Opinion ID: 2114435
Heading Depth: 1
Heading Rank: 2

Heading: HLM's Appeal: Did the District Court Err in Denying HLM's Motion to Compel Arbitration of Wesley's Tort Claim?

Text: A. Preservation of error and scope of review. Before we address the merits of the district court's ruling, we first consider Wesley's contention that HLM did not preserve error on its claim that the Iowa exemption of tort claims from arbitration is preempted by federal law. Ordinarily, issues must be raised and decided by the trial court before they may be raised and decided on appeal. Peters v. Burlington N. R.R., 492 N.W.2d 399, 401 (Iowa 1992). Here, HLM did not make a federal preemption argument in the district court, and consequently, the district court did not decide whether the federal act preempted Iowa's tort-claim exception. Under these circumstances, this issue was not preserved for our review. The only issue that remains with respect to HLM's appeal is whether the district court correctly interpreted the Iowa Arbitration Act. See Iowa Code ch. 679A. We review issues of statutory interpretation for correction of errors of law. See In re E.H. III, 578 N.W.2d 243, 245 (Iowa 1998). B. Scope of tort-claim exemption. Iowa's arbitration statute provides that a written agreement to arbitrate a future controversy is valid, enforceable, and irrevocable unless grounds exist at law or in equity that would support revocation of the contract. Iowa Code § 679A.1(2). In refusing to enforce the parties' arbitration agreement with respect to Wesley's tort claim, the district court relied on an exception to the statute's general validation of arbitration clauses. Section 679A.1(2) lists three exceptions to the enforceability of arbitration agreements. The one pertinent to the present discussion encompasses any claim sounding in tort whether or not involving a breach of contract, unless so provided in a separate writing executed by the parties. Id. § 679A.1(2)(c). There is no claim here that the parties executed a separate writing making tort claims subject to the contractual arbitration clause. Therefore, the only issue before us is the meaning and scope of the tort-claim exception to arbitration. Our rules of statutory interpretation are well established. When the text of a statute is plain and its meaning clear, the court should not search for a meaning beyond the express terms of the statute.... Henriksen v. Younglove Constr., 540 N.W.2d 254, 258 (Iowa 1995). Thus, we look to what the legislature said, not what it might or should have said. See Iowa R.App. P. 14(f)(13). The application of these rules unequivocally supports the district court's interpretation of section 679A.1(2)(c). The General Assembly plainly and clearly stated its intent in this statute; tort claims are not subject to arbitration. As the legislature explicitly stated, this is so regardless of whether the tort claims involve a breach of contract. Consequently, the negligence claim alleged by Wesley against HLM falls within the scope of this exception even though it arises out of the same facts that support Wesley's breach-of-contract claim. See Reicks v. Farmers Commodities Corp., 474 N.W.2d 809, 810 (Iowa 1991) (stating in dicta that [b]ecause a tort claim is involved, ... Iowa Code chapter 679A is not involved). HLM attempts to overcome the language of the statute by claiming that a literal application of section 679A.1(2)(c) is contrary to the legislature's overall goal of promoting arbitration, and that such an interpretation produces an absurd result as well. It is true that this court will look beyond the ordinary meaning of the statutory language when a statute's literal terms are in conflict with its general purpose. State v. Hopkins, 465 N.W.2d 894, 896 (Iowa 1991). In determining whether such a conflict exists, we consider the objects sought to be accomplished and `place a reasonable construction on the statute which will best effectuate its purpose rather than one which will defeat it.' Id. (quoting State v. Schlemme, 301 N.W.2d 721, 723 (Iowa 1981)). Moreover, we seek to avoid absurd results. See Hagen v. Texaco Refining & Mktg., Inc., 526 N.W.2d 531, 543 (Iowa 1995). The problem with HLM's argument is that the legislature's intent as evidenced by section 679A.1 is not solely to facilitate the use of arbitration as an alternative to sometimes expensive and time-consuming litigation. See generally Humphreys v. Joe Johnston Law Firm, P.C., 491 N.W.2d 513, 514 (Iowa 1992) (stating [a]rbitration is looked on favorably as an alternative to civil litigation). If that had been the sole purpose of chapter 679A, the legislature would not have specifically provided for exceptions to the enforceability of arbitration agreements, as it did in section 679A.1(2). The fact that it did provide for an exception for tort claims evidences an intent to preserve litigants' traditional right to have their claims resolved in a court of law. Thus, the preservation of the conventional method of resolving tort suits in court is also a goal of the legislature in section 679A.1(2). It is certainly within the legislature's province to promote the efficient resolution of claims through arbitration, while at the same time recognizing that parties value the opportunity to have their claims heard in court. The legislature's balance of these inconsistent interests is reflected in its decision to exempt tort claims from the arbitration statute. We will not second guess the legislature's harmonization of these competing goals by ignoring its clear and explicit exemption of tort claims from the scope of chapter 679A. We concede, as argued by HLM, that the tort-claim exception to the arbitration statute will result in some claims proceeding by arbitration and related claims remaining in court. This bifurcation can certainly generate inefficiencies. Nevertheless, it is still within the power of the parties to minimize these inefficiencies by voluntarily agreeing to have all the claims heard in court or all claims determined in arbitration. To the extent the parties cannot resolve this conflict, the legislature has simply balanced these competing interests by providing in chapter 679A that arbitration of contract claims may be compelled, but arbitration of tort claims may not, unless the parties specifically agree to do so. This balance, in our opinion, is not such an absurd result as to warrant our rewriting of the statute. In conclusion, we hold that the district court correctly ruled that pursuant to section 679A.1(2)(c), Wesley's tort claim is not subject to the parties' arbitration agreement. Therefore, the court did not err in denying HLM's motion to compel arbitration of this claim.