Harris Associates v. Clark County School District, 119 Nev. Adv. Op. No. 66 (Nev. 12/30/2003)

• Decision Date: 30 December 2003
• Docket Number: No. 38140.,38140.
• Citation: 119 Nev. Adv. Op. No. 66
• Parties: HARRIS ASSOCIATES, A NEVADA CORPORATION, Appellant, v. CLARK COUNTY SCHOOL DISTRICT, A POLITICAL SUBDIVISION OF THE STATE OF NEVADA, Respondent.
• Court: Nevada Supreme Court

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119 Nev. Adv. Op. No. 66

HARRIS ASSOCIATES, A NEVADA CORPORATION, Appellant, v. CLARK COUNTY SCHOOL DISTRICT, A POLITICAL SUBDIVISION OF THE STATE OF NEVADA, Respondent.

No. 38140.

Supreme Court of Nevada.

December 30, 2003.

Appeal from a district court order denying a motion to compel arbitration. Eighth Judicial District Court, Clark County; Stephen L. Huffaker, Judge.

Reversed and remanded.

BEFORE THE COURT EN BANC.

Morse & Mowbray and Christopher H. Byrd, Las Vegas, for Appellant.

Lefebvre & Associates, Chtd., and Brad R. Kohler II, Alan J. Lefebvre, and Richard A. Prato, Las Vegas, for Respondent.

OPINION

PER CURIAM:

Clark County School District (CCSD) contracted with appellant Harris Associates for construction work. When disputes arose between the parties, Harris requested that those disputes be submitted to arbitration. The CCSD rejected Harris's request, and Harris filed an action to compel arbitration, arguing that NRS 338.150(1)¹ mandates that the parties arbitrate their disputes. The district court denied Harris's motion to compel arbitration, and Harris appeals. We reverse the district court's order.

FACTS

In 1998, the CCSD, a political subdivision of the State of Nevada, contracted with Harris for the Basic High School Addition Project. Several disputes arose between the CCSD and Harris. Harris submitted claims for additional compensation to the CCSD, but the CCSD rejected the claims. Provision 4.5.1 of the parties' contract provided:

Any controversy . . . arising out of or related to the Contract, or the breach thereof shall be settled by arbitration, unless the Owner, at it's [sic] sole option, within twenty (20) days of receiving a request for arbitration rejects arbitration by notifying the Contractor by certified mail, return receipt requested.

Pursuant to this provision, Harris sent the CCSD a letter requesting that their disputes be arbitrated. The CCSD rejected arbitration.

Harris sought declaratory relief in the Clark County District Court to determine whether the CCSD was obligated to arbitrate the claims in accordance with section 4.5.1 of the parties' contract and NRS 338.150(1). After Harris's motion to compel arbitration was denied by the district court, Harris appealed.

DISCUSSION

On appeal, Harris maintains that NRS 338.150(1) mandates arbitration as the means to resolve disputes that arise in public works construction projects. The CCSD responds that NRS 338.150(1) merely requires that public works contracts include a clause that allows arbitration as a means of dispute resolution but does not require arbitration. The CCSD further contends that if NRS 338.150(1) does require arbitration, then the statute violates its right to a jury trial under Article 1, Section 3 of the Nevada Constitution and NRCP 38(a). Harris counters that the Nevada Legislature waived the CCSD's right to a trial by jury.

Interpretation of NRS 338.150(1)

At the time that the parties entered their contract, NRS 338.150(1) provided:

Any agency of this state and any political subdivision, municipal corporation or district and any public officer or person charged with the drafting of specifications for the construction, alteration or repair of public works, shall include in the specifications a clause permitting arbitration of a dispute arising between the agency and a contractor if the dispute cannot otherwise be settled.

The CCSD argues that NRS 338.150(1) merely requires that it include a clause in its public works contracts that permits it to arbitrate disputes at its sole discretion. Harris argues that the statute requires the CCSD to submit to binding arbitration. Because the parties posit two reasonable interpretations of the statute, we conclude that NRS 338.150(1) is ambiguous.² Therefore, we must attempt to discern the legislative intent behind the statute.

