Court Opinion

ID: 5137958
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:48:49.896775+00
Date Added: 2024-06-11T08:24:05.379749
License: Public Domain

2015 UT App 115
_________________________________________________________

               THE UTAH COURT OF APPEALS

     AMERICAN FAMILY INSURANCE AND JASON D. HARDMAN,
                  Plaintiffs and Appellants,
                               v.
               S.J. LOUIS CONSTRUCTION, INC.,
                  Defendant and Appellee.

                             Opinion
                        No. 20130986-CA
                       Filed April 30, 2015

         Third District Court, West Jordan Department
              The Honorable Barry G. Lawrence
                         No. 110400845

            Jan P. Malmberg, Attorney for Appellants

              Robert L. Janicki and Michael L. Ford,
                     Attorneys for Appellee

  JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
 which JUDGES GREGORY K. ORME and JAMES Z. DAVIS concurred.

CHRISTIANSEN, Judge:

¶1      Plaintiffs American Family Insurance and Jason D.
Hardman appeal the district court’s order setting aside a default
judgment against S.J. Louis Construction, Inc. and compelling
arbitration of their claims. Because the district court’s order
compelling arbitration is not a final, appealable order, this court
lacks jurisdiction and we must dismiss the appeal.

                        BACKGROUND

¶2    Hardman was driving through a road-construction zone
maintained by S.J. Louis when his car struck a pipe protruding
     American Family Insurance v. S.J. Louis Construction, Inc.

approximately eighteen inches above the roadway. His car
suffered extensive damage from this collision, but Hardman was
not seriously injured. His insurer, American Family, paid
Hardman approximately $4,500 in total for the property damage
and his personal injury claim. American Family and Hardman
then filed a subrogation complaint against S.J. Louis in the
district court, alleging that S.J. Louis was negligent and seeking
recovery of the damages paid by American Family and
Hardman’s $500 insurance deductible. S.J. Louis did not respond
to the complaint.

¶3      A little less than two years later, in November 2012,
Plaintiffs sought to arbitrate the dispute with S.J. Louis’s insurer,
Zurich American Insurance Company. Unsatisfied with Zurich’s
response to their attempts to arbitrate or negotiate a settlement,
Plaintiffs obtained a default judgment against S.J. Louis from the
district court on January 17, 2013. Plaintiffs then withdrew their
claims from arbitration.

¶4     On May 24, 2013, S.J. Louis filed a motion with the district
court to set aside the default judgment and to compel arbitration
of Plaintiffs’ claims. S.J. Louis argued that ‚a party to an
arbitration agreement may be relieved from a default judgment
under Rule 60(b)(6) of the Utah Rules of Civil Procedure‛ and
that American Family and Zurich had agreed to arbitrate the
claims by virtue of their mutual membership in Arbitration
Forums, Inc., an arbitration-services provider. The district court
agreed, setting aside the default judgment entered against S.J.
Louis and ordering the parties to arbitrate the claims through
Arbitration Forums. Plaintiffs appeal.

             ISSUE AND STANDARD OF REVIEW

¶5     The dispositive issue on appeal is whether the district
court’s order compelling arbitration is a final order from which
Plaintiffs may appeal. ‚The question of whether an order is final
and appealable is a question of law.‛ Powell v. Cannon, 2008 UT

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     American Family Insurance v. S.J. Louis Construction, Inc.

19, ¶ 9, 179 P.3d 799 (citation omitted). We therefore decide as a
matter of law whether the district court’s order is a final
judgment.

                            ANALYSIS

¶6      As a threshold matter, we must determine whether this
court has jurisdiction to consider an appeal from the district
court’s order compelling arbitration.1 Generally, a party may
appeal only ‚‘final orders and judgments’ from a district or
juvenile court, except as otherwise provided by law.‛ Powell v.
Cannon, 2008 UT 19, ¶ 11, 179 P.3d 799 (quoting Utah R. App. P.
3(a)). ‚The final judgment requirement is jurisdictional,‛ and if
the order appealed from fails to satisfy this requirement, ‚we
lack jurisdiction over the appeal and must dismiss it.‛ Id. ¶ 12.
The Utah Uniform Arbitration Act creates an exception to the
final-judgment requirement for certain arbitration-related orders
that would otherwise be deemed interlocutory, but an order
compelling arbitration is not included in this exception. See Utah
Code Ann. § 78B-11-129(1) (LexisNexis 2012). Accordingly, we
may reach the merits of the appeal only if the district court’s

