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NATIONAL SPECIALTY INSURANCE COMPANY, Plaintiff–Appellee, v. Audrey MARTIN–VEGUE

United States Court of Appeals,

Eleventh Circuit.

NATIONAL SPECIALTY INSURANCE COMPANY, Plaintiff–Appellee,

v.

Audrey MARTIN–VEGUE, individually and as Personal Representative of the Estate of Howard Martin–Vegue, Defendant–Appellant.

No. 14–15811

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Non–Argument Calendar.

|

Feb. 25, 2016.

Attorneys and Law Firms

Anthony John Russo, Ezequiel Lugo, Ronald Steven Rawls, Butler Weihmuller Katz Craig, LLP, Tampa, FL, Ryan Kent Hilton, Robinson & Cole, LLP, Sarasota, FL, for Plaintiff–Appellee.

Benjamin C. Hassebrock, R. Hugh Lumpkin, Danya J. Pincavage, Ver Ploeg & Lumpkin, PA, Miami, FL, George E. Carr, Ver Ploeg & Lumpkin, PA, Orlando, FL, for Defendant–Appellant.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 2:13–cv–14431–DLG.

Before TJOFLAT, WILSON and JULIE CARNES, Circuit Judges.

Opinion

PER CURIAM:

 

*1 This appeal arises out of a declaratory judgment action that Plaintiff National Specialty Insurance Company (“Plaintiff” or “the insurance company”) brought against Defendant Audrey Martin–Vegue to determine the applicability of an insurance policy in connection with a fatal trucking accident. The district court denied coverage under the policy at issue and granted summary judgment to Plaintiff. After careful review, we affirm.

 

 

  1. Background

On November 29, 2012, Andrii Plys was driving a tractor trailer carrying a load of Mexican beach pebbles from Gardena, California, to Delray Beach, Florida. During the trip, Plys collided with Howard Martin–Vegue’s vehicle on Interstate 95 in Martin County, Florida, causing collisions with several other cars and resulting in Martin–Vegue’s death. Defendant, Martin–Vegue’s surviving spouse, filed a lawsuit in Florida state court against Plys and motor carrier ABS Transport, Inc. (“Transport”).1 Although the facts of the underlying accident are not in dispute for the purpose of this appeal, the parties dispute whether Plys was operating the tractor trailer on behalf of Transport or on behalf of another company with a similar name, ABS Freight Transportation, Inc. (“Freight”). Plaintiff insurance company issued insurance liability policies to both companies, and in fact Plaintiff has already paid the policy limits under Transport’s insurance plan. Yet as explained more fully below, Defendant argues that she may recover under Freight’s policy as well. In short, the Freight policy applies if Plys was driving on behalf of Freight. But if Plys was driving on behalf of Transport, then there is no coverage.

 

 

  1. The Relationship Between Freight and Transport

Freight and Transport were motor carriers with connections both to the accident and to each other. The individual owners of Freight and Transport used to be married to each other but were separated at the time of the November 2012 accident. Freight’s owner is Nenad Bojkovski; Transport’s owner was Kristina Mangarova until she dissolved the company. While married, the couple worked for Freight, but in March 2012, around the time Mangarova separated from her husband, she left Freight and created Transport.2

 

Freight then leased the trailer involved in the accident to Transport under an equipment lease agreement dated October 15, 2012. At the time of the accident, the tractor Plys was driving displayed Transport’s name and U.S. Department of Transportation identification number. Transport had leased the tractor from an independent trucking company called Deen, LLC. Under the lease agreement, Deen also provided one of its employees, the driver Plys, to drive the tractor for Transport. According to Plys, he never drove for Freight, although Freight owned the trailer he was pulling on the day of the crash. Thus, on the day of the November 29, 2012, accident, the tractor, trailer, and driver were all leased to Transport.

 

*2 Making matters more complicated, even though the above indicates that Transport was the lessee of the trailer at the time of the accident, there is paperwork from before the accident showing that Freight agreed to carry the pebbles involved in the crash. One of the documents is a Confirmation of Contract Carrier Verbal Agreement (“Carrier Contract”) between a dispatcher for Freight and a trucking broker named International Commodity Carriers Corporation (“ICCI”). ICCI links motor carriers like Freight and Transport with customers in need of someone to transport their goods. When a motor carrier begins working with ICCI, it must enter into a contract and confirm it has authority to operate as a motor carrier under federal regulations and has appropriate insurance. Dispatchers for motor carriers can then access postings showing loads available for truckers to haul. When a dispatcher wants to take a certain job, he calls ICCI and negotiates a rate for the shipment.

