Couch Invs., LLC v. Peverieri

• Citation: 270 Or.App. 233,346 P.3d 1299
• Decision Date: 01 April 2015
• Docket Number: A155483.,11CV0285SF
• Parties: COUCH INVESTMENTS, LLC, an Oregon limited liability company, Plaintiff–Respondent, v. Leonard PEVERIERI, an individual; Judith Peverieri, an individual; and Peverieri Investments, LLC, an Oregon limited liability company, Defendant–Appellants.
• Court: Court of Appeals of Oregon

270 Or.App. 233

346 P.3d 1299

COUCH INVESTMENTS, LLC, an Oregon limited liability company, Plaintiff–Respondent

v.Leonard PEVERIERI, an individual; Judith Peverieri, an individual; and Peverieri Investments, LLC, an Oregon limited liability company, Defendant–Appellants.

11CV0285SF

A155483.

Court of Appeals of Oregon.

Argued and Submitted Nov. 18, 2014.

Decided April 1, 2015.

Charlie Ringo argued the cause and filed the briefs for appellants.

Christopher J. Manfredi, Bend, argued the cause for respondent. On the brief were Gerald A. Martin, Martin E. Hansen, and Francis Hansen & Martin, LLP.

Before SERCOMBE, Presiding Judge, and HADLOCK, Judge, and TOOKEY, Judge.

Opinion

TOOKEY, J.

Leonard and Judith Peverieri and Peverieri Investments, LLC (landlords) appeal a general judgment confirming an arbitration award in favor of Couch Investments, LLC (tenant). Landlords argue that the trial court erred in denying their petition to vacate the arbitration award, because the arbitrator exceeded his powers by issuing rulings that were beyond the scope of the parties' stipulation to arbitrate and limit claims. See ORS 36.705(1)(d) ( “Upon petition to the court by a party to an arbitration proceeding, the court shall vacate an award made in the arbitration proceeding if* * * [a]n arbitrator exceeded the arbitrator's powers[.]”). In deciding the issue submitted to him by the parties, the arbitrator ordered remedies, citing as authority the parties' stipulation and ORS 36.695(3) (providing, in part, that “an arbitrator may order such remedies as the arbitrator considers just and appropriate under the circumstances of the arbitration proceeding”).

We conclude that, because the parties did not agree, in their stipulation, to “waive” or “vary the effect of” ORS 36.695(3), the arbitrator did not exceed his powers. See ORS 36.610(1) (with exceptions not relevant to this case, “a party to an agreement to arbitrate or to an arbitration proceeding may waive, or the parties may vary the effect of, the requirements of ORS 36.600 to 36.740 to the extent permitted by law”). Thus, the trial court did not err when it denied landlords' petition to vacate the arbitration award, granted tenant's petition to enter the award, and entered a general judgment in the form of the arbitration award. Accordingly, we affirm.

The relevant facts are not in dispute. Tenant operated a gas station on landlords' property, pursuant to a long-term lease signed by the parties in 1997. In 2011, landlords filed a complaint seeking tenant's eviction, alleging that tenant was in default because tenant had (1) failed to maintain insurance in tenant's name; (2) allowed unauthorized third parties to occupy the premises; and (3) failed to comply with laws relating to tenant's use of the premises. An exhibit attached to the complaint shows that the laws that landlords alleged tenant had violated were “DEQ regulations pertaining to the capture of storm water from the area surrounding the fueling stations.” Tenant then filed a complaint against landlords, alleging intentional interference with economic relations and breach of contract and seeking related mandatory injunctive relief.

The two cases were consolidated and, before the case reached trial, the parties, through counsel, signed a “STIPULATION TO ARBITRATE AND LIMIT CLAIMS” (parties' stipulation), which stated:

“1. The Parties have agreed to arbitrate the claims raised in the above actions. The Parties have mutually selected William E. Flinn to serve as the arbitrator. The arbitration is scheduled for December 18, 2012.

“2. The only issue to be resolved through arbitration is whether [tenant], as tenant, or [landlords], as landlord, are liable under the lease that is the subject of the above actions (the ‘Lease’) for the cost of storm water drainage improvements required by the Oregon Department of Environmental Quality (the ‘DEQ Issue’).

“3. The Parties agree that David Cole of the DEQ may testify both through his affidavit and by phone, as well. The Parties disagree whether any other witness can provide relevant testimony on [the] DEQ Issue. The Parties, however, do agree that should the arbitrator allow any testimony to be offered on the DEQ Issue (other than Mr. Cole's testimony), it will only be testimony of the Parties themselves.

“4. Other than the DEQ issue, all claims raised in the Parties' pleadings will be dismissed by the Parties with prejudice.

