Lewis v. Varde

• Decision Date: 23 November 2022
• Docket Number: A176014
• Parties: Edward LEWIS, an individual, and Tamara Lewis, an individual, Plaintiffs-Respondents, v. Valdene Marie Leimomi VARDE, dba Oregon Progressive Construction, and James Varde, Defendants-Appellants.
• Court: Oregon Court of Appeals

322 Or.App. 746

Edward LEWIS, an individual, and Tamara Lewis, an individual, Plaintiffs-Respondents, v. Valdene Marie Leimomi VARDE, dba Oregon Progressive Construction, and James Varde, Defendants-Appellants.

A176014

Court of Appeals of Oregon

November 23, 2022

Submitted September 2, 2022.

Washington County Circuit Court 21CV03926; A176014 Theodore E. Sims, Judge.

Valdene Marie Leimomi Varde and James Varde fled the briefs pro se.

Sean J. Riddell fled the brief for respondents.

Before Tookey, Presiding Judge, and Egan, Judge, and Kamins, Judge.

TOOKEY, P. J.

In this action by plaintiffs asserting, among other claims, breach of a residential construction contract, defendants Valdene Varde and James Varde, who are sister and brother, appeal contending in a single assignment of error that the trial court erred in denying their petition to compel arbitration of plaintiffs' claims. ORS 36.730 (providing for appeal of an order denying petition to compel arbitration). We conclude that the trial court erred in denying the petition and therefore reverse and remand.

For purposes of determining the arbitrability of the dispute, we assume the truth of the allegations of plaintiffs' complaint. Livingston v. Metro Pediatrics, LLC, 234 Or.App. 137, 140, 227 P.3d 796 (2010). Plaintiffs alleged that "Plaintiffs and Defendants entered into a written contract *** that provided Defendants would perform construction work for the benefit of Plaintiffs"; that they "tendered payments to Defendants * * * for the work under the Contract"; that "Defendants materially breached the Contract by abandoning the construction project on the Property prior to completion, and by failing to perform the construction work to the standard of care previously agreed"; and that defendants misrepresented their skills and experience and ability to complete the project and "converted" plaintiffs' payment to cover their personal debts. Based on those alleged facts plaintiffs asserted against defendants claims of breach of contract, unlawful trade practices, conversion, fraud, and unjust enrichment.

Defendant Valdene Varde filed a petition to compel arbitration, noting that the parties' contract included an arbitration clause providing, "Both parties agree to mandatory arbitration or mediation to resolve any and all disputes that may arise from this contract." Plaintiffs objected to arbitration; thus, the matter was presented to the court for decision.

ORS 36.360 provides, in part:

"(1) An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable [322 Or.App. 748] and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.

"(2) Subject to ORS 36.625(8), the court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate."

Oregon courts recognize a presumption in favor of the enforceability of an arbitration provision. Livingston, 234 Or.App. at 147; see Snow Mountain Pine, Ltd. v. Tecton Laminates Corp., 126 Or.App. 523, 529, 869 P.2d 369, rev den, 319 Or. 36 (1994) ("Arbitration is required unless we can say with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute, and we resolve all doubts in favor of coverage[.]") (citing Portland Assn. of Teachers v. School Dist. No. 1, 51 Or.App. 321, 325, 625 P.2d 1336 (1981)). Ambiguities as to the scope of an arbitration clause are resolved in favor of arbitration. Industral Matrix Joint Venture v. Pope & Talbot, 341 Or. 321, 332-33, 142 P.3d 1044 (2006).

ORS 36.625(1) provides:

"On petition of a person showing an agreement to arbitrate and alleging another person's refusal to arbitrate pursuant to the agreement:

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"(b) If the refusing party opposes the petition, the court shall proceed summarily to decide the issue * * * and order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate."

The trial court summarily considered the petition to compel arbitration and denied it for two reasons that we reject:

First, the court reasoned that compelling arbitration was "problematic" because the parties had failed to designate an arbitrator, rendering the arbitration provision ambiguous and unenforceable. The court was mistaken. Under ORS 36.645(1), if the parties to an agreement to arbitrate have not agreed on a method for appointing an arbitrator, "the court, on petition of a party to the arbitration proceeding, shall appoint the arbitrator." The parties' failure to designate an arbitrator for their dispute did not render the arbitration provision unenforceable. The court therefore erred in denying the petition to compel arbitration on that ground.

Second, the court reasoned that compelling arbitration was "problematic" because defendant James Varde was not a signatory to the contract, and plaintiffs' claims against him therefore would proceed to trial, resulting in a splitting of the action. However, as plaintiffs have alleged in the complaint, James Varde, although not a signatory, was a party to the alleged contractual agreement. Thus, if, as we have concluded, the arbitration provision is enforceable, the claims against James Varde that arise from the contract are also subject to arbitration.

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