Case Title: UniFirst Corp. v. Junior's Pizza, Inc.

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2012-02-16T00:00:00Z

Document:
UniFirst Corp. v. Junior's Pizza,
Inc. (2011-248)
 
2012 VT 13
 
[Filed 23-Feb-2012]
 
ENTRY
  ORDER
 
2012 VT 13
 
SUPREME COURT
  DOCKET NO. 2011-248
 
FEBRUARY TERM, 2012
 
UniFirst
  Corp.
}
APPEALED FROM:
 
}
 
 
}
 
     v.
}
Superior Court, Chittenden Unit,
  
 
}
Civil Division
 
}
 
Junior's Pizza, Inc.
}
DOCKET NO. S1060-10 CnC
 
 
 
 
 
Trial Judge:  Helen M. Toor
  
 
In the above-entitled
cause, the Clerk will enter:
 
¶ 1.            
This is an appeal by defendant Junior's Pizza, Inc. from a superior
court decision confirming an arbitration award and awarding attorney's fees to
plaintiff UniFirst Corporation.  The Chittenden
Superior Court, Civil Division, held that Junior's waived its right to object
to arbitration by failing to challenge the award within thirty days of
receiving notice.  Finding no error, we affirm.
¶ 2.            
UniFirst is a Massachusetts corporation that
rents and sells work uniforms, linens, and other products in Vermont and other
states.  Junior's is a Vermont corporation that owns restaurants in
Colchester and Burlington.  In 2005 and 2008, Junior's and UniFirst agreed to service contracts according to which UniFirst would provide products to Junior's restaurants. 
Both contracts stated in relevant part:
All
disputes of whatever kind between the Customer and UniFirst
based upon past, present or future acts, whether known or unknown, and arising
out of or relating to the negotiation, formation or performance of this
Agreement shall be resolved exclusively by final and
binding arbitration.  
In November 2008, Junior's terminated those
agreements, and UniFirst sought an $8000 payment for
services previously rendered.  Junior's did not respond to requests for
payment.  
¶ 3.            
In June 2009, pursuant to the arbitration clause in the parties'
contracts, UniFirst filed a demand for final and
binding arbitration with the Commercial Arbitration Tribunal of the American
Arbitration Association (AAA).  Junior's declined to submit to
arbitration, stating that it would reconsider if UniFirst
produced a valid arbitration agreement.  UniFirst
subsequently provided copies of the contract provision quoted above to both
Junior's and the AAA.  Junior's continued to maintain it was not required
to submit the matter to arbitration.  In July 2009, the AAA notified the
parties that UniFirst had met all filing requirements
and arbitration would proceed absent a court order staying the matter. 
Junior's never sought a court order staying arbitration.  For its part, UniFirst did not seek a court order compelling Junior's to
participate in arbitration. 
¶ 4.            
Notice of the arbitration hearing was provided to both parties, and the
hearing took place on October 28, 2009.  Junior's did not
participate.  On November 2, 2009, UniFirst was
awarded $43,038.03 in damages and attorney's fees, and Junior's was ordered to
reimburse UniFirst $2100 in administrative fees
associated with conducting the arbitration.  The next day, the AAA
notified Junior's of the award by email and certified mail.  A copy of the
award was also mailed to Junior's in early December 2009.  
¶ 5.            
On August 30, 2010, UniFirst filed a motion to
confirm the arbitration award with the superior court.  Junior's moved to
dismiss the action but failed to comply with a court order to file a timely
legal memorandum.  The motion was denied.  The parties then filed
cross-motions for summary judgment, and the court ruled in favor of UniFirst, finding that Junior's had waived its right to
object to the arbitration award by failing to challenge it within thirty days
pursuant to 12 V.S.A. § 5677(c).  Junior's now appeals arguing that (1) it
did not waive its right to object to the arbitration award, (2) UniFirst was required to petition to compel arbitration
prior to engaging in arbitration without Junior's participation, and (3) the
arbitration was not conducted in strict accordance with the terms of the
contracts.
¶ 6.            
This Court's review of an arbitration award is limited.  "Vermont
has a strong tradition of upholding arbitration awards whenever
possible."  R.E. Bean Constr. Co. v. Middlebury
Assocs., 139 Vt. 200, 204, 428 A.2d 306, 309 (1980).  "This
Court has long recognized the importance of arbitration as an alternative to
litigation for the efficient resolution of disputes."  Springfield
Teachers Ass'n v. Springfield Sch. Dirs., 167 Vt.
180, 183, 705 A.2d 541, 543 (1997).  "If courts were permitted to
broadly question the determinations of an arbitrator, then arbitration would
become merely another expensive and time consuming layer to the already
complex litigation process.' "  Id.
at 183, 705 A.2d  at 543-44 (quoting R.E.
Bean Constr. Co.,
139 Vt. at 204-05, 428 A.2d at 309).  " We
are not at liberty to set aside an arbitration panel's award because of an
arguable difference regarding the meaning or applicability of laws urged upon
it.' "  Muzzy v. Chevrolet Div., Gen. Motors Corp., 153 Vt.
179, 185, 571 A.2d 609, 613 (1989) (quoting Merrill, Lynch, Pierce, Fenner & Smith,
Inc. v. Bobker, 808 F.2d 930, 933-34 (2d Cir. 1986)).
¶ 7.            
Under the Vermont Arbitration Act (VAA), 12 V.S.A. §§ 5651-5681, we must
confirm an arbitration award unless grounds are established to vacate or modify
it.  See 12 V.S.A. § 5676; Matzen
Constr., Inc. v. Leander Anderson Corp., 152 Vt. 174, 177, 565 A.2d 1320,
1322 (1989).  Appellate review is confined to: "(1) whether there exist
statutory grounds for vacating or modifying the arbitration award, and (2)
whether the parties were afforded due process."  Springfield Teachers Ass'n, 167 Vt. at 184, 705 A.2d  at
544.  Although Junior's has not moved to vacate the arbitration
award, it objected to the award in opposition to UniFirst's
motion to confirm.  If timely, these objections are equivalent to requests
to vacate.  Id. at 187, 705 A.2d  at 545-46.
¶ 8.            
As an attempt to vacate the arbitration award, Junior's objections were
untimely.  Under the VAA:
 
