Masurovsky v. Green, 95-CV-1317.

• Docket Nº: No. 95-CV-1317.
• Citation: 687 A.2d 198
• Case Date: December 30, 1996
• Court: Court of Appeals of Columbia District

687 A.2d 198

Laura MASUROVSKY, et al., Appellants,
v.
David GREEN, Appellee.

No. 95-CV-1317.

District of Columbia Court of Appeals.

Argued November 7, 1996.

Decided December 30, 1996.

As Amended March 4, 1997.

687 A.2d 200

Nancy F. Lesser, with whom Erik S. Jaffe and Megan E. Hills, Washington, DC, were on the brief, for appellant Masurovsky.

Pamela A. Bresnahan, with whom Steven R. Becker, Washington, DC, was on the brief, for appellant Zweben.

Jonathan Halperin, with whom Patrick M. Regan and Marc Fiedler, Washington, DC, were on the brief, for appellee.

Before TERRY, STEADMAN and KING, Associate Judges.

STEADMAN, Associate Judge:

This case requires us to examine the intersection of contract interpretation and what is generally termed the "presumption in favor of arbitration." We hold that the presumption in favor of arbitration is applicable to issues regarding the interpretation or construction of an agreement containing an arbitration clause, but not to issues of the existence of an agreement to arbitrate, or of whether the court or arbitrator determines the existence of such an agreement. We further hold that the trial court erred in determining that an agreement was completely integrated, and thereby superseded a prior agreement to arbitrate, on the basis of the document alone. We vacate the trial court's order denying appellants' motion to compel arbitration, and remand for further proceedings.

I.

This case arose from the legal representation of Dr. David Green by Marc Zweben and Laura Masurovsky. Dr. Green first retained Zweben in November or December 1993 in connection with a pending lawsuit against C & P Telephone Company and its successor Bell Atlantic over telephone directory services. On December 21, 1993, Zweben sent Dr. Green a one page, three paragraph letter that became their first representation agreement. The text of the letter read:

This letter will confirm our agreement that I will represent you in the above referenced matter. You will be billed for services and expenses on a monthly basis, with services to be charged at an hourly rate of $150, against a retainer of $5,000.

Any disputes arising out of this representation will be resolved in accordance with the rules of the American Arbitration Association.

If this is consistent with your understanding, please countersign on both originals of this letter, return one fully executed copy to me, and retain one for your records.

Dr. Green executed the letter on December 27, 1993.

687 A.2d 201

In September 1994, Zweben suggested that Dr. Green retain Masurovsky to assist Zweben with the Bell Atlantic case. On September 29, 1994, Zweben sent Dr. Green another letter that became their second representation agreement. The text of that letter read:

This letter sets forth the agreement under which Marc S. Zweben, P.C. will continue to represent you in the referenced case, in the light of the Court's favorable decision on Bell Atlantic's Motion in Limine, and Laura Masurovsky's involvement in the case.

As we have discussed, Laura will enter an appearance in the case, and we will work together as co-counsel. I will continue to bill at $150 per hour for my time, and will bill for Laura's time at the same rate. In order to keep your costs to a minimu sic will use a paralegal, at $50 per hour. In addition, we will use your office staff, as much as possible, to prepare information and documents.

I will incorporate Laura's bill into mine, so that you will receive a single invoice. I will continue to bill monthly, for expenses as well as hourly fees, and payment will be due ten days from the date of the invoice.

If you find this agreement acceptable, please sign below, and fax a copy back to me.

Dr. Green executed the letter that same day.

In January 1995, Dr. Green settled his case against Bell Atlantic upon the advice of Zweben and Masurovsky. Dissatisfied with the settlement, Dr. Green filed a legal malpractice suit against Zweben and Masurovsky on June 2, 1995. On July 21, 1995, Zweben and Masurovsky moved pursuant to D.C.Code § 16-4302 (1989) to compel arbitration under the first representation agreement. Dr. Green opposed the motion, and Zweben and Masurovsky filed replies. In an order docketed September 13, 1995, the trial court concluded that no hearing was necessary, and denied the motion to compel arbitration.

The trial court gave two reasons for denying the motion. First, the trial court held that the arbitration clause in the first agreement was "insufficient to establish an arbitration requirement" because it was "vague and unclear on its face" and "does not say there is an agreement to arbitrate and says nothing regarding the loss of judicial rights or remedies." The trial court held in the alternative that there was no agreement to arbitrate because the second agreement, which did not contain an arbitration clause, governed the dispute. Zweben and Masurovsky timely filed this appeal.¹

II.

Appellants first contend that the trial court erred in finding the arbitration clause of the first agreement vague and unenforceable because it improperly failed to apply the presumption in favor of arbitration. We agree.

"A motion to compel arbitration invokes the well-established preference for arbitration when the parties have expressed a willingness to arbitrate." Friend v. Friend, 609 A.2d 1137, 1139 (D.C.1992). Variously called a presumption, preference or policy, the rule favoring arbitration is identical under the D.C. Uniform Arbitration Act, D.C.Code §§ 16-4301 to 16-4319 (1989), and the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (1996). Id. Succinctly put, the rule is that

where the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.

687 A.2d 202

Carter v. Cathedral Ave. Coop., Inc., 566 A.2d 716, 717 (D.C.1989) (quoting AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986)). Thus, we have said that a trial court must determine if a particular arbitration clause is "susceptible of an interpretation" that arbitration is required for a particular dispute. Haynes v. Kuder, 591 A.2d 1286, 1289 (D.C.1991). If the clause is susceptible to such an interpretation, then the trial court must order arbitration. Hercules & Co. v. Beltway Carpet Serv., Inc., 592 A.2d 1069, 1072 (D.C.1991). We review such a determination de novo. Haynes, supra, 591 A.2d at 1289.

Here, the trial court denied the motion to compel arbitration in part because it found the arbitration clause of the first agreement "vague and unclear on its face," and hence "insufficient to establish an arbitration requirement." The arbitration clause provided that "any disputes arising out of this representation will be resolved in accordance with the rules of the American Arbitration Association." We agree with appellants that the clause is not vague in the sense that it has no meaning. Indeed, we cannot readily think of any meaning other than that arbitration is required for disputes arising from the attorney-client relationship. Although the clause in its application may not be a model of clarity, and may possess a certain amount of ambiguity, that is precisely the circumstance in which the presumption becomes operative. By failing to apply the presumption in favor of arbitration and to construe any ambiguity in favor of arbitration, the trial court erred in its conclusion that the language was insufficient to require arbitration of this dispute.²

However, the trial court had a distinct alternative ground upon which it based its denial of the motion to arbitrate. We turn to that issue.

III.

The trial court alternatively ruled that, in any event, the second agreement was the sole source of the parties' respective rights and obligations. The court reached that conclusion "based on the language of the second agreement." It noted that nothing in the second agreement referred to the first agreement and that there was nothing in the letter to lead anyone to conclude that it did not constitute a new relationship between the parties. Although the trial court did not specify...