Wiser v. Wayne Farms, 04-2021.

• Decision Date: 17 June 2005
• Docket Number: No. 04-2021.,04-2021.
• Citation: 411 F.3d 923
• Parties: Clyde WISER; Wanda Wiser, Appellees, v. WAYNE FARMS, a division of Continental Grain Co., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

411 F.3d 923

Clyde WISER; Wanda Wiser, Appellees, v. WAYNE FARMS, a division of Continental Grain Co., Appellant.

No. 04-2021.

United States Court of Appeals, Eighth Circuit.

Submitted: January 14, 2005.

Filed: June 17, 2005.

Vincent O. Chaddick, argued, Fayetteville, Arkansas (Shannon L. Fant, on the brief), for appellant.

James G. Lingle, argued, Rogers, Arkansas (H. Clay Fulcher, on the brief), for appellee.

Before MELLOY, SMITH, and COLLOTON, Circuit Judges.

COLLOTON, Circuit Judge.

Wayne Farms appeals from the district court's¹ denial of its motion to compel arbitration, arguing that the court erroneously applied Arkansas law rather than Georgia law. Wayne Farms filed its motion in response to Clyde and Wanda Wiser's complaint alleging fraud, fraudulent inducement, and promissory estoppel. The district court found that the arbitration clauses in two agreements between Wanda Wiser and Wayne Farms were unenforceable under Arkansas law due to lack of mutuality of obligation. We affirm.

I.

In 1997, Wayne Farms and Wanda Wiser signed two Breeder Flock Agreements (the "Agreements") contemplating a five-year relationship in which Wanda would care for chickens supplied by Wayne Farms and harvest the chickens' eggs in exchange for compensation. This arrangement remained essentially unchanged until 1999, when the Wisers attempted to sell their farm. Instead of a buyer, the Wisers located a potential lessee who was interested in operating the Wisers' farm with an option to purchase it. The potential lessee wanted to retain the contracts with Wayne Farms, and offered to pay the Wisers a percentage of the income received therefrom.

The Wisers allege that upon hearing of the lessee's interest, they contacted Wayne Farms regarding the potential lease. Wayne Farms, according to the Wisers, agreed to permit the lessee to operate under the Agreements so long as certain improvements were made to the Wisers' facilities. The Wisers needed to borrow money in order to make the improvements, so, according to the Wisers' complaint, Clyde Wiser sought assurances from Wayne Farms that if the lessee did not perform acceptably under the Agreements, Wayne Farms would permit Wanda Wiser to resume raising its poultry. Wayne Farms, the Wisers allege, "promised both Wanda and Clyde Wiser that in the event Wayne Farms decided to terminate its relationship with the [lessee], Wanda Wiser would be allowed to again raise breeder hens for Wayne Farms." (Compl.¶ 7).

The Wisers borrowed about $54,000 to make the required improvements and proceeded to lease their farm in 2000. The lessee did not perform to Wayne Farms's satisfaction, and, as a result, Wayne Farms removed its hens from the Wisers' farm in 2002. The Wisers repeatedly requested that they be permitted again to raise breeder hens for Wayne Farms, but they were denied each time.

The Wisers brought suit against Wayne Farms on March 7, 2003, seeking damages in excess of $500,000 for alleged fraud, fraudulent inducement, and promissory estoppel. Wayne Farms answered on April 21, 2003, and, on the same day, moved the court to compel arbitration pursuant to the arbitration clauses contained in the Agreements. The district court issued its order denying Wayne Farms's motion on March 25, 2004, holding that the Wisers were not bound by the arbitration clauses in the Agreements. The court's order contained no express consideration of choice of law, but relied on the Arkansas Supreme Court opinion in Tyson Foods, Inc. v. Archer, 356 Ark. 136, 147 S.W.3d 681 (2004). Archer was decided subsequent to the parties' filings in this case, and held that "Arkansas precedent on mutuality requires that the terms of the agreement must fix a real liability upon both parties," id. at 687, and that a contract clause permitting one party to "pursue any other remedies at law or equity," id. at 685, while requiring the other party to submit any controversies to arbitration, lacked mutuality. Id. at 687. The district court found the Agreements to be similar in relevant part to the contract at issue in Archer, and therefore held that the arbitration clauses contained in the Agreements were unenforceable for lack of mutuality.

