In the
United States Court of Appeals
For the Seventh Circuit

No. 99-2723

Tri-State Business Machines, Inc.,

Plaintiff-Appellee,

v.

Lanier Worldwide, Inc.,

Defendant-Appellant.



Appeal from the United States District Court
for the Western District of Wisconsin.
No. 98-C-0403-S--John C. Shabaz, Chief Judge.


Argued April 6, 2000--Decided July 26, 2000



      Before Posner, Chief Judge, and Flaum and Ripple,
Circuit Judges.

       Flaum, Circuit Judge. On March 30, 1999, the
district court entered judgment in favor of
plaintiff Tri-State Business Machines, Inc.
("Tri-State") pursuant to a prior arbitration
award, and denied defendant Lanier Worldwide,
Inc.’s ("Lanier") counterclaim for breach of the
duty of good faith and fair dealing. Lanier now
appeals the district court’s orders executing
that judgment, contending that the district court
erred in its enforcement of the arbitration
award.

I.   Background

      On June 9, 1998, Tri-State filed suit in the
Circuit Court for LaCrosse County, Wisconsin,
alleging that Lanier violated the Wisconsin Fair
Dealership Law ("WFDL"), Wisc. Stat. sec. 135 et
seq. (1999), when it terminated a Dealer
Agreement/1 between the two parties. The case
was removed to federal court pursuant to
diversity jurisdiction, and Lanier then moved to
stay the case pending the completion of
arbitration. The district court granted Lanier’s
motion to compel arbitration and stayed all
arbitrable issues.

      After an arbitration hearing, a panel of three
arbitrators determined that the WFDL was
inapplicable to the Dealer Agreement between the
parties. However, the panel also found that,
according to the terms of the Agreement, Lanier’s
termination of its relationship with Tri-State
triggered an obligation on its part to repurchase
from Tri-State "any L[anier] inventory that T[ri-
State] currently owns." In order to implement
this conclusion, the arbitration panel required
that "L[anier] . . . pay to T[ri-State] such
amount as T[ri-State] paid to L[anier] as the
purchase price for such inventory when T[ri-
State] purchased such inventory originally . . .
." In addition, the arbitration panel ordered
Lanier to pay Tri-State overdue service payments
in the amount of $41,760.40. This award was
confirmed in its entirety by the District Court
for the Western District of Wisconsin and
judgment was entered for Tri-State.

      On May 28, 1999, Tri-State filed a motion for a
writ of execution and an order to compel Lanier
to perform its obligations under the confirmed
award. The district court granted this motion and
directed Lanier to pay $417,835.20 to Tri-State
for existing inventory, but later stayed this
order pending resolution of Lanier’s motion for
reconsideration. After reconsideration, the
district court ordered Lanier to pay $346,265.20
to Tri-State. Included in that amount were
$321,258.00 in inventory, $3,831.83 in Lanier
sales literature, and $21,174.84 plus interest
from the balance remaining on the money judgment.
The district court held that the additional
inventory balance of $92,774.83 should be
addressed between the parties and then, if
necessary, submitted to the district court.

      Tri-State made a second motion for a writ of
execution in the amount of $346,265.20 on June
21, 1999. The district court granted this motion
and ordered that the second writ of execution
issue immediately. The district court further
required Lanier to place the remaining disputed
amount in a trust account. Lanier now challenges
the writs of execution issued against it, arguing
that the district court erred in determining that
certain items--specifically used equipment and
sales literature--were within the meaning of
"inventory" as used by the arbitration panel in
its award.

II.   Analysis

      The dispute in this case centers on the meaning
of the word "inventory" as used by the
arbitration panel in its award to Tri-State. The
arbitration panel ordered Lanier to "repurchase
from T[ri-State] any L[anier] inventory that
T[ri-State] currently owns." According to Lanier,
the district court erred in finding that this
repurchase requirement included both used
equipment and sales literature possessed by Tri-
State. Lanier argues that used equipment and
literature are not within the definition of
"inventory" as that term was used by the
arbitration panel, and that those items should
have been excluded by the district court in
calculating the amount Lanier owed Tri-State
pursuant to the arbitration award. We review the
district court’s conclusions of law de novo and
its findings of fact for clear error. See Harter
v. Iowa Grain Co., 211 F.3d 338, 347 (7th Cir.
2000).

