Evansville-Vanderburgh School Corp. v. Evansville Teachers Ass'n

• Decision Date: 23 June 1986
• Docket Number: EVANSVILLE-VANDERBURGH,No. 1-1285A331,1-1285A331
• Citation: 494 N.E.2d 321
• Parties: 33 Ed. Law Rep. 438 SCHOOL CORPORATION, Defendant-Appellant, v. EVANSVILLE TEACHERS ASSOCIATION and Bruce Hatfield, Plaintiffs-Appellees.
• Court: Indiana Appellate Court

Page 321

494 N.E.2d 321

33 Ed. Law Rep. 438

EVANSVILLE-VANDERBURGH SCHOOL CORPORATION, Defendant-Appellant, v. EVANSVILLE TEACHERS ASSOCIATION and Bruce Hatfield Plaintiffs-Appellees.

No. 1-1285A331.

Court of Appeals of Indiana First District.

June 23, 1986.

Jeffrey R. Frank, Frank & Collins, Evansville, for defendant-appellant.

Jack N. Van Stone, Van Stone & Krochta, Evansville, for plaintiffs-appellees.

RATLIFF, Judge.

STATEMENT OF THE CASE

Evansville-Vanderburgh School Corporation (School) appeals the order compelling arbitration issued by the Gibson Circuit Court. We affirm.

FACTS

Bruce Hatfield was employed as a teacher by School for the 1985-86 school year. School assigned Hatfield five class periods plus one study hall per day. Contending such assignment violated the contract between School and the Evansville Teachers Association (Association) which limited such assignments to five periods per day, Hatfield initiated grievance procedures pursuant to the collective bargaining agreement between School and Association. Upon rejection of his grievance, Hatfield requested arbitration as provided for at pages 13-15 of the agreement. School refused to arbitrate contending Hatfield's grievance was not within the agreement. Hatfield and Association then filed a complaint in two counts, the first seeking an order compelling arbitration, and the second seeking an order directing School to comply with the contract and unspecified damages. The trial court entered an order compelling arbitration, and it is from this order that this appeal ensues.

ISSUES

1. Is the order compelling arbitration an appealable order?

2. Is the provision of a side letter agreement between School and Association a part of the collective bargaining agreement and, therefore, subject to the arbitration provisions of that agreement?

DISCUSSION AND DECISION

Issue One:

School asserts the order compelling arbitration is an appealable final order. On the other hand, Hatfield and Association contend the order is interlocutory and not presently appealable. If Hatfield and Association are correct, the second issue presents nothing for our consideration at this time.

The question of whether an order compelling arbitration is appealable has been the subject of a substantial amount of litigation, and is one upon which the authorities are divided. See generally Annot. 6 A.L.R. 4th 654. One line of cases holds that an order compelling arbitration is a final judgment inasmuch as the order has disposed of the issue before the court and is appealable as a final judgment. See Goodall-Sanford, Inc. v. United Textile Workers of America (1957), 353 U.S. 550, 77 S.Ct. 920, 1 L.Ed.2d 1031; Cincinnati Gas & Electric Co. v. Benjamin F. Shaw Co. (6th Cir.1983), 706 F.2d 155; United Steelworkers of America v. Black, Sivalls & Bryson, Inc. (8th Cir.1979), 608 F.2d 303; Karavos Compania v. Atlantica Export Corp. (2d Cir.1978), 588 F.2d 1; Dewart v. Northeastern Gas Transmission Co. (1953), 139 Conn. 512, 95 A.2d 381; Cajun Electric Power Cooperative, Inc. v. Louisiana Power & Light Co. (1976), La.App., 334 So.2d 554; Merrill, Lynch, Pierce, Fenner & Smith, Inc. v. Griesenbeck (1967), 21 N.Y.2d 688, 287 N.Y.S.2d 419, 234 N.E.2d 456; In re Wilaka Construction Co. (1966), 17 N.Y.2d 195, 269 N.Y.S.2d 697, 216 N.E.2d 696.

On the other hand, several courts have held that orders compelling arbitration are interlocutory and not appealable. These cases hold the issue of whether arbitration was proper can and should be raised in an appeal from the order confirming the arbitrator's award. See Graham v. Scissor-Tail, Inc. (1981), 28 Cal.3d 807, 171 Cal.Rptr. 604, 623 P.2d 165; North Broward Hospital Dist. v. William Passalacqua Builders, Inc. (1975), Fla.App., 312 So.2d 206; Bellaire City Schools Board of Education v. Paxton (1979), 59 Ohio St.2d 65, 391 N.E.2d 1021; Cassidy v. Keystone Insurance Co. (1982), 297 Pa.Super. 421, 443 A.2d 1193; Teufel Construction Co. v. American Arbitration Association (1970), 3 Wash.App. 24, 472 P.2d 572.

