United States Court of Appeals
For the First Circuit
No. 07-1766
COMBINED ENERGIES,
Plaintiff, Appellee,
v.
CCI, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. John A. Woodcock, Jr., U.S. District Judge]
Before
Boudin, Chief Judge,
Selya and Stahl, Senior Circuit Judges.
Ronald W. Schneider, Jr., with whom Bernstein Shur Sawyer &
Nelson were on brief, for appellant.
Thomas G. Rohback, with whom James J. Reardon, LeBoeuf, Lamb,
Greene & MacRae, LLP, John J. Aromando and Pierce Atwood, LLP, were
on brief, for appellee.
February 1, 2008
STAHL, Senior Circuit Judge. This lawsuit arises from a
business partnership gone sour. Plaintiff-appellee Combined
Energies ("CE") filed suit in Maine federal district court against
Defendant-appellant CCI, Inc. ("CCI"), alleging various contract
and tort claims related to what CE describes as a raid on CE's
workforce subsequent to a failed take-over attempt by its erstwhile
business partner CCI. CCI moved to stay the proceedings and compel
arbitration. The district court denied the motion and, holding
that CE's claims do not fall within the scope of the parties'
arbitration agreement, we affirm.
I. Background
CE is a Maine construction and energy services
subcontractor. CCI is an Alaskan prime contractor. CE and CCI
entered into a business relationship for the purposes of developing
and performing projects for the U.S. Navy. The business
relationship was formalized in three key agreements. The Teaming
Agreement ("TA"), signed in late December 2004, established CCI as
the prime contractor and CE as the subcontractor for a project
proposal to be submitted to the U.S. Navy. The TA also
contemplated other Navy contract opportunities. After the Navy
accepted the proposal and awarded the contract to CCI, CCI and CE
concluded a Strategic Alliance Agreement ("SAA") on August 23,
2005, a short document in which the parties stated their intention
"to strategically align themselves with one another in order to
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promote and utilize their respective expertise for the purpose of
developing and performing projects . . . ." That same day, the
parties also entered into a Purchase Order Agreement ("POA") laying
out the standard terms and conditions applicable to each party's
performance of the Navy contract.
It appears that the parties proceeded to perform as
directed by the above triumvirate of agreements until their
relationship broke down irretrievably in late 2006. CE alleges
that CCI inquired about purchasing its business on October 15,
2006, an offer that CE declined. According to CE, CCI then set out
to "raid what it could not buy," by "preventing CE from performing
its obligations under existing contracts, preventing CE from
obtaining new contracts, damaging CE's good reputation," and
filching CE's entire workforce. CE was subject to a spate of mass
resignations in early January 2007; the majority of the resignation
letters, which are attached to CE's complaint, state that the
sender had accepted or intended to accept a position with CCI.
On February 1, 2007, CE filed suit against CCI in the
United States District Court for the District of Maine, alleging
tortious interference with its business; unjust enrichment; breach
of the TA and SAA; breach of implied covenants including the duty
of good faith and fair dealing; and defamation and slander per se.
Arguing that an arbitration clause in the POA mandated the
submission of CE's claims to arbitration, CCI timely moved to stay
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the proceedings and compel arbitration; CE opposed the motion. On
March 14, 2007, the district court denied CCI's motion, finding
that it could not conclude that "the arbitration clause in a
construction contract encompasses a law suit alleging multiple
violations of tort and contract law from the unsavory tactics CE
claims CCI used in a bid to take-over its business."
Pursuant to the Federal Arbitration Act ("FAA"), this
court has jurisdiction to review the district court's interlocutory
order denying CCI's request for a stay and motion to compel
arbitration. See 9 U.S.C. §§ 16(a)(1)(A), 16(a)(1)(B); Campbell v.
Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 550 (1st Cir. 2005).1
II. Discussion
We are not now tasked with deciding upon the merits vel
non of CE's claims against CCI, but rather upon their
1
The FAA provides that:
A written provision in . . . a contract
evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter
arising out of such contract or transaction,
or the refusal to perform the whole or any
part thereof, or an agreement in writing to
submit to arbitration an existing controversy
arising out of such a contract, transaction,
or refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist
at law or in equity for the revocation of any
contract.
9 U.S.C. § 2. The POA containing the arbitration clause at issue
here is a contract in interstate commerce because it is an
agreement between Alaskan and Maine corporations to perform work
for the U.S. Navy; thus, this dispute is within the purview of the
FAA.
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arbitrability. "[A]rbitrability depends on contract
interpretation, which is a question of law." Keystone Shipping Co.
v. New England Power Co., 109 F.3d 46, 50 (1st Cir.
1997)(alteration in original)(quoting PaineWebber Inc. v. Elahi, 87
F.3d 589, 592 (1st Cir. 1996))(internal quotation marks omitted).
Accordingly, "[w]e evaluate the district court's denial of a motion
to compel arbitration de novo." Kristian v. Comcast Corp., 446
F.3d 25, 31 (1st. Cir. 2006)(citing Campbell, 407 F.3d at 551).
