Am. Fed'n of State v. City of Albuquerque

• Decision Date: 05 April 2013
• Docket Number: No. 31,075.,31,075.
• Citation: 299 P.3d 441
• Parties: AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, AFL–CIO, AFSCME LOCAL 3022, Petitioner–Appellee, v. CITY OF ALBUQUERQUE, Richard J. Berry, Mayor of City of Albuquerque, Respondents–Appellants.
• Court: Court of Appeals of New Mexico

299 P.3d 441

AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, AFL–CIO, AFSCME LOCAL 3022, Petitioner–Appellee,

v.CITY OF ALBUQUERQUE, Richard J. Berry, Mayor of City of Albuquerque, Respondents–Appellants.

No. 31,075.

Court of Appeals of New Mexico.

Dec. 28, 2012.

Certiorari Granted, April 5, 2013, No. 34,007.

Youtz & Valdez, P.C., Shane C. Youtz, Stephen Curtice, Albuquerque, NM, for Appellee.

David Tourek, City Attorney, Michael I. Garcia, Assistant City Attorney, Rebecca E. Wardlaw, Assistant City Attorney, Samantha M. Hults, Assistant City Attorney, Albuquerque, NM, for Appellants.

OPINION

CASTILLO, Chief Judge.

{1} The American Federation of State, County, and Municipal Employees (AFSCME) sought an injunction and temporary restraining order in district court to prevent the City of Albuquerque (City) from closing the drug treatment Albuquerque Recovery Program (ARP) and laying off bargaining unit employees. The court granted an injunction regarding the closing of the facility and contracting out of work but refused to grant equitable relief regarding the layoff procedures. AFSCME later sought to compel arbitration on the issue of layoffs. The court granted the motion to compel arbitration. The City appeals, arguing that AFSCME waived its right to arbitration by invoking the court's discretionary powers. We agree and reverse.

I. BACKGROUND

{2} The City's Family and Community Services Department provided services to individuals addicted to drugs through ARP. Based on budget concerns and low success rates, the City was in the process of closing the program during the spring of 2010. The program had eight employees, four of whom were AFSCME members, who are covered by a Collective Bargaining Agreement (CBA).

{3} On April 8, 2010, AFSCME filed a verified petition for temporary restraining order, preliminary injunction or, in the alternative, writ of mandamus for injunctive relief, relying on the language in Sections 35 and 38 of the CBA. Layoff procedures are covered by Section 35 of the CBA, which requires thirty days' written notice to an employee before the effective date of a layoff and provides a guide to transfers and the rehiring of employees. Section 38 of the CBA covers the procedures to be followed when the City permanently contracts out services that historically have been performed by bargaining unit members. Those procedures require the City to notify AFSCME of an anticipated action thirty days before implementation, to meet and confer with AFSCME over the anticipated action, and to provide data to AFSCME so that it could present arguments to the City before the contracting out of services takes place.

{4} On April 12, 2010, a lengthy hearing was held at which three witnesses testified regarding the closing of the program. The court entered a temporary restraining order and preliminary injunction that ordered the City to keep the facility open until it abided by the provisions of Sections 38.1 through 38.1.4 of the CBA, which is the portion of the CBA that sets out procedures for the contracting out of city services. The court refused to enjoin the city regarding the layoff process under Section 35 of the CBA.

{5} On June 8, 2010, AFSCME filed a motion to show cause before the court, asking the court to hold the City in contempt and to order reinstatement of the laid-off employees under Section 38. The court denied that motion and allowed the facility to remain closed, but ordered the City to meet one more time with AFSCME to discuss the issue of contracting out the services.

{6} Three months later, on September 20, 2010, AFSCME filed a motion to compel arbitration concerning the issue of layoffs under Section 35 of the CBA. The City opposed the motion on the grounds of waiver. The district court granted the motion. In this appeal by the City, we consider whether AFSCME, through its actions in district court, waived its right to arbitration.

II. DISCUSSIONA. Standard of Review

{7} “As with a summary judgment motion, a motion to compel arbitration may only be granted as a matter of law when there is no genuine issue of material fact as to the existence of an agreement.” DeArmond v. Halliburton Energy Servs., Inc., 2003–NMCA–148, ¶ 4, 134 N.M. 630, 81 P.3d 573. We review de novo any grant of a motion to compel arbitration. See id. As we review the district court's determination, we keep in mind that “[t]he party asserting the default in pursuing arbitration bears a heavy burden of proving waiver.” United Nuclear Corp. v. Gen. Atomic Co., 93 N.M. 105, 115, 597 P.2d 290, 300 (1979).

