The HONORABLE ANN D. MONTGOMERY, United States District Court 1 Judge for the District of Minnesota.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 96-4081

_____________ C & S Acquisitions Corp., * Successor by assignment of CIS * Corporation, * * Appellant, * Appeal from the United States * District Court for the District v. * of Minnesota. * Northwest Aircraft, Inc., a Delaware * corporation, * * Appellee. *

_____________ Submitted: October 23, 1997 Filed: August 13, 1998

_____________ Before McMILLIAN, FLOYD R. GIBSON, and BEAM, Circuit Judges.

_____________ FLOYD R. GIBSON, Circuit Judge. C & S Acquisitions Corp. ("C & S") appeals the district court's grant o f 1 summary judgment to Northwest Aircraft, Inc. ("Northwest") in C & S's action fo r alleged breaches of four aircraft lease agreements. C & S also appeals the districtThe HONORABLE RICHARD H. KYLE, United States District Judge for the 2 District of Minnesota. Althou gh CIS Corporation negotiated the lease agreements with Northwest, 3 C & S later became the lessor as CIS Corporation's successor-in-interest after CI S Corporation went bankrupt during the lease terms and C & S purchased the aircraft out of the bankruptcy. -2- court's order which compelled the parties to arb itrate the three claims pertaining to the

2 condition of the aircrafts' airframes and engines. For the reasons set forth below, we affirm.
I. BACKGROUND

Purs uant to four lease agreements dated July 12, 1988, Northwest leased fou r non-advanced Boeing 727-200 ai rcraft from C & S. Although each of the four leases 3
con cerned a separate aircraft, the lease provisions at issue are essentially identical

. Each lease contained a section 9.23 in which the parties agreed to submit certai n disputes to arbitration. Section 9.23 provides that: Any dispute between [C & S] and [Northwest] regarding the condition of the Airframe or any Engine arising under Section 8 or 9 hereof shall be refer red to and determined by the manufacturer of (respectively) th e Airframe or Engine. Appellant's A

pp. at 111. Each lease also contained a section 14 entitled "Remedies." Section 14(e) stated that:

To the extent permitted by Applicable Law, [Northwest] hereby waives any rights no w or hereafter conferred by statute or otherwise which may require [C & S], otherwis e than in accordance with the provisions of this Section 14, to sell , lease or otherwise use the Airframe or any Engine inSpecifically, in Count 1, citing section 9.18 of the leases, C & S alleged tha t 4 Northwest failed to return certain manuals and technical records concerning th e aircrafts' engines and airframes. In Count II, citing section 9.2, C & S alleged that the condition of one retur

ned engine did not meet the required return standards. In Count III, citing sections 8.7, 8. 11, and 9.4, C & S alleged that Northwest failed to make the necessary modifications and repairs to the aircraft and their engines. -3- mitigation of [C & S's] damages or which may otherwise limit or modify any of [C & S's] rights or remedies under this Section 14

. Id. at 125 (emphasis added). Finally, the leases contained a section 17.1 entitle d "Renewal Option" which provided that:

(a) [Northwest] shall have the right, subject to the pro visions set forth herein, to extend this Lease up to a maximum of three years in one or mo re successive periods of not less than one year and not more tha n thr ee years (each such period being hereafter referred to as a "Renewa l Term"), the first Renewal Term commencing at the en d of the Basic Term and each of the following Renewal Terms (if any) commencing at the end of the immediately preceding Renewal Term. . . . The rental payabl e du ring any Renewal Term shall be the lesser of the Fair Market Renta l Value for the Aircraft or $93,500 per month. . . . (b) [Northwest] sh all not renew any lease of a 727-200 aircraft so that the term of such lease would be extended into the period of time which wo uld be covered by a Renewal Term hereunder without firs t providing written not

ice thereof to [C & S] and negotiating with [C & S] in goo d faith with respect to [Northwest] electing to extend this Leas e pursuant to Section 17.1.
Id. at 133-34 (emphasis added).
After the leases expired, Northwest returned the four aircraft to C & S. Upon inspecting the aircraft, C & S commenced this action against Northwest. The first three counts alleged deficiencies in the condition of the airframe s and engines. In Count IV, 4In the arbitration agreements, the p arties selected Boeing Commercial Airplane 5 Company to arbitrate disputes regarding the condition of the aircrafts' airframes an d Pratt & Whitney Aircraft to arbitrate disputes over the condition of the aircrafts ' engines. -4- C & S soug ht to enforce section 17.1(b). Section 17.1(b) allegedly prohibite d Northwest

