Court Opinion

ID: 9544881
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:02:51.385348+00
Date Added: 2024-06-11T15:13:44.240285
License: Public Domain

RICHARDSON, J.,
dissenting.
The majority holds that the court properly enjoined arbitration of certain of defendant’s claims under the contract. While I agree with the majority’s disposition of three of the bases the trial court utilized in granting the injunction, I disagree with the disposition of the plaintiffs defense that the claims for arbitration were not timely. I would reverse and remand with instructions to compel plaintiff to submit to arbitration on all of defendant’s claims. An order for the parties to arbitrate does not rule on the arbitrability of any claim. That is a decision the arbitrator is empowered to make.
*614The majority, while professing to abide by the policy of encouraging arbitration when parties agree to that method of dispute resolution, has now lent encouragement to recalcitrant parties. The court, rather than the arbitator, will become the initial determiner as to defenses to arbitration. The progression of this case aptly illustrates why the policy of facilitating agreements to arbitrate is important. The trial court enjoined arbitration of all claims made by defendant. This court requires certain of those claims to be arbitrated and upholds the injunction on the balance of the claims. Thus, the parties will have to go to arbitration and present the case anyway.
The majority correctly observes that the issues in a proceeding to enjoin arbitration may not exceed the scope of the inquiry permitted by ORS 33.230 under which a party may obtain an order compelling arbitration. In such a proceeding, the party resisting arbitration may defend on the ground that there has been no default in the agreement to arbitrate. I disagree, however, with the majority’s interpretation of ORS 33.230 to the effect that a party may claim it is not in default by contending the claims are not arbitrable. While the majority says that the inquiry is narrow it draws the line so that courts have the power to rule on questions of law and questions involving limited factual inquiry respecting the arbitrability of a claim. That is not a very bright line. Almost any contract dispute will involve pure questions of law and questions of law involving limited factual inquiry. That is no basis for holding that a court rather than an arbitrator should decide them. An arbitrator has the authority to rule on questions of law, Brewer v. Allstate Insurance Co., 248 Or 558, 436 P2d 547 (1968), and certainly may determine questions of fact, limited or otherwise, that bear on arbitrability.
There is no question that courts are equally competent to rule on such questions and there may be instances in which the agreement to arbitrate is specifically limited to certain types of disputes or claims and a court could conclude as a matter of law that arbitration is barred or that certain defenses obviouly have merit. It is tempting for courts to rule on arbitrability when the issue is presented and the conclusion appears obvious. However, the parties, *615by agreeing to arbitrate, have selected that forum for dispute resolution. That forum is empowered to decide questions of arbitrability. To allow a court to determine preliminary questions of arbitrability turns a proceeding to compel or bar arbitration into a traditional contract action wherein the evidence and arguments may have to be presented twice in the event the court orders arbitration. That is inconsistent with the policy of the state to enhance the arbitrability of disputes. See Budget Rent-A-Car v. Todd Investment Co., 43 Or App 519, 603 P2d 1199 (1979).
With these general propositions in mind, I approach the majority’s discussion of each of the four bases the trial court used in enjoining arbitration.
The first is that the demand for arbitration was not made prior to “final payment” as provided in the arbitration clause of the contract. The simple answer is that whether the party seeking arbitration has complied with the specific procedure is one aspect of arbitrability the arbitrator is empowered to determine. It makes little sense, in the context of an express agreement to arbitrate all disputes arising under the contract, to bifurcate the inquiry and present procedural aspects of the claim to the court, leaving the arbitrator to decide the merits of claims not barred. I agree with the majority that this issue should have been left to the arbitrator.
Plaintiffs second contention is that arbitration is barred because the parties did not intend the claims submitted to be arbitrable. Again the simple answer is that what claims are arbitrable is a dispute under the contract the parties agreed to submit to arbitration. The majority, while appearing to arrive at the same conclusion, in effect rules on part of the defense. The trial court ruled that the contract was ambiguous and received evidence extrinsic to the contract language to determine the parties’ intent. The majority finds that the contract clause in issue is not ambiguous and proceeds to interpret the language vis-a-vis the arbitrability of the defendant’s claims and concludes arbitrability is not specifically excluded. It then holds that arbitrability on that issue is arbitrable. The majority erred in engaging in that analysis. It could be argued that the construction of the contract advanced by the majority is the *616law of the case and that the arbitrator in deciding arbitrability must begin where the majority left off. If arbitrability under the terms of the contract is to be left to the arbitrator then that forum should be left free to completely analyze the issue and the contract language.
