Opinion ID: 1760353
Heading Depth: 2
Heading Rank: 2

Heading: Contractual language of the SPA and the Remmels' complaint

Text: The first issue in the case sub judice is whether the Remmels agreed to arbitrate their claims. Arkansas Code Annotated § 16-108-201 (Supp.2006) allows for arbitration between parties and provides in relevant part: (a) A written agreement to submit any existing controversy to arbitration arising between the parties bound by the terms of the writing is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract. (b)(1) A written provision to submit to arbitration any controversy thereafter arising between the parties bound by the terms of the writing is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract. See also Ark.Code Ann. § 16-108-202 (1987). As a matter of public policy, arbitration is strongly favored. Hart v. McChristian, 344 Ark. 656, 42 S.W.3d 552 (2001). Arbitration is looked upon with approval by courts as a less expensive and more expeditious means of settling litigation and relieving docket congestion. Id. Arbitration is a matter of contract between the parties, and the same rules of construction and interpretation apply to arbitration clauses as apply to agreements generally. Id. The construction and legal effect of a written contract to arbitrate are to be determined by the court as a matter of law. Id. Accordingly, we will give effect to the parties' intent as evidenced by the arbitration agreement itself. Id. In light of the policy favoring arbitration, such agreements will not be construed strictly but will be read to include subjects within the spirit of the parties' agreement. Id. Any doubts and ambiguities of coverage will be resolved in favor of arbitration. Id. Because the duty to arbitrate is a contractual obligation, we must determine from the language of the SPA whether the parties intended to arbitrate the particular dispute in question. Showmethemoney Check Cashers, Inc. v. Williams, 342 Ark. 112, 27 S.W.3d 361 (2000). Section 8.11 of the SPA provides: All disputes arising under this Article 8 (other than claims in equity) shall be resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Arbitration shall be by a single arbitrator experienced in the matters at issue and selected by the Indemnifying Party, and the Indemnified Party and in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be held in such place in Little Rock, Arkansas as may be specified by the arbitrator (or any place agreed to by the Indemnifying Party, the Indemnified Party and the arbitrator). The decision of the arbitrator shall be final and binding as to any matters submitted under this Article 8; provided, however, if necessary, such decision and satisfaction procedure may be enforced by either the Indemnifying Party or the Indemnified Party or in any court of record having jurisdiction over the subject matter or over any of the Parties to this Agreement. All costs and expenses incurred in connection with any such arbitration proceeding (including reasonable attorneys' fees) shall be borne by the Party against which the decision is rendered, or, if no decision is rendered, such costs and expenses shall be borne equally by the Indemnifying Party as one Party and the Indemnified Party as the other Party. If the arbitrator's decision is a compromise, the determination of which Party or Parties bears the costs and expenses incurred in connection with any such arbitration proceeding shall be made by the arbitrator on the basis of the arbitrator's assessment of the relative merits of the Parties' positions. (Emphasis added.) Article 2.2 provides that [n]either the execution and delivery of this Agreement by Rebsamen . . . will . . . (ii) constitute or result in Default[.] Section 2.15 of the SPA defines a default as a Material Adverse Effect on Rebsamen. The Remmels argue that they did not allege anything with regard to any warranty or representations, or any breach of the SPA. We disagree. Here, for the following reasons, the contractual language of the SPA indicates that the Remmels' claims fit squarely within Article 8 of the SPA. First, we note that the second-amended complaint, which was incorporated by reference in the third-amended complaint, contains numerous allegations of McDowell's breach of contract with Rebsamen. Second, the Remmels amended their complaint against Regions and McDowell to include their breach-of-employment-contract allegation that McDowell violated his employment contract with Rebsamen, and in doing so, the Remmels brought the contract claim, as well as those tort claims stemming from the breach-of-contract claim, within Article 8. By alleging a breach-of-contract claim, the Remmels essentially alleged a default, which is expressly prohibited by Sections 2.2 and 2.15 of the SPA. Thus, these claims qualify as all disputes and bring the case within the purview of Article 8, thereby making it subject to arbitration. Further, we note that, once the Remmels began the arbitration proceedings, they failed to object to the scope of the arbitration. In an order denying the Remmels' motion to vacate the arbitration award, dated February 9, 2006, the circuit court made the following finding of fact: Plaintiffs [the Remmels] waived any argument as to the scope of the arbitration by failing to raise that issue [those claims having been arbitrated] in the arbitration proceeding. Here, the Remmels had a full and fair opportunity in the arbitration proceeding to litigate the matters raised in their second- and third-amended complaints, and the arbitrator disposed of the claims. See Riverdale Development Co. v. Ruffin Building Systems, Inc., 356 Ark. 90, 146 S.W.3d 852 (2004) (holding that a third party may use the award to bind his opponent if the party to be bound, or a privy, was before the arbitrator, had a full and fair opportunity to litigate the issue, and the issue was actually decided by the arbitrator or was necessary to his decision). The fact that the Remmels submitted their disputes to arbitration implies an agreement to be bound by the arbitration board's decision. Id.; Anthony v. Kaplan, 324 Ark. 52, 918 S.W.2d 174 (1996). When the reasons supporting an objection are known beforehand, a failure to object will not be excused. Chrobak v. Edward D. Jones & Co., 46 Ark.App. 105, 878 S.W.2d 760 (1994) (citing Apperson v. Fleet Carrier Corp., 879 F.2d 1344, 1359 (6th Cir. 1989)). Therefore, for the foregoing reasons, we hold that, based upon our reading of the contractual language of the SPA, the circuit court properly confirmed the arbitration awards. Accordingly, we affirm the circuit court's rulings on this issue.