Peter Kiewit Sons' Co. v. Port of Portland

• Citation: 628 P.2d 720,291 Or. 49
• Decision Date: 27 May 1981
• Docket Number: No. A8005-02667,A8005-02667
• Parties: PETER KIEWIT SONS' CO., a corporation, Respondent-Petitioner, v. The PORT OF PORTLAND, a Municipal Corporation, Appellant-Respondent. ; CA 18146; SC 27607.
• Court: Oregon Supreme Court

Page 720

628 P.2d 720

291 Or. 49

PETER KIEWIT SONS' CO., a corporation, Respondent-Petitioner, v. The PORT OF PORTLAND, a Municipal Corporation, Appellant-Respondent.

No. A8005-02667; CA 18146; SC 27607.

Supreme Court of Oregon, In Banc.

Argued and Submitted May 5, 1981.

Decided May 27, 1981.

Elizabeth Yeats, Portland, argued the cause for respondent-petitioner. On the brief were John Spencer Stewart and Kobin & Meyer, Portland.

Greg McKenzie, Portland, argued the cause for appellant-respondent. With him on the brief was Wood, Tatum, Mosser, Brooke & Holden, Portland.

TONGUE, Justice.

The question to be decided in this case is whether an order directing the parties to proceed to arbitration in accordance with the terms of a contract is an appealable order.

Petitioner Peter Kiewit Sons' Co. (Kiewit) filed a "petition for order directing arbitration" pursuant to ORS 33.230, ¹ alleging that a construction contract between it and respondent Port of Portland (Port) provided that any controversy between the parties arising out of the contract shall be submitted to arbitration according to the provisions of ORS 33.210 et seq.; that claims by it against the Port totaling $4,000,000 had been denied by the Port, and that the Port had refused to submit the resulting controversy to arbitration. The petition prayed for an order directing the parties to proceed with arbitration in accordance with the terms of the contract.

The "response" by the Port admitted the making of the contract, including the provision for arbitration of any controversy arising under it, but denied the remainder of the foregoing allegations, except "as it alleges that Respondent has refused to appoint an arbitrator." The response also alleged affirmative defenses, on which it demanded a jury trial, to the effect that a previous claim by Kiewit for $1,220,102 had been submitted to arbitration; that subsequent claims by Kiewit had been rejected by the Port on the ground that they were "merged" into the arbitration award on the first claim, and that under the doctrine of res judicata that award "constituted a full and complete settlement of all matters that were or could have been raised by that claim," with the result that "there is nothing left between the parties to arbitrate."

A hearing was then held in the Circuit Court for Multnomah County on the petition of Kiewit and the response by the Port. That court, after considering the pleadings and argument of the parties and after finding that "the making of the contract, and the failure to comply therewith are not an issue," ordered that "the parties hereby are directed to proceed to arbitration in accordance with the terms of their contract * * *."

A notice of appeal was filed by the Port to the Court of Appeals from that order. A motion to dismiss that appeal was then filed by Kiewit, contending that the order by the circuit court was not an appealable order. The Court of Appeals denied that motion (49 Or.App. 1005, 621 P.2d 642 (1980)), holding that the order was an appealable order. Kiewit then filed with this court a petition for review of that decision. We allowed that petition because this question is one of importance and one of first impression with this court.

The principal contentions by Kiewit in support of its petition for review can be briefly summarized as follows:

(1) A party to a contract which requires arbitration for all controversies arising under it and who seeks to avoid arbitration may either:

(a) Refuse to arbitrate and file an action for damages or other relief, thus submitting the controversy to a court for decision.

(b) Refuse to arbitrate the controversy without filing such an action.

(2) In the event that the recalcitrant party files such an action, the other party to the contract may make an application under ORS 33.240 requesting the circuit court to enter an order abating that action so that the arbitration may be had without further delay in accordance with the terms of the agreement. ² Such an order has been held by this court to be not an appealable order in Jackson v. Penny Duquette Knits, 276 Or. 465, 555 P.2d 201 (1976).

(3) This being so, it would be incongruous for this court to hold that if, as in this case, the recalcitrant party refuses to arbitrate, but does not file such an action, forcing the other party to make application to the circuit court under ORS 33.230 for an order directing the parties to proceed with the arbitration, such an order is an appealable order, thus forcing a delay of the arbitration proceeding until that appeal can be heard and decided.

The principal contentions to the contrary by the Port were summarized by it as follows:

(1) "Persuasive federal authority supports the proposition that such an order is appealable because petitioner has obtained full relief and no further matter is pending before the trial court."

