Delta Stone Products v. Eurostone Machine USA, 2:17-cv-00737

Background

Delta Stone (Utah) purchased a stone-cutting machine from EuroStone (S.C.) under a Sales Contract; EuroStone agreed to assist with vendor selection, import/transport, and to purchase insurance.
Delta Stone warned EuroStone the project was time-sensitive and that damage or delay would cause loss.
The machine arrived at Delta Stone damaged in Heber City, Utah; repairs and delay allegedly caused lost profits and other damages.
Delta Stone sued EuroStone for breach of contract, breach of fiduciary duties, and negligence, alleging EuroStone failed to notify carriers of time/quality sensitivity and failed to procure adequate insurance covering consequential damages and amenable to suit in Utah.
EuroStone moved to dismiss or for summary judgment and alternatively to compel arbitration under the Sales Contract’s broad arbitration clause.
The Court denied dismissal/summary judgment but stayed and ordered arbitration of the dispute under the Sales Contract, administratively closing the case pending arbitration.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the dispute is subject to the Sales Contract arbitration clause	Delta Stone: claims concern separate "value-added" shipping/insurance services excluded from the Sales Contract and thus not arbitrable	EuroStone: shipping/insurance services were part of the Sales Contract; arbitration clause covers "disputes related to" the contract	Court: Arbitration clause is broad and covers dispute; stay for arbitration granted
Whether extrinsic evidence shows a separate agreement overriding arbitration	Delta Stone: produced bills and a company-president statement suggesting separate value-added services	EuroStone: no evidence of a separate agreement that supersedes or waives arbitration; references in documents tie services to the contract	Court: Plaintiff’s complaint admits services were part of the contract; any doubt resolved in favor of arbitration
Standard for construing arbitration clauses and applicable law	Delta Stone: urges narrow reading based on alleged exclusion	EuroStone: urges liberal federal policy favoring arbitration and broad construction of "arising out of or relating to" language	Court: applied federal policy favoring arbitration and state-law contract principles; clause construed broadly in favor of arbitration
Whether the court should dismiss or stay pending arbitration	Delta Stone: sought adjudication in court of damages and duties	EuroStone: sought dismissal/summary judgment or, alternatively, arbitration under FAA	Court: Denied dismissal/summary judgment; stayed case and compelled arbitration per 9 U.S.C. § 3

Key Cases Cited

Ragab v. Howard, 841 F.3d 1134 (10th Cir.) (federal policy favors arbitration; contract-formation is a gateway issue)
Granite Rock Co. v. Int’l Broth. of Teamsters, 561 U.S. 287 (Sup. Ct.) (courts decide gateway contract-formation/applicability questions)
Cent. Fla. Inv., Inc. v. Parkwest Assocs., 40 P.3d 599 (Utah) (contract interpretation; ascertain parties’ intent from contract language)
Landers v. Fed. Deposit Ins. Corp., 739 S.E.2d 209 (S.C.) (strong presumption favoring arbitration; broad clauses construed expansively)
Lindon City v. Engineers Const. Co., 636 P.2d 1070 (Utah) (broad arbitration clause covers disputes arising out of contract)
Nat’l Amers. Ins. Co. v. SCOR Reinsurance Co., 362 F.3d 1288 (10th Cir.) (references between agreements support arbitrating claims under related documents)
ARW Exp. Corp. v. Aguirre, 45 F.3d 1455 (10th Cir.) (arbitration agreements need not be in a single document; related agreements can compel arbitration)