M & C Corp v. Erwin Behr GMBH & Co ( 2005 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 05a0267p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
M & C CORPORATION,
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No. 04-1557
v.
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ERWIN BEHR GMBH & CO., KG, -
Defendant-Appellant. -
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 91-74110—Paul V. Gadola, District Judge.
Argued: April 28, 2005
Decided and Filed: June 17, 2005
Before: KEITH, MERRITT, and CLAY, Circuit Judges.
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COUNSEL
ARGUED: Larry J. Saylor, MILLER, CANFIELD, PADDOCK & STONE, Detroit, Michigan, for
Appellant. Russ E. Boltz, RUSS E. BOLTZ P.C., Rochester, Michigan, for Appellee. ON BRIEF:
Larry J. Saylor, Elisa M. Angeli, MILLER, CANFIELD, PADDOCK & STONE, Detroit, Michigan,
for Appellant. Russ E. Boltz, RUSS E. BOLTZ P.C., Rochester, Michigan, John C. Louisell,
TIMMIS & INMAN, Detroit, Michigan, for Appellee.
CLAY, J., delivered the opinion of the court, in which KEITH, J., joined. MERRITT, J.
(p. 12), delivered a separate dissenting opinion.
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OPINION
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CLAY, Circuit Judge. According to the United States Supreme Court,” [a]rbitration
agreements allow parties to avoid the costs of litigation.” Circuit City Stores, Inc. v. Adams, 532
U.S. 105, 123 (2001). This litigation proves the exception to that rule. This is now the fourth appeal
to this Court regarding an arbitration award that was finalized in 1994, three years after Defendant
Edwin Behr GmbH & Co. (“Behr”) terminated its contract with Plaintiff M & C Corporation, who
had been acting as the exclusive sales agent for Behr’s automotive parts. See M & C Corp. v. Erwin
Behr GmbH & Co., KG, 87 F.3d 844 (6th Cir. 1996) (“Behr I”); M & C Corp. v. Erwin Behr GmbH
& Co., KG, 143 F.3d 1033 (6th Cir. 1998) (“Behr II”); M & C Corp. v. Erwin Behr GmbH & Co.,
KG, 326 F.3d 772 (6th Cir. 2003) (“Behr III”).
1
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 2
In Behr III, this Court reversed the district court’s order holding that Award Eight of the
arbitrator’s 11 part award is ambiguous with regard to the amounts Behr owes M & C. The Eighth
Award addresses M & C’s claim that the parties’ contract entitles M & C to commissions on
customer orders for Behr parts that were placed after Behr terminated its contract with M & C. This
Court instructed the district court to specify the particular ambiguity in the Eighth Award. On
remand, via an order dated March 29, 2004, the district court identified a purported ambiguity in the
award and again remanded to the arbitrator to (1) determine the exact scope of the commissionable
products under the Eighth Award and (2) to state what payments, if any, are due to each party from
the other under that award.
For the reasons stated below, we REVERSE the district court’s order, which found an
ambiguity in the arbitration award that purportedly justified a remand to the arbitrator. All of the
potential products for which M & C is seeking commissions were ordered by Behr’s customers more
than three years after Behr terminated its contract with M & C. Under the plain language of the
parties’ contract, M & C is not entitled to commissions on these orders, even assuming that M & C
actively solicited these orders during the contract period. Moreover, because the issue of
commissionable products can be resolved through the unambiguous language of the contract, the
further question of how much money, if any, each party owes the other can be readily determined
in a judicial forum. A remand to the district court, however, would only invite further delay in this
protracted litigation. Therefore, this Court shall retain jurisdiction over this case. Within 30 days
of this opinion’s issuance, the parties shall submit a joint stipulation reflecting the amounts owed
or overpaid pursuant to Award Eight. If the parties cannot agree on these amounts, they are directed
to advise the Court in writing of their respective positions. After receipt of the joint stipulation or
the opposing briefs, the Court will enter an appropriate final judgment resolving the issue of
payments owed under the contract.
I
BACKGROUND
A complete factual background is more fully set forth in this Court’s three prior published
opinions. We reiterate only those facts necessary to understand the reasoning in this opinion.
