Wellman, Inc. v. Square D Co., No. 4018.

CourtUnited States State Supreme Court of South Carolina
Writing for the CourtPer Curiam
Citation620 S.E.2d 86
PartiesWELLMAN, INC., a Delaware Corporation, Plaintiff, v. SQUARE D COMPANY, a Delaware Corporation, R.D.H. Consultants, Inc., a North Carolina Corporation, Cameron & Barkley Company, a Delaware Corporation, Zimmer A.G. a division of MG Technologies AG, a German Corporation, individually and as co-venturer in the Zimmer/Raytheon Consortium, Fluor Enterprises, Inc., a California Corporation, and Fluor Facility & Plant Services, Inc., a South Carolina Corporation and Washington Group International, Inc., Ohio Corporation, successor to Raytheon Engineers & Constructors, Inc., Defendants, of whom Washington Group International, Inc., an Ohio Corporation, successor to Raytheon Engineers & Constructors, Inc., and Zimmer/Raytheon Consortium are the Appellants, and Wellman, Inc., a Delaware Corporation, and Zimmer A.G., a Division of MG Technologies, a German Corporation, Individually are the Respondents.
Decision Date21 September 2005
Docket NumberNo. 4018.
620 S.E.2d 86
WELLMAN, INC., a Delaware Corporation, Plaintiff,
v.
SQUARE D COMPANY, a Delaware Corporation, R.D.H. Consultants, Inc., a North Carolina Corporation, Cameron & Barkley Company, a Delaware Corporation, Zimmer A.G. a division of MG Technologies AG, a German Corporation, individually and as co-venturer in the Zimmer/Raytheon Consortium, Fluor Enterprises, Inc., a California Corporation, and Fluor Facility & Plant Services, Inc., a South Carolina Corporation and Washington Group International, Inc., Ohio Corporation, successor to Raytheon Engineers & Constructors, Inc., Defendants,
of whom Washington Group International, Inc., an Ohio Corporation, successor to Raytheon Engineers & Constructors, Inc., and Zimmer/Raytheon Consortium are the Appellants, and
Wellman, Inc., a Delaware Corporation, and Zimmer A.G., a Division of MG Technologies, a German Corporation, Individually are the Respondents.
No. 4018.
Court of Appeals of South Carolina.
Heard May 11, 2005.
Decided July 25, 2005.
Withdrawn, Substituted and Refiled September 21, 2005.
Rehearing Denied September 21, 2005.

Page 87

Henry P. Wall, Wesley D. Peel, and Bruner, Powell, Robbins, all of Columbia, for Appellants.

Alan M. Warshauer, of New York City; Elizabeth Van Doren Gray, A. Jackson Barnes and J. Calhoun Watson, all of Columbia; Mark W. Buyck, Jr. and Marian H. Lee, both of Florence; Thomas A. McDonald, Mark D. Howard, David S. Allen and Thomas A. Smith, all of Chicago, IL, for Respondents.

ORDER DENYING PETITION FOR REHEARING

PER CURIAM.


Appellant has filed a Petition for Rehearing. Respondent has also filed a Petition for Rehearing with request for oral argument and a Motion to Supplement the Record. After a careful consideration of the Petitions for Rehearing, the Court is unable to discover that any material fact or principle of law has been either overlooked or disregarded and hence, there is no basis for granting a rehearing.

It is, therefore, ordered that the Petitions for Rehearing, as well as the request for oral argument be denied. The Motion to Supplement the Record is granted. The Court

Page 88

withdraws the filed opinion and substitutes the attached opinion.

s/ C. Tolbert Goolsby, J.
                s/ Thomas E. Huff, J.
                s/ H. Samuel Stilwell, J.
                 HUFF, J.:
                

Washington Group International, Inc., the successor to Raytheon Engineers and Constructors, Inc. (Raytheon/Washington), appeals the trial court's denial of its motion to compel arbitration on behalf of itself and the Zimmer/Raytheon Consortium. We affirm in part and reverse in part.

FACTS

Raytheon Engineers and Constructors, Inc. and Zimmer AG entered into a written agreement to form Zimmer/Raytheon Consortium for the purpose of constructing a manufacturing facility for Wellman, Inc. The Consortium agreement provides: "Zimmer shall act as the CONSORTIUM LEADER for the term of this AGREEMENT." In addition, the agreement contains the following arbitration provision:

10.9.1 Claims between the MEMBERS regarding their respective rights and obligations under this AGREEMENT and/or under the CONTRACT shall be first addressed by the Management Committee. If the Management Committee is unable to unanimously settle such claims within thirty (30) days, its settlement shall be determined according to Articles 10.9.2 through 10.9.4 below.

