Bratt Enterprises, Incorporated v. Noble International Ltd.; Set Enterprises Inc.

*The Honorable Jennifer B. Coffman, United States District Judge for
the Eastern and Western Districts of Kentucky, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0262P (6th Cir.)
File Name: 03a0262p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
BRATT ENTERPRISES,
INCORPORATED,
Plaintiff-Appellant,
v.
NOBLE INTERNATIONAL LTD.;
SET ENTERPRISES INC.,
Defendants-Appellees.
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No. 01-4244
Appeal from the United States District Court
for the Southern District of Ohio at Cincinnati.
No. 99-00543—S. Arthur Spiegel, District Judge.
Argued: March 13, 2003
Decided and Filed: July 31, 2003
Before: CLAY and ROGERS, Circuit Judges; COFFMAN,
District Judge.*
2 Bratt Enterprises v. Noble Int’l, et al. No. 01-4244
_________________
COUNSEL
ARGUED: John B. Pinney, GRAYDON, HEAD &
RITCHEY, Cincinnati, Ohio, for Appellant. Robin E.
Harvey, BAKER & HOSTETLER, Cincinnati, Ohio, for
Appellees. ON BRIEF: John B. Pinney, GRAYDON,
HEAD & RITCHEY, Cincinnati, Ohio, for Appellant. Robin
E. Harvey, BAKER & HOSTETLER, Cincinnati, Ohio, for
Appellees.
ROGERS, J., delivered the opinion of the court, in which
COFFMAN, D. J., joined. CLAY, J. (pp. 9-12), delivered a
separate dissenting opinion.
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OPINION
_________________
ROGERS, Circuit Judge. Noble International Ltd.
(“Noble”) asserted a breach of contract claim against Bratt
Enterprises, Inc. (“Bratt”) in connection with Noble’s
purchase of Bratt’s steel processing business. The district
court ordered the parties to arbitrate “any and all disputes
related to” the claim based upon an arbitration provision
contained in the parties’ agreement. We conclude that the
district court erred by compelling the arbitration of an issue
that the parties had not agreed to arbitrate.

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No. 01-4244 Bratt Enterprises v. Noble Int’l, et al. 3
1At the time of the transaction, Bratt was known as H&H Steel
Processing Comp any, Inc. The com pany assumed its current name after
the H& H Steel Processing Comp any, Inc. name was sold during the
transaction in question.
2 SET Enterprises, Inc., the other named appellee, is a wholly-owned
subsidiary of Noble International Ltd. that was formed by a merger
involving H& H Steel Processing, Inc. H&H Steel Processing, Inc. was
formerly known as Utilase Blank Welding Technologies, Inc., which was
the purchaser of the steel business. Noble International L td. was the
guarantor of Utilase Blank Welding Techno logies, Inc. under the
agreement. For ease of use, we re fer collectively to Set Enterp rises, Inc.
and Noble International Ltd. as “No ble,” given the identity of their
interests in this appeal.
FACTS
On September 30, 1998, Bratt1 sold its steel processing
business to Noble2 under an asset purchase agreement. Noble
agreed to purchase most of the business’s assets and agreed to
assume most of the business’s liabilities, including its
accounts payable. One provision of the agreement, however,
provided that Bratt would retain all accounts payable in
excess of $1.2 million, effectively capping Noble’s liability
for the accounts payable.
This assumption of liability was only one portion of the
purchase price, which included other forms of consideration.
Given the fluid values associated with some elements of the
purchase price, including the business’s accounts payable, the
parties agreed to a post-closing adjustment of the purchase
price, so that the price would more accurately reflect closing-
day values. Under the parties’ agreed method of adjustment,
the elements would be valued as of the closing day, with the
valuations being reflected on a balance sheet, and adjustments
would be made based on the balance sheet values. The
agreement also provided that, in the event a dispute arose with
4 Bratt Enterprises v. Noble Int’l, et al. No. 01-4244
3 Specifically the agreement, in pertinent part, reads:
The Basic Purchase Price set forth in [the previous section] will
be subject to adjustment after the Closing Date (as hereinafter
defined) as follows:
(i) [Noble] will prepare and deliver to [B ratt] within
sixty (60) days following the Closing Date (or as soon
thereafter as practicable) a balance sheet for [Bratt] as
of the opening of business on the Closing Date (the
“Closing Balance Sheet”). The Closing Balance Sheet
will be used to determine the amount of Assumed
Liabilities as well as any adjustments pursuant to
[certain portions of this agreement] as of the Closing,
for purposes of determining the final Basic Purchase
Price (the “Final Basic Purchase Price”).
(ii) The Closing Balance Sheet will be prepared in
acco rdance with G AAP (as defined herein). . . .
(iii) W ithin 30 days after the delivery of the Closing
Balance Sheet, [Bratt] will notify [Noble] as to whether
it disagrees with any of the amou nts includ ed in the
Closing Balance Sheet. If such notice is not given, the
Closing Balance Sheet will be final and conclusive for
all purp oses. If the parties are unable to resolve their
differences within 60 days of their receipt of the
Closing Balance Sheet, [Noble] and [Bratt] agree to
retain a national accounting firm, other than the
independent audito rs used by Noble or [Bratt], to
arbitrate the dispute and render a decision within 30
days of such retention, which decisio n will be final and
binding for all purp oses. A ny award pursuant to this
Section 1.3(c)(iii) may be entered in and enforced by
any court having jurisdiction over the matter. [Noble]
and [Br att] will each pay one-half of the costs of the
services rendered by said accounting firm.
Asset Purchase Agreement, J.A. at 160-61.
regard to any amount reflected on the balance sheet, the
parties would arbitrate the dispute.3

