M & C Corp. v. Erwin Behr GmbH & Co.

• Decision Date: 12 May 1998
• Docket Number: No. 96-2571,96-2571
• Citation: 143 F.3d 1033
• Parties: M & C CORPORATION, a Michigan corporation, d/b/a Connelly Company, Plaintiff-Appellant, v. ERWIN BEHR GMBH & CO., KG, a foreign corporation, Defendant-Appellee, Heinz Etzel; Michel Karkour; and Sami Sarkis, Defendants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1033

143 F.3d 1033

M & C CORPORATION, a Michigan corporation, d/b/a Connelly Company, Plaintiff-Appellant, v. ERWIN BEHR GMBH & CO., KG, a foreign corporation, Defendant-Appellee Heinz Etzel; Michel Karkour; and Sami Sarkis, Defendants.

No. 96-2571.

United States Court of Appeals Sixth Circuit.

Argued March 11, 1998.

Decided May 12, 1998.

Russ E. Boltz (argued and briefed), John C. Louisell (briefed), Cross Wrock, Detroit, MI, for Plaintiff-Appellant.

Larry J. Saylor (argued), Elisa M. Angeli (briefed), Miller, Canfield, Paddock & Stone, Detroit, MI, for Defendant-Appellee.

Before: KEITH, SUHRHEINRICH, and DAUGHTREY, Circuit Judges.

KEITH, J., delivered the opinion of the court, in which SUHRHEINRICH, J., joined. DAUGHTREY, J. (p. 1041), delivered a separate opinion concurring in part and dissenting in part.

OPINION

KEITH, Circuit Judge.

Plaintiff-Appellant, M & C Corporation ("M & C"), appeals an order from the district court granting Defendant-Appellee, Erwin Behr's ("Behr"), motion for stay of further enforcement proceedings pending arbitration. On appeal, M & C contends that: 1) the district court erred in granting Behr's motion for stay; 2) the district court erred in finding that the arbitrator had not previously addressed the issue Behr now claims is subject to arbitration; and 3) in the event of any ambiguities, the district court erred in failing to remand the issue back to the original arbitrator. Conversely, Behr claims that this court is without jurisdiction to hear this appeal. For the reasons discussed herein, we REVERSE the decision of the district court.

I.

This case comes before this Court for the second time on appeal. Familiarity with our previous decision, see M & C Corp. v. Erwin Behr, 87 F.3d 844 (6th Cir.1996) ("Behr I"), is presumed. We briefly summarize the pertinent facts. M & C Corporation, a Michigan Corporation doing business as the Connelly Company, entered into a contract on March 18, 1985, with Behr, a German limited liability corporation. According to the terms of the parties' agreement, M & C was to serve as the exclusive sales agent for Behr in the United States and Canada for a period of at least five years for the sale of wood interior panels for luxury automobiles. The contract specified that the "agreement shall be interpreted with and governed by the laws of the State of Michigan," and that "[a]ll disputes arising in connection with the present contract shall be finally settled under the Rules of the Court of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules."

In 1991, Behr, in accordance with the provisions of the contract, terminated the parties' agreement. However, when, pursuant to contract, Behr failed to forward to M & C the commissions earned for some of the sales and client development work it had performed, M & C brought suit in the federal district court. Pursuant to the parties' agreement, the district court stayed any judicial proceedings and ordered the parties to submit the dispute to arbitration.

Following the issuance of the Arbitration Award, M & C sought confirmation of the award in the federal district court pursuant to 9 U.S.C. § 207, and in accordance with the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, otherwise known as the New York Convention. See 9 U.S.C. § 201. On August 15, 1994, the district court adopted the recommendation of the magistrate judge and confirmed and entered judgment on awards one through six and eight through ten. On March 20, 1995, the district court once again adopted the magistrate judge's recommendation and confirmed and entered judgment on awards seven and eleven.

In Behr I, we affirmed the judgment of the district court in confirming the arbitral award. However, while Behr I was pending before this Court, M & C moved in the district court to enforce various arbitral awards, including award eight, which is the subject of dispute in this appeal. The district court found that Behr had failed to specifically perform the obligations imposed under award eight and that as a result, Behr's actions "directly violate[d] the terms of the arbitral award and this court's [district court] August 15, 1994 order confirming that award." Behr was thereafter held in contempt. JA, 232.

