Bay Shore Power Co. v. Oxbow Energy Solutions ( 2020 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 20a0260p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
BAY SHORE POWER COMPANY, ┐
Plaintiff-Appellant, │
│
> No. 20-3119
v. │
│
│
OXBOW ENERGY SOLUTIONS, LLC, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Northern District of Ohio at Toledo.
No. 3:17-cv-01982—Jeffrey James Helmick, District Judge.
Decided and Filed: August 13, 2020
Before: MOORE, CLAY, and MURPHY, Circuit Judges.
_________________
COUNSEL
ON BRIEF: Gregory J. Phillips, Nicholas J. Secco, Trevor G. Covey, James E. von der Heydt,
BENESCH FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, Ohio, for Appellant.
John P. Gilligan, Daniel M. Anderson, ICE MILLER LLP, Columbus, Ohio, Derek R. Molter,
ICE MILLER LLP, Indianapolis, Indiana, for Appellee.
CLAY, J., delivered the opinion of the court in which MOORE, J., joined. MURPHY, J.
(pp. 11–21), delivered a separate dissenting opinion.
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OPINION
_________________
CLAY, Circuit Judge. In 1998, Oxbow Energy Solutions (“Oxbow”) entered into a long-
term supply contract to provide limestone to Bay Shore Power Company (“Bay Shore”). In
2014, Oxbow breached the agreement and Bay Shore initiated arbitration proceedings to
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 2
vindicate its rights under the contract. After Bay Shore prevailed, it filed the instant action to
confirm the arbitration award and recover its attorneys’ fees. The district court granted summary
judgment for Oxbow, finding that the contract provides that both parties are to bear their own
attorneys’ fees with no possibility of recovery by the prevailing party. For the reasons that
follow, we disagree with the district court’s reasoning and REVERSE its judgment.
BACKGROUND
In 1998, Bay Shore entered into a Limestone Supply Agreement (“LSA”) with Oxbow to
provide limestone with certain chemical characteristics. The parties agreed to resolve any
disputes that might arise according to specified “Dispute Resolution Procedures.” R. 7-1, LSA,
PageID # 50. These procedures are listed in Annex A of the LSA, under a section entitled
“Definitions and Interpretation.” Id. at 53, 56–58. The procedures provide that if informal
negotiations between the parties and mediation attempts fail, then any dispute shall be settled by
binding arbitration. The parties further agreed that following arbitration any party could appeal
“to any State or Federal court of competent jurisdiction sitting in Cleveland, Ohio on the basis
that the panel has made a mistake of law or the panel’s finding or award is against the weight of
evidence or is beyond the power or jurisdiction of the panel.” Id. at 58.
In 2013, the supplier of limestone that Oxbow was providing to Bay Shore raised the
price of its product. As a result, it was no longer profitable for Oxbow to provide that limestone
to Bay Shore under the contract price and so, by early 2014, without Bay Shore’s permission,
Oxbow began to provide lower quality limestone. The inferior limestone posed a danger to Bay
Shore’s equipment. The limestone was necessary for the proper functioning of a Circulating
Fluidized Bed boiler, a critical piece of equipment at Bay Shore’s electrical power plant. Bay
Shore subsequently agreed to pay—under protest—a price in excess of that permitted by the
LSA for adequate limestone. After private negotiations and mediation failed in 2015, Bay Shore
invoked the Dispute Resolution Procedures and filed a demand for arbitration in 2016.
In 2017, a three-member arbitration panel ruled in favor of Bay Shore. The panel
unanimously held that Oxbow had breached the LSA by refusing to provide limestone at the
agreed-upon price, and awarded Bay Shore nearly $5 million in damages, costs, and interest.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 3
The arbitration panel did not, however, award attorneys’ fees to Bay Shore. It determined that
the provision of the Dispute Resolution Procedures that empowered the panel to “assess the costs
of the arbitration . . . against any party as the panel shall determine” expressly “denies it the
jurisdiction to award attorneys’ fees.” R. 7-4, Arb. Award, PageID # 99.
Bay Shore then filed an “Application to Confirm Arbitration Award and to Award
Attorneys’ Fees” in federal district court. R. 1, Application, PageID # 1. In response to a joint
motion from the parties, the court confirmed the panel’s award and ordered Oxbow to pay it
immediately, which Oxbow did. The parties then filed cross-motions for summary judgment on
the attorneys’ fees issue. The district court ruled for Oxbow, determining that the LSA did not
permit the prevailing party to recover its attorneys’ fees from the non-prevailing party.
According to the district court, mutually conflicting provisions in the LSA barred
recovery of attorneys’ fees. One provision in the Dispute Resolution Procedures (subsection
(b)(iv)) reads:
(iv) Binding Nature. Any decision rendered by the arbitrators pursuant to any
arbitration shall be final and binding upon the parties hereto, and judgment may
be entered upon it in accordance with Applicable Law in any court of competent
jurisdiction, including award of damages or injunctive relief, and may, in the
discretion of the panel, assess the costs of the arbitration (including reasonable
fees and expenses of the members of the panel) against any party as the panel
shall determine (but excluding attorneys’ fees which shall be borne by each party
individually).
R. 7-1, LSA, PageID # 57–58 (emphasis added). The provision immediately following this one
appears to be in conflict because it grants the prevailing party a right to attorneys’ fees. That
clause (subsection (b)(v)) provides:
(v) Costs and Expenses. The prevailing party in any arbitration or court
proceedings shall be reimbursed by the other party for all costs, expenses and
charges, including, without limitation, reasonable attorneys’ fees, incurred by said
prevailing party.
Id. at 58. To add another complication, a third provision—located in the “Miscellaneous” article
of the LSA—also indicates that the prevailing party is entitled to an award of its attorneys’ fees:
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Section 15.7. Attorneys’ Fees. If legal advice or assistance is obtained to enforce
any provision of this Agreement and a final determination of a court of competent
jurisdiction is made, the prevailing party shall recover from the non-prevailing
party all reasonable attorneys’ costs, expenses and fees incurred in connection
therewith.