 

In this case, the ICCI Carrier Contract confirmed a verbal agreement for Freight to haul the pebbles from California to Florida. Freight’s name and contact information are included on the document, so one may possibly infer that someone from Freight called ICCI to arrange transport of the pebbles.3 The Carrier Pickup & Delivery Schedule (“Delivery Schedule”), another pre-haul document ICCI generated, similarly identifies Freight.

 

 

  1. Procedural Background

Freight and Transport each held $1 million insurance policies issued by Plaintiff. After Defendant filed her state-court lawsuit against Transport and Plys, she entered into a settlement agreement under which she “fully and finally settle[d] and terminate[d] any and all past, present, or future” claims against Transport related to the accident. As to Plys, she settled all claims “except to the extent that there is other liability insurance coverage available to [him].” This settlement exhausted the $1 million limits of Transport’s policy.

 

After the settlement, Plaintiff filed this declaratory action seeking a ruling that it owes no coverage under Freight’s insurance policy because (1) Plys is not an insured under its terms and (2) the MCS–90 endorsement4—which guarantees a minimum level of coverage in the event Freight becomes liable but coverage is otherwise excluded under the policy’s terms-does not apply. The Freight policy defines “insureds” as follows:

 

  1. You for any covered “auto”.
  2. Anyone else while using with your express or implied permission a covered “auto” you own, hire or borrow. However, none of the following are “insureds” under this subparagraph:

….

(8). Anyone that is using an “auto” of yours under a written lease or trailer interchange agreement.

Plaintiff maintains that Plys falls under the exclusion found in subsection (8) because Plys was using a trailer that was leased to Transport at the time of the accident.

During discovery for this action, Defendant obtained the ICCI pre-haul documents bearing Freight’s information. Now contending that Freight, not Transport, was the actual motor carrier responsible for the accident, Defendant amended her complaint in the Florida suit to add it as a defendant. And because Defendant’s settlement agreement with Plys allows her to sue him based on any other liability insurance he has, Defendant seeks additional recovery from Plys under the Freight liability policy, arguing that he was using the trailer on Freight’s behalf, and not pursuant to a written lease agreement with Transport.

 

*3 To resolve this coverage issue, the parties filed cross-motions for summary judgment in this action. The district court granted summary judgment to Plaintiff, the insurance company in this action. Based on the record evidence, the court concluded that “Transport, not Freight, was the motor carrier for-hire at the time of the accident.” Thus, because Plys was operating the leased trailer on behalf of Transport, the court found that Plys is not an insured under subparagraph (8) of the Freight policy’s exclusions. In addition, the court reasoned that the MCS–90 endorsement is inapplicable because Freight was not the for-hire motor carrier.

 

Defendant argues on appeal that the district court erred in denying coverage because there are factual disputes about (1) Plys’s status as an insured under the Freight policy and (2) whether the MCS–90 endorsement applies to the accident.

 

 

  1. Standard of Review

“We review a district court’s grant or denial of summary judgment de novo, considering all the facts and reasonable inferences in the light most favorable to the nonmoving party.” Norfolk S. Ry. Co. v. Groves, 586 F.3d 1273, 1277 (11th Cir.2009). Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “An issue of fact is ‘material’ if, under the applicable substantive law, it might affect the outcome of the case.” Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1259–60 (11th Cir.2004).

 

 

III. Discussion

We first examine whether the district court erred in finding as a matter of law that Plys is not an insured under the Freight policy. Then we decide if any other coverage is available under Freight’s MCS–90 endorsement.

 

 

  1. Coverage of Plys under the Freight Insurance Policy

Again, in the section of the Freight policy defining the insureds, “[a]nyone that is using an ‘auto’ of yours under a written lease or trailer interchange agreement” is denied coverage. An “auto” includes a trailer or semitrailer. The parties agree that Illinois law governs the Freight policy, and Illinois courts require that the unambiguous terms of insurance policies be given their plain, ordinary, and popular meaning. Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1212 (Ill.1992).

