In re Hart Ski Mfg. Co., Inc.
| Decision Date | 01 March 1982 |
| Docket Number | Bankruptcy No. 3-80-200,Adv. No. 80-0165. |
| Citation | 18 BR 154 |
| Parties | In re HART SKI MFG. CO., INC., Debtor. HART SKI MFG. CO., INC., Plaintiff, v. MASCHINEFABRIK HENNECKE, GmbH, a West German corporation, Defendant. |
| Court | U.S. Bankruptcy Court — District of Minnesota |
Robert S. Brill, Minneapolis, Minn., for Hart Ski Mfg. Co., Inc.
William M. Barron, New York City, for Maschinefabrik Hennecke, GmbH.
The above-titled action came before the Court on a motion by defendant for an order dismissing the Complaint herein and staying all proceedings in this Court pending resolution of issues by arbitration under procedures established by the International Chamber of Commerce. The motion, and the relief for which it prays, is premised upon provisions of the United Nations Convention on the recognition and enforcement of foreign arbitral awards, 21 U.S.T. 2517, T.I.A.S. No. 6997 (Dec. 29, 1970) as implemented by Chapter 2 of the United States Arbitration Act, Title 9 U.S.C. § 201 et seq.
The motion has been submitted upon written briefs, and upon all of the file, record and proceedings, the following Memorandum Decision, incorporating Findings of Fact and Conclusions of Law, is made and entered, and is deemed to comply with form requirements of the Rules of Bankruptcy Procedure.
Hart Ski Mfg. Co., Inc., the debtor and plaintiff in this action, filed a petition for reorganization pursuant to Title 11 U.S.C. § 701 et seq. (§ 301 et seq., Bankruptcy Code) on February 13, 1980. On June 9, 1980, the defendant, a West German corporation, filed a proof of claim in that proceeding as an unsecured creditor. This proof of claim is based upon an alleged balance due defendant for the purchase of polyurethane metering and mixing machines, presses and molds from defendant by plaintiff in 1977. On July 18, 1980, Hart served and filed a complaint objecting to the allowance of this claim, and interposing a counter-claim alleging breach of contract, breach of warranties, misrepresentation, and negligence upon which it seeks judgment for $13,000,000 in exemplary and compensatory damages. The motion sub judice was filed on October 28, 1980. The facts necessary to the determination of this motion can be stated rather briefly and augmented, where necessary, in the discussion of the issues.
Hennecke manufactures machines which mix polyol and isocyanate to produce polyurethane. Prior to 1977, Rossignol, a major European manufacturer of skiis, had utilized a machine produced by defendants to manufacture skiis with a polyurethane core. In July, 1977, Mr. Ruedi Unternacher, representing Hart Distribution AG, a Swiss company, contacted defendant and inquired about this utilization of one of defendant's machines. Shortly thereafter, Unternacher and Francois Wirtz, who at that time was employed by Rossignol but was to join Hart as a director of engineering within a short time, met with defendant's sales representative. After brief negotiation and investigation, Hart determined that it would purchase a machine, and, in August, Wirtz asked defendant to send an order confirmation for a HK-100 model metering and mixing machine. On September 12, 1977, this order confirmation was sent to Hart Distribution AG in Switzerland. The order confirmation specifies a price for the machine C.I.F. delivered St. Paul, Minnesota, USA, and states that the sale is made subject to certain general conditions which were printed on the form. Section VII.2 of the form provides that if the buyer is located outside of Germany, all disputes are to be conclusively decided by arbitration under the procedures of the International Chamber of Commerce, Paris. Section VII.1 provides that the place of performance for both parties is Birlinghoven, thereby designating German law to be applicable to the contract.
Thereafter, Wirtz developed a general concept for molds and presses into which the polyurethane would be injected to form skiis, and requested defendant to manufacture four molds, two presses, and some related equipment. On November 3, 1977, defendant sent Wirtz a telex message describing the equipment to be manufactured, the price, and related details. On November 4, 1977, defendant received a reply telex message from Roger Zaspel, "hart ski a s'tp" confirming the purchase. This telex includes the phrase "hk 100 complete as per confirming a-7201-135." The telex message was confirmed by a purchase order from Hart which is dated November 3, 1977. The total of the order was then confirmed by defendant by an order confirmation, dated December 6, 1977, on the same form which had been utilized to confirm the original order. The order was filled, and the HK-100 was delivered to Hart in Minnesota in early January and the molds, presses, etc. delivered in May, 1978. The proof of claim alleges that $174,680 of the purchase price remains unpaid.
Hennecke contends that the order confirmations contain all of the controlling terms and provisions of the contract between these parties, and that the dispute between them, and the issues raised in this case, must be submitted to arbitration under procedures established by the International Chamber of Commerce.
Plaintiff's initial position was quite unambiguously set forth in its memorandum in opposition to defendant's motion; viz:
Hart's original opposition to the motion was premised upon the contention that Hennecke is in default in proceeding to arbitration and has waived any right to resort to this provision of the contract.
Seven months after the matter was submitted, Hart shifted gears and submitted a memorandum in which it repudiates the statements that:
Hart now contends that there never was an agreement to submit disputes to arbitration. Without any explanation of why this latter day conversion occurred, Hart reconstructs the transaction by a laborious analysis of the written documents, and concludes that the order from Hart to Hennecke dated November 3, 1977, comprises the contract, and that all else was prologue. Hart then resorts to a provision of Hart's purchase order which states:
Hart contends that this provision is an express repudiation of all provisions, terms and conditions contained in Hennecke's order confirmation, including the arbitration clause.
For several reasons, the Court is not persuaded.
First, this Court cannot agree with the proposition that Hennecke's order confirmation of September 19, 1977, was merely an offer. The offer to sell and the acceptance had been made verbally in August, and this instrument confirmed the contract, reduced it to writing, and established its terms and conditions insofar as the HK-100 machine itself was concerned.
Thereafter the parties discussed and negotiated for the purchase of molds, presses, etc. to use with the machine to manufacture the skiis. These were essential to Hart's use of the machine and had to be purchased somewhere. By telex Hennecke established a firm price for these items designed "as discussed in our company." This may have been an offer, but by telex Hart stated "please find below p.o. 3310 (which will follow by mail) confirming Mr. Wirtz and Mr. Bjork's purchase." The plain import of this statement is that the purchase agreement had already been consummated and that the purchase order would merely be written confirmation. This telex then concludes:
"hk 100 complete as per confirming a-7201-135."
This phrase was used again in the Hart purchase order. Why? What is the import of this phrase? Hart contends that it refers only to the machine with all of the ancillary equipment and features listed on the original order confirmation and does not pertain to the molds, presses, etc. However, Hart offers no explanation of why, if this is so, it was felt necessary or advisable to make note of that transaction on two separate subsequent documents. If one bears in mind that the apparatus was of little value to Hart unless it would both manufacture polyurethane and then compress and shape that polyurethane into a ski, a more reasonable interpretation and explanation of the inclusion of this phrase is apparent. Hart had decided to purchase the necessary equipment for both stages of the operation from one manufacturer. This language was most likely inserted to assure that the machine and all ancillary equipment purchased from Hennecke would be complete and would include everything necessary to perform the entire operation and function for which the apparatus was purchased. In asserting or affirming that the entire...
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