Haynes v. Kuder, 90-816.

• Decision Date: 31 May 1991
• Docket Number: No. 90-816.,90-816.
• Citation: 591 A.2d 1286
• Parties: Ellen H. HAYNES, Appellant, v. Armin U. KUDER, et al., Appellees.
• Court: D.C. Court of Appeals

591 A.2d 1286

Ellen H. HAYNES, Appellant, v. Armin U. KUDER, et al., Appellees.

No. 90-816.

District of Columbia Court of Appeals.

Argued April 2, 1991.

Decided May 31, 1991.

Jay P. Holland, with whom Steven M. Pavsner was on the brief, Greenbelt, Md., for appellant.

Charles I. Hadden, with whom Kevin M. LaCroix was on the brief, Washington, D.C., for appellees.

Before TERRY, STEADMAN and FARRELL, Associate Judges.

FARRELL, Associate Judge:

Appellant, the plaintiff in an underlying action for malpractice against the attorney who represented her in certain divorce matters, appeals from an order of the trial court compelling arbitration pursuant to a provision of the parties' retainer agreement.¹ Appellant challenges the trial judge's determination that her dispute with the attorney came within the scope of the arbitration clause. She also contests the court's rejection, without an evidentiary hearing, of her claim that no valid agreement to arbitrate existed because the attorney had failed to disclose material facts concerning arbitration and hence had fraudulently induced her into executing the arbitration clause. We affirm.

I.

In the summer of 1985, appellant Haynes retained a Maryland attorney to represent her in a marital dispute with her husband when both parties were Maryland residents. One year later, appellant separated from her husband and moved to the District of Columbia. In November 1986, acting upon the advice of her Maryland attorney, appellant consulted with appellee Kuder, who is licensed to practice law in the District of Columbia. The purpose of the consultation was to discuss whether Kuder would represent Haynes in her domestic dispute. On December 1, 1986, Kuder mailed two documents to Haynes at her home—an "engagement letter" which set forth the terms of an agreement for Haynes to retain the services of Kuder, and a cover letter. The cover letter described the engagement letter as "setting forth the terms which we discussed in our conference," and explained the initial steps Kuder proposed to take if Haynes decided to retain him. In particular Kuder noted that "our first step will be to communicate with your present counsel in Maryland" in order to review his file and knowledge of the case; Kuder understood that the attorney had "indicated a willingness to cooperate fully" in regard to Haynes's consulting Kuder. The engagement letter attached the firm's current fee schedule and explained in detail the basis on which fees would be calculated and billed. Of primary relevance here, the proposed agreement contained the following provision for arbitration:

Although we do not anticipate any dispute concerning payment of fees, it is our policy that in case any such disputes arise, they will be handled through the less formal and more expeditious process of arbitration, rather than court action. Accordingly, it is agreed between you and the firm that any claim by the firm for unpaid fees and expenses, and any defenses or counterclaims to such a claim, whether based on a claim of inadequate representation or any other ground, shall be resolved exclusively through arbitration in the District of Columbia under the then applicable rules of the American Arbitration Association. Judgment upon an award rendered by the Arbitrator(s) in any such proceeding maybe sic entered and enforced in any Court of competent jurisdiction. Emphasis added.

The letter requested Haynes's signature of acceptance "if the foregoing terms correctly reflect our agreement and understanding." Haynes executed the agreement on December 22, 1986. Seven months later, Kuder filed an action for divorce on behalf of Haynes in Maryland. The Hayneses settled their dispute in September 1988, at which time Haynes owed Kuder almost $11,000 in attorney's fees.

On July 20, 1989, Haynes sued Kuder and his law firm for legal malpractice in Superior Court, demanding a jury trial. On August 7, 1989, under the terms of the engagement letter, Kuder demanded arbitration to obtain "payment of balance of legal fees and costs." Haynes resisted arbitration. On September 11, 1989, Kuder filed a motion to compel arbitration and stay Haynes's Superior Court malpractice action. In his supporting affidavit, Kuder stated that he had "fully discussed with Mrs. Haynes all of the terms of the engagement letter, including the arbitration provisions, prior to her execution of the engagement letter." Haynes filed a motion to stay the arbitration proceedings in which she challenged the validity of the retainer agreement by repeating allegations made in her complaint that Kuder had fraudulently induced her to hire him. She further attacked the existence of the arbitration clause as fraudulently procured by Kuder's misrepresentations, stating:

At no time before I was induced to sign the retainer agreement did Mr. Kuder call my attention to or explain the meaning or significance of the arbitration clause to me. I had never before been involved in an arbitration proceeding or in a civil lawsuit for damages, and had no idea that by signing the retainer agreement I was giving up my right to sue Mr. Kuder for his negligence, or to have a jury determine the merits of my claims. If he had done so, I would have insisted on deleting that clause from the retainer agreement.

