Court Opinion

ID: 619045
Source: CourtListenerOpinion
Date Created: 2011-12-15 22:17:49+00
Date Added: 2024-06-11T17:50:47.267941
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              DEC 15 2011

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

FADAL MACHINING CENTERS, LLC,                    No. 10-55719

              Plaintiff-Appellant,               D.C. No. 2:09-cv-06478-PA-FFM

  v.
                                                 MEMORANDUM *
COMPUMACHINE, INC.,

              Defendant-Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     Percy Anderson, District Judge, Presiding

                          Submitted December 7, 2011 **
                              Pasadena, California

Before: PREGERSON and PAEZ, Circuit Judges, and CONLON, District Judge.***

       Fadal Machining Centers, LLC (“Fadal”), a manufacturer of machines and

machine-related parts, sued Compumachine, one of its exclusive distributors, for

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

       ***
            The Honorable Suzanne B. Conlon, United States District Judge for
the Northern District of Illinois, sitting by designation.
breach of contract and the duty of good faith. The case was filed in the United

States District Court for the Central District of California pursuant to a forum

selection provision in the parties’ distributorship agreement. Fadal’s amended

complaint established diversity jurisdiction under 28 U.S.C. § 1332.1 Attached to

the complaint were a copy of the distributorship agreement and fifteen allegedly

unpaid invoices that each referred to Fadal’s website for the terms and conditions

of sale. The terms and conditions posted on Fadal’s website were referenced in the

complaint. The website’s authenticity was undisputed.

      Fadal drafted the distributorship agreement and all related documents. The

agreement provided that Fadal would unilaterally establish “the terms of sale . . .

from time to time.” The terms and conditions on Fadal’s website provided that

within six months after any act or omission in controversy, claims or disputes

“arising out of or related to this agreement, or the breach thereof” shall exclusively

be submitted to arbitration in Los Angeles, California under the Commercial

Arbitration Rules of the American Arbitration Association (“AAA”). The district

court dismissed this case without prejudice under Fed. R. Civ. P. 12(b)(6) because

Fadal’s own terms and conditions of sale for each invoice required submission of

      1
       The initial complaint was dismissed because Fadal, a limited liability
company, failed to identify the citizenship of all its members or owners. Johnson
v. Columbia Properties Anchorage LP, 437 F.3d 894, 899 (9th Cir. 2006).

                                           2                                    10-55719
non-payment claims to arbitration. The court relied on the broad language of the

arbitration clause as clearly establishing an agreement to submit all disputes,

including the question of arbitrability, to an arbitrator.

       Fadal timely appealed. We have jurisdiction under 28 U.S.C. § 1291. We

review the district court’s determination of the validity and scope of an arbitration

clause de novo. Chalk v. T-Mobile USA, Inc., 560 F.3d 1087, 1092 (9th Cir. 2009).

California law provides the substantive contract law of decision. See First Options

of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Any ambiguity in contract terms

is construed against the party that drafted the agreement. Cal. Civ. Code § 1654.

The language of an arbitration agreement establishes whether the determination of

arbitrability is for the court or delegated to an arbitrator. First Options, 514 U.S. at

943.

       The district court did not err in concluding an arbitration agreement existed

between the parties. See Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772,

2778 n.2 (2010) (limiting the initial question to “whether any agreement between

the parties ‘was ever concluded’”). Each invoice attached to the complaint referred

to the terms and conditions of sale on Fadal’s website. Fadal’s own terms and

conditions included a clear and comprehensive mandatory arbitration clause. The

terms and conditions were entitled “CONTRACT” in large bold type, and stated

                                            3                                     10-55719
that its terms prevailed over any other agreement. The distributorship agreement

attached to the complaint clearly expressed the parties’ intent that Compumachine

would be bound by the terms and conditions Fadal set for each sale of machinery

and parts. See DVD Copy Control Ass’n v. Kaleidescape, Inc., 97 Cal. Rptr. 3d

856, 870 (Cal. Ct. App. 2009) (unambiguous intent of parties was that defendant

“would comply with the specifications that [plaintiff] provided after the agreement

was signed”). The distributorship agreement, invoices, and terms and conditions

of sale drafted by Fadal support the district court’s conclusion that the parties

agreed to the terms and conditions posted on Fadal’s website.

      Nor did the district court err in concluding that the arbitration clause clearly

and unmistakably delegated the question of arbitrability to the arbitrator. See First

Options, 514 U.S. at 944–45. Fadal argues that the district court placed too much

emphasis on the language “arising out of or relating to” in the arbitration clause.

However, the language of the arbitration clause shows a clear and unmistakable

intent to delegate questions of scope to the arbitrator. See id. at 944. The clause

incorporates the AAA’s Commercial Arbitration Rules, which provide that “[t]he

arbitrator shall have the power to rule on his or her own jurisdiction, including any

objections with respect to the existence, scope or validity of the arbitration

agreement.” AAA Commercial Arbitration Rules, R-7(a).

                                           4                                        10-55719
      The district court did not err by declining to consider extrinsic evidence.

California law requires courts to accept provisionally extrinsic evidence that

purports to explain the meaning of contract terms. See Pacific Gas & Elec. Co. v.

G.W. Thomas Drayage & Rigging Co., 442 P.2d 641 (Cal. 1968). However, the

extrinsic evidence Fadal submitted related to the interpretation of the agreement’s

scope—a question for the arbitrator—and not to the existence of the arbitration

agreement.

      Fadal’s remaining arguments are issues for arbitration.

      AFFIRMED.

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