Matterhorn, Inc. v. NCR Corp., S82-78.

• Decision Date: 27 May 1983
• Docket Number: No. S82-78.,S82-78.
• Parties: MATTERHORN, INC., Plaintiff, v. NCR CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Indiana

563 F. Supp. 1340

MATTERHORN, INC., Plaintiff, v. NCR CORPORATION, Defendant.

No. S82-78.

United States District Court, N.D. Indiana, South Bend Division.

May 27, 1983.

William J. Reinke and Patrick J. O'Neil, Barnes & Thornburg, South Bend, Ind., for plaintiff.

John R. Cromer (pro hac vice) and Thomas M. Walz, South Bend, Ind., Hammond, Cromer, Jackson & Borgmann, Indianapolis, Ind., for defendant.

MEMORANDUM AND ORDER

SHARP, Chief Judge.

This case is presently before the court on defendant's, NCR Corporation, (NCR) Motion to Compel Arbitration and for Stay of Action Pending Arbitration filed March 31, 1983. Both parties have fully briefed the issues and an evidentiary hearing was held April 29, 1983. For the reasons that follow, defendant's motion will be denied.

This action was originally filed on March 1, 1982. On May 20, 1982 defendant NCR filed a Motion for Stay of Action Pending Arbitration which was denied on July 15, 1982 by this court. Defendant's Notice of Appeal from the denial of stay was filed on August 16, 1982, and the appeal is presently pending before the Seventh Circuit. On March 1, 1983, defendant NCR filed a second Motion to Compel Arbitration and for Stay of Action Pending Arbitration which is the motion presently before the court.

Assuming without deciding that the defendant's second motion is proper due to the subsequent filing of the Amended Complaint, this court must consider whether there is a valid arbitration agreement between the parties. Defendant NCR maintains that there is a valid arbitration agreement and is seeking a stay of this action pending arbitration pursuant to 9 U.S.C. § 3 and an order directing plaintiff to arbitrate the issues present in this dispute pursuant to 9 U.S.C. § 4. The plaintiff maintains that there is no binding arbitration agreement and that, at the very least, there is a genuine issue as to the existence of an arbitration agreement, and this court should therefore conduct a jury trial on the issue of arbitration pursuant to 9 U.S.C. § 4.

Section 4 of Title 9, United States Code provides in relevant part as follows:

A party aggrieved by the alleged failure, neglect or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction ... of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement, * * * The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. * * * If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, ... the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may ... demand a jury trial of such issue ... If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.

Thus, under Section 4 the court is required to order arbitration to proceed once it is satisfied that the making of the arbitration agreement is not in issue. However, if the existence of the agreement to arbitrate is in issue, the court is required to proceed summarily to trial on that issue. Great American Trading Corp. v. I.C.P. Cocoa, Inc., 629 F.2d 1282, 1288 (7th Cir.1980); see, Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967).

In the case present before the court, the plaintiff entered into a contract on June 9, 1978 for the purchase of a computerized cash register system manufactured by defendant NCR. The contract consisted of a purchase order for a computer system, referred to as a 2160 System and a document entitled Universal Agreement. Mr. James P. Lauer, Secretary-Treasurer of plaintiff Matterhorn, Inc., read the Universal Agreement prior to signing it and was authorized to enter into the contract by the corporation. The Universal Agreement provides in pertinent part on page 1 as follows:

NCR Corporation (NCR) and customer agree that all equipment, programs, and systems and maintenance services obtained from NCR, either directly or indirectly, shall be furnished only under the terms and conditions of this agreement. Unless the context otherwise requires, the term "customer" shall mean the customer listed above.

The terms and conditions of this agreement shall prevail in spite of any contrary printed provision of any purchase order or other form utilized by customer in effecting the furnishing of any equipment, programs or services and any such form, letter or order must state on the face of it:

FURNISHING OF THE EQUIPMENT, PROGRAMS AND/OR SERVICES IS DONE ONLY IN ACCORDANCE WITH AND PURSUANT TO OUR AGREEMENT DATED 6/9/78.

* * * * * *

THE TERMS AND CONDITIONS ON THE SUBSEQUENT PAGES ARE PART OF THIS AGREEMENT.

Section One of the Universal Agreement contained on page 2 provides in pertinent part as follows:

1. General — ... Neither customer nor NCR shall be bound by any order until it is accepted in writing by NCR and at such time both shall be bound and a contract shall exist in accordance with the terms of this agreement, and, to

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