Court Opinion

ID: 166415
Source: CourtListenerOpinion
Date Created: 2010-08-14 09:13:00+00
Date Added: 2024-06-11T17:24:50.828558
License: Public Domain

F I L E D
                                                                    United States Court of Appeals
                                                                            Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                        September 12, 2005
                                  TENTH CIRCUIT
                                                                        PATRICK FISHER
                                                                                  Clerk

 SUMMIT CONTRACTORS, INC.,

                Plaintiff - Appellee,                     No. 04-6276
           v.                                           (W.D. Oklahoma)
 LEGACY CORNER, L.L.C. and                          (D.C. No. 04-CV-580-M)
 MIVON, L.L.C.,

                Defendants - Appellants.

                             ORDER AND JUDGMENT *

Before HARTZ, McKAY, and PORFILIO, Circuit Judges.

       After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal.    See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

       This appeal arises from a contract dispute between Summit Contractors,

Inc. (Summit) and Legacy Corner, L.L.C. (Legacy). Mivon, L.L.C. (Mivon) was

       This order and judgment is not binding precedent, except under the
       *

doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
not a party to the contract between Summit and Legacy, but Summit seeks

collection of an account payable by Mivon, which was pledged to Summit as

security. Defendants Legacy and Mivon appeal the district court’s denial of their

combined motion to stay and to compel arbitration. We have jurisdiction under

the Federal Arbitration Act (FAA), 9 U.S.C. § 16(a)(1)(A) & (B), and affirm.

I.    BACKGROUND

      On March 31, 2003, Legacy and Summit entered into a “cost-plus”

construction contract (Construction Contract). Under the terms of the

Construction Contract, Summit agreed to build an apartment complex and Legacy

agreed to pay construction costs up to $15,602,614. The Construction Contract

incorporated by reference several supplementary documents, including American

Institute of Architects (AIA) Document A201. Document A201 provides for

mediation and arbitration of “[a]ny Claim arising out of or related to the

Contract.” Aplt. App. at 33, ¶ 4.5.1 & 34, ¶4.6.1. The Construction Contract also

includes a merger clause, stating, “This Contract constitutes the entire agreement

between the parties, and any previously existing contract concerning the work

contemplated by the Contract Documents is hereby revoked.” Id. at 18, Art. 1A.

      Ordinarily, a cost-plus contract would provide a percentage profit for the

contractor, payable as construction progressed. When they entered into the

Construction Contract on March 31, 2003, however, Legacy and Summit also

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entered into an Identity of Interest Agreement (Agreement), in which Summit

agreed to accept a fixed fee in lieu of a percentage profit. The relevant clause

from the Agreement provides for monthly payments of the fixed fee “as

construction progresses,” with the amount of the monthly payment determined by

reference to “the amount of the draw paid under the Project Loan for the month.”

Agreement, Aplt. App. at 36. The Agreement “authorizes [Legacy] to withhold

from the final payment to [Summit] a sum not to exceed 150% of the estimate of

the cost of any incomplete items shown on the HUD Final Inspection Report . . .

.” Id. at 37, ¶ 3(b). It also includes a “Choice of Forum” clause, which provides:

“Any suit, action or proceeding with respect to this Agreement shall be brought in

a court located in Oklahoma County, Oklahoma.” Id. at 38, ¶ 6(c). And, like the

Construction Contract, the Agreement has a merger clause, which states: “This

Agreement embodies the entire agreement between the parties and supersede[s]

all prior agreements and understandings, whether written or oral, implied or

express, if any, relating to the subject matter herein.” Id. at 39, ¶ 6(e).

      On May 10, 2004, Summit filed a breach-of-contract claim in the United

States District Court for the Western District of Oklahoma. The claim alleges

that “Legacy has breached the [Agreement] by failing to make payments due to

Summit in excess of $125,000.00[,] . . . [and that] Legacy has repudiated its

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obligation for future payments that will be due under the Agreement.” Compl.,

Aplt. App. at 5, ¶¶ 8, 9.

      On May 25, 2004, Legacy initiated mediation proceedings with the

American Arbitration Association, claiming Summit “failed to perform concrete

work in conformance with the contract documents and is guilty of inexcusable

delay on the project.” Request for Mediation, Aplt. App. at 44. According to

Legacy, this mediation is “a precondition to arbitration and [is] in accordance

with the construction contract documents[.]” Aplt. Br. at 6.

      Relying on the FAA, 9 U.S.C. §§ 1-15, the Oklahoma Uniform Arbitration

Act, Okla. Stat. tit. 15, §§ 801 et seq., and the arbitration clause of AIA

Document A201, Defendants filed a motion to stay and to compel arbitration.

The district court denied both forms of relief and Defendants appeal.

II.   DISCUSSION

      A.     Motion to Compel Arbitration

      “We review de novo trial court denials of motions to compel arbitration.

Motions to compel arbitration are governed by [the FAA,] 9 U.S.C. §4 . . . .”

