Whitesell Precision Components, Inc. v. Autoform Tool & Manufacturing, LLC (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: June 25, 2019
• Docket: 18A-PL-2462
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), FILED this Memorandum Decision shall not be regarded as precedent or cited before any Jun 25 2019, 8:59 am

court except for the purpose of establishing CLERK Indiana Supreme Court the defense of res judicata, collateral Court of Appeals and Tax Court estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE Andrew W. Hull A. Richard M. Blaiklock Michael R. Limrick Charles R. Whybrew Evan D. Carr Lewis Wagner, LLP Hoover Hull Turner LLP Indianapolis, Indiana Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Whitesell Precision June 25, 2019 Components, Inc., Court of Appeals Case No. Appellant-Defendant, 18A-PL-2462 Appeal from the Marion Superior v. Court The Honorable Heather Welch, Autoform Tool & Judge Manufacturing, LLC, Trial Court Cause No. Appellee-Plaintiff 49D01-1610-PL-36015

Crone, Judge.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 1 of 12 Case Summary [1] Whitesell Precision Components, Inc. (“Whitesell”), brings this interlocutory

appeal from the trial court’s denial of its motion to compel arbitration of a

dispute between Whitesell and Autoform Tool & Manufacturing, LLC

(“Autoform”). The sole issue presented for our review is whether the trial court

erred when it denied Whitesell’s motion to compel arbitration. Finding no

error, we affirm.

Facts and Procedural History [2] Whitesell is in the business of manufacturing and distributing engineered,

specialty, and standard components and parts used in various industries,

including in the assembly and manufacture of automobiles. Autoform is an

auto parts supplier that produces fuel rail assemblies that are used in six-

cylinder General Motors vehicles. Autoform sells its fuel rail assemblies to

Hitachi Automotive Systems, Americas, Inc. (“Hitachi”). There are two fuel

rail assemblies in each vehicle, with three injector cups per assembly. Hitachi

provides Autoform the design specifications for the injector cups to be used in

its fuel rail assemblies.

[3] In October 2013, Hitachi instructed Autoform to contact Whitesell to source

injector cups for use in the fuel rail assemblies. On October 24, 2013, Autoform

contacted Whitesell via email and made a “Request for Quotation” (“RFQ”)

for the manufacture of the injector cups over the course of a five-model-year

production run. Appellant’s App. Vol. 3. at 22. Whitesell responded to the

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 2 of 12 RFQ with a document entitled “Customer Quotation” (“CQ1”) that included a

price per injector cup, minimum fabrication quantity, and shipping and

payment terms. Id. at 25. CQ1 stated, “This Quotation Incorporates and is

subject to the General Terms and Conditions of Seller as printed on the reverse

side or next page ….” Id. The next page of CQ1 set forth the following

relevant general terms and conditions:

1. OFFER AND ACCEPTANCE: These terms and conditions govern all sales of product and services to Buyer. Buyer has read, understands, accepts, and agrees to these terms and conditions. Seller rejects, and objects to, all terms and conditions of Buyer, and hereby notifies Buyer that Seller considers any term or condition of Buyer an unacceptable material alteration of these terms and conditions. If Buyer does not accept these terms and conditions, Buyer will notify Seller by promptly returning any shipments, and failure to do so shall constitute Buyer’s unconditional acceptance of these terms and conditions …. Buyer shall not submit additional or different terms and conditions, and any such additional or different terms and conditions of Buyer shall be deemed objectionable to Seller without further notice from Seller and shall not form a part of any contract between the parties…. To the extent these terms and conditions are determined to constitute an acceptance of any offer of Buyer, such acceptance is expressly conditioned upon Buyer’s assent to all of these terms and conditions only.

….

19. GOVERNING LAW; JURISDICTION: This contract is governed by the laws of ALABAMA, excluding the provision of the United Nations Convention on Contracts for the International Sale of Goods and any conflict of law provisions that would require application of another choice of law…. If requested by Seller following the assertion of any claim related to quality Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 3 of 12 of any product or any warranty, such claim shall be submitted to binding arbitration before three arbitrators…. Such arbitration shall occur in Birmingham, Alabama and be limited to such quality or warranty claim.

21. ENTIRE AGREEMENT: …. No terms or conditions other than those stated above and no engagement or understanding, oral or written, in any way purporting to modify these terms and conditions shall be binding on Seller unless hereafter made in writing and physically signed by its authorized representative.

