Klein v. Klein
| Decision Date | 08 March 2017 |
| Docket Number | SUPERIOR COURT CIVIL ACTION DOCKET NO. CV-15-0151 |
| Parties | JAMES D. KLEIN and MARGARET L. K. SELIAN Plaintiffs, v. MARK C. KLEIN Defendant GEROLD K. V. KLEIN, JR., ELEANOR K. IYER, KATE E. KLEIN, PETER L. KLEIN, and MARGARET L. KLEIN Parties-in-Interest. |
| Court | Maine Superior Court |
Plaintiffs-David Sherman, Esq.
Defendant-Thomas Hallett, Esq.
STATE OF MAINE
CUMBERLAND, ss.
Before the court is Plaintiffs' motion to confirm an arbitration award, and Defendant's motion to stay arbitration, deny Plaintiffs' motion to confirm, and/or vacate the arbitration award.
On August 1, 2016, attorney William Robitzek conducted mediation to settle a lawsuit regarding, inter alia, the division of royalties from a burn treatment. (D.'s Opp'n and Mot. Stay 1.) The mediation resulted in a Term Sheet with provisions whereby the parties indicated their intent to draft a settlement agreement, and to submit disputes as to the terms or implementation of the Term Sheet to Robitzek for binding arbitration. (Pl.'s Mot. Confirm Arbitration Award ¶¶ 2-3.) The Term Sheet was signed by Plaintiffs, Defendant, and all Parties-in-Interest except Gerold K. V. Klein, Jr. (Id. ¶ 2 n. 1.)
When disputes arose on the final language of the settlement agreement, the parties requested arbitration. (Id. ¶¶ 4-5; D.'s Opp'n and Mot. Stay 2.) By agreement, in lieu of a hearing, the parties submitted written materials to Robitzek. (D.'s Opp'n and Mot. Stay 2.) Robitzek issued his Arbitrator's Award on November 3, 2016.1 (Pl.'s Mot. Confirm Arbitration Award ¶ 19.) On November 14, 2016, after several telephonic conferences following November 3, 2016 during which he considered requested changes to his Arbitrator's Award, Robitzek announced he would issue a final Amended Award on November 15, 2016. (Id. ¶¶ 21-23.) On that morning, Defendant contacted Robitzek to object to the issuance. (D.'s Opp'n and Mot. Stay 2-3.)
On November 17, 2016, Plaintiffs filed a motion to confirm the Arbitrator's Award. On December 7, 2016, Defendant filed his opposition and a motion to stay arbitration and/or vacate the Arbitrator's Award. On December 20, 2016, Plaintiffs filed a reply in support of their motion to confirm.
Maine strongly favors arbitration. Barrett v. McDonald Invs., Inc., 2005 ME 43, ¶ 16, 870 A.2d 146. An arbitration agreement or an arbitration provision in a written contract is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for contract revocation. 14 M.R.S. § 5927. The agreement can be a single document or writings exchanged between the parties. Roosa v. Tillotson, 1997 ME 121, ¶ 4, 695 A.2d 1196. General rules of contract interpretation apply, and the contract is interpreted to effect the parties' intentions as reflected in the written instrument, construed with regard for the subject matter, motive, and purpose of the agreement, as well as the object to be accomplished. Reg'l Sch. Unit No. 5 v. Coastal Educ. Ass'n, 2015 ME 98, ¶ 15, 121 A.3d 98. Part of what is bargained for is the arbitrator's contractinterpretation. City of Lewiston v. Lewiston Firefighters Ass'n, IAG, Local # 785, 629 A.2d 50, 52-53 (Me. 1993.) The court will uphold the arbitrator's interpretation if it is a rational construction of the contract. Westbrook v. Teamsters Local No. 48, 578 A.2d 716, 717 (Me. 1990.)
The Term Sheet from the August 1, 2016 mediation provides, in pertinent part:
(6) Disputes as to the meaning of these terms or its implementation, the parties agree to submit them to William Robitzek for binding arbitration, who shall have discretion to award attorneys' fees to the prevailing party.
The court may grant a stay of arbitration on a showing that there is no agreement to arbitrate. 14 M.R.S. § 5928(2). Parties are not ordered to arbitrate their dispute unless they have agreed to do so in writing. Patrick v. Moran, 2001 ME 6, ¶ 5, 764 A.2d 256. Determining substantive arbitrability, i.e., whether parties have made an arbitration agreement, is a function of the court. Westbrook Sch. Comm. v. Westbrook Teachers Asso., 404 A.2d 204, 207 (Me. 1979). However, the absence of a signature goes to the validity of an entire contract, and the validity of the whole contract is a question properly subject to arbitration. Stenzel v. Dell, Inc., 2005 ME 37, ¶ 15, 870 A.2d 133; see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S. Ct. 1801, 1806 (1967).
Defendant argues there was no valid arbitration agreement because the Term Sheet was not signed by Gerold who was listed as one of the "Parties" on the Term Sheet, and that a November 16, 2016 email from Robitzek saying "whether there was ever a valid agreement to arbitrate" was "a matter that needed to be litigated" implied the arbitration provision may not be valid. (D.'s Opp'n and Mot. Stay 9-10.)