Behr, a German limited liability entity, entered into a contract on March 18, 1985, with M
& C Corporation, whereby M & C was to serve as the exclusive sales agent for Behr in the United
States and Canada for a period of at least five years for the sale of wood interior panels for luxury
automobiles. The contract specifies that the “agreement shall be interpreted with and governed by
the laws of the State of Michigan,” and that “[a]ll disputes arising in connection with the present
contract shall be finally settled under the Rules of the Court of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”
On March 18, 1991, Behr terminated the agreement in accordance with the provisions of the
contract. When Behr failed to forward to M & C the commissions it had earned for some sales and
client development work, M & C filed suit in federal district court seeking damages for breach of
contract, improper termination of contract, and tortious interference with contractual relations. The
district court stayed any judicial proceedings and ordered the parties to submit the dispute to
arbitration as required by the contract. Pursuant to the Rules of the Court of Arbitration of the
International Chamber of Commerce, a British arbitrator was then assigned to the case and London,
England, was designated as the neutral site of the proceedings. On March 1, 1994, after more than
one year of submissions of documentation, arguments, and hearings, the arbitrator issued 11 awards.
Behr appealed the arbitrator’s awards to the district court, which the court confirmed on
August 15, 1994. On appeal, this Court affirmed the arbitrator’s award of $683,761 in damages
pursuant to a Michigan statute (MICH. COMP. LAWS § 600.2961(5)(b)) that assesses against a
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 3
defendant an amount equal to two times the value of commissions due but intentionally not paid to
a sales representative, and $335,793.47 in legal fees, costs, and expenses. Behr I, 87 F.3d at 846-47,
850-51. Behr did not contest the award of $956,768 in damages and interest payments for
commissions that it wrongfully withheld from M & C. Id. at 847.
While Behr I was pending before this Court, M & C moved in the district court to enforce
various arbitral awards, including Award Eight. The district court found that Behr had failed to
specifically perform the obligations imposed under Award Eight and that as a result, Behr’s actions
“directly violate[d] the terms of the arbitral award and the district court’s August 15, 1994 order
confirming that award.” Behr was thereafter held in contempt.
Subsequent to this court’s judgment to affirm in Behr I, Behr paid M & C $2,165,871, in
satisfaction of Awards Four, Five, Seven, Ten and Eleven. Behr continued to contest, however, the
amount due under Award Eight. Award Eight does not require the payment of a specific monetary
amount; rather, the award requires Behr to provide M & C with documentation for sales of certain
products and to pay commissions on the future sales of these products. Clause 7.3 of the parties’
contract referenced in Award Eight requires Behr to pay commissions on “all new orders which are
not renewal or extensions orders, received from customers within three years following the date of
termination.”
Behr sought a stay of enforcement proceedings “because the amounts owing on that disputed
award have not been reduced to judgment.” Behr contended that the parties disagreed over the
interpretation of the word “order” and that because the issue was not addressed by the arbitrator, a
stay was appropriate. In its initial determination, the district court ruled that a stay of enforcement
pending arbitration was not warranted because Behr had not raised a good faith dispute that had not
been previously decided in arbitration. Upon Behr’s motion for reconsideration, however, the
district court determined that Behr had raised a good faith issue of what constitutes an “order” under
the commission contract, and that the prior arbitration award had not addressed that issue.
Behr had argued to the district court that the term “order” was ambiguous because it could
mean either a “purchase order” or a “release order.” A purchase order contains a list of the general
terms (including price per unit) of future purchases by a customer, whereas the customer must issue
a release order for a specific number of parts to be shipped on designated dates. It was Behr’s
position that to the extent any release orders were issued more than three years following the
termination of the contract, M & C was not entitled to receive commissions, as dictated by Clause
7.3. The district court accepted Behr’s argument that the term “orders” in Clause 7.3 is ambiguous
and granted Behr’s motion for stay of further enforcement proceedings pending resolution of that
ambiguity in arbitration.
On appeal in Behr II, this Court reversed the district court’s decision to remand the case to
the arbitrator. We held:
[A] reading of the arbitrator’s award, together with its opinion, leads this
Court to find that the award is not ambiguous, and the district court’s remand to
arbitration was not proper.
The arbitrator’s opinion clearly determined that pursuant to [Clause 7.3 of]
the parties’ agreement, the payment of commissions is tied to the receipt of “all new
orders… received from customers within three years following the date of
termination… but which were actively solicited by [M & C] from the Customers
prior to the date of said termination.” (Emphasis added). As read, there is a two-fold
requirement in the arbitrator’s award: 1) the “order” must be received prior to the
three years following termination of the contract; and 2) such an order must have
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 4
materialized as a result of the “active[ ] solicit[ation]” by M & C prior to the
termination of the contract.