Id. at 26 (emphasis added).

[4] On November 6, 2013, Autoform sent an email to Whitesell containing a

purchase order. The purchase order called for the delivery of 300 injector cups

as a sample for the “PPAP” (product part approval process), followed by

delivery of 8700 injector cups after PPAP approval. Id. at 28-31. The PPAP

purchase order also included design specifications and delivery terms.

[5] In late January 2014, Hitachi asked Autoform to provide new pricing to

account for a lower volume of fuel rail assembly purchases than previously

anticipated. Accordingly, Autoform submitted a second RFQ to Whitesell

based on Hitachi’s request for information regarding a lower volume order of

injector cups. In February 2014, Whitesell provided Autoform a second quote

(“CQ2”) taking into account the lower volume and listing a higher price per

injector cup.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 4 of 12 [6] On November 17, 2014, Autoform issued its first production purchase order to

Whitesell listing the original CQ1 lower price per injector cup. Thereafter,

Autoform issued additional production purchase orders to Whitesell also

containing the lower price. From at least January 2015 through May 2016,

Whitesell shipped injector cups to Autoform with invoices reflecting the CQ1

original lower quoted price per cup.

[7] On October 16, 2015, Whitesell’s quality manager signed a document emailed

to him by Autoform called the “Supplier Quality Guidelines” (“SQG”). The

SQG stated, in relevant part, “By signing this document, the supplier has

reviewed [Autoform’s] Quality Guideline and has accepted [Autoform’s] Terms

and Conditions.” Appellant’s App. Vol. 2 at 193. It was not until late July

2016 that Whitesell sent Autoform an invoice which reflected the higher CQ2

per-cup price. Subsequent invoices also reflected the higher price. Autoform,

however, continued to send purchase orders listing the CQ1 lower price.

[8] This pricing dispute prompted Whitesell to file a complaint for breach of

contract and declaratory judgment against Autoform on October 11, 2016. On

the same date, Autoform filed a complaint for breach of contract against

Whitesell. The cases were consolidated and transferred by agreement to the

Marion County Commercial Court. Thereafter, the parties engaged in

preliminary settlement negotiations that ultimately failed. In December 2016,

Autoform filed an emergency motion for a temporary restraining order

(“TRO”) after Whitesell stated that it would stop shipping injector cups to

Autoform until Autoform made back payments based on the higher pricing and

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 5 of 12 agreed to pay the higher price going forward. Following a hearing on the TRO

motion, the trial court granted a TRO requiring Whitesell to continue shipping

the injector cups to Autoform during the pendency of the lawsuit. After several

continuances, the parties agreed to be bound by a preliminary injunction until

the trial court could enter a judgment at a bench trial on the merits.

[9] On October 3, 2017, Autoform filed an emergency motion for contempt

alleging that Whitesell threatened to stop shipping the injector cups. During a

hearing on that motion, the trial court learned for the first time that Autoform

believed it was receiving defective injector cups from Whitesell that were

causing problems with the fuel rail assemblies, and that Hitachi had begun

assessing costs against Autoform related to the allegedly defective fuel rail

assemblies. In turn, Autoform had reduced its payments to Whitesell on the

belief that the alleged defects in the fuel rail assemblies were being caused by

quality issues with the injector cups from Whitesell. The parties informed the

trial court that they had communicated about correcting the quality issues, but

they disagreed as to the corrective process. Following the hearing, the trial

court issued a preliminary order based on what the parties agreed was an

acceptable temporary resolution.

[10] The trial court held a subsequent hearing to consider Autoform’s motion for

contempt regarding the quality issues, but the court was unable to conclude the

hearing and continued it. Two days before the continued hearing was

scheduled to begin, Whitesell’s counsel withdrew their appearances and new

counsel entered appearances and requested a continuance on the contempt

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 6 of 12 matter, which the trial court granted. Thereafter, Whitesell filed a motion to

terminate the contempt proceedings. The trial court held a hearing and

determined that in order to resolve the quality disputes regarding the injector

cups, the trial court “would need to determine which part[ies’ terms and

conditions] govern the parties’ agreement.” Appealed Order at 12.

