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

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.
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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
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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
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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.
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[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
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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
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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).
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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
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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.”
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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
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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.
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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.
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