Logan & Kanawha Coal Co. v. Detherage Coal Sales, LLC

841 F. Supp. 2d 955, 76 U.C.C. Rep. Serv. 2d (West) 557, 2012 WL 171375, 2012 U.S. Dist. LEXIS 7206
CourtDistrict Court, S.D. West Virginia
DecidedJanuary 20, 2012
DocketCivil Action No. 2:11-cv-00342
StatusPublished
Cited by1 cases

This text of 841 F. Supp. 2d 955 (Logan & Kanawha Coal Co. v. Detherage Coal Sales, LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Logan & Kanawha Coal Co. v. Detherage Coal Sales, LLC, 841 F. Supp. 2d 955, 76 U.C.C. Rep. Serv. 2d (West) 557, 2012 WL 171375, 2012 U.S. Dist. LEXIS 7206 (S.D.W. Va. 2012).

Opinion

MEMORANDUM OPINION & ORDER

JOSEPH R. GOODWIN, Chief Judge.

Pending before the court are the plaintiff Logan & Kanawha Coal Co., LLC’s (“Logan”) Motion to Confirm Arbitration Award [Docket 1] and the defendant Detherage Coal Sales, LLC’s (“Detherage”) Motion to Vacate Arbitration Award [Docket 9]. For the reasons discussed below, the court DENIES the plaintiffs Motion to Confirm Arbitration Award [Docket 1] and GRANTS the defendant’s Motion to Vacate Arbitration Award [Docket 9].

1. Background

A. Facts

Around March 9, 2010, Steve Melton from Logan faxed a purchase order draft to Bill Detherage. (Def.’s Mem. Supp. Mot. Vacate Arbitration Award & Opp’n Pl.’s Mot. Confirm Award [Docket 10], at 2.) The fax included a cover sheet stating that the fax was two pages and the purchase order. (Id.) The purchase order offered to purchase from Detherage “10,-000 tons per month of Alma Seam Coal.” (Id.) Additionally, the purchase order contained the following statement: “ALL TERMS & CONDITIONS ON THE FOLLOWING PAGES ARE INTO AND MADE A PART OF THIS CON[958]*958TRACT.”1 (Id.) However, the fax did not contain any pages other than the cover sheet and the purchase order. (Id.)

Mr. Detherage received the fax from Logan, changed the quantity term on the purchase order from “10,000 clean tons per month to 7,000,” and signed and returned the purchase order to Logan. (Id.) On or around March 15, 2010, Mr. Melton at Logan signed the purchase order and faxed it back to Mr. Detherage. (Id.) On the fax’s cover page was the statement “We have a deal.” The cover page states that the fax only consists of two pages, including the cover page. (Id.)

On May 11, 2010, Logan sent Detherage a letter that stated “[p]lease find enclosed the written agreement setting forth the quantity, price, and other terms under which L & K demands performance.” (Resp. Mot. Vacate Arbitration Award [Docket 14], at 5.) Included with the letter were the purchase order and the Logan & Kanawha Coal Co., LLC Standard Terms & Conditions, which contained an arbitration clause. (Id.) After receiving the letter from Logan, Detherage began delivering coal to Logan. (Id.)

A dispute between the parties arose concerning Detherage’s performance under the contract. (Id. at 5-6; Def.’s Mem. Supp. Mot. Vacate & Opp. Pl.’s Mot. Confirm Award [Docket 10], at 2.) Logan filed an arbitration demand on December 28, 2010, with the American Arbitration Association (“AAA”) asserting that Detherage breached their agreement. (Def.’s Mem. Support Mot. Vacate & Opp. Pl.’s Mot. Confirm Award [Docket 10], at 2.) In response, Detherage’s counsel sent a letter to Logan’s counsel seeking documentation regarding whether Detherage had received the standard terms and conditions as part of the parties’ contract. (Id. at 3.)

Subsequently, Detherage sent a letter to the AAA appointing an arbitrator. Included in the letter was the following statement: “Without consenting to arbitration and without waiving defenses and rights available to Detherage Coal Sales, LLC ... [Detherage] does hereby designate the following individual as its arbitrator....” (Id.) However, Detherage refused to pay the AAA’s arbitration fee or participate in the arbitration panel’s evidentiary hearing. (Id. at 4.) Ultimately, the arbitration panel concluded that under the Uniform Commercial Code (“UCC”), the parties had agreed to arbitrate the dispute and Logan was entitled to an award of $2,706,000. (Resp. Mot. Vacate Arbitration Award [Docket 14-12], at Ex. L.)

B. Procedural History

On May 13, 2011, Logan filed a Motion to Confirm Arbitration Award [Docket 1]. In response, Detherage filed a Motion to Vacate Arbitration Award [Docket 9] and a Response in Opposition to Plaintiffs Motion to Confirm Arbitration Award [Docket 10], The Motions are now ripe for review.

II. Contract Formation and Agreement to Arbitrate Analysis
A. Contract Formation

The parties do not dispute that a valid contract was formed during their exchanges in March 2010. See 1 Patricia F. Fonseca & John R. Fonseca, Williston on Sales § 7:31 (5th ed. 2005) (“[T]he court needs only determine first whether or not a contract has been formed”). Under West Virginia Code § 46-2-204(1), “[a] contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.” W. VaCode § 46-2-204. For a [959]*959valid contract to be formed, the parties must intend to enter into and be bound by the agreement. See 1 Richard A. Lord, Williston on Contracts § 3:2 (4th ed. 2011).

In this case, the parties intended to be bound by their fax exchanges. After receiving the purchase order from Logan, Mr. Detherage altered the quantity term, signed the purchase order, and returned it to Logan. (Def.’s Mem. Supp. Mot. Vacate & Opp’n Pl.’s Mot. Confirm Award [Docket 10], at 2.) Mr. Melton at Logan then signed the purchase order and returned it to Mr. Detherage. On the cover page of this document was the statement ‘We have a deal.” (Id.) After this exchange of documents, Detherage began to deliver coal to Logan. (Resp. Mot. Vacate Arbitration Award [Docket 14], at 5.) Thus, Logan and Detherage intended to be bound by their March 2010 agreement and a valid contract was formed.

B. Contractual Agreement to Arbitrate

The court must next consider what terms are included in the parties’ agreement. See Williston on Sales § 7:31 (“If the contract has been formed, the court must then determine what terms are contained in the contract so that the court may enforce those terms.”). The parties dispute whether their March 2010 agreement includes an agreement to submit disputes to arbitration. Logan asserts that the contract contains an arbitration provision, which would require that the parties arbitrate all disputes. (Mem. Supp. Mot. Confirm Arbitration [Docket 2], at 2.) Detherage argues that it “never agreed to arbitrate” and that it “objected to the arbitration.” (Def.’s Mem. Supp. Mot. Vacate & Opp’n Pl.’s Mot. Confirm Award [Docket 10], at 1.) Detherage also claims that “[i]t is undisputed that the purchase order signed by the parties did not contain an agreement to arbitrate.” (Id. at 2.)

The United States Supreme Court has found that "arbitration 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." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (quoting Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). Even though courts view arbitration agreements favorably, an "underlying agreement between the parties to arbitrate" must exist. Arrants v. Buck, 130 F.3d 636, 640 (4th Cir.1997).

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841 F. Supp. 2d 955, 76 U.C.C. Rep. Serv. 2d (West) 557, 2012 WL 171375, 2012 U.S. Dist. LEXIS 7206, Counsel Stack Legal Research, https://law.counselstack.com/opinion/logan-kanawha-coal-co-v-detherage-coal-sales-llc-wvsd-2012.