Opinion
No. 1 CA-SA 11-0304
01-24-2012
GHA TECHNOLOGIES INC., an Arizona corporation, Petitioner, v. THE HONORABLE MICHAEL R. MCVEY, Judge of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MARICOPA, Respondent Judge, MARK ANTHONY TOSOC a/k/a TONY TOSOC, Real Party in Interest.
Loose Brown & Associates, PC By Donald A. Loose And Jesse Callahan Attorneys for Petitioner Ridenour, Hienton & Lewis, PLLC By Patricia A. Premeau And Daniel B. Zebelman Attorneys for Real Party in Interest
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
Petition for Special Action from the
Maricopa County Superior Court
Cause No. CV2011-053933
The Honorable Michael R. McVey, Judge
JURISDICTION ACCEPTED; RELIEF GRANTED
Loose Brown & Associates, PC
By Donald A. Loose
And Jesse Callahan
Attorneys for Petitioner
Phoenix
Ridenour, Hienton & Lewis, PLLC
By Patricia A. Premeau
And Daniel B. Zebelman
Attorneys for Real Party in Interest
Phoenix GOULD, Judge
¶1 Petitioner GHA Technologies ("GHA") seeks special action relief from the trial court's denial of its motion to dismiss real-party-in-interest Mark Anthony Tosoc's counterclaim. For the following reasons, we accept jurisdiction and grant relief by vacating the trial court's order denying GHA's motion to dismiss and directing the court to grant the motion.
Factual and Procedural History
¶2On December 15, 2010, GHA and Tosoc entered into an employment agreement, which contained several provisions regarding binding arbitration. One of the arbitration provisions stated, in relevant part:
[Tosoc] and GHA agree that any disputes regarding the meaning, interpretation, construction, scope or enforceability of [the arbitration provisions] . . . shall be decided by the arbitrator and/or arbitration panel which shall have exclusive power and authority to decide such disputes.The employment agreement further provided that all claims by Tosoc would be subject to binding arbitration through the American Arbitration Association ("AAA") and interpreted and enforced according to the rules of the Federal Arbitration Act ("FAA").
¶3 On May 13, 2011, GHA filed a complaint in the trial court alleging Tosoc breached the employment agreement. On June 24, Tosoc filed a counterclaim for unpaid wages. GHA moved to dismiss Tosoc's counterclaim on the ground it was subject to binding arbitration. In response, Tosoc asserted that the binding arbitration provision was unenforceable because it lacked mutuality and was unconscionable. On September 23, the trial court denied GHA's motion without comment. On December 16, GHA filed its special action petition from the trial court's denial of the motion to dismiss.
The arbitration provisions of the employment agreement contain a carve-out for any breach by Tosoc regarding the "nondisclosure, confidentiality and non-solicitation provisions" of the agreement as well as disputes "which may cause immediate or irreparable harm to GHA." GHA's complaint was based on allegations involving these exceptions to the binding arbitration provision.
Jurisdiction
¶4 We exercise our discretion to accept jurisdiction over this special action because GHA has no "equally plain, speedy, and adequate remedy by appeal," and the issue raised by GHA is a purely legal one. Ariz. R.P. Spec. Act. 1(a); Chartone, Inc. v. Bernini, 207 Ariz. 162, 165, ¶ 7, 83 P.3d 1103, 1106 (App. 2004). The trial court's denial of GHA's motion to dismiss is a nonappealable, interlocutory order. United States v. Superior Court (Goodfarb), 144 Ariz. 265, 269, 697 P.2d 658, 662 (1985). Because the issue presented is a legal one and readily resolved, GHA should not be compelled to litigate Tosoc's counterclaim in court when Tosoc's counterclaim may be subject to a more speedy and efficient resolution in binding arbitration. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967) (stating that "the unmistakably clear congressional purpose" of the FAA was that when parties to a contract agree to arbitration, the arbitration procedure be "speedy and not subject to delay and obstruction in the courts"); Brake Masters Sys., Inc. v. Gabbay, 206 Ariz. 360, 363, ¶ 8, 78 P.3d 1081, 1084 (App. 2003) (holding that the purpose of the Arizona arbitration statutes is "a simple and expeditious alternative to litigation").
Discussion
¶5 The issue before this Court is whether the trial court acted in excess of its jurisdiction when, in denying GHA's motion to dismiss, it ruled upon the validity and enforceability of the employment agreement's arbitration provision. Ariz. R.P. Spec. Act. 3(b). Interpretation of an arbitration provision in an employment agreement is a question of law that we review de novo. See Burke v. Voicestream Wireless Corp. II, 207 Ariz. 393, 395-96, ¶ 11, 87 P.3d 81, 83-84 (App. 2004). This Court may consider grounds raised by the parties but not explicitly considered in the trial court's ruling, and the trial court's ruling will be affirmed if it was correct for any reason apparent in the record. Forszt v. Rodriguez, 212 Ariz. 263, 265, ¶ 9, 130 P.3d 538, 540 (App. 2006); Zuck v. State, 159 Ariz. 37, 42, 764 P.2d 772, 777 (App. 1988).