The only “order” the arbitrator could have referred to was the form entitled
“Purchase Order,” not a form entitled “Material Release.” The “Purchase Order” is
the only order that M & C had direct involvement in “actively solicit[ing]” from
customers. Whereas, it is based entirely on the customer’s needs when the goods
ordered via the Purchase Order are “released.” The arbitrator determined, and this
court agrees, that the primary intent of the parties’ agreement was to provide M &
C the equitable relief of specific commissions for work that it had actively solicited.
Thus, as the only “order” that M & C had any involvement in actively soliciting were
Purchase Orders, which were also the only “orders” that were before the arbitrator
to consider, the arbitrator has necessarily determined that “new orders” refers to new
“Purchase Orders.”
* * * *
Further, even if it is as Behr contends that the payment of commissions is tied
to “payment of money by the customer,” this payment of money is also tied to when
the “Material Release” is issued. Therefore, it necessarily follows that a “Material
Release,” itself, is also tied to the payment of commissions. And the arbitrator’s
award clearly indicates that the payment of commissions is not subject to the three-
year limitation.
When Behr challenged the continued payment of commissions to M & C after
termination of the contract, the arbitrator clearly stated,
“I have accepted the evidence which shows that an agent, like
Connelly [M & C], is involved in significant effort and expenditure
before commission accrues [i.e. when a “Material Release” is issued].
It obtains the business for its principal by means of such activity
which it undertakes in the hope of future award. The contract scheme
in clause 7 for the continuance of commission after termination but
the cessation of the duty to service at that point seems just and natural
and I accept the evidence that commission payment during “life of
[the] part” is customary in the industry.”… (Emphasis added).
Thus, even if we assume Behr’s proposition to be true, it was still the active
solicitation of M & C prior to contract termination which resulted in the receipt of
Purchase Orders during the three-year time frame, and it was the release of those
“new [purchase] orders” which triggered the receipt of money from the customer and
the “commission payment[s] during ‘life of [the] part.’”
As the Arbitration Award is clear, the district court erred in granting Behr’s
motion for stay of enforcement pending arbitration.
Behr II, 143 F.3d at 1039-41.
Following the decision in Behr II, Behr moved for partial satisfaction of the judgment for
all amounts due under the Eighth Award on the 1994 K Special parts. In the motion, Behr
represented that it paid M & C $468,163.42 in commissions and post-judgment interest “on all
purchase orders for ‘K Special’ parts for the 1994 model year,” which, it argued, “fully satisfies all
sums due for ‘1994 K Special’ parts under the Eighth Award as interpreted by the Sixth Circuit.”
The district court denied the motion. See M & C Corp. v. Erwin Behr GmbH & Co., 34 F. Supp. 2d
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 5
543, 547 (E.D. Mich. 1999). After M & C moved for clarification of what Behr owed on the Eighth
Award, the district court amended its prior opinion to include the following language:
Accordingly, the Sixth Circuit’s holding that M & C is entitled to commissions for
the “life of the part” means that M & C is entitled to commissions on any material
release for each “1994 K Special” part order pursuant to any Purchase Order which
was issued by General Motors Corporation to Behr prior to March 18, 1994.
The district court’s clarification of the Sixth Circuit’s interpretation of Behr’s obligation
under the Eighth Award did not end the matter, however, because Behr filed yet another motion for
partial satisfaction of judgment, contending that it had actually overpaid M & C by over $200,000.
According to Behr, it did not owe commissions to M & C on certain lines of parts (specifically, the
1996 EK parts and 1997 K parts) because they were ordered by General Motors more than three
years after the termination of the contract between M & C and Behr and were not therefore “actively
solicited” by M & C. In response, M & C cited a reference in Behr II to Behr’s obligation to pay
commissions during the “life of the part” and argued that “commissions were payable for the life
of the part program whenever those orders were renewed or extended.” M & C argued that the 1996
EK parts and 1997 K parts were essentially the same as those parts for which M & C actively
solicited orders and that a simple name-change did not justify depriving M & C of a commission.
M & C further argued that, regardless of whether Behr and GM chose to identify parts with a yearly
label, e.g., “1994 K Special” or “1996 EK,” all such parts were either renewals or extensions of old
orders, new orders, or renewals or extensions of new orders; adding a “year” tag to a part program
name – i.e., adding “1996” to “K Special” – does not make the program any different, according to
M & C.