Id. at 50.1
The district court held that there was no “meeting of the minds” on whether the non-
prevailing party should reimburse the prevailing party for its attorneys’ fees because the LSA
provisions on attorneys’ fees contradicted each other and it was impossible under Ohio law to
harmonize the clauses. R. 36, Dist. Ct. Summ. J. Order, PageID # 551. Specifically, it found:
Ultimately, I can ignore subsection (b)(iv)’s “which shall be borne by each party
individually,” no more than I could ignore subsection (b)(v)’s “arbitration or.”
Because the two provisions are irreconcilable, I must conclude there was no
meeting of the minds as to arbitration-related attorneys’ fees and find subsection
(b)(v) unenforceable insomuch as it relates to arbitration-related attorneys’ fees.
Id. It therefore granted Oxbow’s motion for summary judgment and denied Bay Shore’s. This
timely appeal followed.
DISCUSSION
This Court reviews district court orders granting summary judgment de novo. McMullen
v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004). We also review de novo a denial of a cross-
motion for summary judgment on purely legal grounds—such as Bay Shore’s in the present case.
See id. This appeal does not turn on the presence, or absence, of a genuine dispute of any
material fact, but rather presents a narrow question of contract interpretation.
Bay Shore contends that “[t]he language within the LSA’s four corners provides a clear
path to reconcile the fee-shifting clauses, through a simple sequencing of arbitral and court
jurisdiction.” Appellant’s Br. at 12. While subsection (b)(iv) “forbids an arbitration panel from
awarding fees to the prevailing party in arbitration,” subsection (b)(v) and Section 15.7
“unambiguously shift fees to the prevailing party.” Id. The only way to harmonize these
1Section 15.6, which provides for the resolution of “[a]ny dispute” in accordance with the Dispute
Resolution Procedures is also located within the “Miscellaneous” article of the LSA. R. 7-1, LSA, PageID # 49–50.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 5
clauses, Bay Shore says, is to read the former provision as limiting the arbitration panel’s
jurisdiction to award attorneys’ fees and the latter two as granting the prevailing party the right to
recover attorneys’ fees through an action in court.2
This argument first raises the question of federal subject matter jurisdiction over an
arbitration award. The Supreme Court has held that the Federal Arbitration Act (“FAA”),
9 U.S.C. § 1 et seq., does not provide federal courts with an independent basis for subject matter
jurisdiction. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581–82 (2008). For cases
within a federal court’s jurisdiction, section 9 of the FAA permits parties to apply to a court “for
an order confirming” an arbitration award. 9 U.S.C. § 9. Aside from narrow grounds allowing a
court to modify, vacate, or correct an award that are not relevant here, id. §§ 10–11, courts can
do no more than confirm or deny confirmation of the award. “[A]n action to confirm the award
should be a summary proceeding, not a proceeding in which the defendant seeks affirmative
relief.” Occidental Chem. Corp. v. Int’l Chem. Workers Union, 853 F.2d 1310, 1317 (6th Cir.
1988) (quoting Prof’l Adm’rs Ltd. v. Kopper-Glo Fuel, Inc., 819 F.2d 639, 642 (6th Cir. 1987)).
Oxbow maintains that the arbitration panel’s decision to not award attorneys’ fees was part of the
panel’s merits decision and is insulated from judicial review because the LSA delegates “any
dispute” arising under the LSA to an arbitration panel and mandates that the panel’s resolution of
any dispute will be “final and binding upon the parties.” Appellee’s Br. at 12–13.3
Oxbow’s argument underscores that this case is about arbitrability—that is, to what
extent the parties delegated dispute resolution to an arbitrator. As we have recently reaffirmed, it
is a “central tenet of the FAA” that “arbitration pursuant to the statute is ‘a matter of consent, not
coercion.’” Taylor v. Pilot Corp., 955 F.3d 572, 577 (6th Cir. 2020) (quoting Volt Info. Scis.,
2Oxbow argues that Bay Shore waived its argument regarding how the provisions can be harmonized
because it did not make this argument until its opening brief on appeal. Not so. For example, in its motion for
summary judgment before the district court, Bay Shore argued: “To expand a single parenthetical limiting the
arbitrators’ jurisdiction to overwrite and render superfluous two separate provisions inserted specifically and solely
to allow the prevailing party to recover its fees is unreasonable and violates fundamental tenets of contract
construction and interpretation.” R. 32-1, Br. in Support of Bay Shore’s Mot. for Summ. J., PageID # 485.
3Oxbow does not contest that this Court has diversity jurisdiction over this matter. In fact, the parties are
citizens of different states and the amount in controversy regarding attorneys’ fees is well in excess of $75,000.
28 U.S.C. § 1332. Instead, as noted above, Oxbow’s argument is that the FAA limits our jurisdiction because the
parties allegedly delegated the issue of attorneys’ fees to the arbitration panel’s discretion.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 6
Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). It is clear that the
parties consented to binding arbitration and indicated that “[a]ny decision rendered by the
arbitrators pursuant to any arbitration shall be final and binding upon the parties hereto.” R. 7-1,
LSA, PageID # 57. However, Bay Shore’s proposed construction of the LSA relies on the fact
that the parties specifically excluded the issue of attorneys’ fees from the list of arbitrable issues.
The arbitration panel acknowledged this by first observing that section 15.7 did not
provide it with the authority to award attorneys’ fees because that provision provides for an
award of attorneys’ fees after “a final determination of a court of competent jurisdiction is made”
and “this arbitration was initiated and has been conducted pursuant to Section 15.6, Dispute
Resolution, of the LSA, and is not currently before a court.” R. 7-4, Arb. Award, PageID # 98.