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No. 01-4244 Bratt Enterprises v. Noble Int’l, et al. 5
After Noble submitted the closing balance sheet, along with
its proposed adjustments, numerous disputes arose between
Noble and Bratt. Unable to resolve these disputes, Bratt filed
a complaint in the district court below. Noble filed its answer
and a four-count counterclaim. The parties have settled all
disputes between them except the first count of Noble’s
counterclaim, which is the focus of this appeal.
The first count of Noble’s counterclaim asserted a breach
of contract claim in which Noble sought to recover the
difference between the accounts payable balance, over $1.8
million as reflected on the closing balance sheet, and the $1.2
million limit of its liability. Noble simultaneously moved the
district court to compel arbitration of this claim. Bratt
opposed submitting this counterclaim to arbitration. Bratt
argued that the $1.2 million cap was a result of a mutual
mistake and that the contract should accordingly be reformed
before any disputes regarding the account amounts could be
submitted to arbitration. The district court granted Noble’s
motion to compel arbitration, concluding that the claim
“relate[d] to adjustments to the Closing Balance Sheet.” In
accordance with the lower court’s order, the parties proceeded
to arbitrate, and the arbitrator ruled in Noble’s favor on the
breach of contract claim. Bratt then filed a motion for
reconsideration of the order compelling arbitration, which the
district court denied. The district court then entered a
judgment reflecting the arbitrator’s decision. Bratt now
appeals, asserting that the district court erred by compelling
arbitration of all disputes related to Noble’s breach of contract
claim.
STANDARD OF REVIEW
We review de novo a district court’s decision to compel
arbitration under the Federal Arbitration Act. Javitch v. First
Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003).
6 Bratt Enterprises v. Noble Int’l, et al. No. 01-4244
ANALYSIS
“Before compelling an unwilling party to arbitrate, [a] court
must engage in a limited review to determine whether the
dispute is arbitrable; meaning that a valid agreement to
arbitrate exists between the parties and that the specific
dispute falls within the substantive scope of that agreement.”
Javitch, 315 F.3d at 624 (6th Cir. 2003) (citing AT&T Techs.
v. Communications Workers of Am., 475 U.S. 643, 649
(1986)). The district court properly concluded that a valid
agreement to arbitrate existed between Bratt and Noble, but
erred in concluding that all aspects of Noble’s breach of
contract claim fell within the scope of that agreement.
The duty to arbitrate a dispute derives from the parties’
agreement and a party cannot be required to submit to
arbitration any dispute that the party has not agreed to so
submit. Roney & Co. v. Kassab, 981 F.2d 894, 897 (6th Cir.
1992) (citing Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland
Stanford Junior Univ., 489 U.S.468, 478 (1989); AT&T
Techs., 475 U.S. at 648-49; Wiepking v. Prudential-Bache
Sec., Inc., 940 F.2d 996, 998 (6th Cir. 1991)). The parties’
agreement to arbitrate in this case reads, in pertinent part:
[Bratt] will notify [Noble] as to whether it disagrees with
any of the amounts included in the Closing Balance
Sheet. . . . If the parties are unable to resolve their
differences within 60 days of their receipt of the Closing
Balance Sheet, [Noble] and [Bratt] agree to retain a
national accounting firm . . . to arbitrate the dispute and
render a decision within 30 days of such retention, which
decision will be final and binding for all purposes.
Asset Purchase Agreement, J.A. at 160-61 (emphasis added).
The plain language of this section demonstrates that the
parties agreed to submit disagreements regarding “any of the
amounts included in the Closing Balance Sheet” to
arbitration, as that phrase is the only referent to which “the
dispute” could apply. Based upon this language, the district