 

In deciding whether Plys was using the trailer under a written lease, we look not only to whether a written lease existed, but also to whether Plys was in fact using the trailer on behalf of Transport. First, there is no genuine dispute that a written lease existed. Defendant contends there is evidence that the October 15, 2012 agreement was in fact created after the November 29, 2012 accident. She suggests that Bojkovski had an incentive to shift responsibility from Freight to Transport to prevent the accident from adding to his company’s already poor driving record. As evidence that the lease was created after the November 2012 accident, Defendant notes that Mangarova signed the lease on Transport’s behalf using the last name “Mangarova,” not “Bojkovski.” Defendant argues that Mangarova was still married to Bojkovski when the lease was purportedly executed, so the fact that she signed the name “Mangarova” means that the agreement was manufactured sometime after the couple’s divorce following the November accident.

 

*4 We are unpersuaded. Mangarova testified that she usually signed documents using her own last name even while married, and besides, she and Bojkovski were already separated when she signed the agreement. Furthermore, Defendant’s claim that Mangarova’s signature on the lease does not conform to her signature on other documents is unfounded. Mangarova’s signature on the lease appears to match the one on her affidavit filed in this litigation. There is no evidence the signature is forged, and a jury could not reasonably infer from these arguments that Mangarova created the equipment lease after the November accident. As a result, the undisputed evidence demonstrates that a written lease for the trailer existed when Plys caused the accident.

 

The undisputed evidence also shows that Plys was using the trailer under the written lease, as required by the exclusion. First, and contrary to Defendant’s argument, the Carrier Contract is not evidence that Freight was the motor carrier. For one thing, a representative from ICCI confirmed that sometimes a company contracts to haul a load even though another company ends up as the carrier. This practice—“double broking,” as ICCI called it in the Carrier Contract—voids the initial contract. So, if the contracting carrier performs as agreed, ICCI pays upon receipt of an invoice and a bill of lading. But if another carrier hauls the load, ICCI would pay the actual carrier as long as that carrier has authority to haul under federal regulations, carries sufficient insurance, and produces the signed bill of lading showing it in fact transported the goods. Therefore, that Freight entered into the Carrier Contract does not determine who actually hauled the goods.

 

And here, all the evidence concerning the identity of the transporter of the pebbles points to Transport. Defendant does not dispute that Transport leased both the tractor and driver involved in the accident. As explained above, Transport also leased the trailer. Mangarova and Plys testified that the latter worked exclusively for Transport; Bojkovski confirmed that Freight never employed him. In fact, the tractor Plys drove displayed Transport’s name and DOT number. There is no dispute that Transport had authority to haul as a motor carrier and carried sufficient insurance. Plys even signed the bill of lading for the goods. Transport thus fulfilled ICCI’s requirements for payment.5 Defendant fails to contradict any of this evidence.6

 

We further find that the district court did not improperly credit Bojkovski and Mangarova’s testimony. Defendant accuses them of altering a copy of the ICCI Delivery Schedule to remove Freight’s identifying information and to conceal its involvement in the accident.7 Given this accusation, she asserts that Bojkovski and Mangarova’s testimony is unreliable, and so a jury must determine their credibility. Offering evidence for impeachment purposes, however, cannot create a genuine issue of fact at the summary judgment stage. See McMillian v. Johnson, 88 F.3d 1573, 1584 (11th Cir.1996) (holding that impeachment evidence is not substantive and “may not be used to create a genuine issue of material fact for trial”). Setting aside Defendant’s credibility arguments (upon which she relies heavily), there is no substantive evidence that Plys was hauling the goods for Freight when he caused the fatal accident.

 

*5 In sum, the undisputed evidence demonstrates that Plys was using the trailer under a written lease, on behalf of Transport, at the time of the accident. Consequently, based on the plain terms of the Freight policy’s exclusions, Plys is not an insured.