This court reviews issues of statutory construction de novo.³ When "the words of the statute have a definite and ordinary meaning, this court will not look beyond the plain language of the statute, unless it is clear that this meaning was not intended."⁴ However, if a statute "is ambiguous, the plain meaning rule of statutory construction" is inapplicable, and the drafter's intent "becomes the controlling factor in statutory construction."⁵ An ambiguous statutory provision should also be interpreted in accordance "with what reason and public policy would indicate the legislature intended."⁶ Additionally, we "construe statutes to give meaning to all of their parts and language, and this court will read each sentence, phrase, and word to render it meaningful within the context of the purpose of the legislation."⁷ Further, no part of a statute should be rendered meaningless⁸ and its language "should not be read to produce absurd or unreasonable results."⁹

The legislative history of NRS 338.150 indicates that the Legislature intended it to mandate arbitration. In 1971, the Legislature amended NRS 338.150 in several ways. The Legislature changed the language of NRS 338.150(1) from "may include in the specifications a clause permitting arbitration" to "shall include in the specifications a clause permitting arbitration."¹⁰ The Legislature also added NRS 338.150(3), exempting the department of transportation from the arbitration-clause requirement.¹¹ Changing "may" to "shall" and simultaneously exempting the department of transportation from the requirements of NRS 338.150(1) are strong indications that the Legislature intended arbitration to be mandatory. If the Legislature had intended that the contract provision would merely give other state subdivisions the option to arbitrate at their discretion, it would have had no reason to exempt any department, since each department would still be free to arbitrate or not.

The wording of NRS 338.150(2) and NRS 338.150(1) also supports the view that the Legislature intended to require arbitration. NRS 338.150(2) provides that "[a]ny dispute requiring arbitration must be handled in accordance with the industry's rules for arbitration as administered by the American Arbitration Association or the Nevada Arbitration Association." (Emphasis added.) The Legislature's use of the phrase any dispute requiring arbitration suggests that the Legislature intended NRS 338.150(1) to mandate arbitration as opposed to merely requiring the inclusion of a clause giving the public entity responsible for the public works project discretion to arbitrate.

The testimony of those appearing before the Legislature in support of the amendment of NRS 338.150 in 1971 also indicates that the Legislature intended arbitration to be mandatory under NRS 338.150(1).¹² Mr. Oakes, Manager, Associated General Contractors, speaking to the Assembly Committee on Judiciary, discussed how arbitration would save the state money.¹³ Mr. Oakes further stated:

[T]he State Planning Board has failed to use the standard arbitration clause in its contracts and specifications and this makes it difficult for building contractors. If the specifications aren't clear and there is no arbitration clause, court action has to decide the disagreement, which takes time. The insertion of the standard arbitration clause in state building contracts would save the state money and the association would like to see the bill passed.¹⁴

The minutes also demonstrate that other persons testifying believed that arbitration would be a faster and more efficient way to resolve disputes concerning public works projects.¹⁵ Mr. Oakes testified that he believed that arbitration would keep some contractors from filing for bankruptcy protection.¹⁶ Other contractors testified that they believed that arbitration would be a much better means of resolving their disputes with the state than litigation.¹⁷ One of the contractors went as far as to say, "[T]here wasn't a contractor in the state that has not gotten burned by this section as it is now."¹⁸

Since the Legislature passed the proposed amendments, the Legislature must have accepted the proponents' comments and concluded that arbitration would be a more efficient means of resolving public works disputes. The comments further indicate that the Legislature intended arbitration to be mandatory under NRS 338.150(1). It is reasonable to conclude that the Legislature would not enact a statute that makes dispute resolution easier and more efficient and then, simultaneously, grant the disputants the authority to circumvent the process and undermine the statute's purpose. Therefore, we conclude that the Legislature intended NRS 338.150(1) to mandate binding arbitration.

Right to jury trial

The CCSD contends that if NRS 338.150 requires binding arbitration, the statute unconstitutionally denies the parties their right to trial by jury. Article 1, Section 3 of the Nevada Constitution provides: "The right of trial by Jury shall be secured to all and remain inviolate forever; but a Jury trial may be waived by the parties in all civil cases in the manner to be prescribed by law . . . ." NRCP 38(a) states: "The right of trial by jury as declared by the Constitution of the State or as given by a statute of the State shall be preserved to the parties inviolate."

The CCSD contends that Williams v. Williams¹⁹ supports its argument that NRS 338.150(1) violates its right to a jury trial. In Williams, this court held that former NRS 38.215 was "an unconstitutional infringement on the right to trial by jury."²⁰ NRS 38.215 imposed compulsory arbitration on private parties wishing to pursue certain types of automobile claims and limited their right to obtain a jury trial after arbitration. NRS 338.150(1) is distinguishable from former NRS 38.215 in that NRS 338.150(1) does not require two private parties to arbitrate their claims. In this case, the private party is waiving a jury trial, and the public agency is the one seeking to enforce the right to a jury trial. The Legislature, on behalf of the CCSD, has waived its right to a...