R.I. Council on Postsecondary Educ. v. Hellenic Soc'y Paideia – R.I. Chapter, 2017-200-Appeal.

• Decision Date: 12 March 2019
• Docket Number: No. 2017-200-Appeal.,No. 2017-201-Appeal. (WC 16-402),2017-200-Appeal.,2017-201-Appeal. (WC 16-402)
• Citation: 202 A.3d 931
• Parties: RHODE ISLAND COUNCIL ON POSTSECONDARY EDUCATION et al. v. HELLENIC SOCIETY PAIDEIA – RHODE ISLAND CHAPTER.
• Court: Rhode Island Supreme Court

202 A.3d 931

RHODE ISLAND COUNCIL ON POSTSECONDARY EDUCATION et al.

v.HELLENIC SOCIETY PAIDEIA – RHODE ISLAND CHAPTER.

No. 2017-200-Appeal.

No. 2017-201-Appeal. (WC 16-402)

Supreme Court of Rhode Island.

March 12, 2019

Justice Flaherty, for the Court.

We are called upon to decide whether the terms of a ground lease agreement between the plaintiffs, the University of Rhode Island and the Rhode Island Council on Postsecondary Education, and the defendant, Hellenic Society Paideia – Rhode Island Chapter, require the parties to arbitrate all disputes arising from their lease agreement, or merely a subset of those disputes. The defendant appeals from orders of the Superior Court denying its Motion to Stay Litigation in Favor of Arbitration pursuant to G.L. 1956 § 10-3-3. These consolidated appeals came before the Supreme Court pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not summarily be decided. After hearing the arguments of counsel and examining the memoranda filed on behalf of the parties, we conclude that cause has not been shown and that this case may be decided without further briefing or argument. For the reasons set forth in this opinion, we vacate the order of the Superior Court and remand the case to the Superior Court for entry of an order staying litigation pending arbitration proceedings.

IFacts and Travel

In 2005, the University of Rhode Island and the Rhode Island Board of Governors for Higher Education¹ agreed to lease a parcel of land on the Kingston campus of the University of Rhode Island to the Hellenic Society Paideia – Rhode Island Chapter (the Society or defendant) for the purpose of building and maintaining a Center for Hellenic Studies, which also was to house the Hellenic Studies Program at the University and the University of Rhode Island Center for Humanities. The initial term of the Lease was for ninety-nine years following completion of the building, and the Lease gave defendant the option to extend the initial Lease term for four additional ninety-nine year terms.²

Although excavation was completed and a foundation was laid, construction of the building was halted in 2012 and, for reasons outside the scope of this appeal, construction was never recommenced. In November 2012, plaintiffs sent a Notice of Default and Termination of Ground Lease to the Society, advising it of plaintiffs' intent to terminate the Lease because construction had not been completed within thirty months of the commencement of construction, as required by the Lease. In June 2013, plaintiffs sent another letter to the Society, demanding that defendant restore the property to its former condition.

After years of back and forth between the parties, plaintiffs brought a petition in the Superior Court to appoint a special master to resolve the issues between the parties in relation to the failed project. Plaintiffs soon thereafter filed a first amended complaint seeking, inter alia , a declaratory judgment that defendant was in breach of the Lease. The amended complaint also sought an order directing defendant to restore the premises to its former condition or, in the alternative, to require defendant to reimburse plaintiffs for doing so themselves. While the case was in its early stages, defendant moved for a stay of litigation pursuant to § 10-3-3, arguing that Section 14.3 of the Lease, entitled "Conciliation; Arbitration," required that all disputes be resolved by arbitration. The hearing justice ruled, for reasons discussed in more detail below, that the language of that provision did not mandate arbitration in this case, and consequently he denied defendant's motion for a stay of the litigation. The hearing justice later reaffirmed that ruling after defendant moved for reconsideration of the order denying the motion for a stay.³

Before this Court, defendant argues that the hearing justice erred when he found that the Lease's arbitration clause applied only to disputes that do not involve an alleged breach of the Lease.