10.9.2 Not later than ninety (90) days after the end of said thirty day period either party may appeal its claim to non-binding mediation to the American Arbitration Association to be held in the City of Columbia, South Carolina, under its then effective rules and regulations.

10.9.3 Within thirty (30) days of the MEMBER'S failure to reach agreement under such mediation and declaring an impasse or the conclusion of the mediation, either MEMBER may submit the claim to binding arbitration in accordance with the South Carolina Uniform Arbitration Act (S.C.Code § 15-48-10 et seq.) to be held in the City of Columbia, South Carolina.

. . . .

10.9.4 If and only if after all said measures have been undertaken by either MEMBER submit the claim to a Court of Competent Jurisdiction and then only to enforce such decision on its own terms or have it voided as arbitrary and capricious.

The agreement also contains an ipso facto provision stating, among other things, if a member of the Consortium becomes insolvent and commences a bankruptcy proceeding, the "Insolvent MEMBER (and/or receiver, trustee, liquidator or custodian) shall cease to have any further decision-making authority or vote under this AGREEMENT and the CONSORTIUM shall not require the vote, approval or authority of the Insolvent MEMBER as otherwise may have been required under this AGREEMENT."

The Consortium entered into a contract with Wellman for the construction of the facility. This agreement also contained a provision subjecting "[a]ny controversy or claim arising out of or relating to this CONTRACT or any breach thereof" to "binding arbitration in accordance with the South Carolina Uniform Arbitration Act (S.C.Code § 15-48-10 et seq.)."

Subsequent to the construction of the facility, an issue arose about payments due to Raytheon and Zimmer from Wellman and other issues. As Raytheon and Zimmer disagreed as to how to handle these closeout issues, they entered into a settlement agreement to resolve the dispute. The settlement agreement contained the following provision regarding the leadership of the Consortium:

4. Raytheon as Leader of Remaining Consortium Activities

(a) The rights and obligations of Raytheon and Zimmer under the Consortium Agreement are deemed completed and discharged in all respects and are of no further force or effect, except (i) for the sole and exclusive purpose of serving as the vehicle for Raytheon to assert claims against Wellman and recover damages thereby as contemplated by this Agreement

Page 89

(and to defend any claims which may be asserted by Wellman in connection therewith), and (ii) as otherwise specifically provided herein.

(b) Raytheon shall hereafter become the Consortium "Leader" pursuant to Article 4 of the Consortium Agreement for the purposes described in paragraph (a) of this Section, specifically including the unilateral right to conduct negotiations with Wellman, to settle and resolve all claims and disputes with Wellman on behalf of the Consortium, but solely for the benefit of Raytheon, excluding, however, only those claims and disputes excepted from the application of Section 12 herein.

The settlement agreement also contained the following arbitration provision:

16. Arbitration

Any dispute or controversy between the parties arising out of or relating to this Agreement which cannot be settled amicably shall be resolved by arbitration in the manner provided for in Article 10.9 of the Consortium Agreement, the provisions of which are incorporated herein by reference as if set forth at length herein.

After Raytheon submitted its claim to Wellman, an electric malfunction occurred in the facility, and Wellman suffered damages in excess of eight million dollars. Subsequently, Raytheon filed for bankruptcy pursuant to chapter 11 of the United States Bankruptcy Code. Washington Group International, Inc. acquired assets of Raytheon, including the division responsible for the Wellman project. Wellman ultimately filed suit against Raytheon/Washington and Zimmer, individually and as Consortium members, for damages associated with the electrical malfunction. Zimmer filed cross-claims against Raytheon/Washington for equitable and contractual indemnity.

Raytheon/Washington filed a motion to stay Wellman's claims against it and to compel arbitration based on the arbitration provision in the Consortium's agreement with Wellman. Zimmer opposed Raytheon/Washington's motion, asserting that it had the authority to speak for the Consortium and it preferred to resolve the suit in litigation. Raytheon/Washington also filed a motion to stay Zimmer's cross-claim and to compel arbitration.

After reviewing the memoranda submitted by all the parties, the trial court denied Raytheon/Washington's motions to compel arbitration. The trial court found, pursuant to the ipso facto provision in the Consortium agreement, Raytheon lost its decision making authority regarding Consortium matters due to its insolvency and thus Raytheon did not have the right to demand arbitration in this matter when that action was contrary to the desires of Zimmer. In addition, the court found "that the interests of the parties and the court are best served by resolution of all related claims in one judicial forum." Thus it held all of the claims by Wellman should be litigated in court. Raytheon/Washington appeals the trial court's order.