Other cases have held orders compelling arbitration not appealable absent specific statutory authorization for such appeals, e.g., Roeder v. Huish (1970), 105 Ariz. 508, 467 P.2d 902; Citizens National Bank v. Callaway (1980), Tex.Civ.App., 597 S.W.2d 465, or that because orders compelling arbitration are not listed among those specifically designated as appealable in the arbitration statute such orders are not appealable. ¹

Harris v. State Farm Mutual Automobile Ins. Co. (1973), Fla.App., 283 So.2d 147; Maietta v. Greenfield (1972), Md.App., 267 Md. 287, 297 A.2d 244; Clark County v. Empire Electric, Inc. (1980), 96 Nev. 18, 604 P.2d 352. These cases also hold that the issue of arbitrability may be raised in the appeal from the court's order confirming the award.

The rationale for holding orders compelling arbitration final and appealable is that the court has fully and effectively adjudicated the issue before it, and that delaying appeal until after arbitration compels the parties to engage in a useless arbitration proceeding if the order for arbitration was improper. As stated in Cajun Electric, at 555: "When the trial judge ordered arbitration, he passed on the merits of the case. Therefore, the trial court judgment is a final judgment." The court in Cincinnati Gas & Electric noted that an order which both compels arbitration and stays proceedings pending arbitration, although not final in the strictest sense, fulfills the finality requirement for purposes of appeal. 706 F.2d at 158.

The court in Cincinnati Gas & Electric noted the Second Circuit rule that an order compelling arbitration is appealable if made in an independent proceeding but not if it is part of ongoing litigation. ² On the other hand, it has been held that the mere fact an order compelling arbitration is made on a motion in a pending action does not impair its finality or render it non-appealable. Merril, Lynch. ³

The basis for the contrary holding that orders compelling arbitration are interlocutory and not appealable is aptly stated in Bellaire City Schools, 59 Ohio St.2d at 70, 391 N.E.2d at 1024:

"Numerous jurisdictions have held that if a court has retained jurisdiction over the parties, even though all issues have been referred to arbitration, the court's order to arbitrate and its stay of trial are final and appealable only after judgment is entered on the arbitration award. The rationale appears to be a compelling desire to avoid interlocutory appeals and a strong policy in favor of prompt resolution of disputes in accordance with written contractual arbitration clauses. [Citations omitted.] This court has, likewise, long favored enforcement of written arbitration clauses and the avoidance of interlocutory appeals. [Citations omitted.]

"We endorse the policy in favor of enforcing arbitration contracts to promote speed and efficiency and to lessen the burdens on the court system. To allow an immediate appeal from every order enforcing an arbitration clause would clearly defeat these policies. Moreover, the objective of prompt and orderly disposition of cases through the prohibition of interlocutory appeals would also be defeated if one could immediately appeal the order to arbitrate, then later appeal the arbitration order and any judgment remaining from the trial court."

While cases espousing this view hold that the issue of the right to arbitrate can be raised in an appeal from the order confirming the arbitrator's award, other courts have held it is then too late to raise that issue. According to the latter view, failure to appeal the order compelling arbitration waives the issue, and attempting to raise the issue on appeal from the confirmation order is an impermissible collateral attack. Marchant v. Mead-Morrison Manufacturing Co. (1929), 252 N.Y. 284, 169 N.E. 386, reh. denied 253 N.Y. 534, 171 N.E. 770; C. Itoh & Co. v. Boyer Oil Co. (1921), 198 A.D. 881, 191 N.Y.S. 290.

Upon consideration of the foregoing authorities, we are of the opinion that an order compelling arbitration is an appealable final order in an action solely for that purpose because such an order has fully decided the issue before the court. In determining what constitutes a final judgment, this court has stated that to be appealable as a final judgment, the judgment or order must finally determine the rights of the parties; or, if it does not dispose of all the issues, it will still be appealable if it disposes of some distinct and definite branch of the case leaving no further question to be determined as to that issue. Hansbrough v. Indiana Revenue Board (1975), 164 Ind.App. 56, 326 N.E.2d 599 (overruled on other grounds in P.M. Gas & Wash Co. v. Smith (1978), 268 Ind. 297, 375 N.E.2d 592); Krick v. Farmers and Merchants Bank (1972), 151 Ind.App. 7, 279 N.E.2d 254, trans. denied. Under this definition, the order compelling arbitration in this case is appealable.

Here, however, the issue is clouded because the complaint seeking an order compelling arbitration was coupled with a second count seeking an order directing compliance with the contract and damages. The second count remains pending and unadjudicated.

Indiana Rules of Procedure, Trial Rule 54(B) provides:

"(B) Judgment Upon Multiple Claims or Involving Multiple Parties. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not...