Rodriguez v. Forrester
| Decision Date | 07 January 2019 |
| Docket Number | A-1-CA-36223 |
| Parties | SIMON RODRIGUEZ and JUAN M. RODRIGUEZ, Plaintiffs-Appellees, v. J.G. FORRESTER, Defendant-Appellant. |
| Court | Court of Appeals of New Mexico |
This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
APPEAL FROM THE DISTRICT COURT OF EDDY COUNTY
Marrs Griebel Law, Ltd.
Clinton W. Marrs
Albuquerque, NM
for Appellees
Sutin, Thayer & Brown, P.C.
Frank C. Salazar
Jacqueline K. Kafka
Albuquerque, NM
for Appellant
{1} Defendant appeals from the district court's denial of his motion to compel arbitration. We affirm in part and reverse in part.
{2} Defendant J.G. Forrester (Forrester) is the sole owner and managing partner of Black Gold Resources, Inc. (Black Gold), a Tennessee company incorporated in December 2013. Forrester serves as president, chief executive officer, director, and registered agent of Black Gold. Black Gold is the managing partner of Roaring Fork JV (Roaring Fork), a Tennessee general partnership created by Forrester in 2013 to drill wells for oil and gas in Kansas, Texas, and Oklahoma.
{3} In December 2014, Plaintiff Juan Rodriguez (Son) signed a subscription agreement (the Agreement) with Forrester to purchase a "Unit" in the Roaring Fork partnership. Plaintiff Simon Rodriguez (Father) transferred $60,000 to Son's checking account so that Son could fund the investment. Father was not a signatory to the Agreement, which contains an arbitration provision requiring "all controversies, disputes, or claims pertaining in any manner whatsoever [to] be resolved exclusively through binding arbitration."
{4} Plaintiffs commenced this action against Forrester and one of his employees1 in January 2016 alleging, among other things, a violation of the New Mexico Uniform Securities Act and the New Mexico Unfair Practices Act. Pursuant to the complaint, Plaintiffs "seek to recover $60,000 they lost because of [Forrester's] unlawful solicitation of their investment in the securities of Black Gold . . . and [Forrester's] unlawful sale of the securities to them."
{5} Forrester moved to dismiss Plaintiffs' complaint for lack of personal jurisdiction or, in the alternative, to stay the proceedings and compel arbitration in accordance with the terms of the Agreement. With respect to the latter, Forrester argued that the Agreement's arbitration provision covered "all the claims brought by Plaintiff [sic]" and that the "proper defendants" in the action were not Forrester and his employee but rather "the entities that sold [Son] the Roaring Fork Unit and signed the Agreement: Black Gold and Roaring Fork." In sum, Plaintiffs' effort to avoid the arbitration clause by "attempting to hold [Forrester] personally liable for actions allegedly taken by the Black Gold entity" was "an impermissible tactic" that the district court should reject.
{6} The district court denied Forrester's motion to compel arbitration on the basis that Father and Son "have chosen to sue individually J.G. Forrester" and that "they have not sued . . . Roaring Fork and Black Gold." The court certified its decision for interlocutory appeal, which we granted.
{7} As an initial matter, it was unnecessary for the district court to certify its order denying Forrester's motion to compel arbitration for interlocutory appeal. The New Mexico Uniform Arbitration Act, NMSA 1978, §§ 44-7A-1 to -32 (2001) states that, "[a]n appeal may be taken from . . . an order denying a motion to compel arbitration[.]" Section 44-7A-29(a)(1).
{8} We apply a de novo standard of review to a district court's denial of a motion to compel arbitration. Heye v. Am. Golf Corp., 2003-NMCA-138, ¶ 4, 134 N.M. 558, 80 P.3d 495. Similarly, whether the parties have agreed to arbitrate presents a question of law, and we review the applicability and construction of a contractual provision requiring arbitration de novo. Santa Fe Techs., Inc. v. Argus Networks, Inc., 2002-NMCA-030, ¶ 51, 131 N.M. 772, 42 P.3d 1221.