(2) "A petition to compel arbitration must be distinguished from the separate statutory proceeding to obtain an order to stay existing litigation pursuant to ORS 33.240 pending arbitration while the litigation remains before the Court. An appeal from the latter can be taken at the conclusion of the litigation."

1. The Oregon Arbitration Statutes and Cases.

At common law, the courts refused to enforce agreements to arbitrate controversies upon the ground that such agreements unlawfully ousted the courts from jurisdiction. ³ Statutes were then enacted to authorize arbitration agreements and to provide for their enforcement by the courts. In 1924 the Supreme Court of the United States sustained the validity of such a statute. ⁴

The first Oregon arbitration statute was adopted in 1925 (1925 Or.Laws ch. 186). That statute authorized arbitration agreements and provided for the enforcement of arbitration awards by authorizing entry of judgments on such awards after exceptions on limited grounds. Such judgments were "subject to appeal to the same extent as if said judgment had been obtained after trial by a court of law." (1925 Or.Laws ch. 186 §§ 1, 2, 5, 7 and 9.) Although that statute (Sec. 3) authorized courts to abate suits "brought upon any issues arising out of" an agreement to arbitrate (as under ORS 33.240), it did not authorize courts to issue orders directing parties to proceed with arbitration (as under ORS 33.230).

In 1929, however, that statute was amended to provide, among other things, for orders "directing the parties to proceed to arbitration" in terms substantially similar to those now provided by ORS 33.230, after a minor amendment in 1979 (See 1929 Or.Laws ch. 350 § 2(b) and 1979 Or.Laws ch. 284 § 68). The 1929 statute also amended the provision relating to appeals from judgments entered on arbitration awards in terms substantially similar to those now provided by ORS 33.340. In 1931 the statute was further amended to provide, among other things, that a party against whom an arbitration award shall have been made may, before judgment is entered on such an award, except on the ground, among others, "(t)hat the arbitrators exceeded their powers, * * * ", as now provided by ORS 33.320. (1931 Or.Laws ch. 36 § 3).

Because that statute and those amendments were adopted in 1928, 1929 and 1931 no legislative history is available by minutes or reports of legislative committees.

This court has held in many cases that arbitration agreements are valid and enforceable by the courts. ⁵ In one of these cases, Harrell v. Dove Mfg. Co., 234 Or. 321, 381 P.2d 710 (1963), this court said (at 326, 381 P.2d 710):

"These provisions of our statute are rooted in reasons of policy. One of the primary purposes for which parties agree to arbitrate their disputes is to avoid what they fear may be costly and time-consuming litigation. See generally, Note, 63 Harv.L.Rev. 681 (1950). It would be patently unfair to allow a party to an arbitration proceeding for which both parties have voluntarily contracted to turn the proceedings into a lawsuit in the event the arbitrator's decision is unfavorable to him."

See also Brewer v. Allstate Ins. Co., 248 Or. 558, 562, 436 P.2d 547 (1968).

This court has also considered whether orders to abate civil actions under ORS 33.240, so as to require that the parties proceed to arbitration as provided by the terms of an arbitration agreement, are appealable orders. In Wagner v. Columbia Hospital Dist., 259 Or. 15, 485 P.2d 421 (1971), this court held that because of the unusual circumstances of that case, including the fact that plaintiff, as an employee, was not a party to the arbitration agreement between his employer and union, and plaintiff's contention that arbitration would be futile under the facts alleged by her, she could appeal from the order abating an action and compelling arbitration in that case. Again, in Transco Northwest v. Allied Equit., 275 Or. 675, 552 P.2d 824 (1976), this court, after distinguishing Wagner on its facts, held that such an abatement order could be an appealable order, although the decision on that question is not entirely clear.

Finally, however, in Jackson v. Penny Duquette Knits, 276 Or. 465, 555 P.2d 201 (1976), this court held that abatement orders under ORS 33.240 are not appealable orders, saying (at 468-69, 555 P.2d 201) that:

"Because the language of our statute was not clearly intended to have that result, and in view of the uniformity of the practice in other jurisdictions of granting a 'stay' during arbitration, we are now convinced that our construction of ORS 33.240 in Transco was in error, and that 'abate' in that statute should be read to mean 'stay.' "

" * * *

"An order staying an action while arbitration proceeds does not determine the action so as to prevent a judgment therein. ORS 19.010(2)(a). The arbitration statutes provide for entry of judgment upon the arbitration award, and for judicial review of the award if it is contested. ORS 33.310, 33.330, 33.340. Review of the order of abatement must await the...