Neb. Mach. Co. v. Cargotec Solutions, LLC

• Decision Date: 07 August 2014
• Docket Number: No. 13–2753.,13–2753.
• Citation: 762 F.3d 737
• Parties: NEBRASKA MACHINERY COMPANY, Plaintiff–Appellee v. CARGOTEC SOLUTIONS, LLC, formerly known as Kalmar Industries, USA, LLC, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

762 F.3d 737

NEBRASKA MACHINERY COMPANY, Plaintiff–Appellee

v.CARGOTEC SOLUTIONS, LLC, formerly known as Kalmar Industries, USA, LLC, Defendant–Appellant.

No. 13–2753.

United States Court of Appeals,

Eighth Circuit.

Submitted: May 14, 2014.

Filed: Aug. 7, 2014.

Amy L. MacArdy, James P. Denis, Milwaukee, WI, for appellant.

Michael C. Cox, David Alan Yudelson, Omaha, NE, for appellee.

Before SMITH, BEAM, and SHEPHERD, Circuit Judges.

BEAM, Circuit Judge.

Cargotec Solutions, LLC, (“Cargotec”) appeals from the district court's determination that Cargotec's contract with Nebraska Machinery Company (“NMC”) did not contain arbitration and indemnification provisions. We reverse and remand for the district court to hold a trial and resolve remaining fact issues.

I. BACKGROUND ¹

Cargotec, formerly known as Kalmar Industries, is in the business of manufacturing heavy machinery used in the shipping and container industry. NMC is an authorized dealer for Caterpillar, Inc., and specializes in the sales, rental, and servicing of Caterpillar equipment.

On March 23, 2007, Cargotec sent NMC purchase order number 754399 (“PO No. 1”) for CAT C6.6 engines. PO No. 1 provided that “Standard Kalmar terms and conditions Form F–027 and Packing & Shipping Requirements Form F–058 will apply to this order. If you do not have a copy of these forms on file, please contact the buyer indicated.” Form F–027 contained both an indemnification provision and an arbitration provision. The indemnification provision indicates:

Seller agrees to indemnify, save and keep harmless the Buyer from and against any and all loss, damage, cost, charges or expenses including attorney fees or claims for the same which the Buyer may suffer or sustain or be in any way subjected to on account of ... damage to or loss from or in any way connected with the products or services which are provided by seller pursuant to this contract.

The arbitration provision provides:

At Buyer's sole election, any controversy or claim arising out of or related to this Purchase Order shall be resolved by arbitration under the Federal Arbitration Act and according to the Commercial Arbitration Rules of the American Arbitration Association (AAA).... Notice of demand for arbitration shall be filed in writing with the seller and AAA.

NMC claims that it never received Form F–027.

On March 28, 2007, in response to Cargotec's order, NMC sent Cargotec a purchase order (“NMC PO No. 1”) and, on a separate form, an invoice for the sale of the engines. NMC PO No. 1 provides that the order is “SUBJECT TO THE TERMS AND CONDITIONS ON THE REVERSE SIDE HEREOF WHICH SHOULD BE READ CAREFULLY AND COMPLETELY BEFORE SIGNING.” These additional terms and conditions did not contain any indemnification or arbitration provisions. Cargotec claims that it received the invoice for the engines but never received NMC PO No. 1.

On April 20, 2007, the parties engaged in a transaction bearing many similarities to the first transaction. That is, Cargotec sent NMC purchase order number 754473 (“PO No. 2”) containing similar language to PO No. 1. On April 25, NMC responded with its own purchase order (NMC PO No. 2) and separate invoice. NMC PO No. 2 contained similar terms to NMC PO No. 1. Again, similar to the first transaction, the parties claim they did not receive the other party's terms and conditions concerning the second purchase order. Subsequently, NMC delivered the engines to Cargotec, and Cargotec remitted payment for the engines.

In May and July 2007, Sharron Group, Inc. (“Sharron”), an authorized Cargotec dealer, sold six Cargotec yard trucks to Containerport Group, Inc. (“Containerport”). Cargotec equipped the yard trucks with CAT C6.6 engines purchased from NMC. Unsatisfied with the yard trucks' performance, Containerport sued Sharron in early 2009 in Ohio state court. On July 20, 2009, Sharron filed third-party claims against Cargotec and NMC, among other parties. Cargotec agreed to indemnify Sharron and was dismissed from the suit. On November 11, 2009, Cargotec sent NMC a letter demanding indemnification based upon the previous purchase order documents. NMC rejected Cargotec's demand. In February 2010, Sharron dismissed its claims against NMC.