from renewing "any leases of Boeing 727-200 aircraft which it had unde r lease from other [l]essors which would extend the terms of those leases into a period of ti me which would be covered by a Renewal Term under any of the [l]eases" with C & S wit hout first providing C & S with written notice and negotiating in good faith with C & S for the renewal of C & S's four aircraft leases. Id. at 9- 10. C & S contends that Northwest extended leases on other Boeing 727-200 aircraft during the renewa l terms of its leases and deprived C & S of its opportunit y to negotiate in good faith with Northwest to obtain the benefit of the lease renewals. Invoking the arbitration provisions contained in the four leases, Northwes t demandedthat C & S arbitrate Counts I, II and III. After C & S refused to arbitrate, the distr ict court, pursuant to the Federal Arbitration Act, 9 U.S.C. § § 1-16 (1994) , granted Northwest's moti on to compel binding arbitration of those counts, finding that Counts I-III fell within the scope of the arbitr ation agreement contained in section 9.23 of the leases. Because the arbitrat ors named in the arbitration agreements declined to 5 preside over the arb itration and the parties failed to agree on a replacement arbitrator, the distric t court appointed the Honorable Robert E. Bowen, a retired judge of th e Henn epin County District Court, to serve as arbitrator. In issuing his decision o n Counts I-III, Judge Bowen did not award C & S any recovery on these claims.
Thereafter, Northwest moved the district court for confirmation of t he arbitrator's award on Counts I-III and for summary j udgment on Count IV. On October 23, 1996, the district court granted both motions. Regarding Counts I-III, the district court stated that C & S, who filed no opposition to Northwest's motion to confirm the arbitrator's-5-

award, failed to demonstrate any reason why the court should not enter th e confirmat ionorder. In addition, the district court found that Count IV concerned a lease provision which merely required Northwest to negotiate in good faith in the future and was unenforceable as a matter of Minnesota law.
On Novem ber 22, 1996, C & S filed its Notice of Appeal "from the summar y judgment entere d on October 24, 1996." Appellee's Add. at 7. With its Notice o f Ap peal, C & S also filed its Appeal Information Form which stated that the issue o n appea l concerned: "[w]hether a contractual provision to negotiate in good faith upon notice of a subsequent action is enforceable under Minnesota law regardless of th e actions of the parties after the agreement is s igned." Appellee's Mot. to Dismiss at Ex. F. On December 2, 1996, after the thirty days all owed for filing a notice of appeal had elapsed, C & S filed a Statement of Issues on Appeal, pursuant to Fed. R. App. P

. 10(b)(3), which listed both the summary judgment of Count IV and the de cision to refer Counts I-III to an arbitrator as issues raised in its appeal. Subsequently, Northwes t mov ed this Court to dismiss C & S's appeal, to the extent that C & S purported t o include the district court's decision to compel arbitration of Counts I-III, based on lack of appellate jurisdiction. We decided to consider North west's motion to dismiss as we consider the case on the merits.
II. DISCUSSION
A. The Decision to Compel Arbitration of Counts I-III

We first must address whether this court has appellate jurisdiction to consider t he propriety of the district court's order compelling arbitration of Counts I-III. In its motio n to dismiss, Northwest argues that neither this order nor this issue was timel y appealed because C & S did not specify the district court's order confirming th e arbitration award in its N otice of Appeal or in its Appeal Information Form. The time period for filing an appeal expired on November 25, 1996, and, by tha t date, C & S had-6-

not filed any documents explicitly or implicitly broadening the subject matter of it s appe al. C & S counters that it timely appealed from the district court's October 24 , 1996 Order which represents a single order comprising bot h the summary judgment and the confirmation order. C &S submits that it did not intend for its Appeal Information Form to function as its Fed. R. App. P. 10(b)(3) Statement of Issu es on Appeal and that, by filing its Statement of Issues on Appeal o n December 2, 1996, it met its requirement to articulate the issues appealed.

Federal Rule of Appellate Proce dure 3(c) requires appellants to provide a notice of appeal which "must designate the judgment, order, or part thereof appealed from." Rule 3(c) constitutes "more than a mere technicality," and the failure to comply with Ru le 3(c) "may create a jurisdictional bar to an appeal." Elca Enter. v. Sisco Equip

. Rental & Sale s , 53 F.3d 186, 189 (8th Cir. 1995). Although we generally constru e notices of appeal liberally, "an intent to appeal the judgment in question must b e apparent and there must be no prejudice to the adverse party." Berdella v. Delo , 972 F.2d 204, 207 (8th Cir. 1992).