The district court rejected M & C’s arguments, agreeing with “the Magistrate Judge’s
recommendation that ‘the only commission to which M & C is entitled are those on parts ordered
(through blanket Purchase Orders) within three years after the 1991 termination.’” The district court
reasoned:
The arbitrator’s award clearly applies to only those parts specifically listed under
“1991 Model Year Business”, “1992 Cadillac Business,” and “1994 Cadillac ‘K’ Car
Series” in the arbitrator’s award. The language [in the arbitrator’s award] that “it is
immaterial that there should have been design changes in the parts concerned after
the application of the [sales] efforts [of the Agent]” does not expand the scope of
“the parts concerned.”… Similarly, the “life of the part” language does not broaden
the scope of the parts concerned, as Plaintiff contends.
The district court remained uncertain, however, as to the amounts, if any, Behr owed M &
C. After receiving briefs from the parties, the same district court that had earlier held the award to
be unambiguous found the award to be “unclear in its application” and that the award did “not fully
adjudicate an issue that had been submitted” to the arbitrator. The court therefore entered an order
remanding the matter to the original arbitrator to clarify the amounts owed under that award.
According to the district court, remanding to the arbitrator under these circumstances simply would
require him to complete his duties by applying his reasoning to the facts and would not reopen the
merits of the case.
On appeal in Behr III, this Court reversed the district court’s remand order. We held:
[T]he district court’s order lacks any indication of precisely how the Eighth Award
is “unclear as to its application”, or which issue submitted to the arbitrator was “not
fully adjudicate[d].” Nor with any confidence can we divine the answers from the
circumstances; prior to its remand order, the district court had expressly held that the
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 6
arbitrator’s opinion and award were not ambiguous with respect to Behr's obligation
to pay commissions on the 1996 EK parts and 1997 K parts. If the district court has
changed its mind about this issue, it needs to say so and explain it. If there is another
ambiguity in the award that makes enforcement impossible, the district court needs
to identify it. Until it does so, we cannot undertake a meaningful review of whether
the award is ambiguous or whether the circumstances are appropriate for a remand
to the arbitrator. Moreover, the district court’s vague order creates a substantial risk
that the arbitrator will have insufficient guidance as to how to clarify its award,
creating the potential for yet another journey to the district court, to this court on
appeal, and back yet again to the arbitrator. Accordingly, we find it necessary to
remand this case to the district court for clarification of the precise issue or issues
that remain for the arbitrator on remand.
Behr III, 326 F.3d at 783 (emphasis in original).
On remand, by order of March 29, 2004, the district court specified the purported ambiguities
in the arbitrator’s award and remanded to the arbitrator for clarification:
[T]he Eighth Award is ambiguous in its scope. The Eight Award states in part that
Plaintiff should be paid for “any order of products in the territory and specifically
including the following products.” The award is unclear insofar as the Court cannot
determine whether or not the list that follows this statement is the exclusive list of
the products on which commissions are due. Furthermore, as Defendant notes, there
is a continuing controversy over how long particular parts are commissionable.…
The Court was unable, based on the language in the award and the parties’ filings,
to divine what amount, if any, should be paid on the award.… Therefore the Court
will remand this case to Arbitrator Andrew W. A. Berkeley (1) to state the exact
scope of the products commissionable under the Eighth Award and (2) to state what
payments, if any, are due to each party from the other under the Eighth Award.
Although Behr timely appealed the district court’s order of remand, it failed to ask the
district court to stay its remand order, as required by Rule 8(a)(1) of the Federal Rules of Appellate
Procedure. Instead, Behr moved this Court for a stay. On July 1, 2004, this Court denied Behr’s
motion because, inter alia, Behr had failed to demonstrate irreparable harm that would warrant the
issuance of a stay. M & C v. Erwin Behr GMBH & Co., KG, No. 04-1557 (6th Cir. July 1, 2004).
On the eve of oral argument, the parties filed a stipulation with the Court to dismiss the present
appeal, without prejudice, and with each party bearing its own costs. The Court denied the
stipulation on April 25, 2005. Thereafter, the parties moved this Court to reconsider the denial of
the stipulation, which the Court also refused to grant. In that motion, the parties informed the Court
that the arbitration hearing that the district court ordered had taken place from April 11 through 13,
2005 in London, England and that one of the issues addressed was whether the original arbitration
award is ambiguous. At the conclusion of the hearing, the arbitrator purportedly indicated that he
would endeavor to issue a decision by May 2, 2005. To date, the parties have not apprised the Court
of any new decision from the arbitrator.