Spahr v. Secco, 330 F.3d 1266, 1269 (10th Cir. 2003) (internal citation omitted). 1

      1
       9 U.S.C. § 4 provides in relevant part:
      The court shall hear the parties, and upon being satisfied that the
      making of the agreement for arbitration or the failure to comply
      therewith is not in issue, the court shall make an order directing the
                                                                       (continued...)

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Although federal policy under the FAA strongly favors arbitration for dispute

resolution, “when the dispute is whether there is a valid and enforceable

arbitration agreement in the first place, the presumption of arbitrability falls

away.” Riley Mfg. Co. v. Anchor Glass Container Corp., 157 F.3d 775, 779 (10th

Cir. 1998). An agreement to arbitrate a particular dispute “is a matter of contract

and a party cannot be required to submit to arbitration any dispute which [it] has

not agreed so to submit.” Spahr, 330 F.3d at 1269 (internal quotation marks

omitted). “Although the parties’ intent controls regarding whether they agreed to

arbitrate a particular dispute, determining their intent is a question of law for the

court to decide.” Armijo v. Prudential Ins. Co. of Am., 72 F.3d 793, 797 (10th

Cir. 1995).

      In determining whether the parties agreed to arbitrate a particular issue, we

“generally . . . should apply ordinary state-law principles that govern the

formation of contracts.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,

944 (1995); Riley Mfg. Co., 157 F.3d at 780 n.5 (same); 1 Domke on Commercial

Arbitration § 8:4 (2005) (“A federal court should look to the state law that

normally governs the formation of contracts to determine whether a valid

      1
       (...continued)
      parties to proceed to arbitration in accordance with the terms of the
      agreement. . . . If the making of the arbitration agreement or the
      failure, neglect, or refusal to perform the same be in issue, the court
      shall proceed summarily to the trial thereof.

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agreement to arbitrate arose between the parties.”). Under Oklahoma law, which,

the parties agree, governs here, “[t]he cardinal rule in contract interpretation is to

determine and to give effect to the contractual intent of the parties.” Sunrizon

Homes, Inc. v. Am. Guar. Inv. Corp., 782 P.2d 103, 107 (Okla. 1988); Okla. Stat.

Ann. tit. 15, § 152 (“A contract must be so interpreted as to give effect to the

mutual intention of the parties, as it existed at the time of contracting, so far as

the same is ascertainable and lawful.”). “Where the contract is in writing and the

language is clear and unambiguous, such intent must be determined from the

words used.” Humphreys v. Amerada Hess Corp., 487 F.2d 800, 802 (10th Cir.

1973) (citing Okla. Stat. Ann. tit. 15, §§ 152-54); Okla. Stat. Ann. tit. 15, § 155

(“When a contract is reduced to writing, the intention of the parties is to be

ascertained from the writing alone, if possible, subject, however, to the other

provisions of this article.”) “It is the general rule in Oklahoma that two or more

writings between the same parties executed substantially at the same time and

relating to the same subject-matter are to be considered together in arriving at the

intent of the parties, and it is not essential that the instruments refer in express

terms to each other if in point of fact they are parts of a single transaction.”

Morgan v. Griffith Realty Co., 192 F.2d 597, 599 (10th Cir. 1951); see Okla. Stat.

Ann. tit. 15, § 158 (“Several contracts relating to the same matters, between the

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same parties, and made as parts of substantially one transaction, are to be taken

together.”); see also F.D.I.C. v. Hennessee, 966 F.2d 534, 537 (10th Cir. 1992).

      Defendants contend that (1) the district court erred in not construing the

Construction Contract and the Agreement together and (2) the district court erred

in concluding that the arbitration clause incorporated into the Construction

Contract did not govern disputes arising from the Agreement. We need not reach

Defendants’ first issue, however, because, as we explain below, even when the

two documents are considered together, their clear and unambiguous language

indicates that the parties did not intend to arbitrate issues arising under the

Agreement.

      To begin with, both documents contain merger clauses. Typically, merger

clauses are strong evidence that the parties did not intend to include terms not

expressly incorporated into the document containing the clause. See Rosenblum v.

Travelbyus.com Ltd., 299 F.3d 657, 665 (7th Cir. 2002) (“[T]he presence of a

merger clause is strong evidence that the parties intended the writing to be the

complete and exclusive agreement between them” (internal quotation marks

omitted)); 11 Richard A. Lord, Williston on Contracts § 33:21 (4th ed. 2004) (“A

merger clause tends, of course, to establish the intent of the parties that the

writing shall be an integration of their agreement.”). Even more telling is the

failure of the Construction Contract to incorporate or even mention the Identity of

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Interest Agreement. The Construction Contract provides: “The Contract between

the parties is set forth in the ‘Contract Documents,’ which consist of this

Agreement, the Drawings and Specifications, which include the current edition of

AIA Document A201, ‘General Conditions of the Contract for Construction,’ and

Form HUD-2554, ‘Supplementary Conditions of the Contract for Construction.’”

