Roberts v. Molyneaux, 2013-CA-000044-MR
| Decision Date | 22 August 2014 |
| Docket Number | NO. 2013-CA-000044-MR,2013-CA-000044-MR |
| Parties | K. MICHAEL ROBERTS APPELLANT v. ROBERT MOLYNEAUX AND GERALDINE TALBOTT APPELLEES |
| Court | Kentucky Court of Appeals |
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT
On September 7, 2010, Roberts entered into a Residential Sales Contract with realtor Rick Molyneaux and Geraldine Talbott to purchase a property ownedby Talbott in the Deer Park neighborhood of Louisville. Roberts claims that when he entered into the sales contract, both Molyneaux and Talbott had assured him that the property could easily be turned into a duplex. The listing for the property identified the property as "Single Family Residential" and stated,
Roberts began transitioning the house into a duplex. In January 2011, he received a cease-and-desist order informing him that his construction violated the neighborhood's zoning regulations. Roberts requested a conditional use permit to use the property as a duplex subject to certain restrictions. The zoning board held a public meeting on Roberts's request for a conditional use permit in May 2011. At the meeting, a resident of the neighborhood testified that Talbott had received a similar cease-and-desist order for attempting to convert the property into a duplex in 1992, an order of which Roberts claims he was previously unaware.
On November 17, 2011, Roberts served Molyneaux and Talbott with a demand for arbitration and mediation in accordance with Paragraph 24 of the Residential Sales Contract. Paragraph 24 states, in relevant part:
24. MEDIATION/BINDING ARBITRATION: Notice of Demand for Mediation and Notice of Demand for Arbitration must be made within 365 days after the party raising the claims knew, or should have known, of the existence of said claims. Any dispute or claim (including, without limitation, claims of fraud, misrepresentation, warranty and/or negligence) of Seller, Buyer, brokers, agents or any of them for a sum greater than the limits of small claims court jurisdiction arisingout of this Contract or breach thereof or arising out of or relating to the physical condition of the property covered by this Contract shall first be submitted to mediation in accordance with the Greater Louisville Association of REALTORS, Inc.
. . . .
If mediation does not result in an agreement signed by the parties, all such claims or disputes shall be decided by binding arbitration in accordance with the guidelines of the Greater Louisville Association of REALTORS, Inc. and the laws of the Commonwealth of Kentucky.
Molyneaux and Talbott agreed to mediation and participated without objection in April 2012. When mediation proved unsuccessful, Roberts moved for the appointment of an arbitrator in accordance with the arbitration rules of the Greater Louisville Association of Realtors.
Molyneaux and Talbott refused Roberts's request for arbitration, and instead filed a declaratory judgment action in Jefferson Circuit Court, seeking to have the court declare the rights of the parties with respect to the arbitration provision in the Residential Sales Contract. In their complaint, Molyneaux and Talbott alleged that Roberts knew or should have known of the property's zoning restrictions when he entered into the Residential Sales Contract in September 2010, and therefore, a demand for arbitration in November 2011 was untimely. They asked the court to rule that Roberts waived his right to arbitrate by failing to timely invoke his right to arbitration within the contractual 365-day period.
Roberts moved to dismiss the case and to compel arbitration. Molyneaux and Talbott served Roberts with 38 discovery requests, seeking informationconcerning Roberts's knowledge of the zoning regulations applicable to the property. The court ordered Roberts to answer Molyneaux's and Talbott's discovery requests without ruling on Roberts's motion to dismiss and compel arbitration. Roberts eventually answered the discovery requests, but objected to the requests that sought information related to the merits of his fraud claims, claiming that such discovery would only be answered once the court ruled on his motion to dismiss and compel arbitration.
After receiving Roberts's incomplete discovery answers, Molyneaux and Talbott filed a motion to compel discovery. The trial court considered the motion to compel discovery and Roberts's motion to dismiss and compel arbitration in the same hearing on December 13, 2012. The trial court granted the motion to compel discovery and denied Roberts's motion to dismiss and compel arbitration. Roberts now appeals that decision.
An appeal may be taken from denial of an order to compel arbitration. KRS1 417.220(1)(a). "The trial court's factual findings, if any, are reviewed for clear error, but its construction of the contract, a purely legal determination, is reviewed de novo." North Fork Collieries, LLC v. Hall, 322 S.W.3d 98, 102 (Ky. 2010) (citation omitted). "That is, we defer to the trial court's factual findings, upsetting them only if clearly erroneous or if unsupported by substantial evidence, but we review without deference the trial court's identification and application of legalprinciples." Conseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001).
Roberts argues the timeliness of a demand for arbitration is an issue that should be determined by an arbitrator, not the courts, and therefore, his motion to compel arbitration should have been granted. Molyneaux and Talbott assert that the motion to compel arbitration was properly denied because proceeding with discovery is necessary to establish when Roberts learned of the zoning issues, or when his claim came into existence. They allege that the arbitration agreement itself is void, and Roberts waived his right to arbitrate if the demand for arbitration was not made within 365 days from the date he learned of the zoning restriction.
This court has previously addressed whether the timeliness of a demand for arbitration should be decided by the courts or the arbitrators. Beyt, Rish, Robbins Group v. Appalachian Reg'l Healthcare, Inc., 854 S.W.2d 784 (Ky. App. 1993). In Beyt Rish, we held that the timeliness of an arbitration demand is to be decided by the arbitrator. Id. at 786. That decision was based on two factors: (1) broad and expansive language in the arbitration agreement indicating intent of the parties to leave as much as possible to the arbitrators; and (2) the Uniform Arbitration Act ("UAA"), KRS 417.045-.240, expressing public policy in favor of enforcing arbitration agreements. Id. As we noted in Beyt Rish, the UAA Id. Roberts claims that because theparties clearly had an agreement to arbitrate, the dispute over the timeliness of his demand for arbitration must be decided by an arbitrator.
This court explained the preference for having arbitrators handle the procedural issue of timeliness in Beyt Rish. Citing John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 556-57, 84 S.Ct. 909, 918, 11 L.Ed.2d 898 (1964), we noted:
The United States Supreme Court has held that the decision on such...
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