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No. 01-4244 Bratt Enterprises v. Noble Int’l, et al. 7
court ordered the parties to arbitrate “any and all disputes
related to Counterclaim[] I.”
That order, however, goes beyond the extent of the disputes
that the parties agreed to submit to arbitration. It is true that
the parties disagreed about the valuation of accounts payable
on the closing balance sheet. The district court correctly
compelled the arbitration of that issue, which was resolved
through arbitration. As determined by the arbitrator, the
closing-day value of the accounts receivables was $1,826,694,
or $632,238 in excess of the $1.2 million limit. This value,
pursuant to the parties’ agreement, is final and binding upon
Bratt and Noble for all purposes.
The valuation dispute, however, is only one dispute
involved in Noble’s breach of contract claim. The other
dispute revolves around the validity of the $1.2 million
limitation provision. Noble contends that the limitation
provision was agreed upon by the parties and that it is entitled
to recover based upon Bratt’s breach of that provision. Bratt,
however, contends that the parties agreed upon the $1.2
million liability limit based upon a common or mutual
mistake. While Noble’s claim would obviously require
reference to the closing balance sheet to determine matters of
valuation should Noble prevail on this issue, the dispute
regarding the validity of the limitation provision does not
itself involve a “disagree[ment] with any of the amounts
included in the Closing Balance Sheet.” Rather, it involves
a determination of whether the parties’ intent regarding
Bratt’s retained liabilities was based upon the parties’ sharing
a misunderstanding about an essential term of their
agreement. Thus, this aspect of Noble’s breach of contract
claim is not within the scope of the arbitration clause and is,
therefore, not arbitrable.
We recognize that “in applying general state-law principles
of contract interpretation to the interpretation of an arbitration
agreement . . . due regard must be given to the federal policy
favoring arbitration, and ambiguities as to the scope of the
8 Bratt Enterprises v. Noble Int’l, et al. No. 01-4244
arbitration clause itself resolved in favor of arbitration.” Volt
Info. Scis., Inc., 489 U.S. at 475-76 (citations omitted). Here,
however, there is no ambiguity regarding the scope of the
arbitration agreement. The parties only agreed to arbitrate
disagreements about the amounts reflected on the closing
balance sheet. Congress’s preeminent concern in enacting the
FAA—the enforcement of private agreements to arbitrate as
entered into by the parties—requires that the parties only be
compelled to arbitrate matters within the scope of their
agreement, and this is so even when the result may be
piecemeal litigation. See Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213, 221 (1985). The federal policy that favors
arbitration is not so broad that it compels the arbitration of
issues beyond those agreed to by the parties.
CONCLUSION
For the foregoing reasons, we REVERSE the district
court’s order compelling arbitration of the mutual mistake
issue, VACATE the entry of judgment with respect to the first
count of Noble’s counterclaim, and REMAND the case to the
district court for further proceedings consistent with this
opinion.

