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Erwin-Keith, Inc. v. Stewart

Court of Appeals of Arkansas, Division IV

February 21, 2018

ERWIN-KEITH, INC. APPELLANT
v.
HENRY LEE STEWART, JR., D/B/A STEWART FARMS APPELLEE

         APPEAL FROM THE MONROE COUNTY CIRCUIT COURT [NO. 48CV-16-101] HONORABLE E. DION WILSON, JUDGE

          Hilburn, Calhoon, Harper, Pruniski & Calhoun, Ltd., by: James M. McHaney, Jr., Randy L. Grice, and Hannah E. Wood, for appellant.

          Knapp Lewis Law Firm, by: Donald E. Knapp Jr. and Michael C. Lewis, for appellee.

          KENNETH S. HIXSON, Judge.

         Erwin-Keith, Inc. (Erwin-Keith or appellant), appeals after the Monroe County Circuit Court denied its motion to compel arbitration in favor of appellee Henry Lee Stewart, Jr., d/b/a Stewart Farms (Stewart Farms or appellee). On appeal, appellant argues that the circuit court's finding that no arbitration agreement existed between the parties based on the evidentiary record was clearly erroneous. We affirm.

         I. Facts

         Stewart Farms grew and harvested rice annually. During the 2015 crop year, Stewart Farms entered into a series of four grain purchase agreements (hereinafter referred to as the "contracts") with Erwin-Keith, wherein Erwin-Keith agreed to purchase the rice. After harvesting the 2015 crop, Stewart Farms attempted to deliver the rice to Erwin-Keith; however, Erwin-Keith refused to accept delivery. On October 3, 2016, Stewart Farms filed its complaint for breach of contract against Erwin-Keith alleging damages in excess of $500, 000. The complaint did not attach copies of the contracts.

         Erwin-Keith filed a motion to dismiss the complaint or, in the alternative, to order arbitration. Even though Stewart Farms did not attach the 2015 contracts to its complaint, Erwin-Keith attached copies of the alleged 2015 contracts in dispute as exhibits 1 through 4 to its motion. The originals of the four 2015 contracts were not attached. Instead, Erwin-Keith attached copies of the alleged contracts as exhibits. Each attached exhibit consisted of two pages. Page one was the front of the contract, which contained the identity of the parties, the quantity, grade, price, shipment period for the rice, and signatures of the parties. Page two of the exhibits contained information described as the "Terms and Conditions." Erwin-Keith requested that the circuit court dismiss the action pursuant to the "Terms and Conditions" set forth in page two of those contracts. Alternatively, it argued that the circuit court should dismiss the complaint and order Stewart Farms to submit the dispute to arbitration before the National Grain and Feed Association, also pursuant to the "Terms and Conditions." Furthermore, in its brief in support, Erwin-Keith stated that Stewart Farms did not have copies of the contracts to attach to its complaint. Therefore, Erwin-Keith stated that "the contracts [it attached to its motion to dismiss] should be considered a part of Stewart Farm's Complaint for all purposes."

         The four exhibits appear to be four nearly identical form contracts. Page one states that it is a grain purchase contract between Stewart Farms and Erwin-Keith and contains signatures on behalf of both parties. The last paragraph on page one states:

This contract was made and accepted by the Seller and Erwin-Keith, Inc. in the State of Arkansas and is governed by the laws of the State of Arkansas. Failure to notify Erwin-Keith, Inc. of any discrepancies in the body of this contract within 15 days of receipt will constitute acceptance. For additional information concerning the terms and conditions of the Buyer see the reverse side of this document.

         Page two for each alleged contract contains no signatures or initials by the parties but is entitled "TERMS AND CONDITIONS." Included in paragraph 2 of the terms and conditions is the following pertinent language:

To the extent not inconsistent with the terms of this confirmation, this transaction is subject in all respects to the rules and regulations of the exchange, board, or association designated herein. If Seller is not a member of said exchange, then the rules of the NGFA shall apply. Buyer and Seller agree that all disputes and controversies between them with respect to this contract shall be arbitrated according to said rules and regulations.

         The allegations and responses thereto in the pleadings of the parties are of particular importance to this case. In Erwin-Keith's motion to dismiss, it alleged, "2. The contracts at issue are attached as Exhibits 1 through 4. Each of the contracts have identical Terms and Conditions." Stewart Farms filed a response generally denying the motion to dismiss or, in the alternative, to order arbitration. Further, specifically in paragraph two of Stewart Farms's response, Stewart Farms states, "Paragraph Two (2) does not require a response, in the event a response is required, Plaintiff denies same."

         After Stewart Farms had filed its response, Erwin-Keith filed a reply, stating inter alia:

The plaintiff has not provided a substantive response to Erwin-Keith's motion. For example, in Paragraph 2 of its motion, Erwin-Keith states that "the contracts at issue are attached hereto as Exhibits 1 through 4. Each of these contracts have identical Terms and Conditions." In response to his allegation, the Plaintiff responded by stating: "Paragraph Two (2) does not require [sic] a response; in the event a response is required, Plaintiff denies same." This response is a non-sequitur.

         In response to Erwin-Keith's reply, Stewart Farms filed a supplemental response in which it again repeated its response to paragraph two by stating, "Paragraph Two (2) [of Erwin-Keith's motion] does not require a response, in the event a response is required, Plaintiff denies same." In its brief in support of its supplemental response, Stewart Farms additionally contended that the terms and conditions on page two were unenforceable for a variety of reasons. Erwin-Keith filed another response in opposition, arguing that the arbitration clause was enforceable because "arbitration is ...


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