It concluded that the Dispute Resolution Procedures “specifically den[y] it the jurisdiction to
award attorneys’ fees to the prevailing party” and “[t]he provision in the LSA authorizing an
award of attorneys’ fees, Section 15.7 . . . applies only to courts, not to arbitration panels.” Id. at
99. Therefore, it denied Bay Shore’s request for attorney’s fees. This careful parsing of the LSA
indicates that the panel understood that while it lacked jurisdiction to award attorneys’ fees,
section 15.7 provides a court with such authority.
The panel’s “final and binding” decision correctly recognized that the LSA provides for a
court to decide whether the parties intended for the prevailing party to recover its fees through a
legal action. Bay Shore’s motion for attorneys’ fees is not an impermissible attempt to modify
the panel’s binding arbitration award, but rather is an attempt to vindicate a separate contract
right with respect to an issue that was not delegated to the arbitrators. For comparison, consider
our decision in Crossville Medical Oncology, P.C. v. Glenwood Systems, LLC, 610 F. App’x 464
(6th Cir. 2015). In that case, we found that the district court did not have the authority to award
attorneys’ fees in a confirmation proceeding because the parties agreed to submit their entire
dispute to arbitration. Id. at 470. Unlike the LSA at issue here, the contract in Crossville had no
limiting language with respect to the arbitration panel’s jurisdiction: “The Agreement here only
authorizes an arbitrator to award attorneys’ fees and costs during arbitration, and authorizes the
district court to enter the award as a judgment.” Id. at 468.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 7
Moreover, the Fifth Circuit’s decision in Schlobohm v. Pepperidge Farm, Inc., 806 F.2d
578 (5th Cir. 1986), which we relied on in Crossville, see 610 F. App’x at 469–70, is in accord
on this point as well. The Fifth Circuit found that “the only issue submitted to the arbitrators was
the fair market value of the franchise.” 806 F.2d at 581. The court also recognized that, “[i]f, as
is often the case, the arbitration agreement had provided that ‘any dispute arising from the
contract’ would be submitted to arbitration, a strong case could be made that any award of
attorney’s fees, interest, and costs was necessarily submitted to the arbitrators and a district court
that made such an award would be impermissibly modifying the arbitrators’ decision.” Id.
However, because the agreement did not contain that language, “the district court was free to
consider whether an award of attorney’s fees, interest, and costs was appropriate and that such an
award would not impermissibly modify the arbitrators’ decision.” Id.
In the present case, the arbitration clause in the LSA allows an arbitration panel much
broader authority than the single issue authority delegated to the arbitrators in Schlobohm.
However, the parenthetical in subsection (b)(iv) carving out attorneys’ fees from the panel’s
jurisdiction indicates that “any dispute” except for attorneys’ fees is to be “submitted to the
arbitrators.” Id. Consequently, the district court in the present case would not be impermissibly
modifying the arbitrators’ award by granting Bay Shore attorneys’ fees in accordance with
subsection (b)(v) and section 15.7. We are thus properly tasked with interpreting the meaning of
the provisions at issue to determine if they permit a court to award the prevailing party its
attorneys’ fees accrued in the course of enforcing the LSA.
Oxbow maintains that Bay Shore’s proposed interpretation of the LSA is not supported
by Ohio contract law. The LSA provides that Ohio law governs all interpretations of the
agreement. Under Ohio law, “contracts are to be interpreted so as to carry out the intent of the
parties, as that intent is evidenced by the contractual language.” Skivolocki v. East Ohio Gas
Co., 313 N.E.2d 374, 376 (Ohio 1974). If the terms fail to show an objective meeting of the
minds, then the contract may not be enforced. See 216 Jamaica Ave., LLC v. S & R Playhouse
Realty Co., 540 F.3d 433, 440 (6th Cir. 2008) (Ohio law requires “that the terms of the
agreement establish an objective meeting of the minds, which is to say that the contract was clear
and unambiguous”); Kostelnik v. Helper, 770 N.E.2d 58, 61 (Ohio 2002) (“A meeting of the
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 8
minds as to the essential terms of the contract is a requirement to enforcing the contract.”).
Importantly, a court “should attempt to harmonize all the provisions rather than produce conflict
in them.” Ottery v. Bland, 536 N.E.2d 651, 654 (Ohio Ct. App. 1987). “To that end, no
provision of the contract should be ignored as inconsistent if there exists a reasonable
interpretation which gives effect to both.” Id.We have explained that “Ohio law instructs courts to ‘attempt to reconcile inconsistent
contract terms and give effect to each term.’” Exp.-Imp. Bank of U.S. v. Advanced Polymer Scis.,
Inc., 604 F.3d 242, 248 (6th Cir. 2010) (quoting In re Graham Square, Inc., 126 F.3d 823, 830
(6th Cir. 1997)). “This means that the law recognizes that, in certain circumstances, provisions
in a contract will seem to contradict. But courts must seek to find a construction that would give
effect to each term, and only if such a construction is impossible will the contract be deemed
unenforceable.” Id.; see also Wohl v. Swinney, 888 N.E.2d 1062, 1066 (Ohio 2008) (“When
interpreting a contract, we will presume that words are used for a specific purpose and will avoid
interpretations that render portions meaningless or unnecessary.”); Expanded Metal Fireproofing
Co. v. Noel Const. Co., 101 N.E. 348, 350 (Ohio 1913) (“No provision of a contract is to be
disregarded as inconsistent with other provisions, unless no other reasonable construction is
possible.”)
Bay Shore asserts that subsection (b)(iv), the provision stripping the arbitration panel’s
jurisdiction to award attorneys’ fees, merely indicates that the parties are meant to initially bear
their own fees, but the prevailing party may then seek reimbursement in court. That is why
subsection (b)(v) and section 15.7 permit the recovery of attorneys’ fees through a legal action.
According to Bay Shore, “[t]his reading is very far from ‘impossible’; indeed, given the
sophistication of the parties and the intensive nature of the LSA negotiations in which they set
the terms for a twenty-year multimillion-dollar transaction, it is overwhelmingly likely.”
Appellant’s Br. at 21.
