Court Opinion

ID: 9906258
Source: CourtListenerOpinion
Date Created: 2023-12-01 15:08:54.908792+00
Date Added: 2024-06-11T09:24:12.065975
License: Public Domain

FILED
                                                                  IN THE OFFICE OF THE
                                                               CLERK OF SUPREME COURT
                                                                   NOVEMBER 24, 2023
                                                                STATE OF NORTH DAKOTA

                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                2023 ND 224

Rodney E. Pagel and Scott A. Hager,               Plaintiffs and Appellees
      v.
Jeffrey S. Weikum,                               Defendant and Appellant

                                No. 20230156

Appeal from the District Court of Burleigh County, South Central Judicial
District, the Honorable Gary H. Lee, Judge.

REVERSED AND REMANDED.

Opinion of the Court by Tufte, Justice.

Rodney E. Pagel (argued) and Scott A. Hager (appeared), Bismarck, N.D.,
plaintiffs and appellees.

Mark R. Hanson (argued) and Nicholas Mino (on brief), Fargo, N.D., for
defendant and appellant.
                              Pagel v. Weikum
                               No. 20230156

Tufte, Justice.

[¶1] Jeffrey S. Weikum appeals from a district court order and judgment
denying his motion to compel arbitration and granting Rodney E. Pagel and
Scott A. Hager’s motion for summary judgment. Weikum argues the district
court misinterpreted the scope of the arbitration clause in the agreement. We
reverse the order and judgment, and remand for entry of an order compelling
arbitration.

                                      I

[¶2] The parties agreed to dissolve their law firm, Pagel Weikum PLLP, and
entered into a Release and Settlement Agreement (“Agreement”). The
Agreement included a provision stating: “If there are any disputes regarding
the terms of this Agreement, the Parties agree to submit those disputes to
Judge Karen Klein (ret.) for a binding decision.”

[¶3] Pagel and Hager commenced an action in district court against Weikum
for breach of contract and conversion. Weikum moved to dismiss the complaint
and compel arbitration. Pagel and Hager opposed Weikum’s motion to compel
arbitration and moved for summary judgment on the issues of breach of
contract and conversion. Oral argument was held jointly on both matters. The
district court denied Weikum’s motion to compel arbitration, finding this
dispute was not subject to the arbitration clause. The court granted Pagel and
Hager’s motion for summary judgment. Weikum appeals.

                                      II

[¶4] Pagel and Hager argue Weikum did not properly move to compel
arbitration.

[¶5] The North Dakota Uniform Arbitration Act, N.D.C.C. ch. 32-29.3,
provides: “If a proceeding involving a claim referable to arbitration under an
alleged agreement to arbitrate is pending in court, a motion under this section

                                      1
must be made in that court. Otherwise a motion under this section may be
made in any court as provided in section 32-29.3-27.” N.D.C.C. § 32-29.3-07(5).

[¶6] “An issue which is not properly raised in the pleadings but is tried by the
express or implied consent of the parties will be treated in all respects as
having been raised in the pleadings.” Mertz v. Mertz, 2015 ND 13, ¶ 6, 858
N.W.2d 292 (citation omitted). “Under Rule 15(b), N.D.R.Civ.P., a pleading may
be amended impliedly, by the introduction of evidence which varies the theory
of the case and which is not objected to by the opposing party.” Id. (citation
omitted). “Whether the issue was tried by express or implied consent is a
matter within the sound discretion of the trial court and will not be reversed
on appeal unless an abuse of discretion is shown.” Id. (cleaned up). “A court
abuses its discretion when it acts in an arbitrary, unreasonable, or
unconscionable manner, or if it misinterprets or misapplies the law.” Moody v.
Sundley, 2015 ND 204, ¶ 26, 868 N.W.2d 491.

[¶7] Weikum filed a motion entitled “Motion to Dismiss” citing N.D.R.Civ.P.
12(b)(1) and (3), asserting “the issues in dispute are subject to parties’
agreement for resolution by binding arbitration.” Weikum also answered the
complaint by asserting the issues are not properly before the court because of
the arbitration clause, and requested an order “[t]hat the proper resolution
mechanism for adjudicating disputes in this matter is binding arbitration as
agreed upon in the [Agreement].” Pagel and Hager specifically recognized
“Weikum seeks an order from this court dismissing [the] actions and thus
requiring the parties to attend binding arbitration.” Their response specifically
addressed the district court’s authority to “compel arbitration,” citing relevant
case law regarding arbitration. The parties addressed the issue of compelling
arbitration at the hearing on the motions.

[¶8] The district court analyzed the motion and explained that rather than
submitting a motion to dismiss, Weikum should have made a motion to compel
arbitration under N.D.C.C. § 32-29.3-07. The court, viewing the motion to
dismiss as a motion to compel arbitration under N.D.C.C. § 32-29.3-06(2),
reviewed the Agreement to decide whether it contains an enforceable
agreement to arbitrate and whether the controversy is subject to the

                                       2
agreement to arbitrate. The court denied “[t]he motion to dismiss, or to compel
arbitration.”

[¶9] Both parties briefed this issue to the district court as a motion to compel
arbitration, and the court analyzed and decided the issue under the correct
law. Pagel and Hager did not object on these grounds below. The motion to
compel arbitration was tried by consent by the parties and should be treated
in all respects as if raised in the pleadings. The district court did not abuse its
discretion by considering the motion to dismiss as a motion to compel
arbitration. The motion to compel arbitration is properly before this Court.

                                       III

[¶10] Weikum argues the district court erred by denying his motion to compel
arbitration.

