Rollings v. Thermodyne Industries, Inc., 82774

CourtSupreme Court of Oklahoma
Citation1996 OK 6,910 P.2d 1030
Docket NumberNo. 82774,82774
PartiesBill O. ROLLINGS, Appellee, v. THERMODYNE INDUSTRIES, INC., an Oklahoma corporation, Appellant.
Decision Date23 January 1996

Certiorari to the Oklahoma Court of Appeals, Division III.

Patrick O. Waddel, David L. Bryant, Patricia Ledvina Himes, Gable & Gotwals, Inc., Tulsa, for Appellant.

J. Warren Jackman, Kevin M. Abel, William A. Caldwell, Pray, Walker, Jackman, Williamson & Marlar, Tulsa, for Appellee.

Rex K. Travis, Margaret E. Travis, Oklahoma City, Steven R. Hickman, Frasier & Frasier, Tulsa, Brief Amicus Curiae of Oklahoma Trial Lawyers Association.

SUMMERS, Justice:

Up to now the Court has not squarely confronted this question: Is a private agreement to submit future disputes to statutory arbitration binding on a party to the contract who now prefers court resolution over arbitration?

Rollings, the patent holder of a design of a new industrial water heater, entered into a contract with Thermodyne to manufacture the water heater. The contract stated "[I]n the event of any dispute between the parties hereto relating to this Agreement, the parties hereby agree to arbitrate such dispute under the rules, regulations and guidelines of the American Arbitration Association." The agreement also stated that the "agreement shall be deemed to be a contract made under the laws of the State of Oklahoma, and for all purposes shall be interpreted in its entirety in accordance with the laws of said State." Apparently the parties expected this to be a very profitable venture, with sales in the millions of dollars.

A dispute arose, and Rollings, after sending a couple of letters to Thermodyne, filed suit in District Court. He sought a declaratory judgment, asking that the Court determine that the contract and license were terminated. Rollings also sought to prohibit Thermodyne from manufacturing and selling any more industrial water heaters using his patented design.

Thermodyne moved for an order compelling arbitration pursuant to the clause in the contract. The trial court denied Thermodyne's request, holding that the arbitration clause in the contract was void because it unconstitutionally violated the Oklahoma Constitution, Article 2, Section 6 and Article 23, Section 8. The Court of Appeals reversed, holding that the arbitration clause did not violate the Constitution, observing that the arbitrator's decision was subject to a limited review in the courts. We granted certiorari to resolve this important question.

Rolling's argument is that the arbitration provision in the contract violates Oklahoma Constitution, Article 2, Section 6 and Article 23, Section 8. 1 In essence, his argument is that the arbitration clause unconstitutionally deprives him of access to courts for future controversies such as this one. He claims that regardless of any modern public policies favoring arbitration, the Oklahoma Constitution sets rights in stone which he cannot waive and of which he cannot be deprived.

Oklahoma Constitution, Article 2, Section 6, reads:

The courts of justice of the state shall be open to every person, and speedy and certain remedy afforded for every wrong and

for every injury to person, property, or reputation; and right and justice shall be administered without sale, denial, delay or prejudice

Article 23, Section 8 states:

Any provision of a contract, express or implied, made by any person, by which any of the benefits of this Constitution is sought to be waived, shall be null and void.

A violation of Section 8 is dependent on the abridgment of some other state constitutional right. Thus, if no other state constitutional right has been violated, there is no Section 8 violation.

Thermodyne urges that Section 8 should not be interpreted literally, and asks that it "be applied broadly, not technically and restrictively." First, Thermodyne points out that the Uniform Arbitration Act, 15 O.S.1991 § 801 et seq., specifically mandates enforcement of the arbitration agreements. Thermodyne states that this statute can be aligned with Article 2, Section 6 (and thus Article 23, Section 8) because this Court has never interpreted access to courts to be absolute. Next, Thermodyne urges that even if it is a violation of access to courts, Rollings waived his right to access the courts. Thermodyne gives several examples of instances in which the waiver of constitutional rights (such as waiver of jury trial in a criminal proceeding) has been upheld. Finally, Thermodyne urges that modern public policy requires this Court to uphold the validity of arbitration clauses because it is an effective and efficient method of resolving disputes, and should be favored by this Court.