The fact of the matter is that two provisions in the LSA unequivocally provide for the
recovery of attorneys’ fees. Section 15.7 provides for the recovery of “all reasonable attorneys’
costs, expenses and fees incurred” after “a final determination of a court of competent
jurisdiction is made,” while subsection (b)(v) permits recovery by “[t]he prevailing party in any
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 9
arbitration or court proceedings.” R. 7-1, LSA, PageID # 50, 58. The references to legal
proceedings support Bay Shore’s reading of the clauses, according to which the prevailing party
must seek a court order for attorneys’ fees after the arbitration panel has issued a decision on the
merits. The broad phrasing in section 15.7—i.e., “all reasonable attorneys’ . . . fees”—and the
reference to “arbitration” in subsection (b)(v) also indicate that the parties intended for fees
accrued in the course of arbitration to be recovered.
Moreover, subsection (b)(v) provides that the prevailing party is to be “reimbursed” for
its attorneys’ fees. “Reimburse” means “to pay back to someone” or “to make restoration or
payment of an equivalent to,” indicating that an individual has already incurred some expense.
Reimburse, Merriam-Webster, https://www.merriam-webster.com/dictionary/reimburse. In this
way, subsection (b)(v) accords with subsection (b)(iv). Each party bears its own attorneys’ fees
during arbitration, but the prevailing party may seek reimbursement in court following an
arbitration award. This reading recognizes the “specific purpose” of each provision and avoids
an interpretation that “render[s] portions meaningless or unnecessary.” Wohl, 888 N.E.2d at
1066.
Furthermore, subsection (b)(iv) only refers to what the arbitration panel may do in its
“discretion” (i.e., “assess the costs of the arbitration . . . (but excluding attorneys’ fees)”). R. 7-1,
LSA, PageID # 57–58. This reinforces Bay Shore’s view that while the parties did not intend for
the arbitration panel to assess attorneys’ fees, they did intend for a court to do so. While the
parties would have done well to draft contract terms clear enough to avoid this dispute, Bay
Shore’s construction of the clauses is not at all “impossible.” Exp.-Imp. Bank, 604 F.3d at 248.
Instead it “give[s] effect to each term.” Id. Ohio law compels us to accept such a “reasonable”
construction. Ottery, 536 N.E.2d at 654; Expanded Metal Fireproofing Co., 101 N.E. at 350.
Oxbow argues that the LSA cannot be read to permit the recovery of attorneys’ fees
because the FAA does not permit courts to accept evidence during an arbitration award
confirmation proceeding and so there would be no means for a court to determine which fees
were reasonable. See Menke v. Monchecourt, 17 F.3d 1007, 1009 (7th Cir. 1994) (observing that
because the FAA does not provide “for taking of evidence on an issue such as attorneys’ fees,
. . . the court [would be] powerless to receive evidence concerning attorneys’ fees and award
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 10
an[y] amount it would find appropriate” (quoting Raytheon Co. v. Comput. Distrib., Inc., 632 F.
Supp. 553, 560 (D. Mass. 1986))). However, there is no obstacle to the district court taking
evidence on attorneys’ fees in the present case because the parties did not delegate the issue of
attorneys’ fees to the arbitrators’ discretion. Bay Shore’s motion for attorneys’ fees is not part of
the confirmation proceeding governed by the FAA, but rather constitutes a separate contract
action. As we observed in Crossville, “the prevailing American rule . . . that each party in
federal litigation pays his own attorneys’ fees” can be displaced by “contractual agreement
between the parties.” 610 F. App’x at 470 (quoting Menke, 17 F.3d at 1009).
Ultimately, the provisions at issue can either be read together to permit the recovery of
attorneys’ fees in court but not before an arbitration panel, or they are hopelessly contradictory
and unenforceable. Bay Shore presents a reasonable construction of the terms to harmonize
them while Oxbow only presents reasons to be skeptical of Bay Shore’s interpretation. None of
those reasons are compelling; nor do any of them render Bay Shore’s interpretation impossible.
See Exp.-Imp. Bank, 604 F.3d at 248. Consequently, Bay Shore’s interpretation governs, and as
the prevailing party it may recover from Oxbow its reasonable attorneys’ fees paid in the course
of enforcing the LSA through arbitration and the instant lawsuit. Bay Shore, rather than Oxbow,
is entitled to judgment as a matter of law.
CONCLUSION
For the reasons provided above, we REVERSE the district court’s judgment and
REMAND the case to the district court with instructions to enter summary judgment in favor of
Bay Shore and to calculate and award it reasonable attorneys’ fees in accordance with the LSA.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 11
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DISSENT
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MURPHY, Circuit Judge, dissenting. Contracts frequently include terms that permit the
prevailing party to recover its attorney’s fees from the other side if a dispute arises between
them. And contracts frequently include terms that instead stick with the “American Rule,” under
which the parties cover their own attorney’s fees. But contracts usually do not include both sets
of terms—as the contract in this case does. One provision prohibits the shifting of attorney’s
fees to the prevailing party, while the other requires the shifting of those fees. An arbitration
panel declined to award attorney’s fees in light of these conflicting provisions, and the prevailing
party now seeks them from us. I would affirm the district court’s decision not to award fees or at
least remand for proceedings on this ambiguous contract’s meaning.
Oxbow Energy Solutions agreed to supply limestone to Bay Shore Power Company. The
parties eventually disputed whether Oxbow provided deficient limestone. The Agreement
contained a broad arbitration clause. Section 15.6 stated: “Any dispute arising under this
Agreement shall be resolved in accordance with the Dispute Resolution Procedures.”
Agreement, R.7-1, PageID#50. Those procedures, in turn, required arbitration. Id., PageID#57–
58. The parties thus arbitrated whether Oxbow breached the contract. An arbitration panel ruled
for Bay Shore.
