Nat'l BANK Of Ariz. v. LEE
| Decision Date | 21 June 2010 |
| Docket Number | No. C20093233,2 CA-CV 2009-0158,C20093233 |
| Parties | NATIONAL BANK OF ARIZONA, N.A., Petitioner,v.HON. KENNETH LEE, Judge of the Superior Court of the State of Arizona,in and for the County of Pima, Respondent,and ROBERT T. LAMB,Real Party in Interest. |
| Court | Court of Appeals of Arizona |
Perry & Shapiro, L.L.P. By Christopher R. Perry and Jason P. Sherman Phoenix Attorneys for Petitioner
Law Offices of Dennis A. Rosen By Dennis A. Rosen and Gayle D. Reay Tucson Attorneys for Real Party in Interest
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24.
Not for Publication Rule 28, Rules of Civil Appellate Procedure
APPEAL DISMISSED;
SPECIAL ACTION JURISDICTION ACCEPTED;
RELIEF GRANTED IN PART
¶l In this deficiency action, National Bank of Arizona (NBA) appeals from the trial court's order dismissing its claim against Robert Lamb and referring the matter to arbitration. NBA argues the court should have stayed the proceedings pending arbitration. NBA additionally contends that the deficiency action was exempt from the parties' arbitration agreement and that, in any event, Lamb waived his right to arbitrate. For the reasons set forth below, we dismiss NBA's appeal for lack of appellate jurisdiction. However, in our discretion, we have elected to treat the appeal as a special action and accept special action jurisdiction. We affirm the court's order compelling arbitration but vacate the entry of dismissal and direct the court to enter an order staying the court proceedings.
¶ The relevant facts are undisputed. In March 2006, NBA made a loan to Lamb of $403,650, which was secured by a deed of trust on a parcel of real property. Lamb defaulted on the loan, and NBA exercised its power to sell the encumbered property according to the deed of trust. A trustee's sale was conducted on February 2, 2009, at which time $428,351.43, including interest, was due on the note. The property was sold for $304,000, leaving a deficiency of $124,351.43.
¶ On April 28, 2009, NBA filed a complaint in superior court alleging breach of contract and seeking judgment for the unpaid balance of the loan. In June, Lambsuccessfully moved to dismiss the complaint. The court then referred the matter to arbitration "pursuant to the contract," and NBA filed a notice of appeal.
¶ In moving to dismiss the complaint, Lamb argued that the deed of trust contained a mandatory arbitration clause and that NBA had failed to initiate arbitration within ninety days after the trustee's sale as required under the deficiency statute, A.R.S. § 33-814(A). Without explanation, the trial court granted Lamb's motion to dismiss and referred the case to arbitration. When a trial court grants a motion without specifying its reasons for doing so, we presume its ruling was based on one or more of the grounds asserted by the moving party. Brown v. Superior Court, 137 Ariz. 327, 331, 670 P.2d 725, 729 (1983).
¶ Here, granting Lamb's motion to dismiss on the grounds raised effectively disposed of the case in its entirety, so there should have been nothing left for the trial court to refer to arbitration. However, if the court instead intended to refer the matter to arbitration because it concluded arbitration was the proper forum, then it was required by A.R.S. § 12-1502 to stay the court proceedings. The statute does not authorize dismissal of a cause of action pending arbitration. Consequently, the court's order appears internally contradictory.
¶ This contradiction is significant because it directly affects the issue of this court's jurisdiction over NBA's appeal. Because "the right to appeal exists only by force of statute," Cordova v. City of Tucson, 15 Ariz. App. 469, 470, 489 P.2d 727, 728 (1971), "[w]e are obligated to examine our jurisdiction over an appeal," Grand v. Nacchio, 214 Ariz. 9, | 12, 147 P.3d 763, 769 (App. 2006). If the trial court's order can be characterized as granting a motion to dismiss, we have appellate jurisdiction. See A.R.S. § 12-2101(B); Ariz. R. Civ. P. 41(b) (); Sanchez v. Old Pueblo Anesthesia, P.C., 218 Ariz. 317, n.1, 183 P.3d 1285, 1287 n.1 (App. 2008).