“5. The prevailing party/parties on the DEQ Issue shall be entitled to recover its/their reasonable attorneys' fees under the terms of the Lease.”

(Emphasis added.)

After a hearing, the arbitrator issued a letter opinion dated December 20, 2012, in which he concluded that landlords were “liable for the cost of storm water drainage improvements to the leased premises required by the DEQ.”

Tenant submitted a proposed arbitration award to the arbitrator, which stated, in part:

“[Landlords are] liable for all costs associated with storm water drainage improvements required by the Oregon Department of Environmental Quality (‘DEQ’), as further described in the Affidavit of David Cole, attached * * *. [Landlords] shall complete such improvements to the satisfaction of DEQ on or before [date left blank for the arbitrator to fill in].”

Landlords then submitted an objection to the proposed arbitration award, in which they contended that the proposed award provided relief outside the stipulated agreement between the parties. Landlords contended, among other things, that (1) “the Proposed Award should be changed to reflect that [landlords are] responsible for paying for the improvements necessary to comply with OAR 340–044–0018(3), which is the applicable DEQ regulation regarding the property”; (2) landlords “should not be obligated to make the DEQ Improvements if [landlords are] able to convince the DEQ to accept an alternate plan that sufficiently complies with OAR 340–044–0018(3), or is otherwise acceptable to the DEQ”; (3) “[t]he Proposed Award should also be changed to reflect that [landlords are] responsible for managing and completing the installation of the DEQ Improvements * * * [landlords] must retain control of the installation of the DEQ Improvements if [they are] obligated to pay for it”; and (4) landlords “should not be given a deadline in which to complete the DEQ Improvements.”

The arbitrator held oral argument on landlords' objections and then issued a letter in which he overruled the objections set forth above. In that letter, the arbitrator stated:

“The first issue to be addressed is the scope of the authority given to the arbitrator by the parties' stipulation and the Uniform Arbitration Act, ORS 36.600 et seq. Paragraph (2) of the stipulation provides that ‘[t]he only issue to be resolved through arbitration is whether [tenant] * * * or [landlords] are liable under the lease * * * for the cost of storm water drainage improvements required by the [DEQ].’ ”

(Omissions in original.) The arbitrator continued:

“ORS 36.695(3) says ‘an arbitrator may order such remedies as the arbitrator considers just and appropriate under the circumstances of the proceeding. The fact that such a remedy could not or would not be granted by the court is not a ground for refusing to confirm an award under ORS 36.700 or for vacating an award under ORS 36.705.’ In my opinion, the stipulation and the cited statutes ^{[ 1 ]} give me the authority to make the following rulings on [landlords'] objections and, also, to make the findings, conclusions and awards found in the enclosed proposed arbitration award.”

After further discussion and another hearing regarding the cost of the required storm drainage improvements, the arbitrator issued an arbitration award, which provided, in part:

“(2) [Landlords are] liable for payment of all costs associated with implementation of the storm water drainage improvements required by the Oregon Department of Environmental Quality (‘DEQ’) and described in [tenant's] Exhibits * * *. The total amount of all these costs is $32,500.00.

“(3) Within 15 day's from the date of this award, [landlords] will pay $32,500.00 into [tenant attorney's] client trust account. After the payment is complete, the obligation to comply with the DEQ mandate for storm water drainage improvements will shift to [tenant] and the improvements will be completed, without any participation or control by [landlords], no later than September 15, 2013. This obligation shift does not, in any way, change the findings and conclusions found in the arbitrator's December 20, 2012 opinion letter.

“(4) No later than October 15, 2013 or the 30th day after completion of the improvements, which ever date occurs first, [tenant] will refund to [landlords] any of the trust account funds not paid for improvement implementation and will, at the same time, provide [landlords] with an accounting of the funds paid.”

Subsequently, tenant filed a petition to enter the arbitration award in court, and landlords filed a petition to vacate the award on the basis that the arbitrator had exceeded his powers. See ORS 36.700(1) (“After a party to an arbitration proceeding receives notice of an award, the party may make a petition to the court for an order confirming the award.”); ORS 36.705(1)(d) ( “Upon petition to the court by a party to an arbitration proceeding, the court shall vacate an award made in the arbitration proceeding if * * * [a]n arbitrator exceeded the arbitrator's powers[.]”). After a hearing, the trial court issued an order granting tenant's petition to enter the arbitration award and denying landlords' petition to vacate the award, and, without further explanation, entered a general judgment and money award confirming the arbitration award.

Landlords now appeal, assigning error to the trial court's denial of landlords' petition to vacate the arbitration award. As relevant to this case, a “court shall vacate an award made in the arbitration proceeding if * * * [a]n arbitrator exceeded the arbitrator's powers[.]” ORS 36.705(1...