                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 06-1865
                                   ___________

Suburban Leisure Center, Inc.,          *
                                        *
            Appellee,                   *
                                        * Appeal from the United States
      v.                                * District Court for the Eastern
                                        * District of Missouri.
AMF Bowling Products, Inc.;             *
AMF Billiards & Games, LLC,             *
                                        *
            Appellants.                 *
                                   ___________

                             Submitted: October 20, 2006
                                Filed: November 17, 2006
                                 ___________

Before MELLOY, BENTON and SHEPHERD, Circuit Judges.
                           ___________

SHEPHERD, Circuit Judge.

       AMF Bowling Products, Inc. and AMF Billiards & Games LLC (collectively
“AMF”) appeals from an order of the district court1 denying its motion to dismiss or
in the alternative to compel arbitration and stay proceedings with regard to claims
brought by Suburban Leisure Center, Inc. (“Suburban”) after AMF terminated its oral
franchise agreement with Suburban. We possess jurisdiction of this appeal pursuant
to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 16(a)(1)(C), providing that “[a]n

      1
        The Honorable Donald J. Stohr, United States District Judge for the Eastern
District of Missouri.
appeal may be taken from . . . an order . . . denying an application . . . to compel
arbitration . . . .” For the reasons discussed below, we affirm.

                                           I.

       For the purpose of ruling on AMF’s motion to dismiss or in the alternative to
compel arbitration, the district court assumed the truth of the allegations in Suburban’s
complaint. With the limited purpose of reviewing the district court’s ruling, we, too,
view Suburban’s allegations as true. See Palcko v. Airborne Express, Inc., 372 F.3d
588, 597 (3d Cir. 2004) (stating that a motion to compel arbitration is generally
treated as a motion to dismiss for failure to state a claim upon which relief can be
granted); cf. Manion v. Nagin, 394 F.3d 1062, 1065 (8th Cir. 2005) (viewing factual
allegations as true for purposes of motion to dismiss). Accordingly, the following
facts are undisputed for purposes of this appeal. Suburban distributes indoor and
outdoor lawn and leisure equipment, and AMF manufactures pool tables and pool
table accessories. The parties entered into an oral franchise agreement, whereby they
agreed that Suburban would have the right use the AMF trade name, trademark, or
service mark in order to sell AMF’s line of pool tables and related accessories from
Suburban’s stores located in the St. Louis, Missouri region. Subsequently, the parties
executed a written E-Commerce Dealer Agreement (“e-commerce agreement”), in
which Suburban agreed to provide delivery and installation of AMF’s products sold
by AMF via its website to customers in Suburban’s specified areas.

       With regard to the e-commerce agreement, Section 14 provides that “[t]he
determination of any dispute or claim arising under the Agreement or any invoice or
agreement executed pursuant to this Agreement will be settled by binding arbitration
in Richmond, Virginia.” Further, Section 15 states that the e-commerce “[a]greement
constitutes the entire agreement between the parties and supercedes all prior
agreement[s], oral and written.” Finally, Section 15 goes on to state that the e-



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commerce agreement “will be construed in accordance with the laws of Virginia
without regard to their conflict of laws provisions.”

       On August 25, 2005, AMF sent a termination letter stating that Suburban would
be “required to cease promoting” AMF’s line of pool tables and accessories within
sixty days. The letter made no mention of the e-commerce agreement. Suburban filed
suit in Missouri state court alleging that it was entitled to damages from the
cancellation of the oral franchise agreement without the requisite notice pursuant to
Missouri Revised Statute section 407.405 as well as recoupment for improvements it
had made to its stores in reliance on the oral franchise agreement. See Mo. Ann. Stat.
§ 407.405 (West 2001). Pursuant to 28 U.S.C. § 1441, AMF removed the matter to
federal court. Upon removal, AMF filed a motion to dismiss or in the alternative to
compel arbitration and stay proceedings pursuant to the FAA, 9 U.S.C. § 3. Because
the district court found that the e-commerce agreement did not address Suburban’s
ability to promote or sell AMF’s products, it concluded that Suburban’s underlying
claims did not arise under the e-commerce agreement. Accordingly, the district court
denied AMF’s motion to compel arbitration of the dispute. AMF appeals the district
court’s order.

                                           II.

      We review de novo the district court’s denial of a motion to compel arbitration
based on contract interpretation. Nitro Distrib., Inc. v. Alticor, Inc., 453 F.3d 995, 998
(8th Cir. 2006). As both Missouri and Virginia recognize the validity of the choice
of laws provision contained in the e-commerce agreement, we apply the law of
Virginia to resolve this appeal. See Paul Bus. Sys., Inc. v. Canon U.S.A., Inc., 397
S.E.2d 804, 807 (Va. 1990); Kagan v. Master Home Prods. Ltd., 193 S.W.3d 401, 407
(Mo. Ct. App. 2006). Resolution of this appeal is also governed by the FAA, 9 U.S.C.
§ 1 et seq., because the e-commerce agreement “involved interstate commerce.”



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Amchem Prods., Inc. v. Newport News Circuit Court Asbestos Cases, 563 S.E.2d 739,
743 (Va. 2002).