Plaintiffs third basis is that arbitration was barred by a contract provision requiring notice of a demand for arbitration to be filed within “a reasonable time” after the claim has arisen, but in no event after the claim would be barred by the applicable statute of limitation. Defendant argues these defenses are arbitrable.
The trial court did not rule that the claims were barred by being filed beyond a period equal to the applicable statute of limitations. Instead, regarding that defense, the court concluded
«* * * that at least part of the claims included in the demand for arbitration filed by VIPCO do not violate the statute of limitations. This would appear to be particularly true with respect to the claims for indemnification.”
The court, however, held that all claims were barred because VIPCO had not given notice of its demand for arbitration within a reasonable time. I agree with the majority’s analysis of the precise ruling of the court and the holding that whether the claim was filed within a reasonable time is arbitrable. I disagree with the conclusion that the issue of whether the claim is barred by the applicable statute of limitations is for the court.
The majority begins the analysis by stating:
“Whether a claim is barred by the applicable statute of limitations should be decided by the court where the agreement provides that arbitration may not be demanded after the statute of limitations has run on the claims, and where it is clear, as a matter of law, that the applicable statute has run.* * *” 59 Or App at 610.
I do not read this statement as saying that the arbitrator does not have the power to rule on a defense or a matter of law. The law does not prevent the arbitrator from deciding the issue and does not designate the court as the sole forum. The majority’s selection of the court as the appropriate forum to rule on that defense is thus based on policy considerations.
*617The policy decision to allow the court to decide the issue of timely filing of a claim in arbitration defeats the often expressed policy to encourage arbitration when the parties have agreed to that forum for dispute resolution. The policy now adopted by the majority evinces some lack of confidence in the competence of the arbitration system. It is true the arbitrator may err in his ruling on a matter of law and the losing party may have a limited basis for challenging that ruling, see ORS 33.320,1 but the fact an arbitrator’s award is wrong and also relatively final is not a basis for allowing a recalcitrant party to bypass arbitration and seek a judicial ruling. The parties have agreed to arbitration as a dispute resolution mechanism with the implied knowledge that the arbitrator’s decision on arbitrablity may be erroneous and immune from plenary attack in the judicial forum. Having agreed to arbitration, the parties cannot complain that it may not always suit their needs or may in some instances be cumbersome.
Plaintiffs defense based on a limitation period is a contractual, not a statutory defense. The arbitration clause of the contract adopts the relevant statutory limitation period for determining when a demand for arbitration must be made. Consequently, the question whether a demand was timely is one of the “claims, disputes and other matters in question arising out of or relating to” the contract. The parties agreed to arbitrate such claims or disputes. The question is not whether the claims are arbitrable, but whether, assuming they are the type which are arbitrable, the demand for arbitration was timely. That issue depends on an analysis of the contract and the claims to determine which limitation period is applicable. That should be left to the arbitrator.
Plaintiffs final basis for barring arbitration is that defendant’s claims are “frivolous and patently baseless” because the contract required defendant to maintain insurance for the protection of plaintiff against claims and to indemnify losses plaintiff might incur. Clearly this is a defense to the merits of defendant’s claims and should be decided by the arbitrator.
*618In summary, I conclude that defendant’s claims all involve disputes under the contract which the parties agreed to arbitrate. Although courts have authority to compel or bar arbitration in appropriate proceedings, that authority should be sparingly utilized in order to further the policy of encouraging and facilitating arbitration. The majority takes a step backward in carving out a new and somewhat flexible area in which a court may rule on defenses to arbitration. It may be in a given case that a preliminary ruling will obviate the necessity of extensive preparation for arbitration that may ultimately prove unnecessary. However, in the long run, the basic value of arbitration will be defeated by allowing parties to resort to courts for preliminary procedural rulings on matters that an arbitrator is empowered to decide.
I dissent. Joseph, C. J., and Warren and Rossman, JJ., join in this dissent.

 But see Peter Kiewit v. Port of Portland, 291 Or 49, 628 P2d 720 (1981).