Case Title: KL House Const. Co. v. City of Albuquerque

Citation: 576 P.2d 752, 91 N.M. 492

Docket Number: 

State: new-mexico

Court: New Mexico Supreme Court

Date: 1978-03-30T00:00:00Z

Document:
576 P.2d 752 (1978) 91 N.M. 492 K.L. HOUSE CONSTRUCTION CO., INC., a New Mexico Corporation, and Western Casualty and Surety Company, a Foreign Corporation authorized to do business in New Mexico, Plaintiffs-Appellants, v. The CITY OF ALBUQUERQUE, New Mexico, a Municipal Corporation, Defendant-Appellee. No. 11580. Supreme Court of New Mexico. March 30, 1978. Hannett, Hannett, Cornish & Barnhart, Charles E. Barnhart, Scott Oliver, Albuquerque, for plaintiffs-appellants. Sutin, Thayer & Browne, Irwin S. Moise, Raymond Schowers, Albuquerque, for defendant-appellee. PAYNE, Justice. Appellants sought a declaratory judgment, requesting the district court to construe certain contracts and declare that appellants had fulfilled their obligations under the contracts. Upon the application of appellee, The City of Albuquerque, the district court stayed the proceedings and ordered arbitration. The arbitrators granted the City an award of $125,000. The district court confirmed the award and denied the *753 appellants' motion to vacate, modify or correct the award. This appeal seeks a review of the district court order allowing arbitration and the subsequent order confirming the arbitration award. In April, 1973, the City engaged K.L. House Construction Co. to perform certain additions and other work on a manufacturing plant which the City leases to industrial users. A part of this contract involved a roofing job which House subcontracted to Jack Pope, Inc. Under the contract a "forty year roof" was to be applied. The contract provided that House would give the City a one year warranty on all its work, and further provided that the roofer, Pope, would give a two year warranty running directly to the City. Appellant, Western Casualty & Surety Company, wrote performance bonds to the City in behalf of House. The work was completed and the job was accepted by the City on November 3, 1973. The trial court entered a finding, supported by substantial evidence, that within the one year warranty period the City gave notice to House that there were some problems with the roof. Within its two year warranty period Pope made certain repairs on the roof. After the expiration of both warranty periods the City sought to have the entire roof replaced, asserting that the roofing job failed to meet the requirements of the contract. The appellants, House, Pope and Western, sought a declaratory judgment from the district court that the acceptance of the job by the City and the expiration of the warranty periods satisfied all the terms of the contract with regards to the roof. The City sought to have this issue determined under the arbitration clause in the contract which provided as follows: Appellants claim that arbitration is inappropriate because the dispute did not arise out of the contract but is a dispute which arose after the contract had been completed. The appellants argue that the matter should therefore be determined by a trial in district court. We cannot agree with this position. In addition to the provisions of the arbitration clause in the contract entered into between the parties, the Uniform Arbitration Act adopted by New Mexico provides in § 22-3-9, N.M.S.A. 1953 (Supp. 1975) as follows: The agreement between the parties provided that "[a]ll claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, ... shall be decided by arbitration." We hold that any disputes pertaining to the performance of the contract, even if they arise after the warranty has expired, are disputes which arise out of the contract and are therefore subject to arbitration. We adopt the reasoning of the New York Court of Appeals which said: Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., 37 N.Y.2d 91, 95, 96, 371 N.Y.S.2d 463, 466, 332 N.E.2d 333, 335 (1975). In the present case the subject matter of the dispute has a reasonable relationship to the subject matter of the contract. It would be inconsistent to hold that the parties intended to arbitrate only disputes which were discovered during the period of construction or any short warranty period following thereafter. When a broad and general arbitration clause is used, as in this case, the court should be very reluctant to interpose itself between the parties and the arbitration upon which they have agreed. When the parties agree to arbitrate any potential claims or disputes arising out of their relationships by contract or otherwise, the arbitration agreement will be given broad interpretation unless the parties themselves limit arbitration to specific areas or matters. Barring such limiting language, the courts only decide the threshold question of whether there is an agreement to arbitrate. If so, the court should order arbitration. If not, arbitration should be refused. We therefore affirm the decision of the district court in submitting the matter to arbitration. The appellants also claim that the arbitration award should have been vacated. The New Mexico Arbitration Act sets forth the grounds for vacating an award. § 22-3-20, N.M.S.A. 1953 (Supp. 1975). Appellants contend that there was evident partiality and misconduct by the arbitrators prejudicing their rights. The claim of misconduct by the arbitrators asserted by appellants is based upon two evidentiary matters. An opening statement by counsel for the City was presented to the arbitrators in a written form. It included documents with a synopsis of what the City's position would be as to each document and a summary of what other witnesses would prove. Appellants argue that this deprived them of the opportunity to effectively cross-examine on those matters before they were reviewed by the arbitrators. Conversely, a written article tendered by appellants to the arbitrators was refused as being hearsay. Misconduct of an arbitrator was discussed in Lee v. Providence Washington Ins. Co., 82 Mont. 264, 274, 266 P. 640, 643 (1928), wherein the court stated: The evidentiary rulings by the arbitrators did not constitute misconduct within the meaning of the statute. The only record before us indicates that the evidence either included in the opening statement or excluded in the written article was cumulative and testified to by other witnesses. Appellants were not injured by either act. We affirm the trial court. IT IS SO ORDERED. McMANUS, C.J., and EASLEY, J., concur.