Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-01892/USCOURTS-ca8-14-01892-0/pdf.json

Parties Involved:
Jeff Bendel
Appellant
John Brand
Appellant
Daniel Juhl
Appellant
Juhl Energy Development, Inc.
Appellant
Juhl Energy, Inc.
Appellant
Audrey Loethen
Appellant
Bartly J. Loethen
Appellant
John Mitola
Appellant
Unison Co., Ltd.
Appellee
Winona County Wind, LLC
Appellant
Winona Wind Holdings, LLC
Appellant

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-1892

___________________________

Unison Co., Ltd.

lllllllllllllllllllll Plaintiff - Appellee

v.

Juhl Energy Development, Inc.; Juhl Energy, Inc.; Winona Wind Holdings, LLC;

Winona County Wind, LLC; Daniel Juhl; John Mitola; John Brand; Bartly J.

Loethen; Audrey Loethen; Jeff Bendel

lllllllllllllllllllll Defendants - Appellants

____________

Appeal from United States District Court 

for the District of Minnesota - Minneapolis

____________

 Submitted: February 11, 2015

 Filed: May 26, 2015

____________

Before GRUENDER, SHEPHERD, and KELLY, Circuit Judges.

____________

KELLY, Circuit Judge.

Juhl Energy Development, Inc. (JEDI), appeals from the district court’s order

denying its motion to compel arbitration for contract disputes between JEDI and

Unison Co., Ltd. (Unison). Because the arbitration clause in the Turbine Supply

Agreement (TSA) covers the parties’ dispute, we reverse the judgment.

Appellate Case: 14-1892 Page: 1 Date Filed: 05/26/2015 Entry ID: 4278146 
I. Background

Unison is a South Korean company that manufactures, sells, delivers, and

services Wind Turbine Generators (WTGs). JEDI is a corporate subsidiary of another

named defendant, Juhl Energy, Inc., and is incorporated and located in Minnesota. 

JEDI and Unison are parties to the contractual agreements at issue; the other

defendants are not. There are two agreements between JEDI and Unison that are 1

relevant in this case: the TSA and the Financing Agreement (FA). In the TSA,

Unison agreed to design, manufacture, and sell two WTGs to JEDI for installation in

Minnesota in exchange for $2,574,900; the effective date for the TSA was April 16,

2010. In the FA, Unison agreed to lend to JEDI the amount of the TSA contract

price—$2,574,900; the effective date for the FA was April 14, 2010.

Unison brought suit against JEDI in federal court in Minnesota, asserting

17 claims for relief, all of which relate to the FA. JEDI filed a motion to compel

arbitration, based on an arbitration clause in the TSA, and to dismiss Unison’s

complaint. Following a hearing, the district court denied the motion, and JEDI timely

appealed. This court has jurisdiction pursuant to 28 U.S.C. § 1294 and 9 U.S.C. §

16(a)(1)(C).

II. Discussion

“We review de novo the district court’s denial of a motion to compel arbitration

based on contract interpretation.” Indus. Wire Prods., Inc. v. Costco Wholesale

Corp., 576 F.3d 516, 520 (8th Cir. 2009) (quotation omitted). “If the district court’s

The parties concede all other defendants’ rights regarding arbitration will be 1

decided based on JEDI’s right to compel arbitration, because the claims against all

named defendants should be heard in one forum.

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order concerning arbitrability is based on factual findings, we review such findings

for clear error.” Lyster v. Ryan’s Family Steak Houses, Inc., 239 F.3d 943, 945 (8th

Cir. 2001). “[A]rbitration is a matter of contract and a party cannot be required to

submit to arbitration any dispute which he has not agreed so to submit.” AT&T

Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986) (quotation

omitted). “The [Federal Arbitration Act] limits a district court’s initial role in any

challenge to an arbitration agreement to . . . 1) whether the agreement for arbitration

was validly made and 2) whether the arbitration agreement applies to the dispute at

hand, i.e., whether the dispute falls within the scope of the arbitration agreement.” 

Indus. Wire Prods., 576 F.3d at 520 (internal quotation omitted). The parties concede

the arbitration clause in the TSA is valid; they disagree about whether it applies to

Unison’s complaint. 

We must liberally construe a valid arbitration clause, “resolving any doubts in

favor of arbitration . . . unless it may be said with positive assurance that the

arbitration clause is not susceptible of an interpretation that covers the asserted

dispute.” 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir. 2008) (quotation

omitted). In making this determination, we must decide whether the arbitration clause

is broad or narrow. Fleet Tire Serv. of N. Little Rock v. Oliver Rubber Co., 118 F.3d

619, 621 (8th Cir. 1997) (finding the arbitration clause at issue was broad, because

arbitration was available for claims both “arising from” and “relating to” the

agreement). If the clause is broad, the “liberal federal policy favoring arbitration

agreements requires that a district court send a claim to arbitration . . . as long as the

underlying factual allegations simply touch matters covered by the arbitration

provision.” 3M Co., 542 F.3d at 1199 (quotations and internal citation omitted). 