 

 

  1. Applicability of the Freight Policy’s MCS–90 Endorsement

The second issue on appeal is whether, notwithstanding the exclusion of coverage under the Freight policy’s terms, the MCS–90 endorsement applies to the underlying accident to guarantee a minimum level of coverage. The Motor Carrier Act of 1980 (“MCA”), in addition to deregulating the trucking industry and reducing barriers to entry, addressed safety issues and financial responsibility for trucking accidents. See Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 873 (10th Cir.2009). In particular, Congress addressed “the use by motor carriers of leased or borrowed vehicles to avoid financial responsibility for accidents that occurred while goods were being transported in interstate commerce.” Canal Ins. Co. v. Distribution Servs., Inc., 320 F.3d 488, 489 (4th Cir.2003). To that end, the MCA imposes a minimum insurance requirement on each motor carrier registered to engage in interstate commerce. Id.; see also 49 U.S.C. § 31139(b) (stating that the MCA’s minimum financial obligations apply to “motor carriers”). Motor carriers transporting non-hazardous property must demonstrate financial responsibility of at least $750,000. 49 C.F.R. § 387.9. They must further establish proof of that responsibility in one of three ways: “(1) by an MCS–90 endorsement, (2) by a surety bond, or (3) by self-insurance.” Yeates, 584 F.3d at 874; see also 49 C.F.R. § 387.7(d)(1)-(3).

 

The regulations implementing the MCA provide the specific forms required to establish proof of financial responsibility, including the MCS–90 endorsement relevant to this case. That endorsement provides, in part:

In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere.

49 C.F.R. § 387.15 (emphasis added).

 

Federal law controls the interpretation and operation of the MCS–90. Distribution Servs., 320 F.3d at 492. While the Eleventh Circuit has not extensively analyzed this endorsement, a majority of courts treat “the insurer’s obligation under the MCS–90 endorsement as one of a surety.” Yeates, 584 F.3d at 878 (collecting cases). In that regard, this obligation is triggered only when:

*6 (1) the underlying insurance policy (to which the endorsement is attached) does not provide liability coverage for the accident, and (2) the carrier’s other insurance coverage is either insufficient to meet the federally-mandated minimums or non-existent.

Id. at 879; see also T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 672 (5th Cir.2001) (explaining that “the insurer’s obligations under the MCS–90 are triggered when the policy to which it is attached provides no coverage to the insured”). If a motor carrier’s insurance pays a judgment satisfying the regulatory minimum, the goal of public financial responsibility has been accomplished and the endorsement does not apply. See id.

 

Here, Defendant argues that the endorsement guarantees payment of a judgment of up to $1 million against Freight, even if coverage is excluded under the terms of the policy, because Freight was the for-hire motor carrier of the load of pebbles.8 Federal regulations define a for-hire motor carrier as a carrier in “the business of transporting, for compensation, the goods or property of another.” 49 C.F.R. § 387.5. So, to decide if Freight’s MCS–90 endorsement could possibly apply here, the relevant question is whether Freight was the for-hire motor carrier for the pebbles at the time of the accident.9

 

As we already discussed, there is no genuine dispute that Plys was hauling the pebbles on behalf of Transport. Although Defendant contends that Freight was the for-hire motor carrier if it was entitled to payment for the haul, Transport fulfilled ICCI’s requirements for payment. Transport had authority to haul as a motor carrier and carried sufficient insurance. Plys, who always drove on behalf of Transport, also signed the bill of lading for the goods. There is thus no colorable evidence Freight was the for-hire motor carrier engaged in “the business of transporting, for compensation, the goods or property of another” when Plys caused the fatal accident.10 Id. Instead, all the evidence shows Plys was driving for Transport. Because Transport was therefore the motor carrier for hire, not Freight, the district court properly ruled that Freight’s MCS–90 endorsement is not implicated.11

 

 

  1. Conclusion

For the foregoing reasons, we affirm the district court’s entry of summary judgment in favor of Plaintiff.

 

AFFIRMED.

 

All Citations

— Fed.Appx. —-, 2016 WL 737780

 

 

Footnotes

1

Defendant filed suit on her own behalf and as the personal representative of her husband’s estate.

2

Mangarova actually created a company under the name KM Freight in 2008 before marrying Bojkovski, but the company was dormant until they separated in 2012, at which point the wife changed the company name to ABS Transport, Inc.

3

The Carrier Contract identifies the dispatcher who entered into the verbal agreement with ICCI. His e-mail address bears the domain name “@abstransport.com.” Confusingly, employees of both Freight and Transport used that domain name. Defendant argues that the document on its face is evidence the dispatcher must have worked for Freight. Yet Mangarova testified that the dispatcher worked on behalf of Transport only, and Bojkovski denies Freight ever employed him. Ultimately, for the reasons discussed infra, we find that the Carrier Contract and the employer of the dispatcher are not material to our ultimate inquiry of who hauled the goods.

