Thornburgh Insulation, Inc. v. GEA Process Engineering, Inc.
MEMORANDUM AND ORDER re: 16 MOTION to Compel Arbitration filed by Defendant GEA Process Engineering, Inc. IT IS HEREBY ORDERED that defendant's motion to compel arbitration (#16) is DENIED. Signed by District Judge Stephen N. Limbaugh, Jr on 8/31/15. (CSG)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
THORNBURGH INSULATION, INC.,
GEA PROCESS ENGINEERING, INC., )
No. 4:14:cv1274 SNLJ
MEMORANDUM AND ORDER
Plaintiff Thornburgh Insulation, Inc. filed this lawsuit for breach of the parties’
agreement and for quantum meruit and suit on account in the alternative. Plaintiff had
contracted with defendant GEA Process Engineering, Inc. for plaintiff to furnish labor,
materials, fixtures, and machinery for certain improvements made to property owned by a
third party in Pevely, Missouri (the “project” or “Pevely project”). GEA was the general
contractor for the project and Thornburgh was a subcontractor. Plaintiff alleges it
performed the agreed-upon services, demanded payment from GEA in the amount of
$341,242.31, and that GEA refused to pay. Plaintiff thus filed this lawsuit in this Court.
Defendant notified plaintiff that it had elected to arbitrate the disputes in
Washington, D.C. based on the parties’ arbitration agreement. Plaintiff refuses to
arbitrate, claiming it never agreed to do so. Defendant has thus moved to compel
arbitration and seeks a stay of this litigation in the interim (#16). That motion has been
fully briefed and is now ripe for disposition.
Plaintiff agreed to perform services for defendant at a certain price on April 16,
2013. The agreement was negotiated by John Thornburgh on behalf of plaintiff and
Alex Duvan for defendant over the course of several weeks. Plaintiff sent defendant a
proposal by email and defendant sent plaintiff a purchase order accepting the proposal,
also by email. John Thornburgh then e-mailed Craig Barrett of GEA stating
We are in receipt of the PO for the project please reference our proposal
letter that has been the document everyone has been working with that
includes the specifics as we have discussed together to come to an
agreement on the scope required by GEA. We look forward to a successful
John B. Thornburgh
The purchase order presented by defendant had small font at the bottom of the third page
that stated that GEA’s “STANDARD TERMS AND CONDITIONS APPLY TO THIS
ORDER.” No one signed the purchase order or any other document.
Two days after the agreement was reached, defendant’s Ricky Kellis, a GEA
project manager, sent plaintiff’s, Robert Thornburgh, an e-mail attaching a number of
documents related to the project. Robert Thornburgh was a project manager and had not
been involved in the bidding or negotiation process for the project. The e-mail from
Kellis stated only “Please see attached, I have also included a blank copy of a generic
JHA, to give you an idea” and had two attachments, which were named “7012-0001
Insulation Specification.zip” and “JHA pevely3-20.doc”.
Robert Thornburgh explains in his declaration that he used the “JHA pevely3-20”
document to generate a site-specific JHA for his company’s methodologies and protocols.
(The Court notes that although the parties do not define “JHA,” it appears that it may be
an abbreviation for Job Hazard Analysis.) Robert Thornburgh stated he did not
remember seeing the other attachment labeled Insulation Specification because the scope
of the project had already been agreed upon. Robert Thornburgh states that he assumed
the document regarding “Insulation Specification” was sent erroneously and took no
According to John Thornburgh’s declaration, the “Insulation Specification” was
98 pages long. Among those 98 pages was a two-page document titled “GEA Process
Engineering Inc. Standard Terms and Conditions” (the “Terms and Conditions”). The
Terms and Conditions opening paragraph states
The following terms and conditions form part of each purchase order or
contract…entered into by [GEA] and of the proposal made by [GEA] for its
sale of equipment and services to a purchasing customer (the “Purchaser”).
These terms and conditions shall supersede, and shall be substituted for any
conflicted provisions proposed by the Purchaser in its terms and conditions
in its purchase order or contract.
