Bay Shore Power Company v. Oxbow Energy Solutions, LLC (Docket No. 20-3119), an Opinion recommended for publication by the United States Court of Appeals for the Sixth Circuit. The Court ruled that even in the face of conflicting contract provisions, the winning party, Bay Shore, is entitled to recover reasonable attorneys’ fees from Oxbow.
The Agreement
Bay Shore and Oxbow had entered into an agreement for Oxbow to provide Bay Shore with limestone of a particular quality. The deal no longer became profitable for Oxbow so Oxbow and Bay Shore negotiated an alternate price. That price was higher than the agreement allowed.
After unsuccessful negotiations, Bay Shore filed a demand for arbitration. The arbitration panel ruled in favor of Bay Shore and awarded them $5 million in damages. But the panel specifically excluded attorneys’ fees.
District and Appeals Courts Disagree
Bay Shore filed an “Application to Award Attorneys’ Fees.” Oxbow responded with a motion for summary judgment on the grounds that the agreement did not permit a prevailing party to recover its attorneys’ fees from the other party. The district court granted Oxbow’s motion as there were conflicting provisions of the contract. Therefore, there was no meeting of the minds to enforce the provision.
The Court of Appeals reversed the district court’s decision and allowed for Bay Shore to collect reasonable attorneys’ fees from Oxbow. The Court of Appeals analyzed the language of the contract and arbitration award. They noted that the provision that prevents the prevailing party from collecting attorneys’ fees was contained in a section discussing the powers of the arbitration panel. As a result the Court ruled that the provision prevented only the arbitration panel from granting attorneys’ fees. The Court could still do so.
The Court of Appeals then looked to the other provisions of the contract. These indicated the prevailing party was able to recover fees. So they determined that this created a separate action under the contract to collect attorneys’ fees.
Key Takeaway
The key takeaway from this case is to ensure that when contracting, especially when agreeing to arbitrate, that the arbitration is the exclusive remedy. More generally, carefully review a contract before signing to avoid conflicting provisions.
The full text of the opinion can be found at:
https://law.justia.com/cases/federal/appellate-courts/ca6/20-3119/20-3119-2020-08-13.html