IIStandard of Review

"The issue of whether a dispute is arbitrable is a question of law that this Court reviews de novo. " Town of Johnston v. Rhode Island Council 94, AFSCME, Local 1491 , 159 A.3d 83, 85 (R.I. 2017) (quoting AVCORR Management, LLC v. Central Falls Detention Facility Corp. , 41 A.3d 1007, 1010 (R.I. 2012) ). Arbitration is a creature of the agreement between the parties, and a "duty to arbitrate a dispute arises only when a party agrees to arbitration in clear and unequivocal language, and even then, the party is only obligated to arbitrate issues that it explicitly agreed to arbitrate." State Department of Corrections v. Rhode Island Brotherhood of Correctional Officers , 866 A.2d 1241, 1247 (R.I. 2005). Because arbitration is a matter of contract, "[g]eneral rules of contract construction apply[,]" and "whether the parties agreed to submit a particular dispute to arbitration turns upon the parties' intent when they entered into the contract from which the dispute ultimately arose." Radiation Oncology Associates, Inc. v. Roger Williams Hospital , 899 A.2d 511, 514 (R.I. 2006). "In ascertaining what the intent is we must look at the instrument as a whole and not at some detached portion thereof." Hill v. M. S. Alper & Son, Inc. , 106 R.I. 38, 47, 256 A.2d 10, 15 (1969). Significantly, however, "[w]hen uncertainty exists about whether a dispute is arbitrable, this Court, like the United States Supreme Court, ‘has enunciated a policy in favor of resolving any doubt in favor of arbitration.’ " School Committee of Town of North Kingstown v. Crouch , 808 A.2d 1074, 1078 (R.I. 2002) (quoting Brown v. Amaral , 460 A.2d 7, 10 (R.I. 1983) ).

IIIDiscussion

AAppeal as of Right

Before reaching the merits, we must first grapple with plaintiffs' contention that defendant's appeal is not properly before us.

The defendant's motion for a stay of litigation was brought pursuant to § 10-3-3, which requires a hearing justice to order a stay of litigation "upon being satisfied that the issue involved in the suit or proceeding is referable to arbitration[.]" Direct appeals may be taken "upon the entry of any final order provided in § 10-3-3 [.]" Section 10-3-19. The plaintiffs argue, however, that orders denying a motion to stay litigation, although brought pursuant to § 10-3-3, deny by their very nature the existence of an issue "referable to arbitration" and that, in the absence of an arbitrable issue, the Arbitration Act as a whole, including § 10-3-19, simply does not apply. Thus, plaintiffs submit, an order denying a motion to stay litigation pending arbitration is not final and is reviewable only by writ of certiorari.

Significantly, § 10-3-19 provides that "[a]ny party aggrieved by any ruling or order" as authorized in chapter 3 of title 10 of the General Laws "may obtain review as in any civil action, and upon the entry of any final order provided in § 10-3-3 * * * he or she may appeal to the supreme court as provided for appeals in civil actions[.]" By specifying that "any party" may bring a direct appeal if aggrieved by "any ruling" authorized by chapter 3 of title 10, the General Assembly clearly intended to permit direct appeals from orders both granting and denying motions to stay brought pursuant to § 10-3-3. Section 10-3-19 (emphasis added); see Harvard Pilgrim Health Care of New England, Inc. v. Gelati , 865 A.2d 1028, 1037 (R.I. 2004) ("When the language of a statute is clear and unambiguous, we must enforce the statute as written by giving the words of the statute their plain and ordinary meaning."). We conclude that a party who has sought a stay on the basis of an arbitrable issue is certainly aggrieved by an order denying the existence of such an issue and that such an order is final in nature. Therefore, it is our opinion that a party aggrieved by an order denying a motion to stay litigation brought pursuant to § 10-3-3 may appeal as of right from that order, pursuant to § 10-3-19.⁴

BThe Arbitrable Issue

We turn now to the meat of the issue—whether the parties "agree[d] to arbitration in clear and unequivocal language[.]" Rhode Island Brotherhood of Correctional Officers , 866 A.2d at 1247. The defendant argues that the parties explicitly agreed to refer any dispute arising from an alleged breach of the Lease to arbitration, and defendant relies in support of this argument on a provision entitled "Conciliation; Arbitration." The relevant language is as follows:

"14.3 Conciliation; Arbitration.

"14.3.1 Conciliation In the event of any controversy, claim or dispute arising out of or relating to this Lease or with respect to any breach hereof, the parties shall seek to resolve the matter amicably through mutual discussions * * *.

"14.3.2 Arbitration- If the parties fail to resolve any such controversy, claim or dispute by amicable arrangement and compromise within the thirty (30) day period immediately following the date of the notice initiating such discussions referred to in subsection (a) [sic ] above * * * the aggrieved party shall submit the controversy, claim or dispute to arbitration * * *."

The Arbitration Clause

The underpinning of the hearing justice's bench decision was what he referred to as "a conspicuous difference" between the language of the conciliation clause in Section 14.3.1 and that of the arbitration clause in Section 14.3.2. He pointed out that the conciliation clause referred to "any controversy, claim or dispute arising out of or relating to this Lease or with respect to any breach hereof[.]" He noted that, on the other hand, the arbitration clause omits the language "with respect to any breach hereof." The consequence of this difference, he ruled, was a limitation in the scope of the arbitration clause. In other words, the hearing justice reasoned that, because the arbitration clause omitted the words "with respect to any breach hereof," the parties did not intend to arbitrate issues involving a breach of...