        Pursuant to the FAA, we construe the arbitration clause resolving any doubts
in favor of arbitration. Am. Recovery Corp. v. Computerized Thermal Imaging, Inc.,
96 F.3d 88, 92 (4th Cir. 1996) (citing Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Co., 460 U.S. 1, 24-25 (1983)). “Thus, we may not deny a party’s request to
arbitrate an issue ‘unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted dispute.’” Id.
(quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S.
574, 582-83 (1960)). However, a “party cannot be required to submit to arbitration
any dispute which he has not agreed so to submit.” Amchem Prods., Inc., 563 S.E.2d
at 743 (quoting United Steelworkers of Am., 363 U.S. at 582). When determining
whether a contractual dispute exists that is subject to arbitration, Virginia courts
examine the contract’s language and apply the commonwealth’s substantive contract
law. Id.

      On appeal, AMF contends that the e-commerce agreement’s merger clause
incorporates and subsumes the oral franchise agreement such that the e-commerce
agreement is the sole agreement between the parties necessitating arbitration of the
present dispute. “[A] ‘merger clause’ (sometimes an ‘integration’ or ‘entire
agreement’ clause) . . . ‘merges’ prior negotiations into the writing. A typical clause
includes a recital that the writing ‘contains the entire agreement of the parties.’” 2 E.
Allan Farnsworth, Farnsworth on Contracts § 7.3 (3d ed. 2004); see, e.g., Prospect
Dev. Co., Inc. v. Bershader, 515 S.E.2d 291, 296 (Va. 1999) (observing that a contract
contained an “integration clause” stating “that in the absence of an amendment in
writing, the contract contains the final and entire agreement between the parties”);
Spotsylvania County Sch. Bd. v. Seaboard Surety Co., 415 S.E.2d 120, 126 (Va.
1992) (noting that “a merger clause in the contract stated that the document
‘represent[ed] the entire and integrated agreement between the parties’”).

                                          -4-
      Merger clauses “purport to contractually require application of the parol
evidence rule to the parties’ agreement.” 11 Richard A. Lord, Williston on Contracts
§ 33:21 (4th ed. 1999). In Virginia, “parol evidence . . . is inadmissible to vary,
contradict, add to, or explain the terms of a complete, unambiguous, unconditional
written instrument.” Shevel’s Inc.-Chesterfield v. Se. Assocs., Inc., 320 S.E.2d 339,
343 (Va. 1984)). However, a merger “clause does not prohibit the admission of parol
evidence which does not contradict or vary the terms of the . . . contract . . . .”
Prospect Dev. Co., Inc., 515 S.E.2d at 296. In this case, as the district court found, the
e-commerce agreement does not address Suburban’s ability to promote or sell AMF’s
products, which is the subject of the prior oral franchise agreement. Accordingly, the
prior oral agreement necessarily does not seek to contradict or supplement the
subsequent e-commerce agreement that addresses a different subject, AMF’s selling
its own product from the AMF website. Thus, these facts do not implicate the parol
evidence rule.

        Further, the e-commerce agreement does not extinguish the prior oral franchise
agreement because it constitutes an independent agreement under the “collateral
contract doctrine.” Because “the parol evidence rule does not exclude parol proof of
a prior or contemporaneous oral agreement that is independent of, collateral to and not
inconsistent with the written contract, and which would not ordinarily be expected to
be embodied in the writing,” a merger clause gives rise to no more than a presumption
that all the parties’ prior agreements merged into the written agreement. Shevel’s, 320
S.E.2d at 343 (quoting Pierce v. Plogger, 286 S.E.2d 207, 209 (Va. 1982)). The
Virginia Supreme Court refers to this exception to the parol evidence rule as the
“collateral contract doctrine.” Id. The Shevel’s Court determined that this doctrine
required the admission of a prior oral agreement into evidence, despite a merger clause
in the parties’ subsequent written agreement, because the prior oral agreement was a
“different agreement” that did not seek “to vary or explain” the subsequent written
agreement. Id. In a later case, the Virginia Supreme Court discussed Shevel’s and
stated that its “focus then was on whether parol evidence was admissible in the face

                                           -5-
of a [contract] silent on the subject matter of an alleged separate agreement yet stating
that it was the complete agreement of the parties. We said such evidence was
admissible.” J.E. Robert Co. v. J. Robert Co., Inc. of Virginia, 343 S.E.2d 350, 353
(Va. 1986).


       This case involves two distinct agreements between Suburban and AMF.
Suburban and AMF initially entered into the oral franchise agreement providing for
Suburban’s promotion and sale of AMF products from Suburban’s stores.
Subsequently, the parties executed the written e-commerce agreement, which required
Suburban to install and service AMF products sold by AMF through its website to its
customers. Therefore, the oral franchise agreement addresses a contractual
relationship between the parties that is not covered in any manner by the e-commerce
agreement. As a result, the oral franchise agreement is “independent of, collateral to,
and not inconsistent with” the e-commerce agreement within the meaning of Shevel’s.
See Shevel’s, 320 S.E.2d at 343. Thus, the parties did not intend for the e-commerce
agreement to be their sole agreement such that the merger clause does not subsume
the prior oral franchise agreement pursuant to Virginia’s “collateral contract
doctrine.” Because the agreements are independent of each other, the e-commerce
agreement’s arbitration language cannot be attributed to the oral franchise agreement,
even construing the language in favor of arbitration. Accordingly, Suburban has not
agreed to arbitrate its claims in the underlying suit.


                                          III.


      We conclude that the district court did not err in denying AMF’s motion to
dismiss or in the alternative to compel arbitration and stay proceedings, and affirm.
                        ______________________________




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