Yet this appeal does not concern the merits. It concerns whether Oxbow must pay the
attorney’s fees that Bay Shore incurred during arbitration. The Agreement contains three
provisions that send mixed signals about attorney’s fees. On the one hand, Subsection (b)(iv) in
the Agreement’s definition of “Dispute Resolution Procedures” prohibits the arbitrators from
awarding attorney’s fees: “Any decision . . . may in the discretion of the panel, assess the costs of
the arbitration (including reasonable fees and expenses of the members of the panel) against any
party as the panel shall determine (but excluding attorneys’ fees which shall be borne by each
party individually)[.]” Id., PageID#58.
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On the other hand, two different provisions seem to require the shifting of attorney’s
fees. The very next provision in the Agreement’s definition of Dispute Resolution Procedures
(Subsection (b)(v)) indicates: “The prevailing party in any arbitration or court proceedings shall
be reimbursed by the other party for all costs, expenses and charges, including, without
limitation, reasonable attorneys’ fees, incurred by said prevailing party.” Id. And another
section elsewhere in the Agreement (not in the definition of “Dispute Resolution Procedures”)
adds to the disconnect. Section 15.7—which follows the section requiring disputes to be
resolved through the Dispute Resolution Procedures—authorizes attorney’s fees as well: “If legal
advice or assistance is obtained to enforce any provision of this Agreement and a final
determination of a court of competent jurisdiction is made, the prevailing party shall recover
from the non-prevailing party all reasonable attorneys’ costs, expenses and fees incurred in
connection therewith.” Id., PageID#50.
How did the arbitrators reconcile these provisions? The panel “concluded that because
the jurisdictional language as to an award of attorneys’ fees is unclear, [it did] not have
jurisdiction based on the [Agreement’s] language to award attorneys’ fees.” Final Award, R.7-4,
PageID#98. The panel reasoned that “[a]rbitration is a creature of contract” and that the
arbitrators have “only the jurisdiction and authority to decide claims and issue awards to the
extent the parties’ agreement so provides.” Id., PageID#99. It explained that it had jurisdiction
under Section 15.6, which required all disputes to be resolved through the Dispute Resolution
Procedures. Id. But Section 15.6 “specifically denies it the jurisdiction to award attorneys’ fees
to the prevailing party.” Id. And the panel noted that Section 15.7 “applies only to courts not to
arbitration panels.” Id.After the panel’s opinion, Bay Shore filed an “application” in the district court to confirm
the arbitration award under the Federal Arbitration Act and to obtain the attorney’s fees that the
arbitrators declined to grant. The parties agreed to an order confirming the award but filed cross
motions for summary judgment on attorney’s fees. The district court granted summary judgment
to Oxbow. Finding the Agreement’s provisions “irreconcilable,” the court concluded that “there
was no meeting of the minds as to arbitration-related attorneys’ fees.”
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Bay Shore now appeals. I agree with my colleagues that the district court’s meeting-of-
the-minds reasoning cannot stand. But I would affirm on the alternative ground that Bay Shore’s
request for attorney’s fees conflicts with the Federal Arbitration Act. On the merits, I also find
the agreement’s provisions ambiguous on this attorney’s fees question and so would remand for
the introduction of extrinsic evidence under Ohio contract law. I thus respectfully dissent.
I
The arbitrators held that the Agreement barred them from awarding Bay Shore the
attorney’s fees it incurred in arbitration. Yet Bay Shore asks us to interpret the Agreement de
novo and award these very attorney’s fees in this confirmation proceeding. Its request conflicts
both with the parties’ choice to resolve all disputes in arbitration and with the Federal Arbitration
Act.
A
Start with first principles governing judicial review of arbitration awards. The Federal
Arbitration Act authorizes a party to apply to a court “for an order confirming” an arbitration
award where, as here, the parties’ agreement allows for such a confirmation. 9 U.S.C. § 9. The
Act makes clear that “the court must grant such an order unless the award is vacated, modified,
or corrected as prescribed in sections 10 and 11[.]” Id. Section 10 permits a party to apply to the
court for an order vacating the award in narrow circumstances, such as “where the award was
procured by corruption, fraud, or undue means.” Id. § 10(a)(1). Similarly, § 11 permits a party
to apply to the court for an order modifying or correcting the award in other narrow
circumstances, such as “[w]here there was an evident material miscalculation of figures or an
evident material mistake in the description of any person, thing, or property referred to in the
award.” Id. § 11(a). Together, these three sections represent the exclusive framework governing
review of arbitration awards when a party seeks to confirm an award under the Federal
Arbitration Act. See Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 586–88 (2008).
When no party seeks to vacate or modify the award under §§ 10 or 11, therefore, “an
action to confirm the award should be a summary proceeding, not a proceeding in which the
defendant seeks affirmative relief.” Occidental Chem. Corp. v. Int’l Chem. Workers Union, 853
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 14
F.2d 1310, 1317 (6th Cir. 1988) (citation omitted); see Menke v. Monchecourt, 17 F.3d 1007,
1009 (7th. Cir. 1994); Booth v. Hume Publ’g, Inc., 902 F.2d 925, 932 (11th Cir. 1990); Ottley v.
Schwartzberg, 819 F.2d 373, 377 (2d Cir. 1987). For example, the requesting party files an
application—not a complaint—and the Act directs the court to treat this application as a motion,
not as a usual initial pleading. See 9 U.S.C. §§ 6, 9; IFC Interconsult, AG v. Safeguard Int’l
Partners, LLC, 438 F.3d 298, 308 (3d Cir. 2006); Health Servs. Mgmt. Corp. v. Hughes, 975
F.2d 1253, 1257–58 (7th Cir. 1992). The Act streamlines judicial review in this fashion because
“[t]he parties have contracted for a decision by arbitrators, not the Court.” Wachovia Secs., Inc.
v. Gangale, 125 F. App’x 671, 676–77 (6th Cir. 2005). And the confirmation order is designed
only to “make[] the arbitrators’ award a final, enforceable judgment of the court.” Menke, 17
F.3d at 1009. A confirmation proceeding before a court is not a “redo” of the arbitration
proceeding before the arbitrators.
