Collier v. Pennington

• Decision Date: 04 March 2003
• Docket Number: No. 23,149.,23,149.
• Citation: 69 P.3d 238,2003 NMCA 64,133 N.M. 728
• Parties: William John COLLIER and Irene S. Collier, Plaintiffs-Appellants, v. Arlin PENNINGTON, individually and d/b/a Enchanted Log Homes of New Mexico, Defendant-Appellee.
• Court: Court of Appeals of New Mexico

69 P.3d 238

133 N.M. 728

2003 NMCA 64

William John COLLIER and Irene S. Collier, Plaintiffs-Appellants, v. Arlin PENNINGTON, individually and d/b/a Enchanted Log Homes of New Mexico, Defendant-Appellee.

No. 23,149.

Court of Appeals of New Mexico.

March 4, 2003.

Barry D. Williams, James T. Reist, Krehbiel, Bannerman & Williams, P.A., Albuquerque, NM, for Appellants.

Martin E. Threet, Joey B. Wright, Martin E. Threet & Associates, Clayton Fisher Childs, Albuquerque, NM, for Appellees.

OPINION

CASTILLO, Judge.

{1} In this case, we are faced with an issue of first impression concerning the finality for purposes of appeal of a district court's order that refers some, but not all, of the causes of action between the parties to arbitration. We hold that such orders may be appealed as of right if they meet the usual tests for finality of orders. Applying that holding to this case, we hold that the order is not final. Therefore, we dismiss the appeal as premature.

BACKGROUND

{2} In late 1999, William John and Irene Collier (Homeowners) entered into a contract with Enchanted Log Homes of New Mexico for the purchase and construction of a log home. The contract was signed by Homeowners and by Arlin Pennington, President of Enchanted Log Homes of New Mexico. The contract included a clause requiring arbitration of "[a]ny controversy or claim arising out of or related to this contract, or the breach thereof." Because the contract was signed in 1999, it is subject to the provisions of the Uniform Arbitration Act of 1971, NMSA 1978, §§ 44-7-1 to -22 (1971). The construction and purchase was financed by a local bank. As is typical of construction loans, the loan was set up so that Pennington could draw against the loan amount as construction proceeded.

{3} Unfortunately, a number of disputes developed between Homeowners and Pennington. Ultimately, Homeowners told the bank to stop disbursing funds to Pennington. Pennington then sent Homeowners a letter notifying them that in his view, they had breached their contract by telling the bank to stop disbursing funds to him. The letter further stated that Pennington was invoking the arbitration clause of the contract and would not do any more work on the home until the disputes between the parties were resolved. In addition, Pennington filed a lien against the home for the money he contended he was due.

{4} Homeowners filed suit in district court against Pennington, individually and d/b/a Enchanted Log Homes of New Mexico.¹ Homeowners' complaint alleged ten causes of action against Pennington individually or against Pennington doing business as Enchanted Log Homes of New Mexico or both. In addition, Homeowners filed a motion to stay the arbitration proceeding arguing that Pennington d/b/a Enchanted Log Homes of New Mexico failed to timely and properly invoke the arbitration clause. Ultimately, the district court entered an order that denied the motion to stay, sent some causes of action to arbitration, and retained others for resolution. Specifically, the district court referred to arbitration Homeowners' causes of action against Pennington d/b/a Enchanted Log Homes of New Mexico for (1) cancellation of the lien against the home, (2) slander of title, (3) fraud as it related to the construction contract, (4) bad faith breach of contract, and (5) quantum meruit. The district court did not refer for arbitration the causes of action against Pennington d/b/a Enchanted Log Homes of New Mexico for (1) fraud with respect to the loan contract, (2) breach of fiduciary duties, or (3) conversion. In addition, the district court did not refer for arbitration any of the nine causes of actions against Pennington individually for (1) removal of the lien, (2) slander of title, (3) fraud, (4) unfair trade practices, (5) quantum meruit, (6) breach of fiduciary duties, (7) conversion, (8) prima facie tort, or (9) negligence. Later, Pennington filed an answer and counterclaim. In pertinent part, the answer raised the affirmative defense that Pennington individually was not a proper party to the suit. Without waiving that defense, the counterclaim alleged causes of action by Pennington individually for (1) foreclosure of the lien, (2) fraud, (3) quantum meruit for work done pursuant to alleged change orders, and (4) prima facie tort. The record does not indicate if Homeowners or Pennington have asked the district court to refer to arbitration any of the counterclaims and, thus, we assume that they have not been referred to arbitration.