[11] In January 2018, Whitesell filed five motions, including a motion for partial

summary judgment requesting a determination, as a matter of law, that its

terms and conditions contained in CQ1 (“Whitesell’s T&Cs”) govern the

parties’ contractual relationship, as well as a motion to compel arbitration of

Autoform’s quality-related counterclaims. Whitesell’s motion to compel

arbitration presupposed the granting of its motion for partial summary

judgment.

[12] In February 2018, Autoform filed a cross-motion for summary judgment

arguing that its “Terms and Conditions of Purchase” which incorporated its

SQG (“Autoform’s T&Cs”), govern the parties’ contractual relationship.1

Appellant’s App. Vol. 4 at 3. On May 2, 2018, the trial court stayed ruling on

any motions pending a determination of which parties’ terms and conditions

govern the parties’ relationship. “If Whitesell’s Terms and Conditions

1 Also in February 2018, Whitesell filed a motion to dissolve the preliminary injunction compelling Whitesell to continue supplying injector cups to Autoform. The trial court entered an order denying the motion and requiring Whitesell to continue shipping injector cups to Autoform. Whitesell sought an interlocutory appeal, and another panel of this Court affirmed the trial court in a published opinion. Whitesell Precision Components, Inc. v. Autoform Tool & Mfg., LLC, 110 N.E.3d 380, 381-83 (Ind. Ct. App. 2018), trans. denied (2019).

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 7 of 12 governed, the Court reasoned, then the issue of the injector cup part quality

would be bifurcated from the present case and submitted for arbitration.”

Appealed Order at 13.

[13] On August 9, 2018, the trial court held an evidentiary hearing on the cross-

motions for summary judgment as well as on Whitesell’s motion to compel

arbitration. Thereafter, the trial court entered a consolidated order denying

both parties’ motions for partial summary judgment and Whitesell’s motion to

compel arbitration. Specifically, regarding the summary judgment motions, the

trial court determined that issues of fact and ambiguities remain on which terms

and conditions govern the parties’ relationship, making summary judgment in

favor of either party inappropriate. Regarding the motion to compel

arbitration, the court determined that because the arbitration provision is

contained in, and presupposes application of, Whitesell’s T&Cs, and because

the court could not determine that those terms and conditions govern as a

matter of law, denial of Whitesell’s motion to compel arbitration was

warranted. This interlocutory appeal ensued. For reasons explained more fully

below, this appeal solely involves the trial court’s denial of Whitesell’s motion

to compel arbitration.

Discussion and Decision [14] We begin by noting that an order denying an application to compel arbitration

is appealable as a matter of statutory right. Ind. Code § 34-57-2-19(a)(1);

Brumley v. Commonwealth Bus. Coll. Educ. Corp., 945 N.E.2d 770, 776 (Ind. Ct.

App. 2011); see Ind. Appellate Rule 14(D) (permitting interlocutory appeals as Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 8 of 12 provided by statute). Indiana has long recognized a strong policy favoring the

enforcement of arbitration agreements. Destination Yachts, Inc. v. Pierce, 113

N.E.3d 645, 653 (Ind. Ct. App. 2018), trans. denied (2019). Indiana Code

Section 34-57-2-3(a) provides in relevant part:

On application of a party showing an agreement described in section 1[2] of this chapter, and the opposing party’s refusal to arbitrate, the court shall order the parties to proceed with arbitration. Ten (10) days notice in writing of the hearing of such application shall be served personally upon the party in default. If the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue raised without further pleading and shall order arbitration if found for the moving party; otherwise, the application shall be denied.

Accordingly, once a trial court is satisfied that the parties indeed contracted to

submit their dispute to arbitration, the court is required by statute to compel

arbitration. Destination Yachts, 113 N.E.3d at 653.

[15] Motions to compel arbitration are procedurally akin to motions for summary

judgment. Brumley, 945 N.E.2d at 776. “The party seeking to compel

arbitration has the burden of proving the existence of a contract calling for

arbitration[.]” Id. (citation omitted). After a motion to compel arbitration has

been made and supported, the burden is on the non-movant to present evidence

2 Section 1 provides that “[a] written agreement to submit to arbitration is valid, and enforceable, an existing controversy or a controversy thereafter arising is valid and enforceable, except upon such grounds as exist at law or in equity for the revocation of any contract.”