If a party does seek to alter an arbitration award, the party must instead request relief
through a motion to vacate or modify the award under 9 U.S.C. §§ 10 or 11. Here too, judicial
review is narrow. These sections offer limited paths for changing the award. See Marshall v.
SSC Nashville Operating Co., LLC, 686 F. App’x 348, 352 (6th Cir. 2017). “When courts are
called on to review an arbitrator’s decision, the review is very narrow; one of the narrowest
standards of judicial review in all of American jurisprudence.” Nationwide Mut. Ins. Co. v.
Home Ins. Co., 429 F.3d 640, 643 (6th Cir. 2005) (citation omitted). Courts generally “are not
permitted to consider the merits of an arbitration award even if the parties allege that the award
rests on errors of fact or misinterpretation of the contract.” Andersons, Inc. v. Horton Farms,
Inc., 166 F.3d 308, 328 (6th Cir. 1998) (citation omitted); see Marshall, 686 F. App’x at 353.
In Hall Street, the Supreme Court added that parties may not contract for broader review
of an arbitration award beyond the narrow grounds listed in 9 U.S.C. §§ 10 and 11. 552 U.S. at583–84. There, the parties’ contract permitted a court to modify an arbitration award if the
arbitrator’s findings of fact were not supported by substantial evidence or if the arbitrator’s legal
rulings were wrong. Id. at 579. The Court found these provisions unenforceable—at least if the
parties relied on the Federal Arbitration Act (not state law) to obtain judicial review. Id. at 584,
590. “[W]hen parties take the [Federal Arbitration Act] shortcut,” the Court held, “§§ 10 and 11
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 15
respectively provide the [Act’s] exclusive grounds for expedited vacatur and modification.” Id.
at 583–84. It reasoned that confirmation was designed to be a streamlined procedure “obviating
the separate contract action that would usually be necessary to enforce or tinker with an arbitral
award in court.” Id. at 582. But if the parties could expand that review, it would “open[] the
door to the full-bore legal and evidentiary appeals that can ‘rende[r] informal arbitration merely a
prelude to a more cumbersome and time-consuming judicial review process[.]’” Id. at 588
(citation omitted).
B
Bay Shore’s request for its arbitration-incurred attorney’s fees conflicts with the Federal
Arbitration Act. Recall that this case began with Bay Shore’s application to confirm the
arbitration award under the Federal Arbitration Act. 9 U.S.C. § 9. But the arbitration panel
refused to provide Bay Shore with its arbitration-related attorney’s fees as part of that award. So
Bay Shore’s further request that we grant it those attorney’s fees would compel us to modify the
award. Bay Shore, however, did not file an application requesting “an order modifying or
correcting the award” under 9 U.S.C. § 11. It had good reason not to. Section 11 does not allow
courts to modify an arbitration award by reversing an arbitration panel’s decision that the
contract did not permit it to award fees. Parties, moreover, cannot expand § 11’s narrow grounds
for modification by adding the requested modification to a confirmation application. See Hall
Street, 552 U.S. at 583–84. “[F]or a district court to include an additional award of attorneys’
fees would ‘judicialize’ the arbitration process and constitute an unauthorized modification of the
arbitrators’ award” under the Act. Menke, 17 F.3d at 1009 (discussing Schlobohm v. Pepperidge
Farm, Inc., 806 F.2d 578 (5th Cir. 1986)).
Bay Shore’s request for its arbitration-incurred attorney’s fees also conflicts with the
Agreement. The Agreement leaves no room for the independent judicial inquiry over its
meaning that Bay Shore asks of us here. It unambiguously states: “Any dispute arising under this
Agreement shall be resolved in accordance with the Dispute Resolution Procedures.”
Agreement, R.7-1, PageID#50 (emphasis added). Those procedures indicate that if the parties
cannot settle their contract dispute themselves, “such Dispute shall then be settled by
arbitration.” Id., PageID#56 (emphasis added). And the procedures indicate that “[a]ny decision
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 16
rendered by the arbitrators pursuant to any arbitration shall be final and binding upon the parties
hereto[.]” Id., PageID#57. Yet Bay Shore now asks us to review the Agreement de novo and
conclude that, while its conflicting provisions do not permit arbitrators to award attorney’s fees,
they do permit courts to do so. Oxbow disagrees and offers a competing view. But the
Agreement itself says who should resolve this dispute about the meaning of these conflicting
attorney’s fees provisions—the arbitrators. And the arbitration panel’s opinion nowhere
authorizes the courts to award the fees that it denied.
To be sure, the Agreement noted that a party to the arbitration could “appeal” to a court
“on the basis that the panel has made a mistake of law or the panel’s finding or award is against
the weight of evidence or is beyond the power or jurisdiction of the panel.” Agreement, R.7-1,
PageID#58. But both parties agree that this provision, like the similar provision in Hall Street,
conflicts with the Federal Arbitration Act’s narrow grounds for judicial review of arbitration
awards. See 552 U.S. at 583–84. Bay Shore thus cannot rely on it here. Id.Substantial precedent confirms my reading of the Act and the Agreement. Start with
Schlobohm. There, the Fifth Circuit asked whether a district court correctly awarded the
attorney’s fees that the prevailing party incurred during the confirmation process (not, as here,
during the arbitration). 806 F.2d at 580. The losing party had argued “that the district court sat
solely to confirm the arbitration award and that under the Federal Arbitration Act the district
court could modify or correct the award only under certain narrow circumstances, none of which
are present here.” Id. The court disagreed with this argument because the parties’ arbitration
agreement submitted only one narrow issue to the arbitrators. Id. at 581. Yet the court noted
that this argument would have merit when parties agreed to arbitrate all disputes: “If, as is often
the case, the arbitration agreement had provided that ‘any dispute arising from the contract’
would be submitted to arbitration, a strong case could be made that any award of attorney’s
fees . . . was necessarily submitted to the arbitrators and a district court that made such an award
would be impermissibly modifying the arbitrators’ decision.” Id. That is how the parties’
agreement reads in this case. And that is what Bay Shore asks us to do—modify the arbitrators’
award by adding attorney’s fees to it.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 17
Our court has agreed with Schlobohm’s reasoning since. See Crossville Med. Oncology,
P.C. v. Glenwood Sys., LLC, 610 F. App’x 464, 467–70 (6th Cir. 2015). In Crossville, we
rejected a party’s request for the district court to award attorney’s fees incurred during the
confirmation process. See id. The relevant contract had “the precise language that the Fifth
Circuit in Schlobohm suggested would preclude a court from adjudicating the issue of post-
arbitration attorneys’ fees.” Id. at 469. Like the Agreement in this case, the contract in
Crossville stated that the parties would resolve any dispute through arbitration. Id. We found
this “any dispute” language broad enough to encompass the attorney’s fees issue that the
prevailing party had raised in the district court. Id. at 469–70. And the prevailing party there
(like Bay Shore here) “did submit the issue of attorneys’ fees to arbitration”—showing that this
party recognized that the attorney’s fees dispute was for the arbitrators, not the courts, under the
contract’s broad language. Id. at 470.
