Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-07130/USCOURTS-caDC-06-07130-0/pdf.json

Parties Involved:
Aliron International, Inc.
Appellant
Cherokee Nation Industries, Inc.
Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 4, 2007 Decided July 8, 2008

No. 06-7130

ALIRON INTERNATIONAL, INC.,

APPELLANT

v.

CHEROKEE NATION INDUSTRIES, INC.,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 05cv00151)

Kenneth A. Martin argued the cause and filed the briefs for

appellant.

James J. Proszek argued the cause for appellee. With him

on the brief was John B. Rudolph. Steven D. Cundra entered an

appearance.

Before: HENDERSON, GARLAND, and BROWN, Circuit

Judges.

Opinion for the Court filed by Circuit Judge GARLAND.

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 1 of 9
2

GARLAND, Circuit Judge: The question presented on this

appeal is whether Aliron International, Inc. must arbitrate its

breach of contract dispute with Cherokee Nation Industries, Inc.

The district court decided that arbitration is required, and we

agree.

I

In November 1998, the United States Army awarded

Cherokee Nation Industries, Inc. (CNI) a “Prime Contract” to

provide dental services to Army personnel stationed in

Germany. Because it had never before performed such work for

the government, CNI entered into a “Subcontract” with Aliron

International, Inc. to provide the service and staffing resources

that CNI needed to fulfill its duties under the Prime Contract.

The Subcontract provided that Aliron would perform 49% of the

work and receive 49% of the Prime Contract’s net revenue. The

parties agreed that the Subcontract “shall be construed and

interpreted in accordance with the laws of the State of

Oklahoma,” Subcontract ¶ 22.0 (Appellant’s Appendix (A.A.)

23), and that “any dispute between the parties will be submitted

to binding arbitration in the State of Oklahoma,” id. ¶ 28.0 (A.A.

26). Oklahoma law, the parties further agreed, “shall govern the

arbitration proceedings.” Id. 

Approximately two weeks after Aliron began contract

performance, CNI notified Aliron that the Status of Forces

Agreement (SOFA) between the United States and Germany

precluded CNI from employing a subcontractor to perform its

obligations under the Prime Contract. To comply with the

SOFA without harming CNI’s ability to fulfill its Prime

Contract responsibilities, CNI and Aliron entered into an

“Agreement for Administrative Support and Transfer of

Personnel” (the “Support Agreement”). Under the Support

Agreement, Aliron effectively transferred its employees to CNI,

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 2 of 9
3

thereby avoiding the SOFA’s subcontracting prohibition. The

parties’ financial arrangement remained the same: CNI agreed

to pay Aliron 49% of the Prime Contract’s net revenue in return

for access to Aliron’s employees. Like the Subcontract, the

Support Agreement provided that it “shall be construed and

interpreted according to the law of the State of Oklahoma.”

Support Agreement ¶ 13 (A.A. 14). Unlike the Subcontract, the

Support Agreement did not include an express provision

requiring arbitration of all disputes. 

On January 21, 2005, Aliron filed this action against CNI in

the United States District Court for the District of Columbia,

invoking the court’s diversity jurisdiction. Aliron alleged that,

after April 1, 2004, CNI ceased making payments to Aliron in

breach of its obligations under the Support Agreement. Aliron

claimed damages exceeding $1,800,000. Compl. ¶ 16. Pursuant

to the Federal Arbitration Act, 9 U.S.C. § 4, CNI moved to

compel arbitration of the dispute. CNI argued that, although

only the Subcontract contains an express arbitration clause, the

two documents should be read together.

The district court agreed. Following the relevant Oklahoma

rule of contract construction, the court held that, “because the

Subcontract and the Support Agreement involve the same

subject matter, and because the plain language on the face of the

Support Agreement indicates that it was entered into to preserve

the intent of the Subcontract, they must be construed together as

one contract.” Aliron Int’l, Inc. v. Cherokee Nation Indus., Inc.,

2006 WL 1793295, at *3 (D.D.C. June 28, 2006). The court

concluded that the arbitration provision “of the Subcontract . .

. governs [Aliron]’s claims that CNI has breached the Support

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 3 of 9
4

1

In Green Tree Financial Corp. v. Randolph, the Supreme Court

held that “an order compelling arbitration and dismissing a party’s

underlying claims is a ‘final decision with respect to an arbitration’

within the meaning of § 16(a)(3) of the Federal Arbitration Act, 9

U.S.C. § 16(a)(3), and thus is immediately appealable pursuant to that

Act.” 531 U.S. 79, 82 (2000). 

Agreement,” and it granted CNI’s motion to compel arbitration

and dismissed the case in its entirety. Id. Aliron now appeals.1

II

The district court properly examined CNI’s motion to

compel arbitration under the summary judgment standard of

Federal Rule of Civil Procedure 56(c), as if it were a request for

“‘summary disposition of the issue of whether or not there had

been a meeting of the minds on the agreement to arbitrate.’”

