party for its attorneys' fees because the LSA provisions on attorneys' fees contradicted each other and it was impossible under Ohio law to harmonize the clauses. R. 36, Dist. Ct. Summ. J. Order, PageID # 551. Specifically, it found: Ultimately, I can ignore subsection (b)(iv)'s "which shall be borne by each party individually," no more than I could ignore subsection (b)(v)'s "arbitration or." Because the two provisions are irreconcilable, I must conclude there was no meeting of the minds as to arbitration-related attorneys' fees and find subsection (b)(v) unenforceable insomuch as it relates to arbitration-related attorneys' fees.

Id. It therefore granted Oxbow's motion for summary judgment and denied Bay Shore's. This timely appeal followed.

DISCUSSION

This Court reviews district court orders granting summary judgment de novo. McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004). We also review de novo a denial of a cross-motion for summary judgment on purely legal grounds— such as Bay Shore's in the present case. See id. This appeal does not turn on the presence, or absence, of a genuine dispute of any material fact, but rather presents a narrow question of contract interpretation.

Bay Shore contends that "[t]he language within the LSA's four corners provides a clear path to reconcile the fee-shifting clauses, through a simple sequencing of arbitral and court jurisdiction." Appellant's Br. at 12. While subsection (b)(iv) "forbids an arbitration panel from awarding fees to the prevailing party in arbitration," subsection (b)(v) and Section 15.7 "unambiguously shift fees to the prevailing party." Id. The only way to harmonize these clauses, Bay Shore says, is to read the former provision as limiting the arbitration panel's jurisdiction to award attorneys' fees and the latter two as granting the prevailing party the right to recover attorneys' fees through an action in court.2

Page 664

This argument first raises the question of federal subject matter jurisdiction over an arbitration award. The Supreme Court has held that the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., does not provide federal courts with an independent basis for subject matter jurisdiction. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581-82, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008). For cases within a federal court's jurisdiction, section 9 of the FAA permits parties to apply to a court "for an order confirming" an arbitration award. 9 U.S.C. § 9. Aside from narrow grounds allowing a court to modify, vacate, or correct an award that are not relevant here, id. § § 10-11, courts can do no more than confirm or deny confirmation of the award. "[A]n action to confirm the award should be a summary proceeding, not a proceeding in which the defendant seeks affirmative relief." Occidental Chem. Corp. v. Int'l Chem. Workers Union, 853 F.2d 1310, 1317 (6th Cir. 1988) (quoting Prof'l Adm'rs Ltd. v. Kopper-Glo Fuel, Inc., 819 F.2d 639, 642 (6th Cir. 1987)). Oxbow maintains that the arbitration panel's decision to not award attorneys' fees was part of the panel's merits decision and is insulated from judicial review because the LSA delegates "any dispute" arising under the LSA to an arbitration panel and mandates that the panel's resolution of any dispute will be "final and...

To continue reading

FREE SIGN UP
1 practice notes
  • El-Hage v. Comerica Bank, 121620 MIEDC, 20-10294
    • United States
    • Federal Cases United States District Courts 6th Circuit Eastern District of Michigan
    • December 16, 2020
    ...PageID.538.) That seems to be a fair reading of the agreement. See, e.g., Bay Shore Power Co. v. Oxbow Energy Sols., LLC, 969 F.3d 660, 666-667 (6th Cir. 2020) (applying Ohio law; adopting a reasonable construction of terms governing attorney's fees to harmonize the......
1 cases
  • El-Hage v. Comerica Bank, 121620 MIEDC, 20-10294
    • United States
    • Federal Cases United States District Courts 6th Circuit Eastern District of Michigan
    • December 16, 2020
    ...PageID.538.) That seems to be a fair reading of the agreement. See, e.g., Bay Shore Power Co. v. Oxbow Energy Sols., LLC, 969 F.3d 660, 666-667 (6th Cir. 2020) (applying Ohio law; adopting a reasonable construction of terms governing attorney's fees to harmonize the......