Many other courts have reached similar conclusions. If a contract includes a broad
arbitration clause covering “any dispute,” courts refuse to award attorney’s fees in confirmation
proceedings. See Menke, 17 F.3d at 1009–10; Davison Design & Dev., Inc. v. Frison, 2019 WL
1745787, at *2–3 (W.D. Pa. Apr. 18, 2019); Bd. of Trs. of the Mun. Elec. Util. of the City of
Cedar Falls v. Miron Constr. Co., 2014 WL 1464858, at *8 (N.D. Iowa Apr. 15, 2014); Sullivan
v. Lumber Liquidators, Inc., 2013 WL 4049102, at *4 (D. Nev. Aug. 9, 2013); Hannibal Pictures
v. Les Films de l’Elysee, 2012 WL 6608595, at *3 (C.D. Cal. Dec. 18, 2012); Own Capital, LLC
v. Celebrity Suzuki of Rock Hill, LLC, 2011 WL 3300696, at *1–3 (E.D. Mich. Aug. 2, 2011); cf.
Altruist, LLC v. Medex Patient Transp., LLC, 308 F. Supp. 3d 943, 946, 952–53 (M.D. Tenn.
2018).
C
My colleagues conclude that, like the contract in Schlobohm, the Agreement “specifically
excluded the issue of attorneys’ fees from the list of arbitrable issues.” Maj. Op. 6. It
unambiguously does not. The Agreement sends “any dispute arising under the Agreement” to
arbitration. Agreement, R.7-1, PageID#50. The parties now dispute whether the Agreement
allows courts to award the attorney’s fees incurred during arbitration. They thus are engaged in a
“dispute” that “aris[es] under the Agreement.” So the Agreement’s plain terms reserve this
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 18
dispute’s resolution for the arbitrators. My colleagues respond by pointing to the Agreement’s
provisions authorizing an award of attorney’s fees. But their reliance on these provisions
assumes the conclusion to the debate: Does the Agreement authorize attorney’s fees despite its
conflicting provisions? The attorney’s fees provisions say nothing about the procedure for
resolving that dispute about the Agreement. Instead, the default rule should apply here—that the
arbitrators must resolve it.
Bay Shore, by comparison, argues that we may consider this question de novo because of
the arbitration panel’s use of the word “jurisdiction” when denying attorney’s fees. This
language, Bay Shore argues, shows that the panel did not adjudicate the merits by rejecting Bay
Shore’s interpretation over how to reconcile the conflicting attorney’s fees provisions. Instead,
Bay Shore claims, the panel found that it lacked the power to reach the merits of this attorney’s
fees question and reserved it for the courts. Bay Shore is correct that parties who “agree to
arbitrate” may “exclud[e] certain claims from the scope of their arbitration agreement.” Volt
Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989). But the
arbitration panel nowhere interprets the Agreement to exclude from arbitration the parties’
“specific dispute” about the meaning of these conflicting attorney’s fees provisions. Masco
Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004) (citation omitted). That would
have been surprising. As noted, the Agreement nowhere carves out disputes over attorney’s fees
from arbitration. And “any doubts concerning the scope of arbitrable issues should be resolved
in favor of arbitration” even when the “problem at hand is the construction of the contract
language itself[.]” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25
(1983). Thus, neither party even suggested that the arbitrators lacked the authority to resolve this
attorney’s fees issue. Cf. BP Am. Prod. Co. v. Chesapeake Expl., LLC, 747 F.3d 1253, 1260
(10th Cir. 2014). Instead, both sides requested their attorney’s fees if the arbitrators found them
consistent with the Agreement.
I read the arbitration panel’s opinion differently. The panel did not say it lacked
jurisdiction to resolve this dispute about the meaning of the conflicting attorney’s fees
provisions. It, in fact, addressed that dispute by holding that it lacked jurisdiction “to award
attorneys’ fees to the prevailing party.” Final Award, R.7-4, PageID#99 (emphasis added). The
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 19
panel recognized that the Agreement contained “ambiguous and contradictory language,” but
found that “one section of the [Agreement] on its face contains language that prohibits the award
of attorneys’ fees by an arbitration panel.” Id., PageID#98. The panel thus engaged in
interpretation, not reservation. And it treated the provision barring attorney’s fees as controlling.
Despite its use of jurisdictional language, therefore, the opinion plainly reached the merits of this
contract dispute and resolved the dispute against Bay Shore by denying attorney’s fees. Cf.
Arbaugh v. Y & H, 546 U.S. 500, 510–11 (2006); V Cars, LLC v. Chery Auto. Co., 603 F. App’x
453, 457 (6th Cir. 2015).
