Suburban Leisure v. Amf Bowling Products
Decision Date | 17 November 2006 |
Docket Number | No. 06-1865.,06-1865. |
Citation | 468 F.3d 523 |
Parties | SUBURBAN LEISURE CENTER, INC., Appellee, v. AMF BOWLING PRODUCTS, INC.; AMF Billiards & Games, LLC, Appellants. |
Court | U.S. Court of Appeals — Eighth Circuit |
Vincint Keady, argued, St. Louis, MO, for appellant.
Matthew S. McBride, argued, St. Louis, MO, for appellee.
Before MELLOY, BENTON and SHEPHERD, Circuit Judges.
AMF Bowling Products, Inc. and AMF Billiards & Games LLC (collectively "AMF") appeals from an order of the district court1 denying its motion to dismiss or in the alternative to compel arbitration and stay proceedings with regard to claims brought by Suburban Leisure Center, Inc. ("Suburban") after AMF terminated its oral franchise agreement with Suburban. We possess jurisdiction of this appeal pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 16(a)(1)(C), providing that "[a]n appeal may be taken from an order . . . denying an application . . . to compel arbitration. . . ." For the reasons discussed below, we affirm.
For the purpose of ruling on AMF's motion to dismiss or in the alternative to compel arbitration, the district court assumed the truth of the allegations in Suburban's complaint. With the limited purpose of reviewing the district court's ruling, we, too, view Suburban's allegations as true. See Palcko v. Airborne Express, Inc., 372 F.3d 588, 597 (3d Cir. 2004) ( ); cf. Manion v. Nagin, 394 F.3d 1062, 1065 (8th Cir.2005) ( ). Accordingly, the following facts are undisputed for purposes of this appeal. Suburban distributes indoor and outdoor lawn and leisure equipment, and AMF manufactures pool tables and pool table accessories. The parties entered into an oral franchise agreement, whereby they agreed that Suburban would have the right use the AMF trade name, trademark, or service mark in order to sell AMF's line of pool tables and related accessories from Suburban's stores located in the St. Louis, Missouri region. Subsequently, the parties executed a written E-Commerce Dealer Agreement ("e-commerce agreement"), in which Suburban agreed to provide delivery and installation of AMF's products sold by AMF via its website to customers in Suburban's specified areas.
With regard to the e-commerce agreement, Section 14 provides that "[t]he determination of any dispute or claim arising under the Agreement or any invoice or agreement executed pursuant to this Agreement will be settled by binding arbitration in Richmond, Virginia." Further, Section 15 states that the e-commerce "[a]greement constitutes the entire agreement between the parties and supercedes all prior agreement[s], oral and written." Finally, Section 15 goes on to state that the e-commerce agreement "will be construed in accordance with the laws of Virginia without regard to their conflict of laws provisions."
On August 25, 2005, AMF sent a termination letter stating that Suburban would be "required to cease promoting" AMF's line of pool tables and accessories within sixty days. The letter made no mention of the e-commerce agreement. Suburban filed suit in Missouri state court alleging that it was entitled to damages from the cancellation of the oral franchise agreement without the requisite notice pursuant to Missouri Revised Statute section 407.405 as well as recoupment for improvements it had made to its stores in reliance on the oral franchise agreement. See Mo. Ann. Stat. § 407.405 (West 2001). Pursuant to 28 U.S.C. § 1441, AMF removed the matter to federal court. Upon removal, AMF filed a motion to dismiss or in the alternative to compel arbitration and stay proceedings pursuant to the FAA, 9 U.S.C. § 3. Because the district court found that the e-commerce agreement did not address Suburban's ability to promote or sell AMF's products, it concluded that Suburban's underlying claims did not arise under the e-commerce agreement. Accordingly, the district court denied AMF's motion to compel arbitration of the dispute. AMF appeals the district court's order.
We review de novo the district court's denial of a motion to compel arbitration based on contract interpretation. Nitro Distrib., Inc. v. Alticor, Inc., 453 F.3d 995, 998 (8th Cir.2006). As both Missouri and Virginia recognize the validity of the choice of laws provision contained in the e-commerce agreement, we apply the law of Virginia to resolve this appeal. See Paul Bus. Sys., Inc. v. Canon U.S.A., Inc., 240 Va. 337, 397 S.E.2d 804, 807 (1990); Kagan v. Master Home Prods. Ltd., 193 S.W.3d 401, 407 (Mo.Ct.App.2006). Resolution of this appeal is also governed by the FAA, 9 U.S.C. § 1 et seq., because the e-commerce agreement "involved interstate commerce." Amchem Prods., Inc. v. Newport News Circuit Court Asbestos Cases, 264 Va. 89, 563 S.E.2d 739, 743 (2002).
Pursuant to the FAA, we construe the arbitration clause resolving any doubts in favor of arbitration. Am. Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 92 (4th Cir.1996) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Co., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). "Thus, we may not deny a party's request to arbitrate an issue `unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" Id. (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). However, a "party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Amchem Prods., Inc., 563 S.E.2d at 743 (quoting United Steelworkers of Am., 363 U.S. at 582, 80 S.Ct. 1347). When determining whether a contractual dispute exists that is subject to arbitration, Virginia courts examine the contract's language and apply the commonwealth's substantive contract law. Id.
On appeal, AMF contends that the e-commerce agreement's merger clause incorporates and subsumes the oral franchise agreement such that the e-commerce agreement is the sole agreement between the parties necessitating arbitration of the present dispute. 2 E. Allan Farnsworth, Farnsworth on Contracts § 7.3 (3d ed.2004); see, e.g., Prospect Dev. Co., Inc. v. Bershader, 258 Va. 75, 515 S.E.2d 291, 296 (1999) ( ); Spotsylvania County Sch. Bd. v. Seaboard Surety Co., 243 Va. 202, 415 S.E.2d 120, 126 (1992) ( ).
Merger clauses "purport to contractually require application of the parol evidence rule to the parties' agreement." 11 Richard A. Lord, Williston on Contracts § 33:21 (4th ed.1999). In Virginia, "parol evidence . . . is inadmissible to vary, contradict, add to, or explain the terms of a complete, unambiguous, unconditional written instrument." (Shevel's Inc.-Chesterfield v. Se. Assocs., Inc., 228 Va. 175, 320 S.E.2d 339, 343 (1984)). However, a merger "clause does not prohibit the admission of parol evidence which does not...
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