Opinion ID: 2966836
Heading Depth: 2
Heading Rank: 4

Heading: The merger clause in Contract II provides:

Text: This agreement supersedes all prior oral or written representations and constitutes the entire understanding between Retailer and Hallmark with respect to Retailer's status as a Hallmark Account and may only be modified by written agreement of Hallmark and Retailer. The district court concluded that the reference to an account in the singular, as opposed to the plural, can only mean that [Contract II] referred to the specific account number that was the subject of the contract [Store II]. Had the parties intended the contract to apply to both stores, the district court observed, they could have used the plural term accounts. It may be true that the use of the singular account further suggests that Contract II was focused on Store II. 3 On the other hand, the _________________________________________________________________ 3 In fact, the very existence of a merger clause claiming that the agreement supersedes all earlier representations and constitutes the entire 7 clause's reference to the Retailer's status as a Hallmark account could have been meant to encompass the retailer's ownership of one or many accounts. Of course, the merger clause could also have been written to refer to the Retailer's status as an owner of Hallmark accounts. Such speculation does not get us very far. Fourth, the district court noted that no one from Hallmark told the Gibsons that Contract II would have anything to do with Store I, and Cara's Notions argues that, partially for this reason, it would be unfair now to hold that a conflict regarding Store I must be arbitrated. Betty Gibson complained in her affidavit that no one from Hallmark went over with her any provisions of the forms that she and her husband signed in order to be considered as a Hallmark retailer in Store II. No one from Hallmark attempted to point out any differences between these forms and the earlier forms they had signed regarding Store I or ever stated that the forms were intended to affect any part of the relationship between the Gibsons and Hallmark regarding the first store. We are unmoved. The Gibsons are sophisticated business people and Cara's Notions, Inc., dealt with Hallmark at arm's length. Both parties to such a commercial contract have a duty to read the contract carefully and are presumed to understand it.4 See Sanger v. Yellow Cab Co., 486 S.W.2d 477, 481 (Mo. 1972) (en banc); Harris v. _________________________________________________________________ understanding between the retailer and Hallmark can be understood as supporting the district court's view that Contract II was not intended to refer to both stores, but only to refer to Store II. After all, neither party believes that Contract II abrogated Contract I, which would be the logical conclusion if Contract II's merger clause were given broad and literal effect. However, the force of this argument is substantially undermined by the fact that Contracts I and II were between different parties. It is perfectly consistent to say that Contract II represents the entire understanding between Hallmark and Cara's Notions and that Contract I represents the entire understanding between Hallmark and the Gibsons. 4 The very last line of Contract II before the signatures read, in all capital letters, THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES (PARA. 10). 8 Bingham, 97 S.E.2d 453, 454 (N.C. 1957).5 A corporation desirous of running multiple businesses ought to consult with an attorney if its president and secretary/treasurer cannot understand the contracts into which it intends to enter. Unsurprisingly, Cara's Notions cites no legal authority for the proposition that a corporation may avoid its contractual obligations if it misunderstood them or did not read them carefully enough.6 The arguments made by Cara's Notions and by the district court to support the judgment that the underlying claim need not be submitted to arbitration suffer from one common flaw: none of them addresses the language of the arbitration clause itself. That language was conspicuously noted and is very broad. The arbitration clause in Contract II applies to [a]ny controversy or claim relating to any aspects of the relationship between Hallmark and Cara's Notions. We will not interpret the phrase any aspects of the relationship to mean only those aspects involving one store. The breadth of the language clearly establishes that the arbitration clause was intended to apply to all conflicts between the parties and not only to conflicts regarding Contract II in particular. Cf. CB Commercial Real Estate Group, Inc. v. Equity Partnerships Corp., 917 S.W.2d 641, 646 (Mo. Ct. App. 1996) (When the language is unambiguous, the intent of the parties is reflected within the language of the contract and the court will determine the parties' intent from the four corners of the document itself.); Walton v. City of Raleigh, 467 S.E.2d 410, 411 (N.C. 1996) (same). Because the parties to Contract II are the litigants, the arbitration clause in Contract II applies to this suit between those parties. _________________________________________________________________ 5 The contracts specify that they are to be interpreted in accordance with Missouri law, where Hallmark Cards, Inc., is incorporated. The stores are located, and Cara's Notions is incorporated, in North Carolina. Because the applicable contract law is the same under either Missouri or North Carolina law, we need not decide which state's law must be applied to this case. 6 Cara's Notions also argues thatHallmark's present effort to creatively utilize the May 18, 1994 Hallmark Account Agreement [Contract II] to avoid the requirement that the 1990 account agreement [Contract I] for the University City store [Store I] can only be modified in writing is barred by the parol evidence rule and that there was no consideration in Contract II to support an application of the arbitration clause to conflicts arising from Store I. Both arguments are meritless. 9 D. Finally, even if the arbitration clause had been ambiguous as to its scope, our decision would be guided by the strong federal policy favoring arbitrability, based on the Arbitration Act and repeatedly recognized by the Supreme Court and this Circuit. In AT&T Technologies, Inc., the Supreme Court explained that presumption favoring arbitrability in the context of a labor dispute: Finally, it has been established that where the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that [a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage. 475 U.S. at 650 (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960)). This policy is not limited to labor contracts. In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), the Supreme Court explained that when determining whether parties have agreed to arbitrate a dispute, a court is to apply the federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act, id. at 626 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)) (internal quotation marks omitted). The Supreme Court explained that: [T]hat body of law counsels that questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration. . . . 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, 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. Id. (quoting Moses H. Cone Mem'l Hosp. , 460 U.S. at 24-25) (omission in original). Thus, as with any other contract, the parties' inten10 tions control, but those intentions are generously construed as to issues of arbitrability. Id.; Summer Rain v. Donning Co./Publishers, Inc., 964 F.2d 1455, 1460 (4th Cir. 1992). These principles direct us to order arbitration here.