{8} “Our cases which have considered the question of when to find waiver concur that the line is not easy to draw uniformly. The inquiry depends on the facts of each case[.]” Bd. of Educ., Taos Mun. Sch. v. The Architects, Taos (Architects), 103 N.M. 462, 463, 709 P.2d 184, 185 (1985). While we generally show deference to a district court on factual questions, see In re Bristol, 2006–NMSC–041, ¶¶ 26–27, 140 N.M. 317, 142 P.3d 905, where no facts are in dispute, we are faced with a question of law. See Ovecka v. Burlington N. Santa Fe Ry. Co., 2008–NMCA–140, ¶ 9, 145 N.M. 113, 194 P.3d 728. We review questions of law de novo. Wachocki v. Bernalillo Cnty. Sheriff's Dep't, 2011–NMSC–039, ¶ 4, 150 N.M. 650, 265 P.3d 701. Previous New Mexico cases that have analyzed the waiver of arbitration rights have focused on the legal standard to be met while reviewing the entire record of the proceedings below. See Architects, 103 N.M. at 463–64, 709 P.2d at 185–86;Wood v. Millers Nat'l Ins. Co., 96 N.M. 525, 527–28, 632 P.2d 1163, 1165–66 (1981); Bernalillo Cnty. Med. Ctr. Emp. Ass'n Local Union No. 2370 v. Cancelosi (Cancelosi), 92 N.M. 307, 308–10, 587 P.2d 960, 961–63 (1978). We follow other courts in concluding that, when the underlying facts are not in dispute, the question of whether a party has waived its right to arbitration is a legal matter subject to de novo review. See, e.g., Kawasaki Heavy Indus., Ltd. v. Bombardier Recreational Prods., Inc., 660 F.3d 988, 994 (7th Cir.2011); Erdman Co. v. Phoenix Land & Acquisition, LLC, 650 F.3d 1115, 1116 (8th Cir.2011); Nicholas v. KBR, Inc., 565 F.3d 904, 907 (5th Cir.2009); Khan v. Parsons Global Servs., Ltd., 521 F.3d 421, 425 (D.C.Cir.2008); Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 9 (1 st Cir.2005); MicroStrategy, Inc. v. Lauricia, 268 F.3d 244, 250 (4th Cir.2001); Britton v. Coop. Banking Grp., 916 F.2d 1405, 1409 (9th Cir.1990); MidAmerica Fed. Sav. & Loan Ass'n v. Shearson/Am. Express, Inc., 886 F.2d 1249, 1259 (10th Cir.1989) (“Where the dispositive facts are undisputed, the denial of a motion to compel arbitration, based on a finding of waiver, is a legal conclusion which we review de novo.”); Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20, 24 (2d Cir.1995); In re Estate of Cortez, 226 Ariz. 207, 245 P.3d 892, 895 (App.2010); Cordillera Corp. v. Heard, 41 Colo.App. 537, 592 P.2d 12, 13 (1979); D.M. Ward Constr. Co. v. Elec. Corp. of Kansas City, 15 Kan.App.2d 114, 803 P.2d 593, 597 (1990); Good Samaritan Coffee Co. v. LaRue Distrib., Inc., 275 Neb. 674, 748 N.W.2d 367, 371 (2008); Willco Enters., LLC v. Woodruff, 2010 OK CIV APP 18, ¶ 12, 231 P.3d 767;Ascendant Anesthesia PLLC v. Abazi, 348 S.W.3d 454, 463 (Tex.App.2011); Educators Mut. Ins. Ass'n v. Evans, 2011 UT APP 171, ¶¶ 18–21, 258 P.3d 598.

B. Waiver

{9} The City argues that the district court erred in granting AFSCME's motion to compel arbitration on the ground that AFSCME had waived its right to arbitrate. The City contends that AFSCME invoked the court's discretionary powers through its pursuit of injunctive relief and its subsequent motion to show cause. AFSCME counters by saying that it “limited its recourse” in the district court to a request for temporary equitable relief and did not substantively invoke the court's discretion by asking the court to consider the merits of its case, thus preserving its right to pursue arbitration. We begin by looking to New Mexico law on this issue.

{10} The Supreme Court of New Mexico has set out three guiding principles for determining whether a party has waived its right to pursue arbitration. See Architects, 103 N.M. at 463–64, 709 P.2d at 185–86. First, any analysis begins with a presumption in favor of arbitration and against finding a waiver. See id.103 N.M. at 463, 709 P.2d at 185 (quoting United Nuclear Corp., 93 N.M. at 114, 597 P.2d at 299, for the proposition that “ ‘the courts hold that all doubts as to whether there is a waiver must be resolved in favor of arbitration’ ”). “The second principle, following from the first, is that relief will only be granted upon a showing of prejudice to the party opposing arbitration. Dilatory conduct in itself does not constitute waiver.” Architects, 103 N.M. at 463, 709 P.2d at 185. Third, a court will look at “the extent to which the party now urging arbitration has previously invoked the machinery of the judicial system” and in doing so provoked reliance by the other party in the manifested intent to waive arbitration and in the court's litigation of the case. Id. at 463–64, 709 P.2d at 185–86. We begin with the third principle.

1. Invoking the Judicial Machinery and the Court's Discretion

{11} The “point of no return” in invoking the machinery of the judicial system “is reached when the party seeking to compel arbitration invokes the court's discretionary power, prior to demanding arbitration, on a question other than its demand for arbitration.” Wood, 96 N.M. at 527–28, 632 P.2d at 1165–66. The granting of the equitable remedy of an injunction is a discretionary act by a court. See Smart v. Carpenter, 2005–NMCA–056, ¶ 6, 139 N.M. 524, 134 P.3d 811.

{12} There are three New Mexico cases that provide direction in this regard: Wood,Architects, and Cancelosi. In Wood, our Supreme Court found waiver where the party waited three-and-a-half months after the complaint to file a ...