Opinion ID: 901890
Heading Depth: 1
Heading Rank: 3

Heading: Issue I: Arbitration

Text: [¶ 12.] [T]he construction and legal effect of a written [arbitration] contract are to be determined by the court as a question of law except where the meaning of the language depends upon disputed extrinsic evidence. Flandreau Public Sch. Dist. No. 50-3 v. G.A. Johnson Const., Inc., 2005 SD 87, ¶ 7, 701 N.W.2d 430, 434. We review legal questions concerning arbitration agreements de novo. Id. (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947-48, 115 S.Ct. 1920, 1926, 131 L.Ed.2d 985, 996 (1995)). A circuit court's factual findings supporting its [arbitration] decision, however, are reviewed under the clearly erroneous standard of review. Masteller v. Champion Home Builders Co., 2006 SD 90, ¶ 9, 723 N.W.2d 561, 563-64. [¶ 13.] The circuit court concluded that the arbitration clause in the Par Golf-Bodell subcontract did not require Par Golf to arbitrate with Wal-Mart Trust before suing that property owner to enforce the mechanic's lien. The circuit court also concluded that Bodell, the only defendant with a contractual arbitration clause, waived its right to assert that clause in this litigation. The circuit court stated: The arbitration provision in the subcontract does not preclude Par Golf from proceeding against the landowner. [Further,] Bodell agreed to diligently seek from Wal-Mart all sums owing to Par Golf. There is no evidence of any efforts. On the contrary Bodell, Wal-Mart and Travelers are united in their efforts to defeat Par Golf's claim for payment. Bodell waived its right to compel Par Golf to arbitrate the claims. [¶ 14.] Before addressing Defendants' appeal of these rulings, we address Par Golf's assertion that Defendants waived the right to challenge the circuit court's arbitration decision. Par Golf points out that although Bodell sought to enforce the arbitration clause in two related lawsuits, [5] those cases have not been appealed. Par Golf further contends that Bodell failed to sufficiently raise the failure to arbitrate issue in this case. Defendants respond that they did not waive the arbitration issue because they attempted to enforce the arbitration provision in this litigation on two occasions. We agree with the Defendants. [¶ 15.] Bodell formally moved to dismiss in October 2006, arguing that the subcontract required arbitration. The court heard the motion and decided the issue at a November 2, 2006 motions hearing. Furthermore, when Par Golf amended its complaint, Defendants answered and again moved to dismiss for failure to arbitrate. Ultimately, the circuit court expressed its reasoning for denying the motion in a written decision. The record reflects that Defendants preserved this issue for appeal by raising it before the circuit court. [¶ 16.] With respect to the merits of the arbitration issue, the parties do not specifically address the circuit court's joinder/waiver analysis. Instead, Par Golf points out that it had no arbitration agreement with Wal-Mart Trust, the property owner and party Par Golf sued. Therefore, Par Golf argues that even though it was contractually obligated to arbitrate with Bodell over disagreements arising from the subcontract, the arbitration provision in the subcontract with Bodell did not obligate Par Golf to arbitrate before asserting mechanic's lien and unjust enrichment claims against Wal-Mart Trust. Apparently conceding that Par Golf had no direct contractual duty to arbitrate with Wal-Mart Trust, Defendants argue that a property owner should be able to assert against the subcontractor any defense (including arbitration) that the general contractor could assert against the subcontractor. [¶ 17.] We decline to consider Defendants' assignment of defenses argument. We do so because, even if Wal-Mart Trust were entitled to assert Bodell's defenses against Par Golf, Defendants have failed to cite authority suggesting that this right includes the defense of arbitration. More specifically, Defendants have submitted no authority indicating that a subcontractor, who has an arbitration clause with its general contractor but no contract to arbitrate with the property owner, must nevertheless arbitrate before pursuing mechanic's lien and unjust enrichment claims against the owner. [6] [¶ 18.] This failure to cite authority gives us significant cause for concern in light of the underlying principle that `arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.' Flandreau Public School, 2005 SD 87, ¶ 10, 701 N.W.2d at 435 (citing AT & T Tech., Inc. v. Commc'n Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986)). Further, Defendants have failed to identify how Par Golf could have obtained relief on its mechanic's lien and unjust enrichment claims against Wal-Mart Trust in an arbitral forum only involving Bodell. Under those circumstances arbitration is generally not enforced. See Franke v. Poly-America Med. and Dental Benefits Plan, 555 F.3d 656, 658 (8th Cir.2009) (concluding that arbitration agreements are to be enforced unless a party can show that it will not be able to vindicate its rights in the arbitral forum) (quoting Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir.2004)). In light of these principles and the absence of any authority supporting Defendants' argument, we decline to consider whether a general contractor may assign to the property owner the general contractor-subcontractor's contractual agreement to arbitrate. See Hart v. Miller, 2000 SD 53, ¶ 45, 609 N.W.2d 138, 149 (concluding that the failure to submit authority on an issue constitutes a waiver of the argument on appeal).