Under Section 8 we have invalidated agreements to release a party from all future liability arising out of a personal injury. Pine Belt Lumber Co. v. Riggs, 80 Okla. 28, 193 P. 990 (1921); Chicago, R.I. & P. Ry. Co. v. Smith, 77 Okla. 297, 188 P. 670 (1920). But the provision has not been interpreted literally and restrictively. For example, we have held valid an agreement permitting self-help repossession rather than requiring recourse in the courts. Helfinstine v. Martin, 561 P.2d 951 (Okla.1977) (held valid because the remedy of self-help was available at common law and thus was adopted at statehood). Interpreting this section, the Tenth Circuit validated plea bargains in criminal cases. Larsen v. Frazier, 835 F.2d 258 (10th Cir.1987).

As for Section 6, this Court has also declined a literal construction, although we have closely scrutinized actions which deny access to courts. In St. Paul Fire & Marine Ins. Co. v. Getty Oil Co., 782 P.2d 915, 919 (Okla.1989), we held that Section 6 "requires that a complainant must be given access to a court if he has suffered a wrong which is recognized in the law." We also stayed with our prior observation that Section 6 operates as a mandate to the judiciary rather than a limitation on the legislature. See Wagoner County Election Bd. v. Plunkett, 305 P.2d 525 (Okla.1956). In other words, Section 6 was intended to guarantee that the judiciary would be open and available for the resolution of disputes, but not to guarantee that any particular set of events would result in court-awarded relief. 2 The Legislature may repeal the actionability of certain behavior, as it did with the causes of action for seduction and alienation of affections. 76 O.S.1991 § 8.1; Wilson v. Still, 819 P.2d 714 (Okla.1991).

Further, we have held that Section 6's protection does not require that the government waive all immunity in order to allow suits to proceed to court. Griggs v. State ex rel. Dept. of Transp., 702 P.2d 1017, 1018-19 (Okla.1985). Section 6 has most often be used to insure, regardless of status, that equal access to court is permitted. Jeffries v. State, 9 Okla.Crim. 573, 132 P. 823 (1913) (it violates the letter and spirit of Section 6 to deny access to court because a pauper cannot pay the fees and costs); Fiedeer v.

Fiedeer, 42 Okla. 124, 140 P. 1022 (1914) (married woman must be given access to court to prosecute an action against her husband)

Although the legislature is permitted to enact legislation to facilitate speedy resolution of differences, that legislation cannot be used to deny access to court. In Johnson v. Scott, 702 P.2d 56 (Okla.1985), the plaintiff was incarcerated, and brought a small claims action to retrieve some clothes left in the jail. The judge dismissed for failure to appear. We held that the legislature could set out a procedure to follow for small claims in order that they proceed quickly and smoothly. However, this procedure could not be construed to deny a plaintiff the right to present his claim.

ARBITRATION

Oklahoma has adopted the Uniform Arbitration Act. See 15 O.S.1991 § 801 et seq. The Act, in Section 802, states that the making of a written arbitration agreement confers upon the courts the jurisdiction to enforce the agreement to arbitrate any existing or future controversies. 3 It further states the grounds which may serve as a basis to vacate the award by a reviewing court: (1) fraud, (2) bias of an arbitrator, (3) arbitrator exceeded his or her power, (4) hearing was not conducted fairly, (5) there was no arbitration agreement. Clearly, the Uniform Arbitration Act provides for judicial review, albeit limited.

We have on several occasions reviewed various statutes dealing with arbitration. Following the trend, we have stated that "courts generally favor arbitration statutes." Voss v. City of Oklahoma City, 618 P.2d 925, 928 (Okla.1980). Arbitration allows for a speedy and less costly resolution of conflicts. Id.

There are different kinds of arbitration. Arbitration required by a statute is considered compulsory arbitration. Arbitration agreed to by private parties is referred to as voluntary arbitration. It is voluntary arbitration which is involved in the present case.

Oklahoma has reviewed arbitration in both the voluntary and compulsory setting. In Mindemann v. Ind. School Dist. No. 6, 771 P.2d 996 (Okla.1989), we invalidated an arbitration provision which required the last level of the grievance procedure to be submitted to binding arbitration. The provision was invalidated because a statute required that the school board have the decision-making power in such instance. We held that the school board could not "negotiate away" its statutory duties. Shortly thereafter, we invalidated an arbitration provision because it impermissibly delegated the school board's authority to reprimand a teacher. Raines v. Indep. School Dist. No. 6, 796 P.2d 303 (Okla.1990).

In Voss v. City of Oklahoma City, 618 P.2d 925 (Okla.1980), the issue was whether the employee's rights to proceed to District Court had been waived by the adoption of the collective bargaining agreement. The Court stated that while an agreement to arbitrate a future controversy was unlawful at common law, the common law did not apply because of...

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