The arbitration clause at issue in this case is located in the TSA. The relevant

paragraphs of the TSA read as follows:

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16.1 Negotiation of Disputes. The Parties agree that in the event any

dispute arises between them under or in connection with this

Agreement or any legal relationship associated with or

contemplated by this Agreement (the “Dispute”), the Parties shall

first promptly make all reasonable efforts to resolve the Dispute

by amicable negotiations involving senior representatives of the

Parties. . . .

16.2 Arbitration. If the Parties fail to resolve the Dispute within 21

days pursuant to Section 16.1 (or any such longer period as

Parties may mutually agree to in writing), then either Party may

submit the Dispute for binding arbitration by delivering to the

other Party a written notice (a “Notice of Arbitration”) . . . .

According to the terms of the TSA, a Dispute is “any dispute” arising between

the parties “under orin connection with [the TSA] or any legal relationship associated

with or contemplated by [the TSA].” A party may then submit any such Dispute, if

not resolved in a specified time, “for binding arbitration . . . .” The FA, in contrast, 

contains no such provision. 

The arbitration clause in the TSA is at least as broad as the arbitration clauses

this court has considered in two instructive cases. In Fleet Tire, the clause stated that

“[a]ny controversy or claim arising out of or relating to this Agreement or any breach

of its terms shall be settled by arbitration . . . .” 118 F.3d at 620. We found in Fleet

Tire that the clause “constitutes the broadest language the parties could reasonably

use to subject their disputes to that form of settlement, including collateral disputes

that relate to the agreement containing the clause.” Id. at 621. Similarly, in 3M Co.,

the arbitration clause at issue required arbitration if the parties disputed “the

existence, cause, or value of any change to the scope of services Amtex was to

provide.” 542 F.3d at 1196 (paraphrasing the clause at issue). We concluded this

language, too, was broad in scope. Id. at 1199. 

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The arbitration clause in the TSA covers any dispute that arises “in connection

with” the TSA or “any legal relationship associated with or contemplated by” the

TSA. We conclude that thislanguage rendersthe arbitration clause in the TSA broad,

not narrow, in scope.

2

Because the arbitration clause is broad, we must then determine whether the

underlying factual allegations touch on matters covered by the arbitration clause. 

See id. at 1199. As noted, the arbitration clause in this case covers disputes that arise

in connection with “any legal relationship associated with or contemplated by [the

TSA].” The question, then, is whether the FA—which makes no mention of

arbitration—embodies a “legal relationship” that is either “associated with or

contemplated by” the TSA. 

The TSA specificallyaddresses the financing arrangement between Unison and

JEDI, which is the subject matter of the legal dispute between the parties. The TSA 3

Unison contendsthe TSA clause is permissive, rather thanmandatory, and that 2

this distinction requires us to construe the arbitration clause narrowly. However,

whether an arbitration clause is permissive or mandatory does not, at least in this

case, speak to whether the clause is broad or narrow.

TSA ¶ 3.4 reads, in part, as follows:

3

Unison will provide financing to Purchaser for the purchase price of the

WTGs

The loan proceeds shall be used solely for the payment of the Contract

Price due Unison for the WTGs for the Project. . . .

The obligations of Purchaser under the Financing Documents shall be

secured by a first-priority security interest in Purchaser’s note from the

user of the WTG. . . .

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is contingent on finalizing the financing documents on or before the effective date of

the TSA, and the FA expressly states that the parties have “entered into a Turbine

Supply Agreement.” The FA also limits the amount of JEDI’s loan to “the aggregate

amount of all payments due and payable to [Unison] under the Turbine Supply

Agreement . . . .” And the FA conditions Unison’s obligation to loan this money on,

among other things, Unison having received a copy of “each Project Document.” The

FA, in turn, defines “Project Documents” to include the TSA. These cross-references,

along with the interdependent nature of the parties’ obligations under both the TSA

and the FA, make it difficult to read these documents without reaching the conclusion

that they are two parts of one overarching business plan between the same parties.

4

The TSA and the FA each embodies a legal relationship that is associated with, and

contemplated by, the other. Any dispute regarding the FA would, therefore, be a

dispute that is covered by the arbitration clause in the TSA.

The financing documents shall be prepared and negotiated on or before

April 16th, 2010, and this Agreement shall be contingent upon finalizing

such documents on or before said date.

