Court Opinion

ID: 9702661
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:20:24.440176+00
Date Added: 2024-06-11T18:21:40.332387
License: Public Domain

SABERS, Justice
(concurring in result in part and dissenting in part).
On Issue II, I concur in the result that SDCL 21-25A-1 is not unconstitutional.
I respectfully dissent on Issue I. The majority opinion incorrectly concludes that SDCL 5-18-11 is unconstitutional. Arbitration of contract disputes does not usurp a municipal function. No authority exists for the proposition that arbitration is a municipal function. “The purpose of arbitration is to permit a relatively quick and inexpensive resolution of contractual disputes by avoiding the expense and delay of extended court proceedings.” Azcon Const. Co. v. Golden Hills Resort, 498 N.W.2d 630, 633 (S.D.1993) *134(citation omitted). Arbitration places quasi-judicial authority in the hands of a neutral third-party. See SDCL ch. 21-25A; Julius G. Getman, Labor Arbitration and Dispute Resolution, 88 Yale L.J. 916, 932 (1979). An arbitrator is a “neutral person.” Black’s Law Dictionary, 105 (6th ed.1990). A municipality, as a party to a contract, could not be both arbitrator and one of the parties involved in a dispute. Also, the list of enumerated powers of municipalities does not include arbitration of disputes over contracts in which the City is a party. SDCL ch. 9-12.
The majority opinion incorrectly relies upon City of Sioux Falls v. Sioux Falls Firefighters, Local 814, 234 N.W.2d 35 (S.D.1975). That case dealt with the setting of salaries by an arbitration panel, a function that had previously been deemed a municipal function by this court. Id. See Schryver v. Schirmer, 171 N.W.2d 634 (S.D.1969). Here, the City argues that the enforcement of contracts is a municipal function. However, the power to enter into a contract and the power to enforce it are entirely different than the power to determine, resolve or arbitrate through judicial or quasi-judicial means. In Firefighters, arbitration was attempted to create a contract between labor and the City of Sioux Falls, 171 N.W.2d 634, while here, arbitration would be used to settle a dispute concerning an existing contract.
The City also claims that arbitration is not mandatory under the AIA standard form. However, the AIA standard form clearly states that any dispute or controversy “shall” be settled by arbitration. The word “shall” means that arbitration is mandatory. Along with the right to enter into contracts comes the responsibility to be bound by the terms thereof. As noted earlier, the use of binding arbitration in settling contract disputes with private parties is not usurping a municipal function. SDCL ch. 9-12.
SDCL 5-18-11 should not be deemed unconstitutional. When considering the constitutionality of any statute there is a “presumption in favor of constitutionality and that presumption is not overcome until the unconstitutionality of the act is clearly and unmistakably shown and there is no reasonable doubt that it violates fundamental constitutional principles.” Accounts Management, Inc. v. Williams, 484 N.W.2d 297, 299 (S.D.1992) (citations omitted). A challenger has the burden of proving that a statute violates a state constitutional provision. Id. (citation omitted). In this case, the City has not proven beyond a reasonable doubt that SDCL 5-18-11 is an unconstitutional usurpation of a municipal function. See State v. Heinrich, 449 N.W.2d 25, 27 (S.D.1989).
Therefore, SDCL 5-18-11 is not unconstitutional under these circumstances, and the provisions of the contract between the City and Lien should be enforced according to their terms.