Opinion ID: 2635821
Heading Depth: 2
Heading Rank: 2

Heading: all of peterson's claims are subject to arbitration

Text: ¶ 18 We now turn to the question of which of Peterson's claims are subject to arbitration. Whether a district court correctly interpreted the scope of an arbitration clause is a question of law which we review for correctness. See Bybee v. Abdulla, 2008 UT 35, ¶ 7, 189 P.3d 40; Docutel Olivetti Corp. v. Dick Brady Sys., Inc., 731 P.2d 475, 479 (Utah 1986). A determination of which claims the parties intended to be subject to arbitration requires that we interpret the arbitration clause of the contract. This we do as a matter of law unless we find ambiguity in the plain language of the agreement. Cent. Fla. Invs., Inc., 2002 UT 3, ¶ 12, 40 P.3d 599. ¶ 19 The language of the arbitration clause is not ambiguous. The parties have agreed to arbitrate any dispute arising under this agreement that cannot be settled by informal means. We find that all of Peterson's claims fit neatly under the plain meaning of arising under this agreement. We therefore affirm the ruling of the district court on cross-appeal.
¶ 20 Peterson claims that IHC intentionally injured its contract rights when it backed away from its traditional policy of vigorous collection of delinquent accounts. The nature of this dispute clearly contemplates application of the contract. In order to determine if IHC has intentionally interfered with Peterson's contract rights, the arbitrator will have to evaluate the terms of the contract as well as the rights and duties of the parties under the contract. Thus, this claim arises under the agreement.
¶ 21 Peterson claims that IHC breached the implied covenant of good faith and fair dealing. Good faith is a judicially recognized, common law duty. As we have previously held, A claim for breach of the implied covenant of good faith and fair dealing... is based on judicially recognized duties not found within the four corners of the contract. These duties, unlike the duties expressly stated in the contract, are not subject to alteration by the parties. Christiansen v. Farmers Ins. Exch., 2005 UT 21, ¶ 10, 116 P.3d 259 (internal citation omitted). Thus, by law, good faith and fair dealing are implied terms of every contract. Id. They are recognized as included terms regardless of whether or not they are expressly stated in the contract language. They exist whenever a contract is entered, and are imposed on the parties `consistent with the agreed common purpose' of the contract. Id. (quoting St. Benedict's Dev. Co. v. St. Benedict's Hosp., 811 P.2d 194, 200 (Utah 1991))(internal citation omitted). As the duties of good faith and fair dealing arise out of the relationship between the parties created by the contract and have no independent existence outside of the contract, a claim for the breach of the covenant of good faith arises under the contract. ¶ 22 Our decision today is consistent with our former decision in Christiansen v. Farmers Insurance Exchange. In Christiansen, plaintiffs asserted breach of both the express terms of their insurance contract and the implied covenant of good faith and fair dealing. Id. ¶ 1. Under the terms of the agreement between the parties, the breach of express contract claims were sent to arbitration. Id. Respondents then filed ... a motion for a protective order to prevent further discovery related to the bad faith claim until after a breach of the express contract was established. Id. The district court denied the motion, holding that the good faith claim was severable from the express contract claim and could therefore be pursued in litigation concurrent with the arbitration on the express contract claim. Id. We affirmed, holding that the respondent had failed to demonstrate good cause for a protective order because the claims of breach of express contract and bad faith are premised on distinct duties that give rise to divergent and severable causes of action. Id. ¶¶ 10, 14. Whether good faith claims are severable from arbitrable contract claims is a determination entirely dependant on the language of the arbitration clause at issue. In the case we decide today, the parties agreed to arbitrate any dispute arising under this agreement that cannot be settled by informal means. Such was not the case in Christiansen. ¶ 23 Further, at the time the Christiansen dispute reached this court, arbitration on the express breach of contract claim had concluded. Id. ¶ 6. [B]ecause the breach of express contract claim [had] been resolved by arbitration, the question of whether any other issues in the Christiansens' court action should have been stayed [was] moot. ... Id. As the Christiansen arbitration had been fully resolved but had not addressed the bad faith claim, it was appropriate for the bad faith claim to be pursued in litigation.