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SELAS FLUID PROCESSING CORPORATION v. ULTRA-CAST

July 19, 2004.

SELAS FLUID PROCESSING CORPORATION
v.
ULTRA-CAST, INC.



The opinion of the court was delivered by: THOMAS O'NEILL, Senior District Judge

MEMORANDUM

I. INTRODUCTION

Plaintiff, Selas Fluid Processing Corporation, filed a motion to compel arbitration seeking to submit claims for damages against defendant, Ultra-Cast, Inc., to the American Arbitration Association in Philadelphia, Pennsylvania. With the consent of the parties, I denied plaintiff's motion without prejudice and ordered it to be treated as a complaint. Presently before me are plaintiff's motion for summary judgment with respect to plaintiff's motion to compel arbitration, defendant's response thereto, defendant's cross-motion for summary judgment and plaintiff's response thereto. For the reasons stated below, I will grant plaintiff's motion for summary judgment and deny defendant's cross-motion for summary judgment.

  II. BACKGROUND

  Plaintiff Selas Fluid Processing Corporation (SFPC) is a Delaware corporation having administrative, sales and engineering offices in Blue Bell, Pennsylvania, and a test facility and spare parts warehouse in Conshohocken, Pennsylvania. Plaintiff designs, engineers, fabricates and installs various types of combustion-related process plant equipment for chemical, petrochemical, refining and other industries. In 2002, plaintiff entered into a contract with Praxair hydrogen plant facilities in Port Arthur, Texas, to design, engineer and fabricate a steam methane reformer. Also in 2002, plaintiff entered into two contracts with Atofina styrene monomer plant in Carville, Louisiana: one to design, engineer, fabricate and deliver a steam superheater and another to revamp an existing superheater.

  In connection with these contracts, plaintiff required substantial quantities of reformer tube and outlet manifold assemblies, outlet header pipe material, and other cast material. To satisfy these requirements, plaintiff retained as a subcontractor defendant Ultra-Cast, Inc., a Michigan corporation with its principal place of business in that state. Defendant manufactures heat and corrosion resistant cast tubing, radiant tube assemblies, fittings, and various petrochemical and heat treating related castings.

  On October 14, 2002, plaintiff issued Purchase Order 02F-5102-03684 to defendant, under which defendant agreed to procure materials and manufacture various products to be delivered to the Praxair facilities in Texas, in connection with plaintiff's Praxair contract. On November 14, 2002, Jeffrey Spillman, defendant's President and Chief Executive Officer, signed the acknowledgment copy of Purchase Order 02F-5102-03684.

  On December 20, 2002, plaintiff issued Purchase Order 02RF-6037-03800 and Purchase Order 02F-5103-03799 to defendant, under which defendant agreed to procure materials and manufacture various products to be delivered to the Atofina facilities in Louisiana, in connection with plaintiff's Atofina contracts. On January 28, 2003, Mark Hallstrom, defendant's Vice President of Sales, signed the acknowledgment copies of Purchase Orders 02RF-6037-03800 and 02F-5103-03799. Defendant commenced performance under the three Purchase Orders. Each acknowledgment copy to the three Purchase Orders included the following language above the signature line:
Acknowledgment: By execution below, commencement of performance, or any other actions by Seller acknowledging this Purchase Order, Seller hereby accepts and agrees that the contract of sale of products/services is expressly limited to the terms specifically set forth, or incorporated by reference, in this Purchase Order, to the exclusion of additional or different terms in documentation provided by Seller. A signed acknowledgment copy must be returned to Purchaser within (5) days after receipt of this Purchase Order.
  Paragraph 21 of plaintiff's standard terms and conditions of purchase, contained in the Purchase Orders, provides, in relevant part:
 