1. Shortly after the notice of appeal was filed in this case, this
court directed the parties to address the matter of our
jurisdiction. S.J. Louis argued in its brief that the district court’s
order was nonfinal and that this court therefore lacked
jurisdiction over the appeal. At oral argument, however, S.J.
Louis changed its position based on its reading of Zions
Management Services v. Record, 2013 UT 36, 305 P.3d 1062, and
agreed with American Family that the district court’s order was
final for purposes of appeal. Nevertheless, ‚acquiescence of the
parties is insufficient to confer jurisdiction on the court.‛
Anderson v. Wilshire Invs., LLC, 2005 UT 59, ¶ 22 n.4, 123 P.3d 393
(citation and internal quotation marks omitted). This concession
by S.J. Louis therefore does not resolve the jurisdictional
question.

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     American Family Insurance v. S.J. Louis Construction, Inc.

order compelling arbitration is a final judgment. See Powell, 2008
UT 19, ¶¶ 14, 23.

¶7      ‚A district court’s order is a final judgment only if it ends
the controversy between the parties by finally disposing of the
litigation on the merits as to all claims and all parties.‛ Id. ¶ 15.
‚If any issue remains pending, the final judgment rule is not
satisfied.‛ Id. Thus, where a party has sought relief on the merits
in the district court but those claims are subsequently ordered to
arbitration, ‚an order staying litigation and compelling
arbitration is not a final order from which an appeal may be
taken.‛ Id. ¶ 20. However, ‚if the only issue before the court is
whether to compel arbitration, an order compelling arbitration is
‘a final decision because it effectively end*s+ the controversy
between the parties and [leaves] no claims pending before the
district court.’‛ McGibbon v. Farmers Ins. Exch., 2015 UT 3, ¶ 9,
345 P.3d 550 (alterations in original) (quoting Zions Mgmt. Servs.
v. Record, 2013 UT 36, ¶ 26, 305 P.3d 1062).

¶8      In Powell v. Cannon, the plaintiffs sued their healthcare
providers, alleging negligence in the delivery of the plaintiffs’
child. 2008 UT 19, ¶ 2, 179 P.3d 799. The defendants filed a
motion to stay litigation and compel arbitration, which the
district court granted. Id. ¶¶ 3, 6. The plaintiffs appealed from
that order, and our supreme court dismissed the appeal for lack
of jurisdiction. Id. ¶ 31. The supreme court held that an order
staying litigation and compelling arbitration is not a final
judgment from which an appeal may be taken. Id. ¶ 20. The
supreme court explained that ‚the district court retained
jurisdiction over the case by staying the litigation pending the
completion of the arbitration.‛ Id. ¶ 18. Thus, the court held,
‚*u+ntil the district court enters judgment on the arbitration
award, the *plaintiffs’+ underlying claims for medical
malpractice remain viable and cognizable.‛ Id. The supreme
court also observed that the district court could modify, correct,
or vacate the arbitration award after the arbitration proceedings
were completed. Id. The supreme court accordingly concluded
that the order compelling arbitration had ‚neither ended the

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     American Family Insurance v. S.J. Louis Construction, Inc.

controversy between the litigants nor disposed of the subject
matter of the litigation‛ and was therefore not a final judgment.
Id. ¶¶ 18, 20.

