Southern California Edison Co. v. Peabody Western Coal Co.
| Decision Date | 01 April 1999 |
| Docket Number | No. CV-97-0448-PR,CV-97-0448-PR |
| Citation | 977 P.2d 769,194 Ariz. 47 |
| Parties | 292 Ariz. Adv. Rep. 16 SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation as Operating Agent of the Mohave Project and on its own behalf; Nevada Power Company, a Nevada corporation; Salt River Project Agricultural Improvement and Power District, an agricultural improvement district; Department of Water and Power of the City of Los Angeles, A municipal corporation of the state of California, Plaintiffs-Appellants, v. PEABODY WESTERN COAL COMPANY, a Delaware corporation, Defendant-Appellee. |
| Court | Arizona Supreme Court |
¶1 Southern California Edison Company, Nevada Power Company, the Department of Water and Power of the City of Los Angeles, and the Salt River Project Agricultural Improvement and Power District (collectively "the Utilities") are parties to a contract with Peabody Western Coal Company ("Peabody"). The contract contains a clause requiring arbitration of some, but not all, disputes. The Utilities petition this court to review the court of appeals' order dismissing their appeal from the trial judge's order compelling arbitration. We are asked to decide whether the order compelling arbitration is subject to pre-arbitration appellate review. Because the circumstances of this case raise questions about one or more of our previous decisions, we granted review. See Ariz.R.Civ.App.P. 23(c)(3). We have jurisdiction pursuant to Ariz. Const. art. VI, § 5(3) and A.R.S. § 12-120.24.
¶2 In 1976, the Utilities and Peabody signed the Amended Mohave Project Coal Supply Agreement. This contract contains an arbitration clause, which reads in part In the event the parties should be unable to reach agreement with respect to a matter herein specified to be established or determined by agreement of the parties, either party may, except where provided to the contrary in this Amended Agreement, call for submission of such matter to arbitration in the manner herein set forth.
(Emphasis added.) The contract specifies certain matters that are to be determined by agreement or negotiation of the parties.
¶3 A dispute arose regarding liability for approximately $30 million in Retiree Health Care Costs and Final Reclamation Costs, and Peabody demanded arbitration. The Utilities argued that the dispute did not fall within the arbitration clause because it was not one of the matters "specified to be established or determined by agreement of the parties." They filed a five-count complaint alleging breach of contract (Count I), seeking a declaratory judgment relating to their liability for post-retirement health care costs and decommission, reclamation, and environmental monitoring costs (Counts II and III), and seeking a declaratory judgment that the issues were not arbitrable (Counts IV and V). In response, Peabody filed a motion to dismiss and to compel arbitration. The trial judge agreed with Peabody and entered an order dismissing Count I, staying the prosecution of Counts II through V, and compelling arbitration of the disputed issues. The order thus effectively denied relief on the declaratory judgment counts claiming non-arbitrability.
¶4 The Utilities appealed, and Peabody moved to dismiss for lack of jurisdiction, arguing that the order compelling arbitration was interlocutory and therefore non-appealable under Roeder v. Huish, 105 Ariz. 508, 467 P.2d 902 (1970). The court of appeals dismissed the appeal "for lack of jurisdiction on the ground stated in the motion to dismiss." The Utilities then filed a petition for review with this court. On the same day, they filed a petition for special action in the court of appeals, seeking relief in the nature of mandamus or prohibition from the trial judge's order compelling arbitration. The Utilities argued that a party should not be required to arbitrate when the dispute does not fall within the narrow arbitration clause and that the remedy by appeal following confirmation of the arbitration award was inadequate. The court of appeals declined jurisdiction.
¶5 The merits of the arbitrability issue are not before us. Suffice it to say that the arbitration clause is not a broad all-disputes provision but one requiring arbitration of only certain disputes. Whether the controversy here falls within this clause is far from clear.