On September 29, 2012, Cargotec filed a demand for arbitration against NMC in Kansas. Cargotec alleged that NMC had contractually agreed to indemnify Cargotec for losses associated with the purchased engines. As the basis for arbitration, Cargotec alleged NMC entered into arbitration agreements on March 23, 2007, and April 20, 2007, i.e., PO No. 1 and PO No. 2.

On November 8, 2012, NMC commenced action in the United States District Court for the District of Nebraska, seeking a declaration that Cargotec's demand for arbitration and indemnification was improper. Subsequently, NMC moved to dismiss or stay the arbitration proceedings and to determine arbitrability (“motion to determine arbitrability”), alleging that Cargotec's arbitration and indemnification provisions did not become part of the contract for the sale of goods between Cargotec and NMC. On December 21, 2012, Cargotec moved to compel arbitration. These motions were referred to a magistrate judge.

After concluding that it had jurisdiction to determine whether the parties entered into an arbitration agreement, the magistrate judge analyzed whether the arbitration and indemnification provisions became part of the parties' agreement under the Uniform Commercial Code (U.C.C.). According to the magistrate judge, two scenarios were possible: (1) “Nebraska Machinery received Cargotec's purchase orders and Cargotec received Nebraska Machinery's invoices[,] [but] [n]either party received any terms and conditions,” or (2) “the parties are assumed to have received all documents sent.” If the first scenario was the operative state of facts under the U.C.C., the magistrate judge determined that the parties were bound to arbitrate any dispute under the contract. However, the magistrate judge found that “the second scenario represents the most plausible explanation of the parties' interaction,” and concluded the U.C.C. did not require NMC to arbitrate under such circumstances. Accordingly, the magistrate judge granted NMC's motion to determine arbitrability and denied Cargotec's motion to compel arbitration.

Cargotec objected to the magistrate judge's order. The district court conducted a de novo review of the magistrate judge's order and, although agreeing with many of the magistrate judge's findings and conclusions, the district court did not agree with the magistrate judge's assessment of the two scenarios, observing:

The most the court can assume from the evidence presented is that there was a meeting of the minds as to purchase, sale, and payment. The parties go on and on about how they did not receive each others documents relating to terms and conditions. There are issues with Cargotec's argument that they sent these documents, when in fact the electronic systems were not available to Nebraska Machinery at that time, and further, not all the identification numbers for sales match up to the purchase orders/invoices. There is no definitive answer other than that. Cargotec wants the court to submit this issue to a trier of fact at trial. However, there are no facts to try. Everything has been submitted to the court. There is nothing to submit to the jury.

Therefore, in the district court's view, the contract consisted only of the purchase, sale, and payment for the engines. Accordingly, the district court granted NMC's motion to determine arbitrability, denied Cargotec's motion to compel arbitration, and entered judgment in NMC's favor. Cargotec appeals.

II. DISCUSSION

In this dispute concerning the formation of an arbitration agreement, “we review the district court's decision de novo.” PCS Nitrogen Fertilizer, L.P. v. Christy Refractories, L.L.C., 225 F.3d 974, 978 (8th Cir.2000). “To the extent that the district court's order concerning arbitrability is based on factual findings, we review those findings for clear error.” Id.

A. Arbitrability

Before reaching the merits of this dispute, Cargotec challenges the district court's authority to determine whether the parties agreed to arbitrate. According to Cargotec, an arbitrator, not the court, must determine issues of arbitrability. We disagree. As we have recognized in the past, “[t]o decide questions of arbitrability, we must determine whether a valid arbitration agreement exists between the parties and, if so, whether the subject matter of the dispute falls within the scope of the arbitration clause.” Koch v. Compucredit Corp., 543 F.3d 460, 463 (8th Cir.2008). “These issues are presumptively committed to judicial determination....” Id. Although parties may eliminate that presumption by providing clear and unmistakable language to the contrary, AT & T Techs. v. Commc'ns Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986), here, the parties did not do so.² Accordingly, whether the arbitration clause became part of the parties' agreement remains a question “presumptively committed to judicial determination.” We now turn to that question.

B. Merits

Cargotec argues that, as a matter of law,³ the parties agreed to arbitrate. However, even if the arbitration provision did not become part of the parties' contracts as a matter of law, Cargotec contends that the district court erred in failing to order a trial to resolve material factual disputes concerning whether the parties agreed to arbitration and indemnification. We agree with Cargotec's latter contention.

Although neither the magistrate judge nor the district court stated the legal standard that applied to the parties' competing motions, the motions should have been analyzed under a standard akin to competing motions for summary judgment. To be sure, in NMC's complaint, it sought a declaration that NMC was not required to arbitrate Cargotec's claims and that NMC incurred no...