City of Benkelman, Nebraska, A Political Subdivision Plaintiff-Appellant
Baseline Engineering Corporation, A Colorado Corporation Defendant-Appellee Layne Christensen Company, a Delaware Corporation Defendant
Submitted: August 1, 2017
from United States District Court for the District of
Nebraska - North Platte
RILEY, BEAM, and SHEPHERD, Circuit Judges.
SHEPHERD, Circuit Judge.
Nebraska community seeks federal review of its multi-million
dollar claims against a Colorado corporation. A United States
District Court in Nebraska determined that it lacked
jurisdiction over the claims and issued a final
judgmentordering the parties to proceed to
arbitration in Colorado. With jurisdiction under 28 U.S.C.
§ 1291, we reverse and remand for further proceedings.
City of Benkelman is a community of less than one thousand
residents located in Dundy County, Nebraska. In 2005, the
state health and human services department ordered the City
to address the excessive amounts of uranium, arsenic, and
other contaminants in the City's drinking water supply.
The City subsequently contracted with Baseline Engineering
Corporation, a Colorado organization, to assist with the
permitting, design, and construction of a water treatment
plant for the City. The City obtained partial funding for the
project from the United States Department of Agriculture -
Rural Development ("USDA-RD").
project began in July 2009 and the plant was operating by May
2012. In June 2012, however, laboratory tests of treated
water samples showed that the uranium levels still did not
comply with federal drinking water standards. Around five
months later, the state denied final approval of the plant
for failure to effectively treat the City's water supply.
City sued Baseline in federal court in Nebraska, alleging
breach of contract, negligence and professional malpractice,
fraud, and negligent misrepresentation. Seeking damages in
excess of $5.5 million, the complaint averred that Baseline
failed to properly design the treatment plant, misrepresented
itself as a water engineering expert, and gave false
information about how to bring the City's water supply
into compliance with state and federal laws.
moved to dismiss the complaint. Citing generally Federal Rule
of Civil Procedure 12(b), Baseline argued that the district
court lacked jurisdiction due to a dispute resolution
provision in a contract that both parties signed on or about
July 21, 2009 (the "July 2009 Contract"). Under the
July 2009 Contract, if the parties cannot resolve a dispute
through a "a face-to-face meeting, " the dispute
must be "submitted to binding arbitration . . .
conducted at a suitable location within 15 miles of
[Baseline's] then existing principal office. The
arbitration shall be completed pursuant to the Uniform
Arbitration Act, C.R.S. § 13-22-201, et seq.,
and governed by the provisions of the Colorado Rules of Civil
Procedure, before a single arbiter." The July 2009
Contract further provides that, if the parties waive
arbitration or if the arbitration provision is invalidated or
does not apply, "venue for any court proceeding will be
the District Court for Jefferson County, State of
City opposed Baseline's motion, arguing that the July
2009 Contract does not control because it was superseded by a
second contract that the parties signed on or slightly before
August 27, 2009 (the "August EJCDC Agreement").
The August EJCDC Agreement, comprised of thirteen pages and
ten exhibits, is a standard form contract prepared by the
Engineers Joint Contract Documents Committee (the
"EJCDC"). The City claims that, because the
treatment plant was funded in part by USDA-RD, the parties
were required to execute the EJCDC agreement and have it
approved by USDA-RD. Indeed, in a letter dated August 28,
2009, Baseline submitted the parties' signed August EJCDC
Agreement to the USDA-RD, and the Agreement was approved on
October 5, 2009. Because paragraph 6.01K of the August EJCDC
Agreement states that "[a]ll [c]ontract [d]ocuments . .
. shall be subject to [a]gency concurrence, " the City
argues that the July 2009 Contract (which was not sent to
USDA-RD for approval) simply memorialized the parties'
initial agreement but was later replaced as the governing
document by the agency-approved August EJCDC Agreement.
August EJCDC Agreement has its own arbitration provision,
although the provision is not mandatory and is triggered only
if a dispute survives the parties' good faith negotiation
and mediation. In such an event the August EJCDC Agreement
states that "either party may seek to have the [d]ispute
resolved by a court of competent jurisdiction."
Alternatively, if less than $200, 000 is in controversy, the
dispute may be resolved by a method mutually agreed upon by
the parties, "including but not limited to
addition to conflicting arbitration and forum selection
clauses, the July and August contracts contain the following
terms relevant to Baseline's motion to dismiss:
(1)Incorporation by reference. Though the
August EJCDC Agreement was signed around a month after the
July 2009 Contract, it is twice incorporated by reference as
"Exhibit B" to the July 2009 Contract. First, page
1 of the July 2009 Contract contains a box titled "Job
Description" followed by an instruction to "[s]ee
Exhibit B hereto - for accompanying EJCDC agreement."
Second, a provision on page 3 titled "Entire
Contract" states, "Exhibits A and B hereto are
incorporated into this Agreement as fully set forth
(2)Choice-of-law. The July 2009 Contract
contains a choice-of-law provision stating that the
parties' agreement "shall be governed by the laws of
the State of Colorado." Under the August EJCDC
Agreement, however, "the law of the state in which the
Project is located"-Nebraska-controls.
(3)Merger clauses. Each contract purports to
represent the entire agreement between the parties and to
trump any prior or inconsistent agreements. The July ...