The Terms and Conditions also includes an arbitration clause requiring all disputes
arising out of the contract to be arbitrated in the City of Washington, D.C. and in
accordance with the Rules of the American Arbitration Association. The Terms and
Conditions include signature lines for “PURCHASER” and for GEA’s representative --neither signature line has been signed. As for the other 96 pages included in the
“Insulation Specification” attachment, neither party provides a copy of those pages or
fully explains what they entailed (or why they were transmitted to Robert Thornburgh).
Defendant GEA asserts that the parties agreed to arbitrate the case by virtue of the
late-delivered Terms and Conditions. Plaintiff disagrees. As discussed below, this Court
finds that the Terms and Conditions were not part of the parties’ agreement, and thus
there was no agreement to arbitrate.
A court faced with a motion to compel arbitration first considers whether the
parties agreed to arbitrate the dispute. Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 626 (1985). If the parties did not agree to arbitrate, this
Court has no authority to require that they do so. Dakota Foundry, Inc. v. Tromley Indus.
Holdings, Inc., 737 F.3d 492, 495 (8th Cir. 2013) (citing Nitro Distrib., Inc. v. Alticor,
Inc., 453 F.3d 995, 999 (8th Cir. 2006)).
“In Missouri, matters incorporated into a contract by reference are as much a part
of the contract as if they had been set out in the contract in haec verba.” Plaintiff’s
complaint states that the parties’ agreement is “made up of plaintiff’s proposal and the
defendant’s purchase order.” (#1 at ¶ 9.) Defendant argues that its Terms and Conditions
became a part of the contract by virtue of their mention in the defendant’s purchase order.
“Such a document becomes a part of the agreement only if ‘the contract makes clear
reference to the document and describes it in such terms that its identity may be
ascertained beyond doubt.’” CentiMark Corp. v. Christofferson, No. 4:11-CV-720 CAS,
2013 WL 328562, at *6 (E.D. Mo. Jan. 29, 2013) (quoting Livers Bronze, Inc. v. Turner
Const. Co., 264 S.W.3d 638, 643 (Mo. App. W.D. 2008)).
Neither party cites any law addressing the matter at issue here, where the Terms
and Conditions were not attached to the purchase order, the purchase order was rejected
by the plaintiff in favor of plaintiff’s proposal, the Terms and Conditions were sent (two
days later) to an individual not involved in the contract negotiation, and the Terms and
Conditions were two pages of a 98-page packet of information named “Insulation
Specifications” in an e-mail attachment. Furthermore, anyone who did come across the
Terms and Conditions among the other apparently unrelated documents might believe
they were inapplicable to the Pevely Project because they refer to GEA and a “Purchaser”
of GEA’s equipment and services. As noted, plaintiff was not a “purchaser,” but rather a
subcontractor for GEA.
“[I]t must be clear that the parties to the agreement had knowledge of and assented
to the incorporated terms.” 11 Williston on Contracts § 30:25 (4th ed.). The Eighth Circuit
held that a party’s “Standard Terms and Conditions” that were referenced but not
attached to certain price quotes were not readily available to the other party and thus
there was no meeting of the minds on the document’s arbitration provisions. Dakota
Foundry, 737 F.3d at 496 (citing Halbach v. Great-W. Life & Annuity Ins. Co., 561 F.3d
872, 876 (8th Cir. 2009) (“a writing may incorporate another document if the terms of the
incorporated document are known or easily available to the contracting parties”)). The
same is true here. Burying the “Terms and Conditions” in a 98-page attachment sent to a
person uninvolved in the negotiation (and two days after the negotiation concluded) does
not make the document readily available for the other side. Moreover, the document
refers to the parties as GEA and a “Purchaser,” which would appear to the reader to be
inapplicable to the parties’ agreement here. Ultimately, to the extent the purchase order
was not rejected by plaintiff outright, the purchase order does not make explicit enough
the identity of the Terms and Conditions applicable to the agreement. See also State ex
rel. Hewitt v. Kerr, 461 S.W.3d 798, 811 (Mo. banc 2015), reh'g denied (June 30, 2015)
(holding that terms must be incorporated in such a way that the contracting party “could
ascertain them beyond doubt” and “manifest his consent”).
IT IS HEREBY ORDERED that defendant’s motion to compel arbitration (#16)
day of August, 2015.
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE
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