II
PURPORTED AMBIGUITY OF THE EIGHTH AWARD
A. Standard of Review
A determination of the arbitrability of a dispute is subject to de novo review. Behr II, 143
F.3d at 1037.
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B. Analysis
Although federal courts have jurisdiction to enforce arbitrations awards, courts may not go
beyond the arbitration award to decide questions that the arbitrator did not decide. Behr II, 143 F.3d
at 1037-38 (citing United Steelworkers of America v. Enter. Wheel & Car Corp., 363 U.S. 593, 599
(1960)). “An ambiguous award may not be enforced but should be remanded to the arbitrator.” Id.
at 1038 (citing Enter. Wheel, 363 U.S. at 597-98). “However, if the arbitrator’s opinion and award,
read together, are not ambiguous, the award should be enforced.” Id. (citing Int’l Bhd. of Elec.
Workers, Local 369 v. Olin Corp., 471 F.2d 468 (6th Cir. 1972)). As discussed below, the relevant
portions of the arbitration award, as well as the parties’ contract, are unambiguous and, therefore,
the district court erred in remanding to the arbitrator for further clarification on the scope of products
for which Behr must pay commissions.
Behr terminated its sales agency agreement with M & C on March 18, 1991. The parties’
agreement specifies Behr’s post-termination obligations to pay commissions to M & C as follows:
First, pursuant to Clause 7.1 of the agreement, Behr is obligated to pay commissions on (a)
all purchase orders obtained by M & C and accepted in writing by Behr prior to the termination of
the agreement, and (b) any extensions or renewal purchase orders for “the same individual item” and
accepted in writing by Behr prior to the termination of the agreement.
Second, pursuant to Clause 7.2 of the agreement, Behr is obligated to pay commissions on
all extension or renewal purchase orders “for the same individual items” received from customers
following the termination of the agreement.
Third, pursuant to Clause 7.3 of the agreement, Behr is obligated to pay commissions “on
all new [purchase] orders” that (a) are “not renewal or extension [purchase] orders,” (b) are received
from customers within three years following the termination of the agreement (March 18, 1994), and
(c) were actively solicited by M & C prior to the agreement’s termination. Clause 7.4 defines
“actively solicited” orders to mean “[purchase] orders which may reasonably be regarded to have
materialized mainly as a result of the negotiations and sales efforts” of M & C.
As noted, Clause 7.2 obligates Behr to pay commissions on renewal orders regardless of
when Behr receives them, so long as those orders involve the “same individual items” as in the
original purchase order. Also as noted, Clause 7.3 obligates Behr to pay commissions on all “new
orders” received within three years of the contract’s termination. Viewed in isolation, Clause 7.2
does not, on its face, place a durational limit on renewal orders for which Behr has to pay
commissions, unlike the three-year window for new orders. Clause 7.2 could be read to impose a
commission obligation on renewal orders only for products that were covered by a purchase order
that M & C solicited and Behr accepted prior to the contract’s termination on March 18, 1991.
Under a more expansive interpretation, however, Clause 7.2 could be read to impose a commission
obligation not only on renewal orders for products covered by a pre-termination purchase order, but
also renewal orders for “new orders” under Clause 7.3 – i.e., renewal orders for products covered
by a purchase order that M & C actively solicited and that Behr received between March 18,1991
and March 18, 1994. Under this latter interpretation of Clause 7.2, Behr’s obligation to pay
commissions on renewal orders for purchase orders that originated within the three-year, post-
contract termination period would not cease until the renewal orders ended, even if those orders
were received more than three years after contract termination.
The following example illustrates how the expansive interpretation of Clause 7.2 would
operate. The “1994 K Special” was a new order that M & C actively solicited and that Behr
received on October 14, 1992, during the three-year, post-contract termination period. Behr
concedes that it owes commissions on this purchase order as a “new order” under Clause 7.3. Under
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the expansive interpretation of Clause 7.2, however, Behr also would be obligated to pay
commissions on all renewal orders for “K Special” parts that are the “same individual items” as the
“1994 K Special” parts, even if those renewal orders were placed more than three years after the
contract’s termination. Thus, assuming that the “1997 K Special” parts are the same as the “1994
K Special” parts, Behr would be obligated to pay commissions for these parts, even though the
purchase order for the “1997 K Special” parts was placed at least five years after the contract’s
termination.