II.

The parties do not dispute that if Arkansas law applies to the Agreements, then their requirement to arbitrate is unenforceable. Wayne Farms asserts that the district court erred in applying Arkansas law because the Agreements clearly state that Georgia law is to govern any disputes arising between the parties. The Agreements each contain a paragraph entitled "Governing Law" providing that the Agreements are to "be governed by, and interpreted and construed in accordance with, the laws of the State of Georgia." They also contain arbitration clauses stipulating to the application of Georgia law in the event of arbitration. The Wisers contend however, that any error committed by the district court in applying Arkansas law is of Wayne Farms's own making, and that Wayne Farms "waived" the argument that Georgia law should apply by its conduct in the district court.

The Wisers are certainly correct that "[o]rdinarily this court will not consider arguments raised for the first time on appeal." Wever v. Lincoln County, Nebraska, 388 F.3d 601, 608 (8th Cir.2004). In the choice of law context, in particular, we repeatedly have refused to consider arguments not presented to the district court. E.g., Colonial Ins. Co. of Cal. v. Spirco Envtl., Inc., 137 F.3d 560, 561 (8th Cir.1998); Davidson & Schaaff, Inc. v. Liberty Nat'l Fire Ins. Co., 69 F.3d 868, 869 (8th Cir.1995); Kostelec v. State Farm Fire & Cas. Co., 64 F.3d 1220, 1224 (8th Cir.1995); Pellerin Laundry Mach. Sales Co. v. Reed, 300 F.2d 305, 309-10 (8th Cir.1962).

This case fits that category. Wayne Farms failed to argue for the application of Georgia law in the district court. The references to Georgia law contained in the Agreements were never urged upon the district court, and citations to Georgia cases or statutes are wholly absent from Wayne Farms's pleadings, motions, and supporting documents. Wayne Farms, in fact, affirmatively relied on Arkansas law to argue almost every legal issue. In its Brief in Support of Motion to Compel Arbitration and to Stay, Wayne Farms cited Arkansas cases regarding the interpretation of the Federal Arbitration Act, 9 U.S.C. §§ 1-14, and the enforceability of arbitration clauses. With respect to the crucial issue on appeal, Arkansas' requirement of mutuality of obligation, Wayne Farms cited only opinions of the Arkansas Supreme Court. "The rule that we will not address arguments raised for the first time on appeal applies even more forcefully when the appellant took the opposite position in the district court," Davidson & Schaaff, 69 F.3d at 869 (internal citations omitted), and this is such a case.

Wayne Farms attempts to explain its failure to argue for the application of Georgia law by noting that there was no difference between the mutuality requirements of Georgia and Arkansas until the Arkansas Supreme Court decided Archer in 2004. As Wayne Farms conceded at oral argument, however, after Archer was decided on February 19, 2004, there was more than a month delay before the district court issued its order, during which time Wayne Farms again failed to direct the district court's attention to a choice of law issue. Responsibility for the district court's application of Arkansas law thus lies squarely with Wayne Farms.

Wayne Farms argues that despite its repeated citation of Arkansas law and failure to direct the district court's attention to Georgia law, the court's application of Arkansas law should be reviewed for plain error. According to Wayne Farms, the district court's application of Arkansas law is "an obvious instance of misapplied law." (Appellant's Reply Br. at 7). "[I]t is well settled," according to Wayne Farms, that a court of appeals may consider an issue for the first time on appeal "in order to prevent plain error or a miscarriage of justice." (Id.) This contention draws some support from Singleton v. Wulff, 428 U.S. 106, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976), where the Supreme Court allowed that a court of appeals would be "justified" in resolving a new issue on appeal where "the proper resolution is beyond any doubt" or where "injustice might otherwise result." Id. at 121, 96 S.Ct. 2868.

More recently, however, the Court has established a stringent test for the correction of unpreserved errors in the criminal context, requiring an obvious error that...