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 9 of 12 that the supposed arbitration agreement is not valid or does not apply to the

dispute in question.” “State law contract principles apply to determine whether

parties have agreed to arbitrate.” Id. (citing MPACT Constr. Grp., LLC v. Superior

Concrete Constructors, Inc., 802 N.E.2d 901, 906 (Ind. 2004)).

[16] Whitesell asserts that Autoform’s quality-related claims must be ordered to

mandatory arbitration pursuant to Whitesell’s T&Cs, and therefore the trial

court erred in denying the motion to compel arbitration of those claims.

However, Whitesell’s motion to compel arbitration presupposes a threshold

determination by the trial court, as a matter of law, that Whitesell’s T&Cs, and

not Autoform’s T&Cs, govern the parties’ relationship. Indeed, Whitesell

specifically concedes this point in its motion to compel. See Appellant’s App.

Vol. 3 at 109-10 (“If the Court agrees that Whitesell’s General Terms and

Conditions apply, then Paragraph 19 of those terms provides that ‘the assertion

of any claim related to the quality of any product … shall be submitted to

binding arbitration.… Once the Court determines which party’s terms and

conditions apply to their relationship, and upon a determination that Whitesell’s

General Terms and Conditions apply, Autoform’s quality claims should be

ordered to mandatory arbitration.”) (emphases added). In denying both

Whitesell’s and Autoform’s motions for summary judgment on this issue, the

trial court specifically concluded that genuine issues of material fact remain as

to which party’s terms and conditions govern the parties’ relationship. Being

unable to determine as a matter of law the threshold issue of which terms and

conditions apply, the trial court could not be satisfied that the parties indeed

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 10 of 12 contracted to submit any quality-related disputes to arbitration. In other words,

without more, an order compelling arbitration would be premature.

Accordingly, the trial court denied Whitesell’s motion.

[17] In this appeal, Whitesell basically requests a de novo determination by this

Court that, as a matter of law, Whitesell’s T&Cs govern the parties’ relationship

and hence the arbitration provision contained therein applies. In response,

Autoform cross-appeals, also requesting a de novo determination that, as a

matter of law, Autoform’s T&Cs govern the parties’ relationship and hence the

arbitration provision does not apply. We reject both parties’ attempts to

sidestep the trial court’s denial of their respective motions for partial summary

judgment on this precise issue by way of an appeal and cross-appeal of the

denial of the motion to compel arbitration. If either party wished to challenge

the trial court’s determination that genuine issues of material fact remain as to

which terms and conditions apply, it could have sought certification from the

trial court and pursued a discretionary interlocutory appeal of the ruling on the

summary judgment motions pursuant to Indiana Appellate Rule 14(B).3

3 It is well settled that an order denying a motion for summary judgment is not a final appealable order, and therefore a party seeking appellate review of a denial must do so by way of requesting certification of an interlocutory appeal from the trial court, as well as seeking acceptance of jurisdiction by this Court, in accordance with Indiana Appellate Rule 14. Anonymous Doctor A. v. Sherrard, 783 N.E.2d 296, 299 (Ind. Ct. App. 2003). No such request was made here.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 11 of 12 Neither party did so. Consequently, we will accept the trial court’s

unchallenged determination as correct.4

[18] In sum, genuine issues of material fact remain on the threshold issue of which

party’s terms and conditions apply to the parties’ relationship, and therefore we

agree with the trial court that Whitesell has not, at this procedural juncture, met

its burden of proving the existence of an enforceable contract between the

parties calling for arbitration.5 Accordingly, we affirm the trial court’s denial of

Whitesell’s motion to compel arbitration.

[19] Affirmed.

Bradford, J., and Tavitas, J., concur.

4 In a motion to dismiss and strike cross-appeal, which we deny as moot by separate order issued contemporaneously with this decision, Whitesell accuses Autoform of improperly trying to cross-appeal the trial court’s uncertified interlocutory order denying its summary judgment motion. However, as explained above, we perceive Whitesell’s appellate arguments, although framed under the guise of an appeal from the motion to compel arbitration, to in large part also be an attempt to appeal the uncertified interlocutory order denying its summary judgment motion. Clearly, Autoform’s cross-appeal is simply a response to Whitesell’s arguments. Stated another way, both parties are doing the same thing, and we reject both of their attempts to make an end run around the trial court’s summary judgment rulings. 5 Obviously, Whitesell may renew its arbitration motion upon resolution of the foregoing contract issues.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-2462 | June 25, 2019 Page 12 of 12