Elzinga & Volkers, Inc. v. LSSC Corp., 94-2941

Citation47 F.3d 879
Decision Date10 February 1995
Docket NumberNo. 94-2941,94-2941
PartiesELZINGA & VOLKERS, INCORPORATED, Plaintiff-Appellee, v. LSSC CORPORATION and Leggett & Platt, Incorporated, Defendants-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Dane L. Tubergen, Hunt, Suedhoff, Borror & Eilbacher, Fort Wayne, IN, Larry A. Hanson, Moore, Costello & Hart, St. Paul, MN (argued), for plaintiff-appellee.

R. Frederick Walters, Karen D. Wedel, Thomas R. Davis (argued), Walters, Bender & Strohbehn, Kansas City, MO, for defendants-appellants.

Before FLAUM and EASTERBROOK, Circuit Judges, and PAINE, District Judge. *

EASTERBROOK, Circuit Judge.

Elzinga & Volkers, Inc. (E & V) was the general contractor for the construction of a factory to be owned and operated by No-Sag Products Corporation. The contract contains a broad arbitration clause, committing the parties to arbitrate "[a]ny controversy or claim arising out of or related to the Contract, or breach thereof". After the completion of the factory, No-Sag was merged into Lear Siegler Seymour Corporation (now known as LSSC Corporation). Later LSSC sold the assets of its No-Sag Division, including the factory, to Leggett & Platt, Incorporated (L & P). No-Sag, LSSC, and L & P in sequence claimed that E & V's work was subpar (the roof leaked, among other problems). Deeming E & V's repairs unsatisfactory, LSSC and L & P jointly served a demand for arbitration. E & V responded with this action to enjoin the arbitration, on the ground that it had promised to arbitrate only with No-Sag, which no longer exists.

Before too long E & V acknowledged that its position was untenable. A merger does not affect the existence of a corporation or the enforcement of its contracts. United States Shoe Corp. v. Hackett, 793 F.2d 161 (7th Cir.1986) (collecting authority in several states). No-Sag became a part of LSSC, which succeeded to all of its assets and liabilities, including the construction contract with E & V. Because E & V now concedes that it must arbitrate with LSSC, the district court properly denied LSSC's motion to compel arbitration. Such a step may have been appropriate earlier, when E & V was resisting, but is no longer necessary. If E & V reneges on its promise (repeated at oral argument in this court) there will be time enough to devise a remedy.

Once E & V acknowledged that it must arbitrate with LSSC, the district court should have denied E & V's request for an injunction. Under AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) the court decides whether the party opposing arbitration must submit to the arbitrator's authority. Whether or not L & P joins LSSC as E & V's adversary in the arbitral proceedings, the arbitration will go on, and the court ought not regulate its details by injunction.

Just who is E & V's proper opponent depends in large measure on the meaning of a clause in the contract. Paragraph 13.2.1 says that the "Owner and Contractor respectively bind themselves ... to the other party hereto and to partners, successors, assigns and legal representatives of such other party". Both LSSC and L & P told the district judge that the sale of the No-Sag Division from LSSC to L & P included LSSC's entitlement to enforce E & V's warranty, an assignment that would permit L & P to arbitrate. E & V responded by relying on another sentence stating that "[n]either party to the contract shall assign the Contract as a whole without written consent of the other." The district court thought this no bar to L & P's participation because assigning the right to enforce a warranty after the structure has been erected does not "assign the Contract as a whole". Nonetheless, the judge concluded, LSSC had not assigned warranty enforcement to L & P, and on this basis the judge enjoined L & P from arbitrating with E & V. 852 F.Supp. 681 (N.D.Ind.1994).

The meaning of the language requiring consent to the assignment of the contract "as a whole" is the sort of "controversy or claim arising out of or related to the Contract" that E...

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    ...clauses." Fluehmann v. Associates Financial Services, 2002 WL 500564, *6 (D.Mass. Mar 29, 2002) (citing Elzinga & Volkers, Inc. v. LSSC Corp., 47 F.3d 879, 881 (7th Cir.1995) and Local Union No. 637, IBEW v. Davis H. Elliot Co., 13 F.3d 129, 132-133 (4th Cir.1993)). This distinction is rele......
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    ...broader clause" in relation to an arbitration clause that covered "all claims 'relating to' an agreement"); Elzinga & Volkers, Inc. v. LSSC Corp., 47 F.3d 879, 881 (7th Cir. 1995) (describing an arbitration clause committing the parties to arbitrate "[a]ny controversy or claims arising out ......
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    ...its claims under the agreements in apparent contravention of them, is a question for the arbitrator (see Elzinga & Volkers, Inc. v. LSSC Corp., 47 F.3d 879, 882 (7th Cir.1995) ).9 NewNet could still collect the indebtedness of course, but it would have to collect directly from Hainet—and it......
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    ...See Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909-10 (7th Cir. 1999) (citing Elzinga & Volkers, Inc. v. LSSC Corp., 47 F.3d 879, 881 (7th Cir. 1995); Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1295 (9th Cir. 1994)). Indeed, "the language 'arising o......
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