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Aliments Krispy Kernels, Inc. v. Nichols Farms

United States District Court, D. New Jersey

June 12, 2018

ALIMENTS KRISPY KERNELS, INC, Petitioner,
v.
NICHOLS FARMS, Respondent.

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN UNITED STATES DISTRICT JUDGE

         This matter returns to the Court after remand from the Third Circuit. Aliments Krispy Kernels, Inc. v. Nichols Farms, 851 F.3d 283 (3d Cir. 2017). The Third Circuit held that there were material issues of fact as to whether the parties agreed to arbitrate, which precluded the Court from entering judgment in either party's favor. Presently before the Court are cross-motions for summary judgment. (ECF Nos. 50, 61). For the reasons discussed herein, because there remain material issues of fact, both parties' motions are denied.

         BACKGROUND

         This matter stems from a disagreement over whether the parties agreed to arbitrate disputes arising out of the sale of pistachios. Aliments is a Canadian company in the business of producing various nut-based snacks for consumers, and has its principle place of business in Quebec, Canada. (ECF No. 50-8, "Aliments Statement of Material Facts [SOMF]" at ¶ 1). Nichols is a California-based company that grows and sells pistachio nuts. (ECF No. 61-10, "Nichols SOMF, " at ¶ 3).

         According to Aliments, in August 2012, it contacted its American broker, Sterling Corporation, to purchase thousands of pounds of pistachios. (Id. at ¶ 4). Thereafter, on August 24, 2012, Aliments, through Sterling, contracted with Nichols to purchase 1, 600 units of pistachios. (Aliments SOMF at ¶ 2; ECF No. 21-1, "Sterling's August Sales Confirmation"). This agreement was memorialized in "Sales Confirmation" prepared by Sterling that same day. (Id.). The Sales Confirmation states that shipment would be made in October 2012 and includes a 30-day credit term. (ECF No. 21-1, "Sterling's August Sales Confirmation"). Additionally, this Sales Confirmation includes the following arbitration provision: "Any controversy or claim arising out of this contract shall be settled by arbitration by the Association of Food Industries of New York in accordance with its rules." (Id.). Nichols never signed this Confirmation. (Id.).

         In any event, a month later, September 27, 2012, Aliments again contracted with Nichols, through Sterling, for another order of pistachios. (Aliments SOMF at ¶¶ 3-4; ECF No. 21-2, "Sterling's September Sales Confirmation"). Again, Sterling prepared a Sales Confirmation on Aliment's behalf, which included the same terms and arbitration provision as Sterling's August Sales Confirmation. (Id.). Moreover, as with the August Sales Confirmation, it is undisputed that Nichols never signed the September Sales Confirmation. (Id.). Based on the preparation of these two Sales Confirmations, Aliments contends that it had enforceable contracts with Nichols for the sale of pistachios, which would be subject to arbitration should any dispute arise. However, to Aliments' surprise, after conducting a credit check, Nichols' declined to extend credit to Aliments and, instead, offered to sell the pistachios only after receiving payment in full. (Nichols SOMF at ¶¶ 12-13). As discussed below, Aliments refused to pay in advance, and was ultimately forced to buy from another farmer.

         Nichols, however, provides a different account of these transactions. According to Michael Lawrence, President of Pacific / Atlantic Crop Exchange, Inc. (Pacific), an agricultural broker, he received a call from Sterling on August 24, 2012, about purchasing pistachios from Nichols. (ECF No. 61-2, "Lawrence Declaration" at ¶ 4). Lawrence then relayed this interest to Nichols' Sales Manager, Freddy Fernandez, who gave Lawrence a verbal confirmation as to price and quantity. (Id. at ¶ 5). That same day, Lawrence prepared a Sales Confirmation, memorializing the terms agreed upon, and emailed it to Sterling. (Id.). The following month, September 2012, Sterling contacted Pacific about making a second order for pistachios. (Id. at ¶ 6). Again, Lawrence relayed this information to Nichols and, after receiving verbal approval from Fernandez, prepared a second Sales Confirmation that was emailed to Sterling on September 27, 2012. (Id.).

         Pacific's August and September Sales Confirmations contain the same terms, with regards to quantity and price, as Sterling's. However, there were apparently two different versions of Pacific's Sales Confirmations, one which included the arbitration clause and one that did not. Specifically, the August and September Sales Confirmations that Lawrence emailed to Sterling did not include an arbitration clause. (ECF No. 61-2 at 7, 9, 11, "Pacific's Emailed Confirmations"). However, the versions attached to Aliment's Motion to Confirm the Arbitration Award contain an arbitration clause, which states:

ARBITRATION: Any controversy or claim arising out of this contract shall be settled in binding arbitration by the Association of Food Industries, Inc. of New York in accordance with its rules then obtaining.

(ECF Nos. 21-5, -6). In his declaration, Lawrence identified these versions as the transmitted copies that he sent to Sterling. (Lawrence Declaration at ¶¶ 5, 6). However, he did not explain why these versions included an arbitration clause, but the emailed Sales Confirmations did not. In any event, Lawrence did not understand the Sales Confirmations to constitute binding agreements:

I did not discuss credit terms of the sale with [Sterling]. In the agricultural commodities business, an agreement on credit terms is one of the elements that needs to be agreed to in order for a binding contract to be created. As was the case before, I did not discuss credit terms of the sale with [Sterling] as I had no authority to do so.

(Lawrence Declaration at ¶ 5). He explained, "[b]ased on my many years in the commodity brokerage business, Nichols had the right to perform a credit check on [Aliments], and require security or advance payment if it thought it to be necessary." (Id. at ¶ 6). Lawrence also acknowledged that he received Sterling's August and September Sales Confirmations; however, because they were not signed by Aliments, he did not forward them to Nichols. (Lawrence Declaration at ¶ 8). Lawrence explained,

[Pacific's] business practice, which I believe is consistent with industry practice, is not to forward to the seller unsigned confirmations. Instead, we wait to receive (and pass on) either a written purchase order or a signed confirmation from the buyer, which we then forward to the seller, and/or a written contract or sales acknowledgement from the seller, reflecting a firm offer to purchase product.

(Id.). According to Lawrence, Pacific never received a signed confirmation from Sterling. ...


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