Even if true, Bay Shore responds, the arbitration panel read the Agreement to bar only the
arbitrators from awarding arbitration-related attorney’s fees, while permitting the courts to
award fees later. I agree that the panel indicated only that the Agreement barred the arbitrators
from awarding fees. But the panel nowhere added that, despite the conflicting attorney’s fees
provisions, the Agreement allowed courts to award the arbitration-related fees that the panel
refused to provide. If the panel had meant to hold that courts could add arbitration-related
attorney’s fees to its award, it would not have ended its opinion with the following statement:
“This Award resolves all claims between the parties presented in the Demand, Counterclaim, or
other pleadings and/or at the Hearing. Any claim not specifically granted is hereby denied.”
Final Award, R.7-4, PageID#109 (emphasis added). This broad language covers Bay Shore’s
claim for fees and does not dismiss the claim without prejudice. The broad language also does
not include any disclaimer that courts may later award fees. That is why, aside from arguing
over whether we may even review this issue, Bay Shore asks us to review the Agreement de
novo. It does not ask us merely to enforce the panel’s prior interpretation of the Agreement. Yet
the meaning of the Agreement was for the arbitrators. And they did not resolve this issue in
favor of Bay Shore.
II
Even if I agreed that we could engage in a de novo review of the Agreement, I could not
find that it unambiguously authorizes arbitration-related attorney’s fees to the prevailing party.
Its terms leave me puzzled whether the parties intended to provide for the shifting of attorney’s
fees incurred during the arbitration. So I would remand for proceedings to resolve that puzzle.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 20
The contract states (and the parties agree) that Ohio law governs its meaning. Under
Ohio law, courts “examine the contract as a whole and presume that the intent of the parties is
reflected in the language of the contract.” Sunoco, Inc. (R & M) v. Toledo Edison Co.,
953 N.E.2d 285, 292 (Ohio 2011). When deciphering the parties’ intent, we give the contract’s
words their “plain and ordinary meaning.” Laboy v. Grange Indem. Ins. Co., 41 N.E.3d 1224,
1227 (Ohio 2015). If, however, the “contract is ambiguous, a court may consider extrinsic
evidence to ascertain the parties’ intent.” Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261
(Ohio 2003). And it is “the role of the finder of fact to resolve ambiguity.” Id. at 1262.
The conflicting attorney’s fees provisions render this Agreement ambiguous. Subsection
(b)(iv) of the Dispute Resolution Procedures gives the arbitrators discretion to award costs, but
“exclud[es] attorneys’ fees which shall be borne by each party individually.” Subsection (b)(v)
then says the prevailing party “shall be reimbursed by the other party for all costs,” including
“reasonable attorneys’ fees[.]” I agree with the district court that these clauses seem
irreconcilable on their face, and I would find that their irreconcilability creates an ambiguity for
the fact finder to resolve.
To reconcile the provisions, Bay Shore interprets Subsection (b)(iv) as preventing only
the arbitrators from awarding attorney’s fees, and it interprets Subsection (b)(v) as requiring a
court to do so. But its reading does not strike me as the only plausible way to reconcile these
seemingly conflicting provisions. It is perhaps more plausible that, as Bay Shore suggested
before the arbitrators, one of the provisions is a “scrivener’s error.” Cf. 7 Corbin on Contracts
§ 28.45, Lexis (database updated 2020). Extrinsic evidence could bear this out. It is also
plausible that the parties meant to prohibit the recovery of arbitration-incurred attorney’s fees,
but to allow the recovery of court-incurred attorney’s fees. After all, Subsection (b)(v) comes
immediately after the provisions in Subsection (b)(iv) detailing court proceedings. To be sure,
this reading is not without problems. Most notably, Subsection (b)(v) says that “the prevailing
party in any arbitration or court proceeding” should recover its fees. But the Agreement might
have included this “any arbitration” language to make clear that attorney’s fees were recoverable
in a confirmation proceeding in which the party who already prevailed in the arbitration merely
sought to confirm the award in a court.
No. 20-3119 Bay Shore Power Co. v. Oxbow Energy Solutions Page 21
And Bay Shore’s reading has its own problems. To start, it relies on the attorney’s fees
language in Section 15.7 of the Agreement. But, as the arbitration panel found, this section does
not apply to disputes (like this one) that flow through the “Dispute Resolution Procedures”
identified in Section 15.6. Those procedures outline a robust process for resolving disputes and
nowhere mention Section 15.7. Likewise, Section 15.7 nowhere mentions arbitration.
Next, Bay Shore’s attempted harmonization of Subsections (b)(iv) and (b)(v) does not fit
the text. By holding that (b)(v) applies to fees incurred during arbitration, Bay Shore reads out
two clauses of Subsection (b)(iv). We must either excise Subsection (b)(iv)’s categorical phrase
that attorney’s fees “shall be borne by each party individually” or include the implied word
“temporarily” in that phrase. In addition, Subsection (b)(iv) grants the arbitration panel
discretion to assess other arbitration costs against “any party as the panel shall determine.”
Subsection (b)(v), by contrast, requires the reimbursement of “all costs, expenses and charges”
incurred by the prevailing party. It would make no sense to give the arbitrators the discretion to
deny these arbitration costs, only to then compel a court to provide the costs anyway.
All of this said, I do not mean to suggests that Bay Shore’s reading is wrong. But it is not
unambiguously right. In these circumstances, the resolution of the Agreement’s ambiguity is a
matter for the trier of fact after discovery and a trial. That conclusion only reiterates my view
that the Federal Arbitration Act should prohibit Bay Shore’s requested relief because the proper
resolution of this dispute entails the “cumbersome and time-consuming judicial review process”
that the Supreme Court sought to avoid. Hall Street, 552 U.S. at 588 (citation omitted).
* * *
In short, Bay Shore’s request for attorney’s fees conflicts with the Federal Arbitration Act
and with the parties’ decision to resolve all disputes through arbitration. I thus would affirm. At
the least, I would remand for further proceedings to decide the ambiguous Agreement’s meaning.
For both reasons, I respectfully dissent.