She also argued that her malpractice claims were outside the scope of the arbitration clause because she had never meant to agree to arbitrate malpractice claims, and because agreements to arbitrate legal malpractice claims violate ethical standards for lawyers.

After a non-evidentiary hearing on these motions, the trial judge ruled in favor of Kuder, ordering that "the parties shall proceed to arbitrate the disputes in this action as provided in the retainer agreement between them dated December 1, 1986."² The judge found that a valid, enforceable agreement to arbitrate existed between the parties. On its face the retainer agreement disclosed to Haynes that the "process of arbitration" would be employed for "disputes concerning payment of fees" and that this arbitration process was an alternative to "court action." The judge also found that the undisputed evidence showed that Haynes was not pressured by Kuder into agreeing to arbitration.³ The scope of the arbitration agreement "clearly" included Haynes's malpractice claim for damages because the gravamen of the claim was the inadequacy of Kuder's legal representation. These claims, the judge reasoned, were expressly included in the language "any defenses or counterclaims to such a claim for unpaid fees, whether based on a claim of inadequate representation or any other ground." Finally, the judge determined that Kuder's inclusion of an arbitration clause to resolve malpractice claims in the retainer agreement neither violated standards of legal ethics nor improperly limited liability for malpractice.⁴

II.

Appellant argues that her agreement to arbitrate, to the extent it was valid at all, was limited to arbitration of fee disputes, thus excluding arbitration of malpractice claims. See Lawrence v. Walzer & Gabrielson, 207 Cal.App.3d 1501, 1507-08, 256 Cal.Rptr. 6, 9-10 (1989). In rejecting this claim, the trial judge found, as noted, that the gravamen of Haynes's suit against Kuder was "inadequate representation" of her interests in the divorce action, and that "such claims are embraced within the arbitration clause of the retainer agreement."

The trial court must decide as a matter of law whether a particular dispute is arbitrable. AFGE v. District of Columbia, 563 A.2d 361, 362 (D.C.1989); Poire v. Kaplan, supra note 1, 491 A.2d at 532-33. To make this determination, the court must inquire merely whether the arbitration clause is "susceptible of an interpretation" that covers the dispute. AFGE v. District of Columbia, 563 A.2d at 363; Carter v. Cathedral Ave. Coop., Inc., 566 A.2d 716, 717-18 (D.C.1989) (quoting AT & T Technologies v. Communications Workers, 475 U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986) and United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960)). This court reviews that determination, like any question of law, de novo, D.C.Code § 17-305(a) (1989).

We hold that the arbitration clause in the retainer agreement is "susceptible of an interpretation" that would include Haynes's claim for damages against Kuder. The clause provides for arbitration of any disputes arising from attorney fee claims including "any defenses or counterclaims to such a claim, whether based on a claim of inadequate representation or any other ground." Haynes's claim filed in Superior Court involves the value of Kuder's services and includes allegations of "inadequate representation." The claim is for money damages consisting of fees paid to Kuder and money allegedly lost in the final divorce settlement because of Kuder's negligence. The arbitration clause is thus "susceptible of an interpretation" that would include Haynes's monetary damage claim regarding the value of Kuder's services rendered.

III.

The more troublesome issue in the case, however, is presented by Haynes's contention that the affidavits of the parties raised material issues of fact requiring an evidentiary hearing on whether or not Kuder fully disclosed the ramifications of the arbitration process to her and, by failing to do so, misled her into approving the arbitration clause. In essence the claim is that Kuder fraudulently induced her into agreeing to arbitration by failing to disclose facts that he, an attorney at the threshold of an attorney-client relationship, had a particular duty to disclose fully.⁵

Except when the party opposing arbitration "denies the existence of the agreement to arbitrate," the District of Columbia Uniform Arbitration Act requires the court to order arbitration when an applicant shows the existence of a valid agreement to arbitrate that is resisted by the opposing pa...