The contract as a whole, does not support this expansive reading of Clause 7.2. Clause 7.3
specifically states that Behr’s obligation to pay commissions on orders placed within three years of
contract termination extends only to new orders, “which are not renewal or extension orders.” If
the parties had intended Behr to pay M & C commissions for renewal orders of “new orders” under
Clause 7.3, then they would not have needed to specifically exclude “renewal or extension orders”
from Clause 7.3. Accordingly, the only logical reading of Clause 7.2 and 7.3 is that M & C is
entitled to commissions on renewal orders placed after the termination of the contract as long as
those renewal orders relate to the “same individual items” covered by a purchase order that M & C
obtained and Behr accepted prior to the contract’s termination on March 18, 1991.
In the so-called “Eighth Award,” the arbitrator dealt with M & C’s claim that it was entitled
to, inter alia, commissions for post-termination orders, and ordered Behr to pay all commissions for
“any order of products in the territory and specifically including the following products:” various
parts falling under the classification “1991 Model Year Business”; various parts falling under the
classification “1992 Cadillac Business”; and various parts falling under the classification “1994
Cadillac ‘K’ Car Series.” The district court held that the arbitrator’s use of the “specifically
including” language to define the range of comissionable parts creates an ambiguity because the
definition implies that M & C might be entitled to commissions on additional parts that the arbitrator
did not list with particularity. Behr argues on appeal that any ambiguity is irrelevant because the
only parts that arguably would be commissionable under a more expansive definition were ordered
more than three years after the termination of the contract between Behr and M & C and, therefore,
Behr has no obligation to pay, per Clause 7.3 of the agreement.
We agree with Behr. Behr has paid all commissions on the “1994 K Special” parts that were
ordered in the 1994 model year; Behr concedes that it owed commissions for sales of these parts
because it is undisputed that the purchase order was received within three years of terminating the
contract with M & C. As discussed above, however, any subsequent purchase orders for “1994 K
Special” parts that Behr received after the three-year period are non-commissionable under Clause
7.3 of the contract because Clause 7.3 does not obligate Behr to pay commissions for renewal orders
when the original purchase order was placed after March 18, 1991.
Behr further argues that the “1996 EK” parts and the “1997 K Special” parts are new parts
that General Motors designed and first ordered more than three years after the termination of the
agreement with M & C. Indeed, the evidence appears to show that GM and its suppliers issued new
purchase orders for these products, and the parts have different part numbers, engineering drawings,
pricing, and tooling as compared to the “1992 EK” and “1994 EK” parts. Notably, M & C does not
dispute that the 1996 and 1997 parts are not identical to predecessor parts, instead arguing that the
products are “essentially the same” to predecessor parts. M & C’s Br. at 6 n.1; see also id. at 7 n.1
(“[D]uring the course of production over the years in any of the programs or platforms, parts are
initially assigned ‘part numbers’ which may, in subsequent years, be changed while still referring
to the same essential part.”); id. at 27-28 (stating that “parts produced under the so-called 1997 K
Special and 1996 EK program… are nothing more than redesigns of parts and programs actively
solicited and actually produced by [M & C] from GM for Behr…”). Assuming that the “1996 EK”
and “1997 K Special” parts are not identical to predecessor parts, then purchase orders for those
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 9
parts are not commissionable under Clause 7.3 because they constitute “new orders” that were
placed more than three years after contract termination.
Moreover, even assuming that the “1997 K Special” parts are identical to the “1994 K
Special” parts, which are commissionable, Behr need not pay commission on orders for the “1997
K Special” parts because those orders would constitute renewal orders for a purchase order that was
placed during the three year period following Behr’s termination of the contact with M & C. Under
Clause 7.3, such renewal orders are non-commissionable; as discussed above, renewal orders are
commissionable under clause 7.2 only if the original purchase order was received prior to the
contract termination date.
M & C nevertheless argues that the scope of commissionable products is ambiguous, thus
requiring a remand to the arbitrator, by claiming that the arbitrator intended to award M & C
commissions on all orders arising from contract “programs” that M & C actively solicited prior to
the contract termination date. See M & C Br. at 6-7 n.1, 15. M & C implies that, because the “EK”
and “K Special” programs commenced in 1992 and 1993, respectively, and because M & C is
entitled to commissions on products ordered during those years, all subsequent purchase orders for
“EK” and “K Special” parts are commissionable (even if placed more than three years after the
contract termination date) because the orders were placed pursuant to a commissionable program.
See id. at 6-7 n.1. According to M & C, the arbitrator should decide which interpretation of the
contract is correct. Id. at 23.