[¶11] “We apply a de novo standard of review to decisions denying or granting
a motion to compel arbitration, unless the district court’s decision is based on
factual findings, in which case we apply the clearly erroneous standard to the
factual findings.” Melendez v. Horning, 2018 ND 70, ¶ 8, 908 N.W.2d 115. In
this case, the district court’s decision does not rest upon any factual findings;
rather, it is based on the court’s interpretation of the Agreement. See, e.g., 26th
St. Hosp., LLP v. Real Builders, Inc., 2016 ND 95, ¶ 11, 879 N.W.2d 437. “The
interpretation of a written contract to determine its legal effect is a question of
law, which is fully reviewable on appeal.” Id.

[¶12] In considering arbitration claims, this Court has recognized four
generally applicable principles:

      (1) arbitration is a contractual matter and parties cannot be
      compelled to arbitrate disputes that they have not agreed to
      submit to arbitration; (2) the question of whether the parties
      agreed to arbitrate is decided by a court unless the parties clearly
      and [unmistakably] require an arbitrator to decide arbitrability;
      (3) a court may not rule on the potential merits of claims that the
      parties have agreed to submit to arbitration; and (4) any doubts

                                        3
      about the applicability of an arbitration clause should be resolved
      in favor of a strong public policy for arbitration.

Melendez, 2018 ND 70, ¶ 8 (adopting the United States Supreme Court’s
arbitration principles cited in AT&T Techs., Inc. v. Commc’ns Workers of Am.,
475 U.S. 643, 648-50 (1986)). “Arbitration clauses are construed under rules
for interpreting contracts and in view of the strong federal and state policy
favoring arbitration.” Melendez, at ¶ 19.

[¶13] We have summarized the rules for construing contracts:

      Contracts are construed to give effect to the mutual intention of
      the parties at the time of contracting. N.D.C.C. § 9-07-03. The
      parties’ intention must be ascertained from the writing alone, if
      possible. N.D.C.C. § 9-07-04. A contract must be construed as a
      whole to give effect to each provision if reasonably practicable.
      N.D.C.C. § 9-07-06. Words in a contract are construed in their
      ordinary and popular sense, unless used by the parties in a
      technical sense or given a special meaning by the parties. N.D.C.C.
      § 9-07-09. If the parties’ intention in a written contract can be
      ascertained from the writing alone, the interpretation of the
      contract is a question of law for the court to decide.

Real Builders, Inc., 2016 ND 95, ¶ 11 (cleaned up).

[¶14] The Agreement states: “If there are any disputes regarding the terms of
this Agreement, the Parties agree to submit those disputes to Judge Karen
Klein (ret.) for a binding decision.” The district court reviewed the arbitration
clause in the Agreement, noting it was broad, but found it “applies only if there
are disputes regarding the terms of the Agreement. If the terms of the
Agreement are clear, are not in dispute, and the intention of the parties can be
ascertained by the plain language of the agreement, there is no dispute to
submit to arbitration.” We disagree.

[¶15] In Melendez, 2018 ND 70, ¶ 17, we relied on a Delaware Supreme Court
case, Parfi Holding AB v. Mirror Image Internet, Inc., 817 A.2d 149, 155 (Del.
2002), describing its analysis for determining arbitrability:

                                       4
      First, the court must determine whether the arbitration clause is
      broad or narrow in scope. Second, the court must apply the
      relevant scope of the provision to the asserted legal claim to
      determine whether the claim falls within the scope of the
      contractual provisions that require arbitration. If the court is
      evaluating a narrow arbitration clause, it will ask if the cause of
      action pursued in court directly relates to a right in the contract.
      If the arbitration clause is broad in scope, the court will defer to
      arbitration on any issues that touch on contract rights or contract
      performance.

In construing arbitration clauses, courts have categorized arbitration clauses
as either broad or narrow. Schwarz v. Gierke, 2010 ND 166, ¶ 17, 788 N.W.2d
302. “A broad arbitration provision covers all disputes arising out of a contract
to arbitrate; a narrow provision limits arbitration to specific types of disputes.”
Id. (citation omitted).

[¶16] We agree with the district court that the language of this arbitration
clause is broad. The provision, requiring “any disputes regarding the terms of
this Agreement” to be submitted to arbitration, is broad. See Melendez, 2018
ND 70, ¶ 16 (construing “any controversy or dispute arises . . . concerning any
provision of this Agreement or the rights and duties of any person or entity in
relation thereto” as a broad arbitration clause, requiring arbitration for claims
about conversion of funds and fraud); Real Builders, Inc., 2016 ND 95, ¶ 22,
(construing a provision stating “any claim or controversy arising out of or
relating to this Agreement” as “broad” noting it “does not contain any specific
exclusions”); Schwarz, 2010 ND 166, ¶¶ 17-29, (construing broad language of
arbitration provision covering “[a]ny controversy arising out of or relating . . .
to any . . . accounts or . . . transactions” to require arbitration of claims for
alleged breach of duty). “[T]his Court resolves any doubts concerning the scope
of arbitrable issues in favor of arbitration when there is a broad arbitration
clause and no exclusion clause.” Schwarz, at ¶ 11.

[¶17] Given that the arbitration clause is broad and not limited by any
exceptions, we must “defer to arbitration on any issues that touch on contract
rights or contract performance,” Melendez, 2018 ND 70, ¶ 17 (citation omitted),

                                        5
including the parties’ rights and performance obligations under the Agreement
relating to contingency fees and the Decker litigation. We therefore conclude
the district court misinterpreted the Agreement by finding the claims were not
arbitrable and by denying the motion to compel arbitration of those claims.

                                     IV

[¶18] We reverse the order and judgment, and remand for entry of an order
compelling arbitration.

[¶19] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte
      William A. Neumann, S.J.

[¶20] The Honorable William A. Neumann, Surrogate Judge, sitting in place
of Bahr, J., disqualified.

                                      6