Construction Contract, Aplt. App. at 18, Art. 1A. The Identity of Interest

Agreement is conspicuously missing from this list. Similarly, although the

Agreement acknowledges the Construction Contract, it does not expressly

incorporate its terms or those of AIA Document A 201, the document containing

the arbitration clause. Finally, the Agreement’s choice-of-forum clause is

compelling evidence against an intent to arbitrate breaches of the Agreement. It

states that “[a]ny suit, action or proceeding with respect to this Agreement shall

be brought in a court located in Oklahoma County, Oklahoma.” Agreement, Aplt.

App. at 38, ¶ 6(c) (emphasis added). Given the express language of the

documents, we hold that the parties did not intend to arbitrate disputes arising

under the Agreement. Thus, we agree with the district court that Summit’s

breach-of-contract claim alleging Legacy’s failure to pay its monthly fee under

the Agreement is not arbitrable. See Spahr, 330 F.3d at 1269 (“[A] party cannot

be required to submit to arbitration any dispute which [it] has not agreed so to

submit.”)

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       B.     Denial of Motion to Stay

       “The decision whether to stay the litigation of the non-arbitrable issues is a

matter largely within the district court’s discretion to control its docket.” Summer

Rain v. Donning Co./Publishers, Inc., 964 F.2d 1455, 1461 (4th Cir. 1992); see

also Moses H. Cone Memorial Hosp. v. Mercury Constr. Co., 460 U.S. 1, 20 n.23

(1983) (“In some cases, of course, it may be advisable to stay litigation among the

nonarbitrating parties pending the outcome of the arbitration. That decision is

one left to the district court . . . as a matter of its discretion to control its

docket.”). Defendants argue that the district court erred in refusing to stay

Summit’s action on the Agreement pending arbitration because the performance

issues are critical to determining whether Summit earned its fee under the

Agreement. Summit counters that Legacy’s obligation to pay the monthly fee is

not conditioned upon Summit’s performance under the Construction Contract but

“upon Legacy’s receipt of the monthly draw [under the Project Loan.]” Aplee.

Br. at 15. Summit alleges that “because the draw is not issued to Legacy until . . .

approval by the Project Architect, the question of adequacy of performance is

already resolved.” Id. at 16 n.4.

       We do not reach the merits of this issue, however, because Defendants have

not provided an adequate record. “A party who seeks to reverse the decision of a

district court must provide an adequate record for this court to determine that

                                            -9-
error was committed.” Travelers Indemnity Co. v. Accurate Autobody, Inc., 340

F.3d 1118, 1119 (10th Cir. 2003). We may decline to consider an issue “[w]hen

the party asserting an issue fails to provide a record sufficient for considering that

issue[.]” 10th Cir. R. 10.3(B). Moreover, under Tenth Circuit Rule 30.1(A)(1)

“[t]he appellant must file an appendix sufficient for considering and deciding the

issues on appeal. The requirements of Rule 10.3 for the contents of a record on

appeal apply to appellant’s appendix.”

      Nothing in the Agreement indicates that the monthly fee owed by Legacy to

Summit is conditioned upon Summit’s performance under the Construction

Contract. The amount of the monthly fee is instead dependent on the amount of

the monthly draw “under the Project Loan.” Agreement, Aplt. App. at 36. The

pertinent language of the Agreement states:

      [Legacy] shall pay [Summit] a fee in the amount of $467,853.00.
      The fee will be payable monthly as construction progresses, starting
      on the 10th day following the date on which the third monthly draw
      is paid to [Summit] under the Project loan and continuing monthly
      thereafter (i.e. on the 10th day following each subsequent payment
      date under the Project Loan) until the fee is paid in full. The amount
      of each monthly payment will be a percentage of the full fee amount.
      The percentage for each monthly payment shall be calculated by
      taking the amount of the draw paid under the Project Loan for that
      month (the “Advance”), and dividing the Advance by $15,602.614.
      The resulting percentage will then be applied to the $467,853 fee
      amount, and an amount equal to 100% of that amount will be owed to
      [Summit] that month.

Id. At ¶ 1 (emphasis added).

                                         -10-
       Despite the evident importance of determining whether the monthly draw

paid under the Project Loan is conditioned on performance of the Construction

Contract, Defendants have included nothing in their appendix to enlighten the

court on the terms or conditions of the Project Loan. Thus, we have no way of

knowing whether Summit’s alleged poor performance of concrete work or

inexcusable delay are central to the resolution of Summit’s breach-of-contract

claim. The failure of Defendants to include the Project Loan in the appendix

“deprives them of the right to challenge the judgment of the district court.”

Travelers Indemnity Co., 340 F.3d at 1121.

III.   CONCLUSION

       For the foregoing reasons, we AFFIRM the district court’s order denying

Defendants’ motions to stay and to compel arbitration.

                                       ENTERED FOR THE COURT

                                       Harris L Hartz
                                       Circuit Judge

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