{5} At some point Homeowners determined that Enchanted Log Homes of New Mexico was not incorporated or licensed as a contractor. In fact, the entity that applied for the license was Systems Technology, Inc. d/b/a Enchanted Log Homes, Inc. The contractor's license was issued to Enchanted Log Homes, Inc., which is not incorporated. Systems Technology, Inc. is incorporated. Based on this information, Homeowners filed a second motion to cancel arbitration. In their motion, Homeowners argued the contract and its arbitration clause were unenforceable because (1) the contract was entered into by a non-existent corporation; (2) Enchanted Log Homes of New Mexico lacks standing to arbitrate; and (3) the contract is unenforceable because the contractor's license is void and the purported contractor, Enchanted Log Homes of New Mexico or Systems Technology, Inc., is not licensed.

{6} After briefing, the district court entered an order denying Homeowners' motion to cancel arbitration and compelling the parties to proceed with arbitration. The order was entered on April 18, 2002. We refer to this as the April 2002 order.

{7} On appeal, we granted a temporary stay of the arbitration proceedings and asked the parties to submit simultaneous briefs on several questions, including the question of whether the April 2002 order was final for purposes of appeal. We raised this question on our own motion because it affects whether this Court has jurisdiction to hear the appeal. Britt v. Phoenix Indem. Ins. Co., 120 N.M. 813, 815, 907 P.2d 994, 996 (1995) (raising sua sponte whether the district court's order was final because the Court lacks jurisdiction to review on appeal a non-final order). Based on the briefs, this Court issued a notice of proposed summary disposition, proposing to hold that the April 2002 order was not final and therefore could not be appealed as of right to this Court at this time. Homeowners filed a memorandum in opposition to the proposed disposition. Not being persuaded by the arguments, we hold that the April 2002 order is not final. Consequently, we dismiss the appeal as premature.

DISCUSSION

Section 44-7-19(A)

{8} Pennington contends that the April 2002 order is not appealable because it is not listed as an order from which an appeal may be taken under the version of the Uniform Arbitration Act in effect at the time the contract was signed. See § 44-7-19. We recognize that some states have treated the list of orders in Section 44-7-19(A) as an exclusive list of the orders that can be appealed. See, e.g., Hodes v. Comprehensive Health Assocs., P.A., 9 Kan.App.2d 36, 670 P.2d 76, 77-78 (1983); Maietta v. Greenfield, 267 Md. 287, 297 A.2d 244, 246-48 (1972), superceded by statute as stated in Horsey v. Horsey, 329 Md. 392, 620 A.2d 305, 311 (1993); State ex rel. MCS Bldg. Co. v. KKM Med., 896 S.W.2d 51, 52-53 (Mo.Ct.App.1995); Clark County v. Empire Elec., Inc., 96 Nev. 18, 604 P.2d 352, 353 (1980). However, our Supreme Court has held that an order referring a matter to arbitration is final for purposes of appeal. Britt, 120 N.M. at 815, 907 P.2d at 996. Thus, we decline to read Section 44-7-19(A) as an exclusive list of orders that may be appealed.

Britt and Lyman

{9} Homeowners contend that the April 2002 order is a final, appealable order under Britt and Lyman v. Kern, 2000-NMCA-013, ¶¶ 7-15, 128 N.M. 582, 995 P.2d 504. Britt and Lyman, however, are distinguishable. In Britt, the plaintiff filed a declaratory judgment action asking the district court to make three determinations. The district court's order completely resolved the first two issues and referred the third issue to arbitration. Britt, 120 N.M. at 815, 907 P.2d at 996. The Supreme Court raised the finality issue on its own motion and decided that the order was final because the referral to arbitration was the last deliberative act of the district court on the third issue. Id. at 815-16, 907 P.2d at 996-97. Further, the other issues raised in the Britt complaint had been fully resolved by the district court. Thus, if the portion of the order referring the matter to arbitration was considered final, the district court had resolved all the issues it had been asked to resolve. Id. Similarly, in Lyman, all the issues between the parties were referred to binding arbitration. Lyman, 2000-NMCA-013, ¶ 9, 128 N.M. 582, 995 P.2d 504. Thus, we determined that Lyman's order was a final order under the reasoning in Britt and held that an attempt to appeal the order several months later was not timely.

{10} By contrast, even if the order referring some causes of action to arbitration is final as to those causes of action, this case differs from Britt and Lyman because there are still causes of action pending in district court against Pennington individually and Pennington d/b/a Enchanted Log Homes of New Mexico. Unlike Britt and Lyman, there are still outstanding issues to be resolved in the district court.

Rule 1-054(B)

{11} We specifically asked the parties to brief the question of whether Rule 1-054(B) NMRA 2003 applies to this order and, if so, whether the order is final under that Rule. See Britt, 120 N.M. at 815, 907 P.2d at 996. We need not address Rule 1-054(B)(2) as Homeowners, in their brief, acknowledge that the April 2002 order is not final under this subsection because it does not "adjudicat[e] all issues as to one or more, but fewer than all parties." We therefore limit our attention...