Matter of Hart Ski Mfg. Co., Inc.

• Decision Date: 19 August 1982
• Docket Number: No. 4-82-Civ. 706.,Adv. No. 80-0165,Bankruptcy No. 3-80-200,4-82-Civ. 706.
• Citation: 22 BR 763
• Parties: In the Matter of HART SKI MFG. CO., INC., a Minnesota corporation, Debtor. HART SKI MFG. CO., INC., Plaintiff, v. MASCHINENFABRIK HENNECKE, GmbH, a West German Corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

22 B.R. 763 (1982)

In the Matter of HART SKI MFG. CO., INC., a Minnesota corporation, Debtor HART SKI MFG. CO., INC., Plaintiff, v. MASCHINENFABRIK HENNECKE, GmbH, a West German Corporation, Defendant.

Bankruptcy No. 3-80-200, Adv. No. 80-0165, No. 4-82-Civ. 706.

United States District Court, D. Minnesota, Fourth Division.

August 19, 1982.

Frank Claybourne and Robert S. Brill, Doherty, Rumble & Butler, Minneapolis, Minn., for Hart Ski Mfg. Co., plaintiff-appellant.

Walter, Conston, Schurtman & Gumpel, New York City, and Alan L. Atlas, Harstad & Rainbow, Minneapolis, Minn., for Maschinenfabrik Hennecke, GmbH, defendant-appellee.

MEMORANDUM ORDER

LARSON, Senior District Judge.

Plaintiff Hart Ski Mfg. Co. seeks reversal of the Memorandum Decision and Order of the Bankruptcy Judge filed March 1, 1982, 18 B.R. 154 as amended May 5, 1982, 22 B.R. 762. Plaintiff filed a petition for reorganization pursuant to Title 11, section 701, et seq., of the United States Code on February 13, 1980. On June 9, 1980, defendant Hennecke filed a proof of claim as an unsecured creditor, based upon an alleged sum due defendant for certain equipment purchased by Hart from Hennecke in 1977. On July 21, 1980, Hart served an objection to Hennecke's claim for $174,680.73 and asserted a counterclaim against Hennecke, alleging misrepresentation, breach of contract, breach of warranties, and negligence and seeking $13,000,000 in damages. Hennecke filed a motion to dismiss the counterclaim and stay the proceedings in Bankruptcy Court, pending arbitration. A hearing on this motion was held December 2, 1980, and the Bankruptcy Judge granted Hennecke's motion by Order dated March 1, 1982. On March 9, 1982, Hart served a motion to amend this Order, and an additional hearing was held on April 27, 1982. By Order dated May 5, 1982, Judge Connelly struck paragraph IV of the March 1, 1982, decision regarding a jurisdictional question, but otherwise denied Hart's motion.

The basic issue raised in this appeal is whether the Bankruptcy Court acted correctly in ordering the parties to submit their dispute to arbitration under the procedures established by the International Chamber of Commerce. The factual findings of the Bankruptcy Court must, of course, be sustained absent a showing that they are clearly erroneous. Solomon v. Northwestern State Bank, 327 F.2d 720, 724 (8th Cir. 1964). Hart argues on appeal that the Bankruptcy Judge's Order is in error because the parties did not agree to arbitrate and even if there was an agreement, Hennecke waived its right to arbitration by filing its proof of claim in Bankruptcy Court. For the reasons stated below, the Decision and Order of the Bankruptcy Judge is affirmed.

I. The Agreement to Arbitrate

Hart engages in an extensive "battle of the forms" analysis regarding the agreement to arbitrate to refute Judge Connelly's finding that the contract provides for arbitration. Several forms were exchanged by the parties, as is often the case in commercial transactions, but the Court agrees with defendant Hennecke that resort to this analysis is unnecessary when the specific facts of this case are considered. Hart's original argument in opposition to Hennecke's motion to dismiss was confined solely to the issue of whether Hennecke had waived its right to arbitrate. Hart conceded that the contract between the parties provided for international arbitration and indicated that it had considered submitting the dispute to such arbitration itself prior to filing for reorganization in February 1980. At the hearing on appeal to this Court, counsel for Hart attempted to explain how these actions were consistent with Hart's present position that there was no agreement to arbitrate, but like the Bankruptcy Court, this Court finds such arguments unpersuasive. The practical construction of an agreement by the parties to it is entitled to great weight in interpreting the agreement. Judge Connelly's finding that "Hart, by its conduct, and explicit representations to the Court evidenced...