4

An MCS–90 endorsement is an endorsement added to a trucker’s insurance policy to satisfy federal motor-carrier regulations requiring minimum levels of financial responsibility. See 49 U.S.C. § 31139(b); 49 C.F.R. § 387.15.

5

For what it’s worth, which appears to be little, nobody has attempted to claim payment for the load of pebbles.

6

Defendant takes issue with the district court’s failure to consider an expert witness who opined that Freight was the motor carrier for the goods. That expert looked at the ICCI documents and concluded that Freight was assigned the load and was therefore the motor carrier. But as explained, we agree with the district court that the pre-haul documents do not create a genuine issue for trial because all the evidence shows that Transport was the actual carrier on the day of the accident, whether or not Freight entered into a Carrier Contract.

7

At some point, Transport supplied Plaintiff with a copy of the Delivery Schedule that omitted references to Freight. Still, nobody disputes that the accurate version of the Delivery Schedule from ICCI names Freight.

8

The parties do not dispute that the MCS–90 would satisfy a judgment against only the policy’s named insured—in this case, Freight. See, e.g., Ooida Risk Retention Grp., Inc. v. Williams, 579 F.3d 469, 477–78 (5th Cir.2009) (explaining that federal regulations define the “insured” as “the motor carrier named in the policy of insurance, surety bond, [or] endorsement” (emphasis in original) (quoting 49 C.F.R. § 387.5)); Armstrong v. U.S. Fire Ins. Co., 606 F.Supp.2d 794, 823–26 (E.D.Tenn.2009) (concluding “that the only sensible reading and interpretation of the MCS–90 is that ‘the insured’ is the named insured”).

9

The parties agree that the time of the accident is the relevant focal point in deciding Freight’s status—and thus whether it was subject to the MCA’s financial responsibility requirements. Other courts agree that it is proper to “determine[ ] the MCS–90’s applicability with reference to time of the loss.” Canal Ins. Co. v. Coleman, 625 F.3d 244, 250–51 (5th Cir.2010) (collecting cases). For that reason, whether Freight initially entered into the Carrier Contract is not relevant to the applicability of the MCS–90.

10

We also find no evidence of a joint venture between Freight and Transport under the laws of Illinois (where both companies were based). We agree with the district court that Defendant fails to produce evidence of many of the elements of a joint venture, including an agreement to carry on a joint enterprise, joint control over the enterprise, and the sharing of profits and losses. See Yokel v. Hite, 809 N.E.2d 721, 727 (Ill.App.Ct.2004) (stating that the criteria for a joint venture are: “(1) an express or implied agreement to carry on a joint enterprise, (2) a manifestation of that intent by the parties, (3) a joint proprietary interest, as demonstrated by the contribution of property, finances, effort, skill, or knowledge by each party to the joint venture, (4) some degree of joint control over the enterprise, and (5) a provision for the parties to share in both the profits and the losses of the enterprise”).

11

Plaintiff made several other arguments about why the MCS–90 should not apply here even if Freight were the for-hire motor carrier. Given our ruling above, we need not address Plaintiff’s alternative arguments.

New Orleans Cold Storage and Warehouse Company, Ltd. v. Grenzebach Corp.

United States District Court,

E.D. Louisiana.

New Orleans Cold Storage and Warehouse Company, Ltd.

v.

Grenzebach Corp.

CIVIL ACTION NO: 15-6642

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Signed January 22, 2016

Attorneys and Law Firms

Larry M. Roedel, Johanna A. Posada, Roedel, Parsons, Koch, Blache, Balhoff & McCollister, Baton Rouge, LA, Carlton Jones, III, Roedel, Parsons, Koch, Blache, Balhoff & McCollister, New Orleans, LA, for New Orleans Cold Storage and Warehouse Company, Ltd.

Sam Zurik, III, Bryan Edward Bowdler, Kullman Firm, New Orleans, LA, for Grenzebach Corp.

 

CARL J. BARBIER, UNITED STATES DISTRICT JUDGE

 

ORDER AND REASONS

*1 Before the Court is Defendant Grenzebach Corporation’s Motion to Compel Arbitration (Rec. Doc. 10), Plaintiff New Orleans Cold Storage and Warehouse Company Ltd.’s opposition thereto (Rec. Doc. 11), and Grenzebach’s reply memorandum (Rec. Doc. 14). Having considered the motion and memorandum of counsel, the record, and the applicable law, the Court finds that the motion should be GRANTED for the reasons set forth more fully below.