When deciding a motion to compel arbitration, a court
must determine whether "(i) there exists a written agreement to
arbitrate, (ii) the dispute falls within the scope of that
arbitration agreement, and (iii) the party seeking an arbitral
forum has not waived its right to arbitration." Bangor
Hydro-Electric Co. v. New England Tel. & Tel. Co., 62 F. Supp. 2d
152, 155 (D. Me. 1999). Only if all three prongs of the test are
satisfied will a motion to compel arbitration be granted. Here,
prongs (i) and (iii) are not at issue; the outcome of this case,
therefore, turns entirely on whether the dispute is of a kind that
the parties had agreed to submit to arbitration.
Whether a claim falls within the reach of a particular
arbitration clause is a question for the district court to
determine initially as a matter of law. See Acevedo Maldonado v.
PPG Indus., Inc., 514 F.2d 614, 616 (1st Cir. 1975). Federal
policy favors arbitration. See Mitsubishi Motors Corp. v. Soler
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Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)("The Arbitration
Act establishes that, as a matter of federal law, any doubts
concerning the scope of arbitrable issues should be resolved in
favor of arbitration . . . .")(internal quotations omitted).
However, "arbitration is simply a matter of contract between the
parties; it is a way to resolve disputes–but only those
disputes–that the parties have agreed to submit to arbitration."
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995).
CCI exhorts us that arbitration clauses must be construed
liberally, while CE cautions that it cannot be compelled to
arbitrate claims that it did not consent to arbitrate. At bottom,
however, federal policy merely "guarantee[s] the enforcement of
private contractual arrangements" by creating "a body of federal
substantive law establishing and regulating the duty to honor an
agreement to arbitrate." Mitsubishi, 473 U.S. at 625 (internal
quotations omitted).
Therefore, "[w]hen deciding whether the parties agreed to
arbitrate a certain matter . . . , courts generally . . . should
apply ordinary state-law principles that govern the formation of
contracts." First Options, 514 U.S. at 944. Under Maine law, a
contract
is to be construed in accordance with the
intention of the parties, which is to be
ascertained from an examination of the
instrument as a whole. All parts and clauses
must be considered together that it may be
seen if and how far one clause is explained,
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modified, limited, or controlled by the
others.
Peerless Ins. Co. v. Brennan, 564 A.2d 383, 385 (Me. 1989).
In support of its argument that the parties' arbitration
agreement requires arbitration of CE's claims, CCI relies on two
clauses in the POA, which it contends must be read in tandem to
mandate an expansive agreement to arbitrate all disputes between
the parties. Paragraph 6.3 of the POA provides:
All unresolved claims, disputes, and other
matters in question between [CCI] and [CE] not
relating to claims included in Paragraph 6.22
shall be resolved in the manner provided in
Article 14.
Paragraph 14.1, the relevant provision of Article 14, states:
All claims, disputes and matters in question
arising out of, or relating to, this POA or
the breach thereof . . . shall be decided by
arbitration in accordance with the
Construction Industry Arbitration Rules of the
American Arbitration Association then in
effect unless the parties mutually agree
otherwise.
Precedent may counsel us to construe arbitration clauses
liberally, but it does not permit us to read out of an arbitration
clause an explicit limit upon the scope of that clause that has
been agreed to by both parties. Reading 6.3 and 14.1 together as
2
Paragraph 6.2 governs POA-related claims against the Navy.
We see no need to recite it verbatim here as it is not particularly
relevant to this case, although we do note that even that section
lays out a dispute resolution procedure only for "dispute[s]
arising under this POA . . . ." (emphasis added).
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Maine law requires produces not an expansive agreement to arbitrate
but rather an arbitration clause clearly and on its face limited to
"[a]ll claims, disputes and matters in question arising out of, or
relating to, this POA or the breach thereof . . . ." (emphasis
added).
The key question remaining, then, is whether CE's claims
arise out of, or relate to, the POA or breach of the POA. CE's
contract-related claims reference the TA and the SAA, not the POA;
however, it is true that CE cannot avoid arbitration by dint of
artful pleading alone. See, e.g., Acevedo Maldonado, 514 F.2d at
616 (finding that arbitration clause covered "contract-generated or
contract-related disputes between the parties however labeled: it
is immaterial whether claims are in contract or in tort"); Kiefer
Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 910 (7th
Cir. 1999)(noting that arbitrability of particular claim does not
"turn on the label—'tort' or 'contract'—a party chose to affix to
the claim"). Nevertheless, we agree with the district court that
the complaint filed by CE cannot be fairly said to arise out of, or
relate to, the POA in the sense that would be necessary to confer
arbitrability in this case. As the district court observed, "[t]he
Complaint does not claim any disputes between CCI and CE about the
work CE performed under the POA, about payment in accordance with
that work, about change orders, delay, quality of workmanship, or
the myriad of other commonplace controversies between general
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contractors and subcontractors." Combined Energies v. CCI, Inc.,
484 F. Supp. 2d 186, 189 (D. Me. 2007). Indeed, as CE points out,
CE existed as a business before entering into any sort of
relationship with CCI and had operations apart from CCI; the
gravamen of CE's allegations--that CCI set upon a course of conduct
that resulted in the destruction of CE's business--reverberate far
beyond the POA and would stand regardless of the parties' rights
and responsibilities as defined by that contract.