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No. 01-4244 Bratt Enterprises v. Noble Int’l, et al. 9
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DISSENT
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CLAY, Circuit Judge, dissenting. The district court did not
err in concluding that all aspects of the breach of contract
claim brought by Defendant, Noble International, Ltd.,
against Plaintiff, Bratt Enterprises, Inc., fell within the scope
of the arbitration agreement. The majority’s approach to
resolving the dispute is in contravention of the principles and
jurisprudence pertaining to matters of arbitration. I therefore
would affirm the district court’s judgment compelling
arbitration, and respectfully dissent.
The Federal Arbitration Act (“FAA”) manifests a strong
and liberal federal policy in favor of arbitration of disputes.
See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 625 (1985); see also Decker v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 205 F.3d 906, 911 (6th
Cir. 2000). The Supreme Court has long recognized that
“where the contract contains an arbitration clause, there is a
presumption of arbitrability in the sense that ‘[a]n order to
arbitrate the particular grievance should not be denied unless
it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the
asserted dispute. Doubts should be resolved in favor of
coverage.’” AT&T Techs., Inc. v. Communications Workers
of Am., 475 U.S. 643, 650 (1986) (quoting Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83
(1960)). “[A]ny doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration, whether the
problem at hand is the construction of the contract language
itself or an allegation of waiver, delay, or a like defense to
arbitrability.” Moses H. Cone Mem’l Hosp. v. Mercury
Construc. Corp., 460 U.S. 1, 24-25 (1983).
The majority ignores this well steeped body of federal
policy and law in concluding that the parties’ dispute
10 Bratt Enterprises v. Noble Int’l, et al. No. 01-4244
regarding the validity of the $1.2 million limitation did not
fall within the ambit of the arbitration provision, but that the
dispute as to the valuation amount exceeding the $1.2 million
limitation did fall within the parameters of the arbitration
provision. It is true, as the majority states, that a court must
determine whether a dispute falls within the substantive scope
of the arbitration agreement before compelling an unwilling
party to arbitrate. It is also true that a party cannot be
compelled to arbitrate a dispute that it had not previously
agreed to arbitrate. However, in concluding that the dispute
involving the limitation provision is not subject to arbitration,
the majority fails to heed the Supreme Court’s directive that
“any doubts concerning the scope of arbitrable issues should
be resolved in favor of arbitration, whether the problem at
hand is the construction of the contract language itself or an
allegation of waiver, delay, or a like defense to arbitrability.”
Moses H. Cone Mem’l Hosp., 460 U.S. at 24-25 (emphasis
added). Instead, the majority resolves the matter against
arbitration by improperly interpreting the language of the
provision in a narrow fashion while showing deference to
Plaintiff’s mutual mistake defense. See Paper, Allied-Indus.,
Chem. & Energy Workers Int’l Union v. Air Prods. &
Chems., Inc., 300 F.3d 667, 676 (6th Cir. 2002) (rejecting the
union’s “narrow” interpretation of the agreement as not
providing for arbitration, and finding that because the union’s
dispute involved the “interpretation or application of any of
the terms or provisions” of the agreement, the dispute was one
for arbitration).
To illustrate, the language of the arbitration agreement
provides in relevant part:
Within 30 days after the delivery of the Closing Balance
Sheet, the Company [Bratt] will notify the Purchaser,
[Noble] as to whether it disagrees with any of the
amounts included in the Closing Balance Sheet. If such
notice is not given, the Closing Balance Sheet will be
final and conclusive for all purposes. If the parties are
unable to resolve their differences within 60 days of their

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No. 01-4244 Bratt Enterprises v. Noble Int’l, et al. 11
receipt of the Closing Balance Sheet, the Purchaser
[Noble] and the Company [Bratt] agree to retain a
national accounting firm . . . to arbitrate the dispute and
render a decision within 30 days of such retention, which
decision would be final and binding for all purposes.
(J.A. at 160-61.) The majority contends that the clause
“disagree with any of the amounts included in the Closing
Balance Sheet[,]” as set forth in the arbitration provision
limits matters subject to arbitration strictly to disputes
involving valuation, and therefore does not encompass any
claim as to which party is responsible for the amount owed.
This shortsighted and narrow approach fails to consider that
implicit in any dispute as to the valuation of any amount on
the Closing Balance Sheet is a claim as to which party is
responsible for the amount, particularly where the Closing
Balance Sheet provided the basis for the Final Purchase Price
under the agreement.
In other words, as part and parcel of determining
disagreements concerning the amounts included in the
Closing Balance Sheet, the parties would expect to also
determine by way of arbitration the applicability of the $1.2
million limitation. Thus, it cannot “be said with positive
assurance that the arbitration clause is not susceptible to an
interpretation that covers the asserted dispute,” and the matter
is therefore entitled to a “presumption of arbitrability.” AT&T
Techs., 475 U.S. at 650 (internal quotation marks and citation
omitted).
In summary, when liberally construing the arbitration
provision as directed by the Supreme Court and in accordance
with federal policy, it is clear that the district court properly
concluded that Defendant’s claim as to the validity of the $1.2
million limitation was one for the arbitrator. See Moses H.
Cone Mem’l Hosp., 460 U.S. at 24-25 (noting that “questions
of arbitrability must be addressed with a healthy regard for
the federal policy favoring arbitration”). I therefore would
affirm the district court’s judgment compelling arbitration of
12 Bratt Enterprises v. Noble Int’l, et al. No. 01-4244
all aspects of Defendant’s breach of contract claim, and
respectfully dissent.

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