Court Opinion

ID: 9861555
Source: CourtListenerOpinion
Date Created: 2023-09-25 00:09:56.246838+00
Date Added: 2024-06-11T11:28:39.373046
License: Public Domain

PEDERSON, Acting Chief Justice,
concurring specially.
I concur in the results. The injunction was properly dissolved. If Mt. Vernon had brought an action in a North Dakota court under § 51-19-12(1), NDCC, for damages or rescission within three years of the investment in the franchise (§ 51-19-12(5), NDCC), no agreement to arbitrate in the franchise agreement could prevent our court from acting.
When the Seattle office of the American Arbitration Association announced, in the face of an allegation that no valid contract existed, that it would nevertheless proceed with the arbitration, it illustrated the confusion as to what arbitrators can do. It is a “chicken-and-egg” situation. Unless there is a valid contract with a valid provision for arbitration, there can be no arbitrators to rule whether or not there is a valid contract. When arbitrators are confronted with this problem, the “bootstrap” doctrine can be expected to take over and the loser has to prove fraud to get a court to consider the question. See Chapter 32-29, NDCC.
The only legal proposition offered by Mt. Vernon in these proceedings is that the franchise contract is void because of Country Kitchen of Western America’s failure to comply with the North Dakota Franchise Investment Law (Ch. 51-19, NDCC). The majority opinion correctly concludes that this court can decide that question and, also, correctly concludes that this contract is not void for that reason. Because construction of a contract is a question of law for the courts, see Stetson v. Blue Cross of North Dakota, 261 N.W.2d 894, 896 (N.D. 1978), it may very well be that other questions of law may arise in this dispute where the arbitrators will not be able to preempt the authority and obligation of the judiciary. See my dissent in West Fargo Public Sch. Dist. v. West Fargo Ed., 259 N.W.2d 612, 620 (N.D.1977).