CCI next argues that, at the very least, the allegations
in CE's complaint that implicate the SAA must be submitted to
arbitration because the SAA is incorporated into the POA and the
two documents must be considered and construed as one contract.3
See Crowe v. Bolduc, 334 F.3d 124, 137 (1st. Cir. 2003)("Under
Maine law, in the absence of anything to indicate a contrary
intention, instruments executed at the same time, by the same
contracting parties, for the same purposes, and in the course of
the same transaction will be considered and construed together,
3
In its reply brief, CCI asserts that CE's response to this
argument was cursory and should be deemed waived. See National
Foreign Trade Council v. Natsios, 181 F.3d 38, 61 n.17 (1st Cir.
1999)("[A]rguments raised only in a footnote or in a perfunctory
manner are waived."). Merely because CE may have waived an
argument regarding the incorporation of the SAA into the POA,
however -- a matter on which we take no view -- it does not follow
that CCI's argument automatically prevails. We may affirm the
district court's order "on any independent ground made manifest by
the record." Skirchak v. Dynamics Research Corp., 508 F.3d 49, 57
(1st Cir. 2007).
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since they are, in the eyes of the law, one contract or
instrument.")(internal quotations omitted).
CCI thus is making two conceptually distinct, although
related, arguments to advocate applicability of the POA's
arbitration clause to CE's SAA-related claims. See In re Olympic
Mills Corp., 477 F.3d 1, 14 n.11 (1st Cir. 2007)("[The principle
articulated in Crowe] is associated with but distinct from a
court's consideration of a separate writing expressly incorporated
by reference . . . . Compare 11 Williston on Contracts § 30:25
('Writing Expressly Incorporated By Reference'), with id. § 30:26
('Writing Implicitly Incorporated By Reference')."). Both are
unavailing. In Crowe, we looked to two agreements executed on the
same day to resolve a question of contractual ambiguity. Here,
there is no comparable ambiguity. "Where the words of a contract
in writing are clear and unambiguous, its meaning is to be
ascertained in accordance with its plainly expressed intent." 11
Samuel Williston & Richard A. Lord, A Treatise on the Law of
Contracts § 30:6 (4th ed. 1993)(internal citations omitted).
Construing the SAA and POA together does nothing to shed additional
light upon an arbitration clause that is already pellucid.
We then turn to whether the POA can be read explicitly to
incorporate by reference the SAA. CCI rests its assertion that the
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POA incorporates the SAA on Paragraphs 2.2 and 16.3 of the POA.4
But it is not at all clear that these clauses operate to import the
SAA wholesale into the POA. It appears that the "Contract
Documents" identified in Paragraph 16.3 of the POA are only listed
there in order of supremacy to resolve disputes "in the event of
any inconsistency" as to the work that is to be performed under the
POA. It is true that Paragraph 16.3 of the POA lists the SAA as
one of the "Contract Documents." However, the POA itself is listed
as one of the Contract Documents, separately from the SAA--that
alone belies CCI's contention that the arbitration clause's
specific reference to the POA could be stretched to encompass
claims relating to the SAA as well. Even if one considers the sum
of the "Contract Documents" to equal the whole of the parties'
agreement, the arbitration clause in Paragraph 14.1 of the POA
applies specifically to disputes arising out of only one of those
4
Paragraph 2.2 states, in relevant part:
The Contract Documents, detailed in Paragraph 16.3
shall consist of the following, with the order of
supremacy beginning with the first described
document and ending with the last described
document within that paragraph.
Paragraph 16.3, labeled “Contract Documents,” lists the following:
a) The Strategic Alliance Agreement dated ____________
between CCI and Combined Energies.
b) This POA;
c) These POA Standard Terms and Conditions;
d) Combined Energies’ response to the Navy RFP as
referenced on the POA; and
e) Contract N62472-05-R-7510 dated 8/12/05 between the US
Navy and CCI Inc.
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documents: the POA. It does not state that it applies to disputes
arising out of all "Contract Documents." Nowhere is it indicated
that the term "POA," as used in Paragraph 14.1, is shorthand for
"the POA and the SAA" or for all the "Contract Documents" combined.
If the parties had intended the arbitration clause to apply to
their agreement writ large or to each of the "Contract Documents"
individually, it would have been as easy to state that expressly.5
See Fit Tech, Inc. v. Bally Total Fitness, 374 F.3d 1, 9-10 (1st
Cir. 2004)(rejecting argument that arbitration clause in one
agreement applied to dispute arising out of another, related
agreement even though former agreement was referenced in latter).
III. Conclusion
For the foregoing reasons, we affirm the district court's
denial of CCI's motion to stay and compel arbitration.
Affirmed.
5
Since we find that the arbitration clause does not reach
claims related to the SAA, we find it unnecessary to consider the
question whether any of CE's claims would be within the scope of a
clause that did extend to SAA-related claims.
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