An application to vacate an award shall be made within 30 days after delivery
of a copy of the award to the applicant, except that if predicated upon
corruption, fraud or other undue means, it may be made within 30 days after
such grounds are known or should have been known.
12 V.S.A. § 5677(c); see also Springfield
Teachers Ass'n, 167 Vt. at 187, 705 A.2d  at
546.  Junior's was provided a copy of the award in December 2009.  It
did not seek to vacate the award until February 2011 when it opposed UniFirst's motion to confirm the award.  Accordingly,
Junior's waived any objections it may have had by failing to seek a vacatur within 30 days.  For this reason, the superior
court correctly granted summary judgment for UniFirst.[*]
¶ 9.            
Even if Junior's had submitted a timely application to vacate the award,
its arguments would be without merit.  First, Junior's argues that UniFirst was required to petition to compel Junior's to
arbitrate before proceeding with arbitration in Junior's absence.  The
parties' contract provides that all disputes between the parties will be
resolved by final arbitration conducted pursuant to the Commercial Arbitration
Rules of the AAA.  Rule 29 provides in relevant part: 
Unless
the law provides to the contrary, the arbitration may proceed in the absence of
any party or representative who, after due notice, fails to be present or fails
to obtain a postponement.  
Commercial Arbitration Rules & Mediation
Procedures R-29 (2009), available at http://www.adr.org.  This rule
accords with Vermont law.  The VAA provides that "arbitrators may hear and
determine the controversy upon the evidence produced notwithstanding the
failure of a party duly notified to appear."  12 V.S.A.
§ 5666.  Thus, an arbitration hearing may proceed without the
participation of an unwilling party.  
¶ 10.         There
is no Vermont rule requiring a party to compel an unwilling adversary to
participate in arbitration.  A party may, pursuant to 12 V.S.A. § 5674,
petition the court to compel or stay arbitration hearings.  This provision
of the VAA is permissive.  It does not mandate a motion to compel prior to
proceeding with arbitration. 
¶ 11.         Our
rule is consistent with the law in other jurisdictions as well as the
FAA.  The FAA provides that a party to an arbitration agreement "may
petition any United States district court . . . for an order directing that
such arbitration proceed in the manner provided for in such agreement."  9 U.S.C. § 4.  Several circuit courts have held that
"the procedural requirements of § 4 are permissive, not mandatory."  Val-U Constr. Co. of S.D. v. Rosebud Sioux Tribe, 146 F.3d 573, 580 (8th Cir. 1998).  State courts have taken the same
view.  See, e.g., Tutti
Mangia Italian Grill, Inc. v. Am. Textile Maint. Co., 128 Cal. Rptr. 3d 551, 556 (Ct. App. 2011) ("[T]he party seeking arbitration need not resort
to [a court order] prior to proceeding with the arbitration."); Battle v.
Gen. Cellulose Co., 129 A.2d 865, 868 (N.J. 1957) ("[N]othing
in our law requires the demandant in the arbitration
to seek preliminarily an adjudication that he has the contractual right.").
¶ 12.         Junior's
also argues that the arbitration hearing was not in strict accord with the
parties' contract, which stipulated that arbitration must take place in
Montpelier, Vermont.  The hearing took place telephonically, with the
arbitrator located in Montpelier and UniFirst's counsel  located in New Hampshire.  Junior's urges
us to view this as a breach and declare the arbitration "improperly
conducted."  
¶ 13.         This
argument has no merit.  Not only has Junior's waived all objections
pursuant to 12 V.S.A. § 5677(c), it waived this particular objection to locale
before the arbitration hearing.  The Commercial Arbitration Rules of the AAA
provide in relevant part:
The parties
may mutually agree on the locale where the arbitration is to be held.  If
any party requests that the hearing be held in a
specific locale and the other party files no objection thereto within 15 days
after notice of the request has been sent to it by the AAA, the locale shall be
the one requested.  If a party objects to the locale requested by the
other party, the AAA shall have the power to determine the locale, and its
decision shall be final and binding.
Commercial Arbitration
Rules & Mediation Procedures, supra, R-10.  Junior's did
not object to the location at the time.  Thus, any objection to the
location of the hearing has long since been waived.
¶ 14.        
As a final matter, UniFirst has
requested attorney's fees and costs associated with this appeal.  This
matter is not properly before us.  Under Vermont Rule of Appellate
Procedure 39(f), a party seeking attorney's fees for work done on an appeal to
this Court must file a motion in the trial court within fourteen days after we
issue the mandate in the appeal.  
Affirmed.
 