We co nclude that C & S's intent to appeal the district court's order compellin g arbitratio n was not apparent from its Notice of Appeal, Appeal Information Form, nor the procedural history of th e case. C & S's Notice of Appeal specifically provides that C & S appeals "from the summary judgment entered on Oct ober 24, 1996." Appellee's Mot. to D ismiss at Ex. E (emphasis added). The summary judgment granted t o Northwest

concerned only Count IV. The Notice of Appeal failed to mention th e dis trict court's prior decision to refer Counts I, II, and III to binding arbitration

. Similarly, C & S's Appeal Information Form listed only one issue for appeal: "[w]hether
a con tractual provision to negotiate in good faith . . . is enforceable under Minnesot a law." Id. at E x. F. Although the appeal of a final order permits review of issue s determined in prior orders when proper notice is provided, this principle does not apply in this case because C & S's appeal of the October 24, 1996 Order failed to give-7-

sufficient notice of its inte nt to appeal the separate, distinct issue regarding the district court's confirmation of the earlier arbitrati on award. See Berdella , 972 F.2d at 208 n.6.
The procedural history of the case also shows that C & S's intent to appeal the distric t court's confirmation order was not apparent. The district court compelle d arbitration of Counts I-III over a year before granting summary judgment on Count IV. After the arbitrator decided against C & S o n Counts I-III, C & S did not challenge this decision. Later, when Northwest moved the district court to confirm the arbitrator' s award, C & S d id not oppose the motion. Instead, C & S first provided notice of it s intent to appeal the co nfirmation order on December 2, 1996 in its Statement of Issues on Appeal, after the time to file the appeal had expired.
We conclude that C & S's omissio n of any timely reference to the district court's confirmation order in its Notice of Appeal or Appeal Informati on Form constitutes more than a mere techni cal deficiency. Because C & S has failed to comply with Rule 3(c),
we lack jurisdiction to consider its arguments regarding the district court's decision to comp el arbitration of Counts I-III. See id. at 208. Therefore, we dismiss C & S' s appeal o f the district court's decision to compel arbitration of Counts I-III for lack o f appellate jurisdiction.
B. The Grant of Summary Judgment on Count IV
In C ount IV, C & S seeks to enforce lease section 17.1(b), which provides that Northwest would "not renew any lease of a 727-200 aircraft . . . without first providing written notice . . . and negotiating with [C & S] in good f aith." Appellant's App. at 134. C & S challenges the district court's grant of summa ry judgment to Northwest on Count IV. The district court determined that section 17.1(b) constitutes an agreement toBoth p arties agree that Minnesota law governs the leases, as stipulated i n 6 section 22.5 of each lease: "[t]his lease . . . shall in all respects be governed by, an d construed in accordance with, the laws of the State of Minnesota." Appellant's App. at 141. -8- negotiate and is unenforceable as a matter of Minnesota law. See id. at 203. Summary 6 judgment is appropriate when the evidence "show[s] that there is no genuine issue as to a ny material fact and that the moving party is entitled to a judgment as a matter o f law." Fed. R. Civ. P. 56(c). We re view the district court's grant of summary judgment de novo , construing the record in the light most favorable to C & S. See Barge v

. Anheuser-Busch, Inc. , 87 F.3d 256, 258 (8th Cir. 1996).

Fo r reversal, C & S argues that certain factual events should remove this cas e from the general principle that an ag reement to negotiate in the future is unenforceable. Namely, C & S places significance on the fact that Northwest drafted the leas e prov ision which Northwest now disclaims as unenforceable. C & S also notes tha t Northwe st, through its President, acknowledged the existence of its obligation t o negotiate with C & S regarding future lease renewals. Finally, C & S maintains tha t sufficient evidence exists for a jury to determine an appropriate damage award. We find C & S's arguments unpersuasive.
Under Minnesota law, agreements to negotiate in good faith in the future ar e unenforceable as a matter of law. See Mo hrenweiser v. Blomer , 573 N.W.2d 704, 706 (Minn. Ct. App. 1998) ("In Minnesota, . . . an agreement to negotiate in good faith in the future is not enforceable because it does not constitute the parties' c omplete and final agreement.") See also Consolidated Grain & Barge Co. v. Madgett , 928 F.2d 816, 817- 18 (8th Cir. 1991) (Under Minnesota law, "an ag reement to negotiate is unenforceable" be cause such agreements generally do not provide a basis for determining whether a breach has occurred or for providing an appropriate remedy for a breach.)-9-

Here, se ction 17.1(b) represents an agreement to negotiate in good faith in th e future for l ease renewals. See id. C & S's arguments miss the mark by assuming a n ob ligationto extend the leases and focusing on the appropriate amount of damage s when, in fact, no agreement to extend the leases existed. Rather, whether the partie s would ultimately ag ree to a renewal of any of the leases and on what terms constitutes
mere spe culation. Accordingly, we affirm the district court's grant of summary judgment to Northwest on Count IV because section 17.1(b) constitutes an agreement to negotiate in the future and is, thus, unenforceable as a matter of Minnesota law. See id. Although this case involves two sophisticated parties, we nonetheless register our disapproval of Northw est's insertion of such an unenforceable provision into the lease.

III. CONCLUSION

For the foregoing reasons, we dismiss C & S's appeal of the district court' s decision to compel arbitration of Counts I-III for lack of appellate jurisdiction and affirm the district court's grant of summary judgment to Northwest on Count IV.

A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.