Here, Robitzek's interpretation that the Term Sheet was a valid contract, implied by his performance of the arbitration despite the absence of Gerold's signature, was reasonable where the Term Sheet, including the arbitration provision, was negotiated during a long day of mediation, see Barrett, 2005 ME 43, ¶ 22, 870 A.2d 146, and did not explicitly require all parties to sign to establish its validity. All parties, including Defendant, were aware Gerold did not sign, and yet they voluntarily invoked and participated in the subsequent arbitration, when they exchanged emails to establish a non-testimonial arbitration process and then submitted written materials as directed by Robitzek's September 30, 2016 arbitration order, evidencing their agreement to arbitrate their disputes as described in the Term Sheet. (Pl.'s Mot. Confirm Arbitration Award ¶¶ 2, 6, 8; D.'s Opp'n and Mot. Stay 2); Roosa, 1997 ME 121, ¶ 3, 695 A.2d 1196. Defendant did not object to the arbitration process until November 15, 2016, after teleconferencing several times with Robitzek following the November 3, 2016 issuance of the Arbitrator's Award to press for amendments. (D.'s Opp'n and Mot. Stay 2.) Robitzek's email that the arbitration agreement's validity must be litigated is only a restatement of law which says the courts decide substantive arbitrability via either a motion to compel or stay, or a motion to vacate. 14 M.R.S. §§ 5928(2), 5938(1)(E); Anderson v. Banks, 2012 ME 6, ¶ 13, 37 A.3d 915. The language of the arbitration provision itself is not so broad as to imply Robitzek's authority to evaluate Defendant's defenses to its enforcement. Cf. Anderson v. Constance Banks, No. CV-10-19, 2011 Me. Super. LEXIS 28, at *11 (Feb. 23, 2011.) But, the court defers to Robitzek's decision that the Term Sheet, including the arbitration provision, was a valid contract. See Bennett v. Prawer, 2001 ME 172, ¶ 8, 786 A.2d 605.
In the alternative, if this court is to decide the validity of the arbitration provision, the question arises as to whether Defendant preserved the issue. See Pelletier& Flanagan v. Me. Court Facilities Auth., 673 A.2d 213, 216 (Me. 1996). A party is not required to file a motion to stay to preserve this issue. Anderson, 2012 ME 6, ¶ 13, 37 A.3d 915. However, Maine Rule of Civil Procedure 8(c) implies the failure to plead an avoidance defense generally results in a waiver. See R.C. Moore, Inc. v. Les-Care Kitchens, Inc., 2007 ME 138, ¶ 24, 931 A.2d 1081. Defendant made no filings or objections to arbitration prior to November 15, 2016. (D.'s Opp'n and Mot, Stay 2); Cf. Anderson, 2011 Me. Super. LEXIS 28, at *4-5. The arbitration provision was sufficiently definite on what promisors undertook in participating which was to be bound by Robitzek's award. Stenzel, 2005 ME 37, ¶ 10, 870 A.2d 133. Defendant manifested his acceptance to the arbitration provision with his voluntary participation, which is inconsistent with saying the agreement was invalid. Id. ¶ 12; Saga Communs. of New England, Inc. v. Voornas, 2000 ME 156, ¶ 12, 756 A.2d 954; (D.'s Opp'n and Mot. Stay 2); Cf. Anderson, 2012 ME 6, ¶ 5, 37 A.3d 915. Defendant is estopped from asserting invalidity, based on his unpreserved affirmative defense, when he did not object until after he received an adverse result. Leete & Lemieux, P.A. v. Horowitz, 2012 ME 71, ¶ 15, 53 A.3d 1106.
Even if Defendant preserved the issue, the arbitration provision is valid where Defendant participated in the mediation that produced the Term Sheet and had opportunity to review before signing, Stenzel, 2005 ME 37, ¶ 12, 870 A.2d 133. Plaintiffs produced several writings evidencing an arbitration agreement between them and Defendant, including the Term Sheet and emails establishing the arbitration procedure, Cf. Patrick, 2001 ME 6, ¶ 9, 764 A.2d 256. The court declines to consider the absence of Gerold's signature in its evaluation of substantive arbitrability as it goes to the validity of the Term Sheet as a whole. See Stenzel, 2005 ME 37, ¶ 15, 870 A.2d 133. The provision, itself, has no language requiring all parties to sign or potential legal consequences if a party were not to sign, and it is a generally accepted principle that any ambiguity inthat language will be interpreted against the drafter. Barrett, 2005 ME 43, ¶ 15, 870 A.2d 146. Furthermore, Defendant manifested his acceptance to the arbitration provision and his intent to be bound with the purpose of putting the terms into effect with his voluntary participation. Stenzel, 2005 ME 37, ¶¶ 12, 14, 870 A.2d 133.
A motion for confirmation of an arbitrator's award shall be granted unless a party asks to vacate, modify, or correct the award. 14 M.R.S. § 5937. The burden of proof is on the party seeking to deny confirmation. NCO Portfolio Mgmt. v. Folsom, 2007 ME 152, ¶ 5, 938 A.2d 24. If the application to vacate...
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