Dakota Gasification Co. v. Natural Gas PipelineCo. of America, 964 F.2d 732

4

(8th Cir. 1992), is distinguishable from the present matter. There were two relevant

agreements in that case—a gas purchase agreement and a financing agreement. 

However, the parties to the two agreements were not the same. The gas purchase

agreement was executed between a partnership and four companies. The financing

agreement was executed between the four companies and the U.S. Department of

Energy—not the partnership. The court in that case held that the parties could not be

compelled to arbitrate based on “the conditions under which the Secretary of Energy

agreed to guarantee the financing for the gasification plant” in the financing

agreement, because it was evident that any disputes with the Secretary of Energywere

intended to be brought in federal court, rather than an arbitral forum. Dakota, 964

F.2d at 735–36. In this case, the parties to the TSA are also the parties to the FA, the

agreements were contingent on one another, and there is no showing that any party

required litigation in federal court as opposed to arbitration when entering into the

agreements. 

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Unison contends, nevertheless, that the TSA arbitration clause cannot be

interpreted to cover the present dispute without making the jurisdiction clause in the

FA a nullity. We disagree because the jurisdiction clause answers a different question

than does the arbitration clause. The FA jurisdiction clause reads as follows:

Section 10.8 Submission to Jurisdiction; Service of Process.

(a) Borrower hereby submits to the jurisdiction of courts of the

State of Minnesota in the County of Hennepin and of the

United Statesfor the Western District of Minnesota for any

legal action or proceeding brought against it in connection

with this Agreement and any other Financing Document. 

By execution and delivery of this Agreement, Borrower

hereby irrevocably accepts for itself and in respect of its

property, generally and unconditionally, the jurisdiction of

the aforesaid courts.

5

The TSA arbitration clause permits a party to submit a dispute to binding arbitration,

while the FA jurisdiction clause simply identifies the agreed-upon jurisdiction “for

any legal action or proceeding brought against it in connection with this Agreement

and any other Financing Document.” Notably, the jurisdiction clause does not

address whether, or under what circumstances, a dispute must be litigated and

resolved in court. As we read these two clauses, they are not in conflict: If a party

wants to settle a dispute through arbitration, it may initiate arbitration proceedings

under the TSA arbitration clause; if the parties choose not to arbitrate a dispute under

the FA, or seek to enforce an arbitration decision, then the parties have consented to

the jurisdiction of the state and federal courts in Minnesota for all litigation relating

to that dispute. Had both documents included separate arbitration and jurisdiction

As the district court recognized at the hearing, there is no Western District of 5

Minnesota in the federal system. Further, Hennepin County is not in western

Minnesota.

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clauses, the parties may have negotiated a different contractual agreement. But asthe

documents are written, enforcing the arbitration clause in the TSA in a dispute

alleging violations of the FA does not render the jurisdiction clause in the FA a

nullity.

6

“When the parties have agreed on an arbitration clause that appears to cover

their dispute, it should be upheld.” 3M Co., 542 F.3d at 1199. The arbitration clause

in the TSA is a broad one. And the dispute concerning the FA, at a minimum,

touches on matters subject to the arbitration clause. The TSA arbitration clause

therefore covers the disputes alleged in this case.

III. Conclusion

We reverse the denial of JEDI’s motion to compel arbitration. On remand, the 

district court may decide in the first instance whether it is appropriate at thisjuncture

to dismiss Unison’s complaint orstay the action in federal court pending the outcome

of the arbitration proceedings. See Green v. SuperShuttle Int’l, Inc., 653 F.3d 766,

769–70 (8th Cir. 2011).

SHEPHERD, Circuit Judge, concurring.

I concur in the court’s opinion reversing the denial ofJEDI’s motion to compel

arbitration. I write separately to reiterate my view that section 3 of the Federal

Arbitration Act unambiguously directs a district court to stay an action and does not

give a district court the discretion to dismiss an action. See Green v. SuperShuttle

The parties also disagree about the meaning of TSA ¶ 18.3, the “Conflicting

6

Provisions” section of the TSA, and what effect it has on the application of the FA

jurisdiction clause in this case. Because the TSA arbitration clause and FA

jurisdiction clause do not conflict and can be applied harmoniously, we need not

address this issue.

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Int’l, Inc., 653 F.3d 766, 770-71 (8th Cir. 2011) (Shepherd, J., concurring); see also

9 U.S.C. § 3 (district courts “shall . . . stay the trial of the action until such arbitration

has been had in accordance with the terms of the agreement”). Recognizing,

however, that we are bound by prior panel decisions from our court, I also concur in

the direction that the district court may decide whether it is appropriate to dismiss or

stay the action. 

______________________________

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