M & C has not advanced a plausible interpretation of the parties’ contract or the arbitrator’s
award interpreting that contract. The parties’ agreement says nothing about commissions based on
“programs.” M & C bases its asserted entitlement to “program”-based commissions on the
following statement in the arbitrator’s award:
I find that Connelly has provided a sufficient body of the required documentary
evidence to fulfill all the requirements of Clause 7.4 [defining “actively solicited”
orders] and that, included within the scope of products subject to commission, are all
products under the 1994 K Special program.
This quotation from the arbitrator’s award is irrelevant, however, because the arbitrator’s finding
that M & C “actively solicited” the “1994 K Special” parts does not translate into a finding that M
& C is entitled to commissions on every subsequent order for “K Special” parts. The contract
authorized the arbitrator to specifically award commissions on the “1994 K Special” parts because
orders for those parts were placed within three years of the contract’s termination. The same is not
true of “K Special” orders for subsequent years.
There are only two clauses in the parties’ contract pursuant to which M & C could recover
commissions for post-1994 orders of “K Special” parts, but neither clause is availing. To recover
commissions under clause 7.2, M & C would have to characterize the post-1994 orders as renewal
orders and link those orders to a purchase order that M & C obtained and Behr accepted prior to the
contract’s termination. M & C concedes, however, that Behr received the “K Special” parts
purchase order after terminating its contract with M & C. See M & C Br. at 7 n.1. To receive
commissions under clause 7.3, M & C would have to characterize the post-1994 “K special” part
orders as new orders, which by definition are not orders for “the same individual items” covered by
a prior purchase order (which are renewal orders). M & C argues, however, that the “K Special”
parts are essentially the same from year to year, indicating its belief that the post-1994 orders for “K
Special” parts are renewal orders for which M & C would not be owed commissions. Moreover,
even if the post-1994 orders for “K Special” parts are for different parts and therefore are considered
new orders, M & C would not be entitled to commissions because those orders were placed more
than three years after Behr terminated its contract with M & C.
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 10
M & C also rests its argument on another passage from the arbitrator’s decision discussing
Clause 7.4, in which he stated:
Clause 7.4 then goes on to say: “‘actively solicited’ orders shall mean such orders
which may reasonably be regarded to have materialized mainly as a result of the
negotiations and sales efforts of the Agent [M &C] and proven to the Company
[Behr] by the production of any letters, telexes, plans, specifications and other
documentation exchanged with the Customers prior to the said date of termination.”
It is to be noted that the criteria is materialization of orders as a result of efforts; it
is immaterial that there should have been design changes in the parts concerned after
the application of the efforts and also that the business could have been lost by the
component supplier because of unacceptable pricing or bad quality.
As above, Clause 7.4 has nothing to do with the three-year time limit on commissionable new orders
under Clause 7.3. The fact M & C can be found to have actively solicited an order for a part even
though the design for that part had changed by the time the customer placed an order has no bearing
on the separate requirement that orders for new products be received within three years of the
contract termination date in order to be commissionable.
M & C also attempts to engraft a “life of the part” commission obligation on Behr; however,
no “life of the part” language is contained in the parties’ agreement, and Clause 7.2 makes it clear
that Behr is obligated to pay commissions for the “life of the part” only when customers renew
orders for products that originally were ordered prior to Behr’s termination of the contract.
Commissions on orders for new products that M & C actively solicited are payable only if Behr
received the orders within three years of the contract’s termination.
In further support of its argument, M & C cites to an October 27, 1992 purchase order from
General Motors (designated INL-D5677), which purportedly represents “the initial blanket purchase
order for the K Special and EK product issued to Behr on October 14, 1992[,] for the 3-year period
effective commencing on August 14, 1994, and which thereby includes at least the three-year period
following August 1994, i.e. through August[] 1997.” M & C Br. at 37 (emphasis in original). The
purchase order, however, explicitly states, “Seller agrees to sell and buyer agrees to purchase… for
the period from the date hereof to the end of the model year shown hereon.” (J.A. 167.) (emphasis
added). The model year shown on the purchase order is “Model Year 1993.” Id. Although the
purchase order states that it was “issued per negotiated 3 year contract, per Cadillac,” J.A. 169, M
& C has not identified the referenced “contract,” nor has it argued that it actively solicited that three-
year contract. In any event, the fact remains that GM needed to issue new purchase orders to
purchase parts for Model Years 1994 and beyond. Because this Court has held that M & C’s right
to commissions is contingent on the issuance of “purchase orders,” Behr II, 143 F.3d 1039-41,
Clause 7.3 of the parties’ contract entitles M & C to commissions only for those GM purchase orders
that Behr received by March 18, 1994. It is immaterial that GM was contractually committed to
issue purchase orders in subsequent years.