¶9      In contrast, our supreme court concluded in Zions
Management Services v. Record that a district court’s order
granting a motion to compel arbitration in an administrative
proceeding was final for purposes of appeal. 2013 UT 36, ¶ 26,
305 P.3d 1062. There, a party to an employment-discrimination
dispute before the Utah Labor Commission filed a motion with
the district court to compel arbitration in the administrative
proceeding. Id. ¶ 6. The district court granted the motion and
ordered the administrative proceedings stayed, and the
employee appealed. Id. ¶¶ 6, 10. The supreme court first
determined that the district court had no jurisdiction over the
claims before the Labor Commission and that the only issue then
properly before the district court was whether the arbitration
agreement should be enforced. Id. ¶ 26. The court then
concluded that the district court’s order was final: ‚*O+nce the
district court issued its Order Compelling Arbitration, there was
nothing left for the district court to do,‛ because, unlike in
Powell, the decision on the motion to compel arbitration ‚left no
claims pending before the district court.‛ See id. On appeal, the
employee relied on Powell to argue that the order was nonfinal
because the district court retained jurisdiction to confirm, vacate,
modify, or correct the arbitration award. Id. ¶ 27. The supreme
court rejected this argument, clarifying that its conclusion in
Powell was not based on the availability of postarbitration
remedies in the district court. Id. ¶ 28. Rather, the supreme court
explained, the order in Powell was nonfinal because the district
court stayed litigation of the underlying claims for negligence
and medical malpractice; thus ‚those claims remained live
before the district court‛ while arbitration proceeded, and the
district court retained jurisdiction. Id.

¶10 The Utah Supreme Court recently issued McGibbon v.
Farmers Insurance Exchange, 2015 UT 3, 345 P.3d 550, wherein the
court again faced the question of whether an order compelling

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     American Family Insurance v. S.J. Louis Construction, Inc.

arbitration was a final judgment. There, the plaintiff filed suit to
recover for injuries sustained in an automobile accident. Id. ¶ 2.
The insurer sought to compel arbitration of the plaintiff’s claims,
and the district court granted the motion. Id. ¶ 4. However,
rather than staying litigation of her claims pending arbitration,
the district court dismissed the plaintiff’s complaint. Id. The
plaintiff sought an interlocutory appeal of the district court’s
order, which the supreme court provisionally granted pending a
determination of its jurisdiction. Id. ¶ 5. The supreme court
ultimately dismissed the appeal, concluding that the district
court’s order was a final judgment from which a direct appeal,
rather than an interlocutory appeal, must be taken. Id. ¶¶ 13, 19.

¶11 In concluding that the district court’s order was a final
judgment, the supreme court reiterated the rule that an order is
not final if the district court ‚retains jurisdiction to resolve any
remaining issues after the conclusion of arbitration
proceedings.‛ Id. ¶ 9 (citing Powell, 2008 UT 19, ¶ 18). However,
because the district court in McGibbon had dismissed the
plaintiff’s complaint when it compelled arbitration, ‚*i+t did not
retain jurisdiction over the proceedings‛ and ‚there remained
nothing left for it to resolve once arbitration was finished.‛ Id.
¶ 10. The supreme court therefore held that the district court’s
order compelling arbitration and dismissing the case was final,
the plaintiff’s interlocutory appeal was improper, and the appeal
had to be dismissed. Id. ¶¶ 13, 19.

¶12 Here, Plaintiffs filed a negligence claim against S.J. Louis
seeking repayment of the damages incurred in the collision. S.J.
Louis moved the district court to compel arbitration, and the
court granted that motion. Unlike in McGibbon, the district court
here did not dismiss the underlying complaint when it ordered
the parties to arbitration. And unlike in Zions Management
Services, the merits of Plaintiffs’ underlying negligence claim are
properly before the district court. The outcome of this case is
therefore governed by the supreme court’s holding in Powell.
And because Plaintiffs’ negligence claim remains ‚live‛ and
pending before the district court, the district court’s order

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     American Family Insurance v. S.J. Louis Construction, Inc.

compelling arbitration here is not final.2 See Powell, 2008 UT 19,
¶ 18. We therefore lack jurisdiction over Plaintiffs’ direct appeal
from that order, and we must dismiss it. See id. ¶ 12.

                         CONCLUSION

¶13 The district court’s order compelling arbitration is not a
final judgment from which a direct appeal may be taken. We
therefore dismiss the appeal.

2. We recognize that the district court here did not formally stay
the litigation on Plaintiffs’ negligence claim. However, with or
without a stay, that claim remains pending before the district
court until a judgment or dismissal is entered. See McGibbon v.
Farmers Ins. Exch., 2015 UT 3, ¶ 10, 345 P.3d 550; Powell v.
Cannon, 2008 UT 19, ¶ 18, 179 P.3d 799.

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