¶6 The Utilities contend it makes no sense to compel parties to engage in a protracted and expensive arbitration before resolving the threshold issue of arbitrability. They argue that "when a trial court orders arbitration, and that order leaves nothing left to be decided in the litigation, the party compelled to arbitrate should be entitled to judicial review of the issue of arbitrability before the arbitration, not after." In Roeder, we held that an order compelling arbitration could be reviewed on appeal after confirmation of the award but was not appealable prior to arbitration proceedings. 105 Ariz. at 510, 467 P.2d at 904. The Utilities argue that the court of appeals interpreted Roeder too broadly in dismissing their appeal. For support, they cite Dusold v. Porta-John Corp., 167 Ariz. 358, 807 P.2d 526 (App.1990), and correctly point out that this court has recently heard two appeals from orders compelling arbitration--Canon School District v. W.E.S. Construction Co., 177 Ariz. 526, 869 P.2d 500 (1994), and Broemmer v. Abortion Services, Ltd., 173 Ariz. 148, 840 P.2d 1013 (1992). They ask that we reexamine Roeder to determine whether its holding should be applied to all arbitrability disputes. Because of the confusing state of the law and increasing number of disputes subject to arbitration, the Utilities urge that this is the time and the case in which to modify Roeder and hold that orders compelling arbitration may be appealed.
¶7 We believe the Utilities' submittal goes too far. First, Dusold does not conflict with Roeder. In Dusold, the judgment from which an appeal was taken contained Rule 54(b) language of finality and was thus appealable under A.R.S. § 12-2101(B), which provides that an appeal may be taken "[f]rom a final judgment entered in an action ... in a superior court." See Dusold, 167 Ariz. at 361, 807 P.2d at 529; see also Spence v. Huffman, 15 Ariz.App. 99, 100, 486 P.2d 211, 212 (1971). The rule referred to in Dusold permits the trial judge to insert language directing "the entry of final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." Ariz.R.Civ.P. 54(b). The order in this case contains no such language. The Utilities evidently attempted to procure an appealable order by submitting a proposed form of judgment denying injunctive relief 1 but did not seek inclusion of Rule 54(b) language. In any event, Peabody objected and submitted its own proposed order, which the trial judge signed. This order simply compelled arbitration and stayed all other proceedings.
¶8 The opinions in Canon School and Broemmer, on which the Utilities rely, provide little guidance. In Canon School, the appeal was from a judgment denying a request to stay the arbitration. 177 Ariz. at 527, 869 P.2d at 501. It is impossible to tell from that opinion whether the judgment contained Rule 54(b) language or whether the request to stay was considered to be a request for injunctive relief. The same is true in Broemmer, 2 in which the appeal was from a judgment compelling arbitration of a medical malpractice suit. 173 Ariz. at 150, 840 P.2d at 1015. Neither case discusses whether an interlocutory order compelling arbitration is appealable. 3 In any event, the judgments may or may not have been appealable under A.R.S. § 12-2102(B).
¶9 Peabody urges that Roeder holds an order compelling arbitration is interlocutory and therefore never appealable. Allowing appeals from such orders would destroy the benefits of arbitration as a speedy, efficient, and inexpensive method of dispute resolution. It contends Roeder is still good law and need not be revisited. Further, it argues, permitting appeals from orders compelling arbitration would judicially amend A.R.S. § 12-2101.01--the statute governing appeals in arbitration--and undermine the legislature's policy favoring arbitration.
¶10 We believe Peabody reads Roeder and § 12-2101.01 too broadly. In Roeder, with facts much like those in the present case, we noted that the court of appeals dismissed the appeal because the order compelling arbitration was interlocutory and was "not expressly made subject to an appeal and, therefore, is not an appealable order." 105 Ariz. at 509, 467 P.2d at 903 (emphasis added). We held that if a party has made a proper record, it may raise the arbitrability issue by objecting to the trial judge's confirmation of the arbitration award and by subsequent appeal. Id. at 510, 467 P.2d at 904. Thus, we concluded that the court of appeals was correct in dismissing the pre-arbitration appeal. Id. We did not address whether, or under what circumstances, an order compelling arbitration could ever be appealed before arbitration. Our comment that the order was not appealable because it was not expressly made subject to an appeal certainly implies that the trial court could have expressly made it...
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