Opinion ID: 1187695
Heading Depth: 2
Heading Rank: 1

Heading: Arizona authority

Text: ¶ 6 The Utilities contend it makes no sense to compel parties to engage in a protracted and expensive arbitration before resolving the threshold issue of arbitrability. They argue that when a trial court orders arbitration, and that order leaves nothing left to be decided in the litigation, the party compelled to arbitrate should be entitled to judicial review of the issue of arbitrability before the arbitration, not after. In Roeder, we held that an order compelling arbitration could be reviewed on appeal after confirmation of the award but was not appealable prior to arbitration proceedings. 105 Ariz. at 510, 467 P.2d at 904. The Utilities argue that the court of appeals interpreted Roeder too broadly in dismissing their appeal. For support, they cite Dusold v. Porta-John Corp., 167 Ariz. 358, 807 P.2d 526 (App.1990), and correctly point out that this court has recently heard two appeals from orders compelling arbitration Canon School District v. W.E.S. Construction Co., 177 Ariz. 526, 869 P.2d 500 (1994), and Broemmer v. Abortion Services, Ltd., 173 Ariz. 148, 840 P.2d 1013 (1992). They ask that we reexamine Roeder to determine whether its holding should be applied to all arbitrability disputes. Because of the confusing state of the law and increasing number of disputes subject to arbitration, the Utilities urge that this is the time and the case in which to modify Roeder and hold that orders compelling arbitration may be appealed. ¶ 7 We believe the Utilities' submittal goes too far. First, Dusold does not conflict with Roeder. In Dusold, the judgment from which an appeal was taken contained Rule 54(b) language of finality and was thus appealable under A.R.S. § 12-2101(B), which provides that an appeal may be taken [f]rom a final judgment entered in an action ... in a superior court. See Dusold, 167 Ariz. at 361, 807 P.2d at 529; see also Spence v. Huffman, 15 Ariz.App. 99, 100, 486 P.2d 211, 212 (1971). The rule referred to in Dusold permits the trial judge to insert language directing the entry of final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. Ariz. R.Civ.P. 54(b). The order in this case contains no such language. The Utilities evidently attempted to procure an appealable order by submitting a proposed form of judgment denying injunctive relief [1] but did not seek inclusion of Rule 54(b) language. In any event, Peabody objected and submitted its own proposed order, which the trial judge signed. This order simply compelled arbitration and stayed all other proceedings. ¶ 8 The opinions in Canon School and Broemmer, on which the Utilities rely, provide little guidance. In Canon School, the appeal was from a judgment denying a request to stay the arbitration. 177 Ariz. at 527, 869 P.2d at 501. It is impossible to tell from that opinion whether the judgment contained Rule 54(b) language or whether the request to stay was considered to be a request for injunctive relief. The same is true in Broemmer, [2] in which the appeal was from a judgment compelling arbitration of a medical malpractice suit. 173 Ariz. at 150, 840 P.2d at 1015. Neither case discusses whether an interlocutory order compelling arbitration is appealable. [3] In any event, the judgments may or may not have been appealable under A.R.S. § 12-2102(B). ¶ 9 Peabody urges that Roeder holds an order compelling arbitration is interlocutory and therefore never appealable. Allowing appeals from such orders would destroy the benefits of arbitration as a speedy, efficient, and inexpensive method of dispute resolution. It contends Roeder is still good law and need not be revisited. Further, it argues, permitting appeals from orders compelling arbitration would judicially amend A.R.S. § 12-2101.01the statute governing appeals in arbitrationand undermine the legislature's policy favoring arbitration. ¶ 10 We believe Peabody reads Roeder and § 12-2101.01 too broadly. In Roeder, with facts much like those in the present case, we noted that the court of appeals dismissed the appeal because the order compelling arbitration was interlocutory and was not expressly made subject to an appeal and, therefore, is not an appealable order. 105 Ariz. at 509, 467 P.2d at 903 (emphasis added). We held that if a party has made a proper record, it may raise the arbitrability issue by objecting to the trial judge's confirmation of the arbitration award and by subsequent appeal. Id. at 510, 467 P.2d at 904. Thus, we concluded that the court of appeals was correct in dismissing the pre-arbitration appeal. Id. We did not address whether, or under what circumstances, an order compelling arbitration could ever be appealed before arbitration. Our comment that the order was not appealable because it was not expressly made subject to an appeal certainly implies that the trial court could have expressly made it appealable. ¶ 11 There are persuasive arguments on both sides of the issue. Challenging the arbitrability of a dispute after confirmation of the award is not always an adequate remedy. Although it is commonly said that the law favors arbitration, it is more accurate to say that the law favors arbitration of disputes that the parties have agreed to arbitrate. See Clarke v. ASARCO Inc., 123 Ariz. 587, 589, 601 P.2d 587, 589 (1979); see also Pima County by Tucson v. Maya Const. Co., 158 Ariz. 151, 154, 761 P.2d 1055, 1058 (1988). Under some circumstances, the goals of arbitration may actually be defeated by requiring the parties to arbitrate before conclusively resolving the preliminary issue of arbitrability. For instance, the present dispute involves the interpretation of a complicated and lengthy Coal Supply Agreement. If it later turns out the dispute was not subject to arbitration, compelling a costly and extensive arbitration when a bona fide dispute exists, not only over liability and the amount owed but also over the very issue of arbitrability, may be a great waste of resources for the litigants, the arbitrators, and the courts. In addition, the requirement of posting a supersedeas bond may make post-confirmation appeal of the arbitrability issue extremely costly for some litigants and impossible for others. On the other hand, permitting appeals from every order compelling arbitration would undermine arbitration as an inexpensive, efficient, and speedy method of resolving disputes.