For these reasons, the district court erred in concluding that there is an ambiguity in the
contract and/or the arbitration award over the scope of commissionable products. Although the
district court identified an ambiguity when it concluded that the arbitrator’s use of the phrase
“specifically including” implies that more than the products he listed in Award Eight are
commissionable, that ambiguity is irrelevant because the only potential products for which Behr has
not paid commissions were ordered more than three years after the contract’s termination. Thus,
there is no reason to remand this issue to the arbitrator.
As noted at the outset, the parties claim that they recently arbitrated the purported ambiguity
in the arbitrator’s Eighth Award concerning the scope of commissionable products. But because the
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 11
parties’ contract is clear on its face, the district court erred in remanding this issue to the arbitrator.
Accordingly, the arbitrator’s forthcoming decision can and will have no bearing on our decision
today.
III
REMAINING OBLIGATIONS UNDER THE EIGHTH AWARD
The remaining issue is whether to remand to the arbitrator to resolve the issue of what
payments, if any, are due to each party from the other under the Eighth Award. The district court
apparently found it necessary to remand because of its belief that the scope of commissionable
products is ambiguous. Because the commissionable products issue can be resolved through
unambiguous contractual language, a remand to the arbitrator on the issue of payments is
unnecessary.
M & C argues that it has not been fully paid the Eighth Award, relying on a report from
Gerald Hepp, CPA, who is a court-appointed receiver. According to a report that Hepp filed with
the district court, Behr owes approximately $3 million in additional commissions, statutory
penalties, attorney fees, interest, and receiver fees. Although Hepp’s calculations omit any
commissions for purchase orders for the 1996 EK and 1997 K Special parts, his report includes
commissions on all purchase orders for the 1994 K Special parts, including those orders received
more than three years after Behr terminated its contract with M & C. In response, Behr’s expert
(James Grosskopf, CPA) calculated commissions due M & C based on the same sales and payment
figures in Hepp’s report, but excluded orders for the 1994 K Special parts that were received more
than three years after the date of the contract termination. Grosskopf determined that Behr actually
had overpaid M & C by $229.039. See J.A. 596-600.
Because Hepp’s assumptions regarding M & C’s entitlement to commissions were partially
incorrect under Clause 7.3 of the parties’ contract, a court must determine whether Behr’s expert has
accurately computed the commissions owed and paid to date. If the court finds that Behr has fully
satisfied the Eighth Award, then it should enter a partial satisfaction judgment for Behr and order
M & C to refund any overpayments. See FED. R. CIV. P. 60(b)(5) (“On motion and upon such terms
as are just, the court may relieve a party… from a final judgment, order, or proceeding [because]…
the judgment has been satisfied, released, or discharged….”). A remand to the district court on this
issue, however, would only invite further delay in this protracted litigation. Therefore, this Court
shall retain jurisdiction over this case. Within 30 days of this opinion’s issuance, the parties shall
submit a joint stipulation reflecting the amounts owed or overpaid pursuant to Award Eight. If the
parties cannot agree on these amounts, they are directed to advise the Court in writing of their
respective positions. After receipt of the joint stipulation or the opposing briefs, the Court will enter
an appropriate final judgment resolving the issue of payments owed under the contract.
IV
CONCLUSION
For all the foregoing reasons, we REVERSE the March 29, 2004 order of the district court
remanding this case to arbitration and retain jurisdiction over this matter to finally determine the
parties’ respective monetary obligations under the arbitrator’s Eighth Award. Within 30 days of
today’s order, the parties shall advise the court what commissions, if any, Behr owes M & C
pursuant to the Eighth Award or whether Behr has overpaid M & C in light of the Court’s
construction of the parties’ contract. In order to avoid further delay in this seemingly endless
litigation, the Court admonishes the parties to make every effort to jointly stipulate to an accounting
under the Eighth Award. Otherwise, the parties shall separately advise the Court of their positions
in writing. Thereafter, the Court shall enter a final judgment resolving the parties’ dispute over the
Eighth Award.
No. 04-1557 M & C Corp. v. Erwin Behr GmbH & Co. Page 12
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DISSENT
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MERRITT, Circuit Judge., dissenting. Instead of reversing the District Court, I would
require the parties to file the arbitrator’s report that is currently pending and then determine the
appropriate action to take, in light of that report.