 

 

FACTS AND PROCEDURAL BACKGROUND

This litigation derives from a sales agreement (the “Agreement”) confected between Plaintiff New Orleans Cold Storage and Warehouse Company (“NOCS”) and Defendant Grenzebach Corporation (“Grenzebach”).1 NOCS is a Louisiana company that provides “warehousing and logistics services for the handling of time and temperature sensitive cargo for its customers,” according to its petition for damages. (Rec. Doc. 1-1.) NOCS frequently receives and handles boxes of fresh poultry. In 2013, NOCS approached Grenzebach about automating the palletization of fresh poultry boxes. On January 28, 2014, Grenzebach provided NOCS with a Quotation (No. LG13147LTR.6.0) for an automated de-palletizing and palletizing system. (See Rec. Doc. 10-2, at 15-30.)

 

NOCS and Grenzebach entered into the Agreement, which called for the development and implementation of such an automated system. According to Grenzebach, the Agreement consists of the Quotation, Addendum 1 (Grenzebach’s Standard Terms and Conditions of Sale), and Addendum 2 (Limitation of Liability and Service Agreement). The Quotation specifically states that a Purchase Order that arises from the Quotation is subject to the Standard Terms and Conditions. The Standard Terms contain an arbitration clause, which states:

Except as specifically provided herein, any dispute, controversy or claim arising out of or in relation to or in connection with this agreement, or in the operations carried out under this agreement, including without limitation any dispute as to the contraction, validity, interpretation, enforceability, or breach of this agreement, shall be exclusively and finally settled by arbitration….

(Rec. Doc. 10-2, at 14.)

 

The parties also signed a Royalty Agreement. (Rec. Doc. 10-2, at 1-3.) Pursuant to this agreement, NOCS agreed to refer companies seeking a similar system to Grenzebach, and Grenzebach agreed to pay a commission to NOCS in return. After encountering problems with the system designed by Grenzebach, NOCS brought suit in Civil District Court for the Parish of Orleans. NOCS sought rescission of the sale and damages for breach of contract. Grenzebach removed the case to this Court on December 9, 2015. On December 22, Grenzebach filed the instant motion. NOCS opposed the motion on January 5, 2016. This Court granted Grenzebach leave to file a reply memorandum on January 11.

 

 

PARTIES’ ARGUMENTS

*2 Grenzebach argues that this matter is arbitrable because (1) the parties agreed to arbitrate in a written contract, (2) the transaction involved interstate commerce, and (3) the contract was valid under general principles of contract law. First, Grenzebach refers to an agreement signed by the parties, which it claims specifically incorporated Grenzebach’s “Standard Terms and Conditions of Sales dated January 24, 2014, attached to quotation no. LG13147LTR.6.0.” It contends that the Standard Terms provide that any dispute arising out of the agreement is subject to arbitration in Atlanta, Georgia. Thus, Grenzebach argues that NOCS agreed to arbitrate in writing.

 

Second, Grenzebach argues that the transaction involves interstate commerce because the parties were citizens of different states. Third, Grenzebach argues that the contract was valid under Georgia contract law, which proves that arbitration clauses that are incorporated by reference into an agreement are enforceable as long as they are clear and unambiguous. Grenzebach also contends that Plaintiff’s claims are within the scope of the arbitration clause. Finally, Grenzebach asks this Court to stay this matter pending the outcome of the arbitration.

 

In its opposition, NOCS argues that Grenzebach has not demonstrated the existence of an agreement to arbitrate. NOCS claims that the contract attached to Grenzebach’s motion is not the subject Agreement. Rather, NOCS contends that Grenzebach attached the Royalty Agreement, the Quotation provided to NOCS, and an unrelated copy of Grenzebach’s Standard Terms and Conditions. NOCS argues that this evidence does not establish the existence of an agreement to arbitrate any disputes arising out of the automated system agreement.

