Opinion ID: 2155659
Heading Depth: 2
Heading Rank: 1

Heading: Consideration of Res Judicata Defense in Proceeding to Compel Arbitration

Text: [¶ 12] Macomber contends that the Superior Court exceeded the scope of its statutory authority by considering the affirmative defense of res judicata before determining whether to compel arbitration. The Uniform Arbitration Act, 14 M.R.S.A. §§ 5927-5949, requires that when there is a complaint or motion to compel arbitration, the matter should proceed to arbitration unless there is a bona fide dispute about the existence of the agreement to arbitrate. Thus, 14 M.R.S.A. § 5928 provides, in pertinent part: 1. Application. On application of a party showing an agreement described in section 5927 and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied. 2. Stay of Proceedings. On application, the court may stay an arbitration proceeding commenced or threatened on a showing that there is no agreement to arbitrate. Such an issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. If found for the opposing party, the court shall order the parties to proceed to arbitration. [¶ 13] Here, there is no dispute that there is an agreement to arbitrate. Where there is no dispute about the existence of an agreement to arbitrate, Maine's `broad presumption favoring substantive arbitrability' governs further consideration of the action. V.I.P., Inc. v. First Tree Dev., LLC, 2001 ME 73, ¶ 4, 770 A.2d 95, 96 (quoting Roosa v. Tillotson, 1997 ME 121, ¶ 3, 695 A.2d 1196, 1197). There is, however, no Maine authority addressing the extent to which the trial court may consider whether the claims that a party seeks to arbitrate are barred by the doctrine of res judicata before sending a matter to arbitration. [¶ 14] Section 5928 establishes that the responsibility to determine the substantive arbitrability of a dispute rests with the court, not the arbitrator. The court is directed to accomplish this through a summary process: [T]he court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied. 14 M.R.S.A. § 5928(1) (emphasis added). The term `summarily' ... has been defined to mean that a trial court should act expeditiously and without a jury trial to determine whether a valid arbitration agreement exists. UNIF. ARBITRATION ACT § 7, 7 (part I) U.L.A. 17 cmt. (Supp.2003). [¶ 15] This is precisely the course followed by the Superior Court in this case. The court employed the summary process established by M.R. Civ. P. 56 and concluded that the dispute was not subject to arbitration. It reached this conclusion not because Macomber's substantive claims that the Tweedies breached the 1996 agreement were outside the scope of the parties' arbitration agreement, but rather because the parties' agreement to arbitrate the claims had been superseded by operation of the doctrine of res judicata as a consequence of a final judgment of a Maine court in a separate proceeding. [¶ 16] Although the broad presumption of arbitrability is a hallmark that must guide our efforts when we seek to interpret and enforce arbitration agreements, it is not irrebuttable. Moreover, it is not intended to afford a litigant the opportunity to use arbitration to revisit a dispute that has been previously resolved. In the absence of an opportunity for a party to be heard on the affirmative defense of res judicata in a summary judicial proceeding, the presumption of arbitrability would in many instances be rendered virtually irrebuttable because that party would be compelled to arbitrate the issue of res judicata along with all of the other issues previously litigated between the parties. Courts do not review an arbitrator's ruling on questions of law. See 14 M.R.S.A. § 5938(1)(A)-(F) (enumerating grounds for vacating an arbitration award); Pelletier & Flanagan, Inc. v. Me. Court Facilities Auth., 673 A.2d 213, 215 (Me.1996) (ruling that a party seeking to vacate an arbitration award has the burden of demonstrating one of the specific statutory grounds requiring the court to vacate the award set forth in section 5938); Sholar Bus. Assocs. v. Davis, 138 N.C.App. 298, 531 S.E.2d 236, 239 (2000) (ruling that [b]ecause an arbitrator is not bound by substantive law or rules of evidence, an award may not be vacated merely because the arbitrator erred as to law or fact); City of Philadelphia v. Fraternal Order of Police, Lodge No. 5, 125 Pa.Cmwlth. 625, 558 A.2d 163, 164 (1989) (ruling that an error of law that does not exceed the powers and authority of an arbitrator is not grounds for reversing award); Schnurmacher Holding, Inc. v. Noriega, 542 So.2d 1327, 1328-29 (Fla.1989) (ruling that courts lack authority to vacate an arbitration award absent a statutory ground for doing so and, moreover, the statutory ground that the arbitrator exceeded his or her power does not include the arbitrator's departure from accepted rule of law). [¶ 17] In Saga Communications, Inc. v. Voornas, 2000 ME 156, ¶ 20, 756 A.2d 954, 962, we upheld the entry of a summary judgment denying arbitration on the basis of the affirmative defense of waiver. The plaintiff was deemed to have waived its right to arbitrate by having filed a complaint seeking to enforce limitations on employment and competition stated in an agreement with the defendant, followed by two separate motions seeking temporary restraining orders, before amending its complaint to seek an order compelling arbitration. Id. ¶¶ 4, 6, 17, 756 A.2d at 957, 961. Here, Macomber sought relief based on the parties' 1996 agreement by actively participating in the foreclosure proceeding and the unsuccessful appeal that followed. His participation in the proceeding was no less substantial than the actions of the plaintiff in Saga Communications. Although waiver is based on precepts different than the affirmative defense of res judicata, the rationale for having the court, in the first instance, determine whether either waiver or res judicata overcome the presumption of arbitrability of a dispute is the same: Courts are better suited to determine the legal consequences of prior judicial proceedings and are reposed with inherent authority to control their dockets and promote judicial economy. [¶ 18] In contrast with our holding in Saga Communications, in Lewiston Firefighters Ass'n v. City of Lewiston, 354 A.2d 154, 167-68 (Me.1976), we held that the affirmative defense of laches should be decided by an arbitrator rather than the court: [A] claim of laches has a degree of uniqueness because it is cognizable only in equity as addressed to the Chancellor's conscience .... [and] the substantive subject-matter of a laches contention projects no distinctive, or difficult, concepts of law.... [N]othing in the substantive content of a laches claim precipitates any matter of important public policy which should prohibit the parties to a collective bargaining agreement from including, as they may deem appropriate, laches questions among those finally to be decided by arbitration. [¶ 19] Unlike the affirmative defense of laches considered in Lewiston Firefighters Ass'n, res judicata is not addressed to the court's conscience, and it is a distinctive concept of law that is often difficult to apply. Res judicata is distinguished from laches by the degree to which the former doctrine embodies important questions of public policy as a key determinant of the degree of finality afforded the judicial process. Res judicata has been characterized as serv[ing] vital public interests beyond any individual judge's ad hoc determination of the equities in a particular case.... It is a rule of fundamental and substantial justice, of public policy and of private peace, which should be cordially regarded and enforced by the courts .... Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981) (internal quotations omitted). [4] [¶ 20] The broad presumption favoring the substantive arbitrability of disputes is in no manner diminished by a court's threshold determination in a summary judicial proceeding that arbitration of the dispute is or is not barred by a prior judgment. We therefore conclude that the Superior Court did not err by entertaining the Tweedies' affirmative defense of res judicata as part of the summary hearing process authorized by 14 M.R.S.A. § 5928(1).