¶6 The parties assert that the FAA and federal law interpreting the FAA govern our decision in this case, and we agree. See Brake Masters, 206 Ariz. at 364, ¶ 11, 78 P.3d at 1085 (stating that parties implicitly accepted that the FAA governed their arbitration agreement by arguing the application of federal cases to their arbitration provision). The arbitration provision in the employment agreement states that the FAA "shall govern the interpretation, enforcement, and proceedings under this arbitration provision." In addition, the AAA does not apply to arbitration provisions in employment agreements. See Arizona Revised Statutes ("A.R.S.") §§ 12-1501 to -1518 (2003).
¶7 Arbitration agreements are placed on "equal footing" with other contracts and are enforced according to their terms. FAA, 9 U.S.C. § 2; Rent-A-Center, Inc. v. Jackson, 130 S. Ct. 2772, 2776 (2010). As a result, when an arbitration provision clearly and unmistakably delegates the authority to decide the validity of an arbitration agreement to an arbitrator, a court must abstain from deciding the issue. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45 (1995); Brake Masters, 206 Ariz. at 364, ¶ 12, 78 P.3d at 1085. The delegation of authority to an arbitrator may be express or implied. See Brake Masters, 206 Ariz. at 366-67, ¶¶ 19-20, 78 P.3d at 1087-88 (holding that the parties' agreement to adhere to AAA rules, which in turn grant the arbitrator authority to determine the validity of arbitration agreements, evidenced the parties' agreement that the arbitrator would decide the validity of the arbitration agreement).
¶8 The validity of an arbitration provision may, like any other contract, be challenged based on fraud, lack of consideration or unconscionability. Rent-A-Center, 130 S. Ct. at 2776; Stevens/Leinweber/Sullens, Inc. v. Holm Dev. & Mgmt., Inc. , 165 Ariz. 25, 28-29, 795 P.2d 1308, 1311-12 (App. 1990). However, because the validity of an arbitration provision is "separable" from the underlying contract, if the challenge is to the underlying contract in general, then the arbitrator determines the validity of the arbitration provision. Rent-A-Center, 130 S. Ct. at 2778; Prima Paint, 388 U.S. at 403-04. If, on the other hand, the challenge is directed at the arbitration provision itself, then the court decides the validity of the provision. Rent-A-Center, 130 S. Ct. at 2778; Prima Paint, 388 U.S. at 403-04.
¶9 In Rent-A-Center, the United States Supreme Court identified the narrow scope of a court's jurisdiction to consider the validity of an arbitration provision. Rent-A-Center held that unless a party specifically challenges the validity of the delegation clause, a challenge to the validity of the arbitration provision in general must be decided by the arbitrator, and not the court. Rent-A-Center, 130 S. Ct. at 2778-79. Thus, as noted by the dissent:
The holding that an "arbitrator shall decide . . . whether a contract containing a valid agreement to arbitrate is enforceable" has been expressly adopted by A.R.S § 12-3006(C) (Supp. 2011).
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[A] claim that an entire arbitration agreement is invalid will not go to the court unless the party challenges the particular sentences that delegate such claims to the arbitrator, on some contract ground that is particular and unique to those sentences.Id. at 2787 (Stevens, J., dissenting).
¶10 Turning to the present case, the trial court did not have jurisdiction to determine the validity of the arbitration provision because the employment agreement contained a delegation clause. Additionally, the employment agreement refers to binding arbitration through AAA, which delegates the responsibility for determining the validity of the arbitration provision to the arbitrator. Tosoc's claims regarding unconscionability and lack of consideration/mutuality challenge the validity of the arbitration agreement in general; none of these arguments address the validity of the delegation provision. Consequently, the trial court erred by denying the motion to dismiss.
Attorney's Fees in Special Action
¶11 GHA requests an award of attorney's fees pursuant to section 16 of the employment agreement and Arizona Rule of Procedure for Special Actions 4(g). But GHA failed to provide us with a copy of section 16 of the agreement, and Rule 4(g) is not an independent basis for a fee award. We therefore decline GHA's request.
Conclusion
¶12For the foregoing reasons, we accept jurisdiction and grant relief by vacating the trial court's denial of GHA's motion to dismiss Tosoc's counterclaim and directing the court to dismiss the counterclaim.
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ANDREW W. GOULD, Judge
CONCURRING:
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MAURICE PORTLEY, Presiding Judge
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ANN A. SCOTT TIMMER, Judge