 

Grenzebach filed a reply, in which it asserts that the evidence shows that the parties agreed to arbitrate any dispute arising out of the Agreement. It points out that the signature of the CEO of NOCS, Mark Blanchard, appears on each page of the Standard Terms attached to its motion as an exhibit. Further, Grenzebach attached an email from Blanchard to a Grenzebach executive, in which Blanchard stated that NOCS accepted the terms in Grenzebach’s Quotation. Because the Quotation incorporated the Standard Terms by reference, Grenzebach argues that this matter should be submitted to arbitration.

 

 

LEGAL STANDARD

Section 2 of the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq., provides:

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 revocation of any contract.

9 U.S.C. § 2.

 

Section 2, “the primary substantive provision of the Act,” reflects “a liberal federal policy favoring arbitration agreements” and effectively creates “a body of federal substantive law of arbitrability.” Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The United States Court of Appeals for the Fifth Circuit has observed that “[i]n enacting the Federal Arbitration Act, Congress declared a national policy in favor of arbitration. [C]ongress’ clear intent, in the Arbitration Act, [was] to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.” Snap-on Tools Corp. v. Mason, 18 F.3d 1261, 1263 (5th Cir. 1994) (quoting Moses H. Cone Mem. Hosp., 460 U.S. at 22).

 

*3 Section 3 of the FAA provides:

If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under the agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3.

 

“The FAA requires district courts to ‘compel arbitration of otherwise arbitrable claims, when a motion to compel arbitration is made.’ ” Harris v. JCPenney Co., Inc., No. 07-9675, 2008 WL 90038, at *1 (E.D. La. Jan. 8, 2008) (quoting Sedco, Inc. v. Petroleos Mexicanos Mexican Nat’l Oil Co., 767 F.2d 1140, 1147 (5th Cir. 1985)). When deciding motions to compel arbitration, courts conduct a two-step inquiry. Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202, 254 (5th Cir. 2012); Wash. Mut. Fin. Grp. v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004). The Court first inquires whether the parties agreed to arbitrate the dispute at issue. Id. This inquiry consists of two subsidiary questions: “(1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement.” Webb v. Investacorp, Inc., 89 F.3d 252, 257–58 (5th Cir. 1996).

 

To determine whether the parties formed a valid agreement to arbitrate, the Court applies ordinary principles of state contract law. Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537-38 (5th Cir. 2003); Grigson v. Creative Artists Agency, LLC, 210 F.3d 524, 531 (5th Cir. 2000). “[T]he federal policy favoring arbitration does not apply to the determination of whether there is a valid agreement to arbitrate between the parties.” Am. Heritage Life Ins. Co., 321 F.3d at 538. In analyzing arbitrability, courts apply federal substantive law. Grigson, 210 F.3d at 531. Moreover, “as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone, 460 U.S. at 24-25. If the Court finds that there is a valid agreement to arbitrate between the parties and that the dispute in question falls within the scope of the arbitration agreement, the Court inquires whether any federal statute or policy renders the claims nonarbitrable. Wash. Mut. Fin. Grp., 364 F.3d at 263.

 

Under section 3 of the FAA, a district court must stay a lawsuit when a party demonstrates that any issue involved in the lawsuit is “referable to arbitration under an agreement in writing for such arbitration.” 9 U.S.C. § 3. This provision is mandatory and demands a stay of legal proceedings “whenever the issues in a case are within the reach of an arbitration agreement.” Complaint of Hornbeck Offshore (1984) Corp., 981 F.2d 752, 754 (5th Cir. 1993). When these circumstances are present, a district court “has no discretion under section 3 to deny the stay.” Id.

 

 

DISCUSSION

*4 As an initial matter, the Court notes that the Agreement falls within the scope of the FAA. Grenzebach asserts that it is incorporated and has its principal place of business in Georgia. NOCS is incorporated and has its principal place of business in Louisiana. NOCS does not contest these assertions. The Fifth Circuit has held that “[c]itizens of different states engaged in performance of contractual operations in one of those states are engaged in a contract involving commerce under the FAA.” Mesa Operating Ltd. P’ship v. La. Intrastate Gas Corp., 797 F.2d 238, 243 (5th Cir. 1986). The Court therefore concludes that the Agreement involves interstate commerce as necessary to implicate the FAA and that Grenzebach may seek relief thereunder.