      Because Lanier’s challenge to the district
court’s writs of execution focuses on the court’s
interpretation of a specific term in the
arbitration award, we are mindful of several
principles governing judicial consideration of
such awards. "It is well-settled that the
district court generally may not interpret an
ambiguous arbitration award." Flender Corp. v.
Techna-Quip Co., 953 F.2d 273, 279 (7th Cir.
1992) (citations omitted); see also United
Steelworkers v. Danly Mach. Corp., 852 F.2d 1024,
1027 (7th Cir. 1988). Rather, "[i]f an award is
unclear, it should be sent back to the arbitrator
for clarification." Flender, 953 F.2d at 279-80
(citations omitted). However, because "remand for
clarification is a disfavored procedure," id. at
280 (citations omitted), "[w]hen possible . . .
a court should avoid remanding a decision to the
arbitrator because of the interest in prompt and
final arbitration." Teamsters Local No. 579 v. B
& M Transit, Inc., 882 F.2d 274, 278 (7th Cir.
1989) (citations omitted). "Thus, a court is
permitted to interpret and enforce an ambiguous
award if the ambiguity can be resolved from the
record." Flender, 953 F.2d at 280 (citations
omitted); see also Ethyl Corp. v. United
Steelworkers, 768 F.2d 180, 188 (7th Cir. 1985),
cert. denied, 475 U.S. 1010 (1986).
      In support of its argument that "inventory"
does not include used equipment and sales
literature, Lanier cites the general contract
principle that damages should put the aggrieved
party in the same position it would have been in
had the contract been performed. See Restatement
(Second) of Contracts sec. 347 cmt. a (1979)
("Contract damages are ordinarily based on the
injured party’s expectation interest and are
intended to give him the benefit of his bargain
by awarding him a sum of money that will . . .
put him in as good a position as he would have
been in had the contract been performed.").
According to Lanier, proper expectation damages
would entail the forced repurchase of Lanier
inventory that Tri-State cannot now sell by
virtue of the termination of the Dealer
Agreement, but does not include used equipment
from which Tri-State has already gotten the
benefit of its bargain. In other words, Lanier
argues that because Tri-State has had the use of
the equipment in question and has benefitted from
that use, requiring Lanier to repurchase it at
the original purchase price would be a windfall
to Tri-State. See E. Allan Farnsworth, Contracts
sec. 12.8, at 874-75 (2d ed. 1990) ("It is a
fundamental tenet of the law of contract remedies
that . . . an injured party should not be put in
a better position than had the contract been
performed.").

       Lanier further argues that used equipment and
sales literature are generally not included
within the meaning of the term "inventory."
According to Lanier, although the arbitration
panel found that the WFDL did not apply to the
parties’ Dealer Agreement, the panel nonetheless
relied on the concept of inventory in the WFDL in
making its award. Under the WFDL, an individual
who grants a dealership and then terminates that
dealership is required to "repurchase all
inventories sold by the grantor to the dealer for
resale under the dealership agreement at the fair
wholesale market value." Wisc. Stat. sec. 135.045
(1999). Lanier contends that this provision
protects the dealer only in regard to goods sold
directly to the dealer by the grantor, and that
the act of leasing, selling, or renting those
goods is an intervening step which removes the
goods from the definition of "inventory" as
contemplated by the WFDL. Lanier also asserts
that "inventory," as it is generally understood
and as it is defined in the WFDL, refers only to
goods held for resale. See U.C.C. sec.
9-102(48)(B) (2000) ("’Inventory’ means goods .
. . which . . . are held by a person for sale or
lease . . . ."); see also Wisc. Stat. sec.
135.045 (1999). Lanier argues that because the
sales literature at issue was not held by Tri-
State for resale, it, like the used equipment,
should not have been included within the
definition of "inventory" for purposes of the
district court’s enforcement of the arbitration
award.

      Tri-State responds that Lanier is not asking
this Court to interpret the arbitration panel’s
use of the word "inventory," but rather to alter
the substantive meaning of the award. According
to Tri-State, Lanier is trying to change the
award by inserting the word "new" before
"inventory" in circumstances where there is no
indication that the arbitration panel intended to
limit its award in this way./2 Tri-State argues
that the plain meaning of "inventory" encompasses
everything it possesses that was originally
purchased from Lanier, including both new and
used equipment. In support of this argument, and
its contention that "inventory" includes sales
literature as well, Tri-State cites the
definition of "inventory" in U.C.C. sec. 9-
102(48)(D), which provides that goods are
"[i]nventory" if they are "materials used or
consumed in a business." U.C.C. sec. 9-102(48)(D)
(2000). Under this definition, both sales
literature and used equipment, as items used in
a business, would be included within the meaning
of "inventory." Tri-State asserts that both the
plain meaning of "inventory," and the definition
of that term in the U.C.C., support the district
court’s reading of the arbitration award.

      Although much of the parties’ argument in this
case focuses on the correct definition of
"inventory," we do not believe that the
arbitration award is as clear as either party
asserts. The award requires that Lanier
repurchase from Tri-State any Lanier "inventory"
Tri-State currently owns, but it does not specify
whether that repurchase obligation includes used
equipment or sales literature. Furthermore, the
definitions offered by the parties are themselves
somewhat ambiguous, and there is no indication
that the various statutes from which those
definitions are taken were actually relied on by
the arbitration panel in making its award. Lanier
urges us to resolve this difficulty by applying
general principles of contract law, but that
argument is itself a concession that the
arbitration panel’s use of the term "inventory"
requires interpretation. As we stated previously,
district courts are not to interpret ambiguous
arbitration awards, but rather should remand such
awards for clarification. See Colonial Penn Ins.
Co. v. Omaha Indemnity Co., 943 F.2d 327, 334 (3d
Cir. 1991) ("[C]ourts have uniformly stated that
a remand to the arbitration panel is appropriate
in cases where the award is ambiguous.").
However, despite our conclusion that the
arbitration panel’s use of the word "inventory"
is subject to multiple interpretations, and
despite the district court’s failure to remand
for clarification of that award, we may
nonetheless affirm the district court if the
meaning of "inventory" is clear from the record.
See Flender, 953 F.2d at 280 (citations omitted).