STANDARD OF REVIEW

The determination of whether a claim is subject to arbitration is subject to de novo review. Vestry Church Wardens of Church of Holy Cross v. Orkin Exterminating Co., 356 S.C. 202, 206, 588 S.E.2d 136, 138 (Ct.App.2003). "Nevertheless, a circuit court's factual findings will not be reversed on appeal if there is any evidence reasonably supporting the findings." Thornton v. Trident Med. Ctr., L.L.C., 357 S.C. 91, 94, 592 S.E.2d 50, 51 (Ct.App.2003).

LAW/ANALYSIS

I. Intertwining doctrine

Raytheon/Washington argues the trial court erred in denying its motions to compel arbitration based on its finding that "the interests of the parties and the courts are best served by resolution of all related claims in one judicial forum." We agree.

Wellman urges this court to adopt the intertwining doctrine. The...

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11 practice notes
  • Moore v. Weinberg, No. 4209.
    • United States
    • Court of Appeals of South Carolina
    • February 20, 2007
    ...must show the intention to substitute a new obligation in place of the existing one." Wellman, Inc. v. Square D Co., 366 S.C. 61, 72, 620 S.E.2d 86, 92 (Ct.App.2005). An addendum that modifies a pre-existing agreement, but does not extinguish it, is not a novation. Parker v. Shecut, 340 S.C......
  • Simpson v. Msa of Myrtle Beach, Inc., No. 26293.
    • United States
    • United States State Supreme Court of South Carolina
    • March 26, 2007
    ...STANDARD OF REVIEW Arbitrability determinations are subject to de novo review. Wellman, Inc. v. Square D Co., 366 S.C. 61, 67, 620 S.E.2d 86, 89 (Ct.App.2005). Nevertheless, a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings. T......
  • Montague v. Dixie Nat'l Life Ins. Co., C/A No.: 3:09-cv-687-JFA
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • June 8, 2011
    ...must show the intention to substitute a new obligation in place of the existing one," Wellman, Inc. v. Square D Co., 366 S.C. 61, 620 S.E.2d 86, 92 (Ct. App. 2005), and "[t]he party asserting a novation has the burden of proving it." Moore v. Weinberg, 373 S.C. 209, 644 S.E.2d 740 (Ct. App.......
  • Smith v. D.R. Horton, Inc., No. 5118.
    • United States
    • Court of Appeals of South Carolina
    • May 23, 2013
    ...Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 22, 644 S.E.2d 663, 667 (2007) (citing Wellman, Inc. v. Square D Co., 366 S.C. 61, 67, 620 S.E.2d 86, 89 (Ct.App.2005)). However, the trial court's “factual findings will not be reversed on appeal if any evidence reasonably supports the fin......
  • Request a trial to view additional results
11 cases
  • Moore v. Weinberg, No. 4209.
    • United States
    • Court of Appeals of South Carolina
    • February 20, 2007
    ...must show the intention to substitute a new obligation in place of the existing one." Wellman, Inc. v. Square D Co., 366 S.C. 61, 72, 620 S.E.2d 86, 92 (Ct.App.2005). An addendum that modifies a pre-existing agreement, but does not extinguish it, is not a novation. Parker v. Shecut, 340 S.C......
  • Simpson v. Msa of Myrtle Beach, Inc., No. 26293.
    • United States
    • United States State Supreme Court of South Carolina
    • March 26, 2007
    ...STANDARD OF REVIEW Arbitrability determinations are subject to de novo review. Wellman, Inc. v. Square D Co., 366 S.C. 61, 67, 620 S.E.2d 86, 89 (Ct.App.2005). Nevertheless, a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings. T......
  • Montague v. Dixie Nat'l Life Ins. Co., C/A No.: 3:09-cv-687-JFA
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • June 8, 2011
    ...must show the intention to substitute a new obligation in place of the existing one," Wellman, Inc. v. Square D Co., 366 S.C. 61, 620 S.E.2d 86, 92 (Ct. App. 2005), and "[t]he party asserting a novation has the burden of proving it." Moore v. Weinberg, 373 S.C. 209, 644 S.E.2d 740 (Ct. App.......
  • Smith v. D.R. Horton, Inc., No. 5118.
    • United States
    • Court of Appeals of South Carolina
    • May 23, 2013
    ...Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 22, 644 S.E.2d 663, 667 (2007) (citing Wellman, Inc. v. Square D Co., 366 S.C. 61, 67, 620 S.E.2d 86, 89 (Ct.App.2005)). However, the trial court's “factual findings will not be reversed on appeal if any evidence reasonably supports the fin......
  • Request a trial to view additional results

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