Hercules & Co. v. BELTWAY CARPET SERVICE

• Court: D.C. Court of Appeals
• Writing for the Court: TERRY, FARRELL, and WAGNER, Associate
• Citation: Hercules & Co. v. BELTWAY CARPET SERVICE, 592 A.2d 1069 (D.C. 1991)
• Decision Date: 21 June 1991
• Docket Number: No. 90-324.,90-324.
• Parties: HERCULES & COMPANY, LTD., Appellant, v. BELTWAY CARPET SERVICE, INC., Appellee.

592 A.2d 1069

HERCULES & COMPANY, LTD., Appellant, v. BELTWAY CARPET SERVICE, INC., Appellee.

No. 90-324.

District of Columbia Court of Appeals.

Submitted December 12, 1990.

Decided June 21, 1991.

William J. Carter was on the brief, for appellant.

No brief was filed on behalf of appellee. Richard C. Daniels entered an appearance for appellee.

Before TERRY, FARRELL, and WAGNER, Associate Judges.

TERRY, Associate Judge:

Beltway Carpet Service and its president, Richard Nowell, filed this action against Hercules & Company, one of Hercules' corporate officers, and a Hercules employee. Count I of the complaint alleged that Beltway and Hercules had entered into a written contract under which Beltway would install carpets as Hercules' subcontractor on a construction project. Beltway claimed that Hercules had breached this contract by failing to pay it for goods and services which it had rendered to Hercules under the contract.¹

Hercules filed an answer denying the breach, along with a separate motion to dismiss count I of the complaint. In the latter motion Hercules pointed out that the contract between it and Beltway contained an arbitration clause, under which Beltway had agreed that all disputes arising out of the contract would be settled by arbitration.² Hercules contended that, because of the arbitration clause, a trial on count I was barred and that count I of the complaint should therefore be dismissed.³ Beltway opposed the motion to dismiss, contending that Hercules, by "waiting until after the institution of this litigation to assert its right to arbitration," had waived that right.

In its reply to Beltway's opposition, Hercules noted that it had filed its motion to dismiss contemporaneously with its answer and had therefore asserted its right to arbitration in its first responsive pleading. Hercules also argued that its motion to dismiss should be treated as a motion to compel arbitration under D.C.Code § 16-4302(a) (1989). Finally, Hercules maintained that the arbitration clause divested the trial court of subject-matter jurisdiction over the contract claim.

The trial court denied the motion to dismiss count I, holding that Hercules, "having failed to raise the jurisdictional defense in its answer, had therefore ... waived the defense by participating in this litigation...." Hercules moved for reconsideration. That motion was also denied, but in its order the court agreed that Hercules had preserved its jurisdictional defense by filing the motion to dismiss contemporaneously with its answer.⁴ Nevertheless, the court adhered to its earlier ruling that Hercules had waived its right to arbitration by participating in the litigation, noting in particular that Hercules had also filed a motion for summary judgment (with respect to the other counts in the complaint), as well as interrogatories. The court concluded that Hercules had "clearly showed an intent to vigorously participate in this litigation" and had therefore waived its jurisdictional defense. Hercules thereupon noted this appeal. We reverse.

I

At the outset we must deal with an obvious jurisdictional issue. Ordinarily, the denial of a motion to dismiss a complaint — or, in this instance, one count of a multi-count complaint — is not a final and appealable order. Crown Oil & Wax Co. v. Safeco Insurance Co., 429 A.2d 1376, 1379 (D.C.1981) (citing cases). The District's arbitration act, however, creates an exception to this general rule, and we conclude that this case fits within the exception.

A party to an arbitration agreement may, upon the other party's refusal to arbitrate, move for an order compelling arbitration. D.C.Code § 16-4302(a) (1989) provides in pertinent part:

On application of a party showing an arbitration agreement, and the opposing party's refusal to arbitrate, the Court shall order the parties to proceed with arbitration....⁵

Under another provision of the arbitration act, the denial of a motion to compel arbitration under this provision "shall be deemed final" for purposes of an appeal. D.C.Code § 16-4317(a)(1) (1989).⁶ Because Hercules' motion to dismiss count I "must be seen as" a motion to compel arbitration, Robinson v. Booker, 561 A.2d 483, 484 (D.C.1989), we hold that its denial is immediately appealable under D.C.Code § 16-4317 and that we therefore have jurisdiction to entertain this appeal.