 
BY THE COURT:
 
 
 
 
 
 
 
Paul L. Reiber,
  Chief Justice
 
 
 
 
 
John A. Dooley, Associate
  Justice
 
 
 
 
 
Marilyn S. Skoglund, Associate Justice
 
 
 
 
 
Brian L. Burgess, Associate
  Justice
 
 
 
 
 
Beth Robinson, Associate
  Justice
 
 
 

[*]  The parties have both framed the
issues in this appeal as if the VAA governs this case, and we have analyzed the
issues accordingly.  Neither party has invoked the
Federal Arbitration Act (FAA), and we therefore need not consider its
application in this case.  Rowe v. Brown, 157 Vt. 373, 379, 599 A.2d 333, 337 (1991) ("Issues not raised on appeal are deemed waived."). 
But we note that the arbitration agreement itself specifically provides: 
"The arbitration shall be conducted . . . pursuant to the Expedited Procedures
of the Commercial Arbitration Rules of the American Arbitration Association and
shall be governed by the Federal Arbitration Act."  (Emphasis
added.)  The FAA provides in relevant part:  "Notice of a motion to
vacate, modify, or correct an award must be served upon the adverse party or
his attorney within three months after the award is filed or delivered."  9 U.S.C. § 12.  Federal appellate courts have held that
a party may not raise affirmative defenses to an application to confirm an
arbitration award unless it does so within the time limit for moving to vacate
an arbitration award.  Cullen v. Pain, Webber, Jackson & Curtis,
Inc., 863 F.2d 851, 853-54 (11th Cir. 1989) (reviewing federal appellate
decisions reaching same conclusion).  Our interpretation of the VAA tracks
these federal decisions.  See, e.g., Springfield
Teachers Ass'n, 167 Vt. at 189, 705 A.2d  at 547. 
Junior's did not challenge the award within three months.  Accordingly,
under either the FAA or the VAA, Junior's has waived objections to this
arbitration award.