 

First, the Court finds that the parties confected a valid agreement to arbitrate under Georgia law.2 “A meeting of the minds is the first requirement of the law relative to contracts.” Tekin v. Whiddon, 504 S.E.2d 722, 725 (Ga. App. 1998) (quoting Simmons v. McBride, 492 S.E.2d 738, 739 (Ga. App. 1997)). To determine whether the parties had the requisite “meeting of the minds,” or mutual assent, Georgia law employs the objective theory of intent “whereby one party’s intention is deemed to be that meaning a reasonable man in the position of the other contracting party would ascribe to the first party’s manifestations of assent, or that meaning which the other contracting party knew the first party ascribed to his manifestations of assent.” Cox Broad. Corp. v. Nat’l Collegiate Athletic Ass’n, 297 S.E.2d 733, 737 (Ga. 1982).

 

In this case, the parties mutually agreed to be bound by Grenzebach’s Standard Terms and Conditions. Each page of the Quotation contains a signature, which Grenzebach claims belongs to CEO Blanchard. The same signature appears on each page of the Standard Terms, which contain the arbitration clause. Moreover, Blanchard confirmed in two separate emails that NOCS accepted Grenzebach’s Standard Terms and Conditions. (See Rec. Doc. 12-2, at 3-7.) Objectively, the signatures and the email profess NOCS’s intent to be bound by Grenzebach’s Standard Terms.

 

NOCS does not deny that the Standard Terms contain an arbitration clause. Instead, it attempts to discredit the documents produced by Grenzebach by pointing out that the Standard Terms reference a different Quotation number and date than the Quotation. However, Blanchard’s signature appears on the Standard Terms, which NOCS does not explain. Nor does it explain Blanchard’s emails in which he accepts the Grenzebach Standard Terms. Thus, NOCS’s acceptance gave rise to a binding contract to arbitrate.

 

NOCS would be bound by the arbitration clause even if Blanchard had not signed the Standard Terms or agreed to the Terms in an email. According to Grenzebach, the Agreement consists of the Quotation, Addendum 1, and Addendum 2. The Quotation specifically references and incorporates the addenda. (See Rec. Doc. 10-2, at 30.) Under Georgia law, “incorporation by reference is generally effective to accomplish its intended purpose where …the provision to which reference is made has a reasonably clear and ascertainable meaning.” Binswanger Glass Co. v. Beers Const. Co., 234 S.E.2d 363, 365 (Ga. App. 1977). The arbitration clause clearly and specifically provides that any dispute arising from the Agreement is subject to arbitration. Therefore, it was incorporated by reference into the Quotation, and Blanchard’s signature on the Quotation constituted acceptance of the Standard Terms.

 

Second, this litigation falls under the scope of the arbitration clause. The Agreement is subject to a broad arbitration clause, which provides that “any dispute, controversy or claim arising out of or in relation to or in connection with this agreement, or in the operations carried out under this agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this agreement” is subject to arbitration. The Fifth Circuit and the Supreme Court have found that such broad arbitration clauses are enforceable. Prima Paint Corp., v. Flood & Conklin Mfg. Co., 388 U.S. 395, 397-98 (1967); Pennzoil Expl. & Prod. Co., 139 F.3d at 1067. Such a clause reaches “all aspects of the relationship” between the parties.Nauru Phosphate Royalties, Inc. v. Drago Daic Interests, Inc., 138 F.3d 160, 164-65 (5th Cir. 1998). This litigation includes claims for rescission of the contract and for breach of contract. Because these claims arise out of the Agreement, they fall within the scope of the arbitration clause.

 

*5 NOCS does not argue that a federal statute or policy renders the claims nonarbitrable. Thus, the Court finds that NOCS’s claims are arbitrable. Pursuant to Section 3 of the FAA, the Court holds that this matter must be stayed pending the outcome of the arbitration.

 

 

CONCLUSION

Accordingly,

 

IT IS HEREBY ORDERED that Defendant’s Motion to Compel Arbitration (Rec. Doc. 10) is GRANTED.

 

All Citations

Slip Copy, 2016 WL 279012

 

 

Footnotes

1

Plaintiff and Defendant spell Defendant’s name differently. Plaintiff spells it “Grenzebach,” while Defendant adds a second “n” to the name, spelling it “Grenzenbach.” This Court will use the spelling that appears on Defendant’s website, omitting the second “n.”

2

Grenzebach asserts that Georgia law applies pursuant to the terms of the contract. NOCS does not contest this assertion.

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