In Robinson v. Booker, supra, the defendant moved to dismiss the plaintiff's complaint on the ground that the court lacked jurisdiction to hear the case because the contract at issue required that all disputes be referred to arbitration. The trial court denied the motion to dismiss, subject to reconsideration if the defendant met certain conditions. The defendant did not appeal from that order, but attempted to submit the dispute to arbitration. The American Arbitration Association, however, declined to accept the dispute because it did not meet certain procedural requirements. Thus the defendant was unable to submit the case to arbitration and suffered a default in the trial court. Super.Ct.Civ.R. 55(a). The defendant moved to vacate the default, but the court denied the motion as well as a later motion for reconsideration. The defendant appealed from the latter denial, but this court dismissed the appeal for lack of jurisdiction, noting that the defendant had not appealed from the original denial of the motion to dismiss, and holding that the appeal from the order denying the motion for reconsideration was untimely because that ruling "did not constitute the denial itself, nor did it revive an appeal right foregone." 561 A.2d at 484.

Significant for the present case was the Robinson court's statement that the original motion to dismiss on the ground that the contract compelled arbitration "must be seen as an application to compel arbitration.... It was this ... order denying the motion to dismiss, therefore, and not the order of default, which constituted the denial of compelled arbitration subject to an immediate right of appeal under D.C.Code § 16-4317." Id. Although this language was technically dictum in Robinson, we think it is a correct statement of the law and adopt it as such. We hold accordingly that the denial of a motion to dismiss a complaint, or any count thereof, alleging a breach of contract, on the ground that the contract requires arbitration, is immediately appealable under D.C.Code § 16-4317. It follows that we have jurisdiction to hear and decide this appeal.

II

Under the District of Columbia arbitration act, a written agreement to arbitrate future disputes arising out of an existing contract "is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract." D.C.Code § 16-4301 (1989). The federal arbitration act contains materially identical language. 9 U.S.C. § 2 (1988). The Supreme Court has held that the federal arbitration act "by its terms... leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985) (emphasis in original). The District of Columbia Circuit has held that "when the parties have provided that a particular type of dispute should be settled in arbitration, rather than in litigation, a court may not override that agreement by itself deciding such a dispute." National Railroad Passenger Corp. v. Boston & Maine Corp., 271 U.S. App.D.C. 63, 66, 850 F.2d 756, 759 (1988) (emphasis in original); accord, Huntington Alloys, Inc. v. United Steelworkers Local 40, 623 F.2d 335, 338 (4th Cir.1980); Gordon-Maizel Construction Co. v. Leroy Productions, Inc., 658 F.Supp. 528, 531 (D.D.C.1987) (under federal act, trial court has no discretion not to order parties to an arbitration agreement to proceed to arbitration). Once a determination is made that a dispute is subject to arbitration under the federal act, a trial court can do nothing further on the merits of the case except to compel arbitration and stay the court proceedings until the arbitration has ended. Merrill, Lynch, Pierce, Fenner & Smith, Inc. v. Thomson, 574 F.Supp. 1472, 1478 (E.D.Mo.1983).

All of these cases, admittedly, arise under the federal arbitration act. Nevertheless, we find them persuasive authority for our interpretation of D.C.Code § 16-4302(a), which, like the federal act, states that the trial court "shall order the parties to proceed with arbitration" upon a showing that an arbitration agreement exists. The federal arbitration act is "substantially similar" to the District's act, COUNCIL OF THE DISTRICT OF COLUMBIA, COMMITTEE ON JUDICIARY AND CRIMINAL LAW, REPORT ON BILL No. 1-140, at 3 (1976) (hereafter COMMITTEE REPORT), except that it applies only to contracts involving maritime transactions or interstate commerce. 9 U.S.C. § 2 (1988); see Thompson v. Lee, 589 A.2d 406, 410 (D.C.1991). Because the federal act does not cover all arbitration agreements in the District of Columbia, our legislature enacted its own statute to "complement" the federal act. COMMITTEE REPORT, supra, at 3. Given this legislative intent, we hold that federal court decisions construing and applying the federal arbitration act may be regarded as persuasive authority in construing and applying the corresponding provisions of the District of Columbia arbitration act, so long as there is no material difference in the statutory language between the two acts. See, e.g., Vale Properties, Ltd. v. Canterbury Tales, Inc., 431 A.2d 11, 13 n. 3 (D.C.1981) (when federal rule and local rule are the same, federal court decisions interpreting federal rule are "persuasive authority" in interpreting local rule (citations omitted)).

D.C.Code § 16-4302(d) (1989) provides that any court proceeding involving an issue subject to...