Aliron Int’l, Inc., 2006 WL 1793295, at *1 (quoting, inter alia,

Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54

n.9 (3d Cir. 1980)); see Bensadoun v. Jobe-Riat, 316 F.3d 171,

175 (2d Cir. 2003). Under Rule 56(c), summary judgment is

appropriate only if “there is no genuine issue as to any material

fact and . . . the moving party is entitled to a judgment as a

matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

247 (1986) (quoting FED. R. CIV. P. 56(c)). We review the

district court’s resolution of this question de novo. See

Czekalski v. Peters, 475 F.3d 360, 362 (D.C. Cir. 2007). 

The Federal Arbitration Act provides as follows:

A written provision in any . . . contract evidencing a

transaction involving commerce to settle by arbitration

a controversy thereafter arising out of such contract . .

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 4 of 9
5

. or the refusal to perform the whole or any part

thereof, . . . 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. “When 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 of Chi., Inc. v. Kaplan, 514 U.S. 938,

944 (1995); see National R.R. Passenger Corp. v. ExpressTrak,

L.L.C., 330 F.3d 523, 529 (D.C. Cir. 2003). The parties here

agree that the relevant state law is that of Oklahoma, as both the

Subcontract and the Support Agreement state that they are to be

construed in accordance with Oklahoma law. Cf. National R.R.

Passenger Corp., 330 F.3d at 530 (applying the law of the

District of Columbia where “[t]he parties’ agreements provide

that they are to be interpreted under District of Columbia law”).

In Oklahoma, “[d]etermining whether a contract is ambiguous

and interpretation of an unambiguous contract are questions of

law” for the court. Otis Elevator Co. v. Midland Red Oak

Realty, Inc., 483 F.3d 1095, 1101 (10th Cir. 2007); see Palace

Exploration Co. v. Petroleum Dev. Co., 374 F.3d 951, 953 (10th

Cir. 2004) (citing Lewis v. Sac & Fox Tribe of Okla. Hous.

Auth., 896 P.2d 503, 514 (Okla. 1994)); Pitco Prod. Co. v.

Chaparral Energy, Inc., 63 P.3d 541, 545 (Okla. 2003).

A

The Oklahoma Supreme Court has long instructed that

“[w]here two contracts, not executed at the same time, refer to

the same subject matter and show on their face that one was

executed to carry out the intent of the other, it is proper to

construe them together as if they were one contract.” Bixler v.

Lamar Exploration Co., 733 P.2d 410, 411-12 (Okla. 1987)

(citing Davis v. Hastings, 261 P.2d 193 (Okla. 1953)); see

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 5 of 9
6

Strickland v. American Bakery & Confectionery Workers Union,

527 P.2d 10, 13 (Okla. 1974); Doss Oil Royalty Co. v. Lahman,

302 P.2d 157, 161 (Okla. 1956). The parties do not dispute that

the rule of contract construction set forth in Bixler controls this

case. Hence, two criteria must be satisfied before we can

conclude that the Subcontract’s arbitration provision governs

disputes under the Support Agreement: (1) the Subcontract and

Support Agreement must each refer to the same subject matter,

and (2) the Support Agreement must show on its face that it was

executed to carry out the intent of the Subcontract. 

The first element of the Bixler test is satisfied here. Both

the Subcontract and the Support Agreement refer to the same

subject matter -- the manner in which Aliron and CNI will work

together to enable CNI to perform its obligation under the Prime

Contract to provide dental services for Army personnel, and the

amount that Aliron will be paid in compensation therefor. The

Subcontract contemplates cooperation through a traditional

subcontracting relationship: under it, CNI would have utilized

Aliron’s medical personnel in return for a 49% share of the

Prime Contract’s net revenue. Subcontract ¶ 3.0 (A.A. 18). The

Support Agreement, made necessary by the SOFA’s prohibition

on subcontracting, simply altered the technical form of the

relationship: instead of establishing a subcontract, it effectively

transferred Aliron’s employees to CNI’s payroll, again for 49%

of net revenue. Support Agreement ¶ 2 (A.A. 12).

Notwithstanding that the two agreements took slightly different

approaches to achieving the same outcome -- effective

performance of the Prime Contract and compensation to Aliron

therefor -- a single subject matter unites both documents.

The second element of the Bixler test is also readily

satisfied. The Support Agreement states that “CNI and Aliron

agree to continue their relationship under this Administrative

Support Agreement with the intent of preserving the benefits and

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 6 of 9
7

obligations undertaken by the parties in the Subcontract.” Id.

preamble (A.A. 12) (emphasis added). It further states that

“[t]his arrangement is entered into to preserve the bargain

between the parties reached in the Subcontract between Aliron

and CNI, . . . which the parties could not implement because of

limitations on subcontracting imposed by the applicable SOFA.”