21. Governing Law and Dispute Resolution. All claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, shall be decided by binding arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, to be held in Philadelphia, Pennsylvania, U.S.A. Notice of the demand for arbitration shall be filed in writing with the other party or parties to this Contract and with the American Arbitration Association. In no event shall the arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. . . . The Contract shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. Supplier consents to the venue and personal jurisdiction of Pennsylvania federal or state courts exclusively to adjudicate disputes arising out of this contract or to enforce the provisions of this arbitration clause.
  Defendant allegedly breached its commitments to plaintiff under Purchase Order 02F-5102-03684. On July 15, plaintiff issued a letter to defendant entitled "Notice of Breach of Contract," which was intended by plaintiff to constitute formal notification of defendant's breach. The issue of payment and delivery of the remaining materials and work associated with Purchase Order 02F-5102-03684 was then allegedly resolved through a teleconference between plaintiff's attorney, Emerson Rhodes, and Spillman, which was summarized in a fax dated July 31, 2003. The July 31 fax contains no reference to the arbitration provision of Purchase Order 02F-5102-03684. On August 25, 2003, plaintiff sent an email to defendant confirming that plaintiff had received the material certifications for the materials and work received under Purchase Order 02F-5102-03684. Plaintiff's August 25 email stated that plaintiff "reserves all rights associated with the order, the cancellation, and/or any payments made" to defendant. In response to plaintiff's August 25 email, defendant sent an email dated August 26, 2003, stating that defendant "reserves all rights in connection with this matter and nothing contained herein or omitted herefrom is or shall constitute a waiver of any of these rights, remedies, claims, or positions."

  In December 2003, defendant delivered to plaintiff the last shipments and material certifications associated with Purchase Orders 02RF-6037-03800 and 02F-5103-03799.

  In December 2003, plaintiff submitted a demand for arbitration under the Construction Industry Arbitration Rules of the American Arbitration Association with venue in Philadelphia, Pennsylvania in accordance with Paragraph 21 of plaintiff's standard terms and conditions set forth in the Purchase Orders at issue. In connection with Purchase Order 02F-5102-03684, plaintiff intends to submit claims for damages arising out of defendant's alleged willful breach of contract and repudiation of its obligations, including breach of express and implied warranties, negligence, deceptive trade practices, lack of good faith, economic duress, misrepresentation, and other such appropriate bases for recovery. In connection with Purchase Orders 02RF-6037-03800 and 02F-5103-03799, plaintiff intends to submit claims for damages arising out of defendant's alleged breach of contract, breach of express and implied warranties, delay in delivery, lack of good faith, deceptive trade practices, and other appropriate bases for recovery. III. STANDARD OF REVIEW

  Under Rule 56(c) of the Federal Rules of Civil Procedure, the moving party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. I must view the facts in the light most favorable to the non-moving party, and the nonmoving party is further entitled to all reasonable inferences drawn from those facts. See Anderson, 477 U.S. at 248. However, the non-moving party must raise "more than a mere scintilla of evidence in its favor" in order to overcome a summary judgment motion, and cannot survive by relying on unsupported assertions, conclusory allegations, or mere suspicions. Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989). The nonmoving party still must establish the existence of each element of its case. See Celotex, 477 U.S. at 323.

  "Where cross-motions for summary judgment are presented, each side essentially contends that there are no issues of material fact from the point of view of that party." Bencivenga v. Western Pa. Teamsters, 763 F.2d 574, 576 n. 2 (3d Cir. 1985). In such cases, each side still must establish that it is entitled to judgment as a matter of law, and therefore, the court must consider the motions separately. Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968). IV. DISCUSSION

  To compel arbitration, I must determine that 1) the parties entered into a valid arbitration agreement, and 2) the specific dispute falls within the scope of that agreement. John Hancock Mutual Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998). See also PaineWebber v. Hartmann, 921 F.2d 507, 511 (3d Cir. 1990) (holding that district courts need only "engage in a limited review to ensure that the dispute is arbitrable — i.e., that a valid agreement exists between the parties and that the specific dispute falls within the substantive scope of that agreement."). In conducting this review, I must apply "ordinary contract principles, with a healthy regard for the strong federal policy in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). "State law applies to issues concerning the validity, revocability ...


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