Subsequent to this court's judgment to affirm in Behr I, Behr paid M & C $2,165,871.00, in satisfaction of awards four, five, seven, ten and eleven. However, Behr continues to contest the amount due under award eight. Award eight does not require the payment of a specific monetary amount, rather the award requires Behr to provide M & C with documentation for sales of certain products and to pay commissions on the future sales of these products. The contract referenced in award eight requires Behr to pay commissions on "all new orders which are not renewal or extensions orders, received from customers within three years following the date of termination." JA, 128.

Behr sought stay of enforcement proceedings "because the amounts owing on that disputed award have not been reduced to judgment." Behr contends that the parties disagree over the interpretation of the word "order" and that because the issue was not addressed by the arbitrator, a stay is appropriate.

The district court in its initial determination, ruled that a stay of enforcement pending arbitration was not warranted because Behr had not raised a good faith dispute that had not been previously decided in arbitration. However, upon Behr's motion for reconsideration, the district court determined that Behr had raised a good faith issue of what constitutes an "order" under the commission contract, and that the prior arbitration award had not addressed that issue. M & C appeals, and this Court now reverses, the district court's order.

II.

As an preliminary matter, Behr argues that this court lacks jurisdiction to entertain an appeal from the district court's order staying enforcement proceedings and compelling arbitration. Behr's argument must fail.

Section 16 of the Federal Arbitration Act governs when a party may seek appellate review. ¹ Behr contends that the district court's order was an interlocutory order, not subject to immediate appeal. Conversely, M & C contends that the district court's order was final and ripe for immediate review.

A final decision is one which " 'ends the litigation on the merits and leaves the court nothing to do but execute the judgment.' " Arnold v. Arnold Corp., 920 F.2d 1269, 1275 (6th Cir.1990) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). Further, a final order is one which " 'dismisses an action in deference to arbitration' and enters a final judgment." Id. Conversely, a stay of proceedings is generally considered interlocutory. See 9 U.S.C. § 3.

Behr first relies on Arnold v. Arnold, 920 F.2d 1269, 1275 (6th Cir.1990), to support its claim that a grant of stay is interlocutory and not appealable. However, Arnold is markedly distinguishable from the case at bar. In Arnold, upon the district court's failure to explicitly rule on a party's motion to stay proceedings pending arbitration, this Court found that it was difficult to determine whether the district court's order granting a motion to compel arbitration was an interlocutory order or final order. This Court, therefore, remanded for clarification, and upon remand, the district court entered an "Order of Clarification" and granted appellee's motion to compel arbitration and dismissed Arnold's first amended complaint. The district court also ordered the clerk of court to enter final judgment in accordance with the court's order. It was pursuant to these acts that this Court stated:

According to the legislative history of section 15, a final order is one which dismisses "an action in deference to arbitration" and enters a final judgment. ² The district court's order of clarification meets both of these requirements. Moreover, a decision of the district court is final if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment."

Arnold, at 1275.

The distinguishing factor in this case is that the district court granted a stay of enforcement pending arbitration. Unlike Arnold where the motion for stay pending arbitration was granted at the very onset of the filing of the complaint, here, M & C filed its complaint; Behr sought arbitration; the district court granted a motion for stay pending arbitration; arbitration was held; awards were granted in favor of M & C; the district confirmed and entered judgment on those awards; this Court affirmed those arbitration awards; and all that was left to be done was for the district court to "execute the judgment."

This is not an instance where "the trial of the action" was being stayed until arbitration was held; rather, arbitration was completed, confirmation was granted, and judgment was entered. See 9 U.S.C. § 3. It is not as Behr contends that the parties will arbitrate what constitutes an order, and upon such a determination by the arbitrator, the parties will seek to "lift the stay, seek confirmation of the decision ... and enforce the award once it is confirmed." Appellees Brief, 24. The district court in its order to stay enforcement did not vacate, set aside or modify its earlier ruling of confirmation and judgment. Indeed, it only sought to clarify the award for the limited purpose of assuring an accurate execution of the judgment.

Next, Behr argues that other circuits in determining whether a decision affecting arbitration is a "final decision," have distinguished arbitration actions that are "independent" from those that are "embedded" in other matters. Specifically, Behr asserts that M & C is appealing an interlocutory order that is "embedded" in the substantive claims against Behr, and it is therefore subject to...