Id. ¶ 1 (A.A. 12) (emphasis added). It is hard to imagine a more

definitive statement that one contract “was executed to carry out

the intent of the other.” Bixler, 733 P.2d at 412. Because both

Bixler elements are thus satisfied, we must construe the two

contracts “together as if they were one contract.” Id.

Aliron has little to say about the second element of the

Bixler test, but it does maintain that the two contracts do not

refer to the same subject matter. Under the Subcontract, Aliron

argues, it “was to perform 49% of the prime contract with its

own employees,” while under the Support Agreement it

“effectively sold its employees to CNI to enable CNI to perform

[the] Prime Contract.” Appellant’s Reply Br. 14. This

distinction is insufficient. Oklahoma law does not require that

two contracts be identical in all respects to be construed as one.

See, e.g., Strickland, 527 P.2d at 13-14 (construing a welfare

benefit plan and a collective bargaining agreement together as

one contract to determine a beneficiary’s death benefits). The

fact that the Subcontract and the Support Agreement travel

along separate paths to reach the same goal is of no moment. As

CNI aptly puts it:

Regardless of whether the personnel supplied by

Aliron worked as “subcontractors” to CNI or were

“sold” to CNI, the substance of the arrangement was

the same -- CNI used dental personnel hired,

credentialed and supplied by Aliron to perform CNI’s

obligations to the Army under the Prime Contract in

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 7 of 9
8

return for CNI’s payment to Aliron of 49% of the net

revenue CNI received under the Prime Contract.

Appellee’s Br. 19.

B

Aliron makes two additional arguments in favor of

reversing the district court’s judgment. First, it asserts that

extrinsic evidence shows the parties entered into the Support

Agreement with the intent that it not contain an arbitration

requirement. That evidence is in the form of an affidavit from

Aliron’s vice president, Ron Grow, who represents that he

negotiated to exclude an arbitration clause from the Agreement.

But Oklahoma law bars the consideration of such extrinsic

evidence unless a contract is ambiguous. See, e.g., Pitco Prod.

Co., 63 P.3d at 546 (“If a contract is complete in itself, and

when viewed as a totality, is unambiguous, its language is the

only legitimate evidence of what the parties intended. That

intention cannot be divined from extrinsic evidence but must be

gathered from a four-corners’ examination of the instrument.”).

It further provides that the question of whether a contract is

ambiguous, and thus requires extrinsic evidence to clarify its

meaning, is a question of law for the court. See Palace

Exploration Co., 374 F.3d at 953; Pitco Prod. Co., 63 P.3d at

545. Following Bixler, we have read the Subcontract and

Support Agreement together as a single contract. And because

we have concluded that the contract is not ambiguous, we

cannot consider the extrinsic evidence that Aliron offers. 

Second, Aliron argues that it should not be required to

submit to arbitration because it never agreed to the Subcontract

that contains the arbitration requirement. Specifically, Aliron

alleges: “[T]he Subcontract that CNI relies [on] is not signed by

Aliron. Therefore, CNI failed to sustain its burden to establish

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 8 of 9
9

that an agreement to arbitrate exists.” Appellant’s Reply Br. 11.

This contention -- based on the fact that the only copy of the

Subcontract in the record is unsigned -- is inconsistent with

Aliron’s repeated representations that it did enter into a

subcontract with CNI. See, e.g., Compl. ¶ 6 (“CNI

subcontracted with Aliron to perform 49% of the work.”); see

also Support Agreement ¶ 1 (A.A. 12) (discussing the “bargain

between the parties reached in the Subcontract between Aliron

and CNI”). Moreover, it is a contention that Aliron never raised

in the district court. Following our well-settled practice, we will

not consider Aliron’s missing-signature contention for the first

time on appeal. See, e.g., Kassem v. Washington Hosp. Ctr., 513

F.3d 251, 255 n.3 (D.C. Cir. 2008); Chappell-Johnson v. Powell,

440 F.3d 484, 489 (D.C. Cir. 2006); District of Columbia v. Air

Fla., Inc., 750 F.2d 1077, 1084 (D.C. Cir. 1984).

III

We conclude that, because the Subcontract and Support

Agreement refer to the same subject matter, and because the

Support Agreement plainly evidences that it was executed to

preserve the intent of the Subcontract, the two contracts must be

read together as one under Oklahoma law. See Bixler, 733 P.2d

at 411-12. Accordingly, paragraph 28.0 of the Subcontract,

which requires that “any dispute between the parties” be

submitted to binding arbitration, applies with equal force to any

dispute that arises under the Support Agreement. The judgment

of the district court is therefore

Affirmed.

USCA Case #06-7130 Document #1126043 Filed: 07/08/2008 Page 9 of 9