      After examining the record of the arbitration
hearing, we find it significant that Tri-State
provided the arbitration panel with an inventory
valuation dated May 29, 1998. That inventory
valuation, submitted as Exhibit 128, lists the
total value of Lanier inventory held by Tri-State
at $321,258.54, an amount that includes the value
of both new and used Lanier equipment held by
Tri-State. At no time during the arbitration
hearing did Lanier object to the inventory list
referencing the used equipment, nor did it
challenge Tri-State’s characterization of that
equipment as inventory. Under these
circumstances, the record supports a conclusion
that "inventory," as the term was used by the
arbitration panel, includes the items contained
in Tri-State’s inventory valuation, and that the
district court properly determined that the
arbitration award ordered the repurchase of the
used equipment from Tri-State. We therefore
conclude that the district court properly issued
the writs of execution in regard to the
$321,258.00 attributable to the repurchase of
Lanier inventory owned by Tri-State.

       Although the record supports the district
court’s finding as to the used equipment, it is
not sufficient to sustain the court’s conclusion
that the word "inventory" in the arbitration
award includes the Lanier sales literature
possessed by Tri-State. The sales literature was
not on the list of inventory submitted to the
arbitration panel, and we can find no indication
in the record that the panel considered the
repurchase of the sales literature in making its
award. While it is possible that a broad reading
of "inventory" could encompass the sales
literature, a narrower reading of that term would
exclude the sales literature from the calculation
of the amount owed by Lanier under the
arbitration award. Because the term "inventory"
in the arbitration award is ambiguous, and
because that ambiguity is not resolved by the
record in regard to the disputed sales
literature, the district court could not have
included the sales literature within the
repurchase requirement of the arbitration award
without engaging in impermissible interpretation
of that award. We therefore conclude that the
district court erred in not remanding the issue
of the sales literature to the arbitration panel
for clarification and in issuing the writs of
execution in regard to the $3,813.83 attributable
to the Lanier sales literature possessed by Tri-
State.

III.   Conclusion

      Having considered the district court’s writs of
execution in light of our conclusion that the
arbitration panel’s use of the word "inventory"
is ambiguous, we AFFIRM the writs of execution
issued by the district court insofar as they
order the repurchase of used Lanier equipment
possessed by Tri-State, but REVERSE and REMAND those
orders in regard to the repurchase of the Lanier
sales literature for further proceedings
consistent with this opinion./3


/1 The Dealer Agreement between Lanier and Tri-State
was entered into by the parties on June 1, 1986,
and expired by virtue of Lanier’s notice of
termination on May 31, 1998. Among other things,
the Dealer Agreement, as amended, provided that
"[a]ny controversy or claim arising out of or
relating to this . . . Dealer Agreement or the
breach . . . thereof shall be submitted to
binding arbitration in Atlanta, Georgia in
accordance with the Commercial Arbitration Rules
of the American Arbitration Association . . . ."

/2 Tri-State argues that because Lanier is now
trying to alter the substantive meaning of the
word "inventory" as it was used in the
arbitration award and in the Award and Judgment
enforcing that award, the proper remedy would
have been to file a Rule 59(e) motion seeking to
alter or amend the judgment issued by the
district court. See Fed.R.Civ.P. 59(e) ("Motion
to Alter or Amend Judgment."). According to Tri-
State, because no such motion was filed within
ten days of the entry of judgment, Lanier’s
arguments are now procedurally barred.

   Although we recognize that a Rule
59(e) motion could be the proper
means of attacking a judgment in circumstances
where the moving party seeks to change or clarify
the judgment entered, that is not the case here.
Lanier does not argue that the judgment should be
altered so that the used equipment and the sales
literature would be excluded from the definition
of "inventory" used by the arbitration panel, nor
does it argue that the arbitration award is
unclear and should be clarified. Rather, Lanier
argues that the arbitration panel did not include
used equipment and sales literature within the
meaning of "inventory," and that the district
court erred in interpreting the arbitration award
to include those items. Under these
circumstances, where Lanier does not seek to
alter, amend, or clarify the arbitration award
enforced by the district court, but rather argues
that the award was erroneously interpreted,
Lanier’s failure to file a Rule 59(e) motion does
not bar its claims and we may consider them on
appeal.

/3 The only issues on appeal are the district
court’s findings regarding the used equipment and
the literature. The remainder of the district
court’s writs of execution, including the
$21,174.84 plus interest attributable to the
balance remaining on the money judgment and the
$92,744.83 that relates to additional inventory
and that the district court ordered placed in
trust, are unaffected by this decision.