¶ In contrast, orders compelling arbitration are interlocutory and unappealable in the absence of inclusion in the order of language consistent with Rule 54(b), Ariz. R. Civ. P., or some other affirmative indication by the trial court that it intended the order to be final. S. Cal. Edison Co. v. Peabody W. Coal Co., 194 Ariz. 47, ¶¶ 18, 20, 977 P.2d 769, 775 (1999); Ruesga v. Kindred Nursing Ctrs., L.L.C., 215 Ariz. 589, ¶¶ 15-16, 161 P.3d 1253, 1258 (App. 2007); W. Agric. Ins. Co. v. Chrysler Corp., 198 Ariz. 64, ¶¶8-9, 6 P.3d 768, 770 (App. 2000). Because neither party addressed the issue of our appellate jurisdiction, we ordered supplemental briefing. Both parties maintain we have jurisdiction because the trial court's order dismissed with prejudice all of the claims pending before it. They therefore assert the order was a final, appealable order that conferred appellate jurisdiction on this court. However, neither party has provided controlling authority to support the underlying premise of their argument that, for jurisdictional purposes, this court is bound by a trial court's erroneous dismissal of claims referred to arbitration, despite the statute requiring it to stay, rather than dismiss, those claims.
¶ We decline to find that the trial court's erroneous order contemporaneously granting dismissal makes the order appealable. As this court stated in Ruesga, "[t]o holdthat the trial court's final order is appealable based on [a] procedural anomaly... would defeat the legislature's intent in making orders compelling arbitration nonappealable." 215 Ariz. 589, ¶ 12, 161 P.3d at 1257. Although the court entered what, under other circumstances, would be an appealable order of dismissal, it simultaneously compelled the parties to arbitrate the very claims it dismissed. See id. ¶12 (). Substantively, the court's order is interlocutory, and this court thus lacks appellate jurisdiction in the absence of Rule 54(b) language. Id. ¶ 15.
¶ For the first time at oral argument, Lamb argued the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, controls our interpretation of the parties' arbitration agreement and the application of federal law renders the trial court's order appealable. Indeed subsection 7(f) of the arbitration agreement states the FAA "shall apply to the construction and interpretation of this arbitration clause." NBA does not dispute Lamb's argument.
¶ As with A.R.S. § 12-1502, under the FAA orders compelling arbitration are interlocutory and, therefore, unappealable. 9 U.S.C. § 16(a)(3); Lloyd v. HOVENSA, LLC, 369 F.3d 263, 268 (3d Cir. 2004). But NBA contends the Supreme Court's opinion in Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000), "changed the law regarding this issue" and suggests we apply its reasoning here. In Green Tree, the Court "address[ed] whether an order compelling arbitration and dismissing a party's underlying claims is a 'final decision with respect to an arbitration' within the meaning of § 16(a)(3) of the [FAA], 9 U.S.C. § 16(a)(3), and is thus immediately appealable." 531 U.S. at 82.
Section 16(a)(3) of the FAA grants federal appellate jurisdiction of arbitration orders that are "final decision[s] with respect to an arbitration." The Court noted that Green Tree, 531 U.S. at 86, quoting Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867 (1994). Therefore, the Court concluded that an order dismissing all claims and compelling arbitration was final.
¶ll But here, our determination of state law issues is governed by Arizona statute, and we are not bound by Green Tree's reasoning or holding. See E. Vanguard Forex, Ltd. v. Ariz. Corp. Comm 'n, 206 Ariz. 399, ¶ 36, 79 P.3d 86, 97 (App. 2003) (). Notwithstanding the parties' agreement, there is no federal mandate that the FAA apply to their agreement. And although the parties may agree to be bound by the provisions of the FAA in the "construction and interpretation" of the agreement's arbitration clause, their choice of law does not govern this court's appellate jurisdiction. "Parties cannot, by agreement or consent, confer subject matter jurisdiction on a court where it would not otherwise exist." Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, ¶ 21, 218 P.3d 1045, 1053 (App. 2009).
¶ In its supplemental brief, NBA argues that, in the event this court lacks appellate jurisdiction, we "should treat the appeal as a special action" because it has no "'equally plain, speedy, and adequate remedy by appeal.'" Ariz. R. P. Spec. Actions 1(a). We agree. The issues raised here are substantial and primarily issues of law; the delay inarbitration sought to be avoided by making such orders nonappealable has already occurred; and we see no reason, under the circumstances, that the parties should bear the time and expense of participating in arbitration if the trial court has compelled arbitration in error. See Ruesga, 215 Ariz. 589, ¶ 16, 161 P.3d at 1258 (); S. Cal. Edison Co., 194 Ariz. 47, ¶ 20, 977 P.2d at 775 (...
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