{9} The right to directly appeal an order denying a motion to compel arbitration reflects New Mexico's strong preference for resolving disputes through arbitration where parties have, as a matter of contract, agreed to that form of dispute resolution. See Horne v. Los Alamos Nat'l Sec., L.L.C., 2013-NMSC-004, ¶ 16, 296 P.3d 478 (); Christmas v. Cimarron Realty Co., 1982-NMSC-079, ¶ 7, 98 N.M. 330, 648 P.2d 788 (). Much as parties cannot be forced to arbitrate when they have not contractually agreed to do so, see Heye, 2003-NMCA-138, ¶ 8 (), "when parties have agreed to arbitrate, the courts must compel arbitration." Santa Fe Technologies, Inc., 2002-NMCA-030, ¶ 51.
{10} The sole question before us is whether Forrester may compel Father and Son to arbitrate their claims. In the district court, Plaintiffs argued that the only two parties to the Agreement were Son and Roaring Fork and that there existed in the record "no contract of any kind, whether arbitration agreement or otherwise," between Plaintiffs and Forrester. The district court agreed with Plaintiffs and denied Forrester's motion to compel arbitration, reasoning that Plaintiffs had "chosen to sue individually J.G. Forrester" and that "they have not sued . . . Roaring Fork and Black Gold." We reverse the district court's ruling with respect to Son. As to Father, we agree that as a nonsignatory to the Agreement and on the record before us, Father cannot be compelled to arbitrate. We explain.
{11} We begin by addressing the district court's treatment of Plaintiffs jointly notwithstanding that, as between the two, Son was the only signatory to the Agreement. In Monette v. Tinsley, 1999-NMCA-040, ¶¶ 1, 6, 12, 126 N.M. 748, 975 P.2d 361, this Court addressed a similar situation where one plaintiff, Donald Monette, was a signatory to an agreement containing an arbitration provision that the defendants were attempting to enforce against Donald and his brother and co-plaintiff, Charles Monette, who was not a signatory to the agreement. We affirmed the district court's denial of the motion with respect to Charles, concluding that Charles was not a party to the contract and that the defendants had failed to show why Charles, a nonsignatory, should be bound to arbitrate in that case. Id. ¶¶ 9, 12. Monette thus illustrates that determinations regarding whether a plaintiff can be compelled to arbitrate must take into account whether the plaintiff is a signatory or nonsignatory to an agreement to arbitrate.
{12} The record in this case reflects that the district court did not consider how each Plaintiff's relationship to the Agreement—i.e., Son's status as a signatory, and Father's status as a nonsignatory—separately affected whether or not he could be compelled to arbitrate his claims against Forrester. We thus proceed with separate analyses of whether Son, on the one hand, and Father, on the other, may be compelled to arbitrate.
{13} When faced with a motion to compel arbitration, a district court "is compelled to order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate." Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ¶ 9, 137 N.M. 293, 110 P.3d 509. "Arbitration agreements are a species of contract, subject to the principles of New Mexico contract law." L.D. Miller Constr., Inc. v. Kirschenbaum, 2017-NMCA-030, ¶ 18, 392 P.3d 194. "Courts are to interpret the provisions of arbitration agreements by the rules of contract law and are to apply the plain meaning of the language utilized, in order to give effect to the agreements struck by the parties." Horne, 2013-NMSC-004, ¶ 16 (internal quotation marks and citation omitted).
{14} The Agreement for the purchase of one unit in Roaring Fork was "entered into . . . between Black Gold . . ., as [m]anaging [v]enturer of the Roaring Fork . . ., and [Son.]" The signatories to the Agreement were "J.G. Forrester, President" on behalf of Black Gold, and Son. The purpose of the Agreement was to formalize a relationship between Son and Forrester's company, Black Gold, whereby Son gained a working interest in up to two wells being drilled in Kansas by Roaring Fork, the general partnership of which Forrester's company was the managing partner. Son's working interest of 1.75 percent had the potential to yield him a 1.3125 percent net revenue interest in each of the wells. The Agreement's broadly worded arbitration clause provided that:
It is agreed that any and all controversies, disputes, or claims pertaining in any manner whatsoever to this Agreement or the purchase of Units in the Joint Venture shall be resolved exclusively by binding arbitration . . . . This agreement to arbitrate . . . shall be broadly interpreted and covers all controversies, disputes, and claims arising out of or relating to a Unit purchase including, but not limited to[,] contract claims, tort claims, and statutory claims or any...
To continue reading
Request your trial