WESTERN AGR. INS. CO. v. Chrysler Corp.

• Decision Date: 13 July 2000
• Docket Number: No. 1 CA-CV 99-0451.,1 CA-CV 99-0451.
• Citation: WESTERN AGR. INS. CO. v. Chrysler Corp., 6 P.3d 768, 198 Ariz. 64 (Ariz. App. 2000)
• Parties: WESTERN AGRICULTURAL INSURANCE COMPANY, an Arizona corporation, as subrogee for Richard Lewis and Dawn Lewis, husband and wife, Plaintiff-Appellant, v. CHRYSLER CORPORATION, a Delaware corporation licensed to do business in the State of Arizona; Tom Jones and Jane Doe Jones, husband and wife d/b/a Jones Auto Center, an Arizona corporation, Defendants-Appellees.
• Court: Arizona Court of Appeals

6 P.3d 768

198 Ariz. 64

WESTERN AGRICULTURAL INSURANCE COMPANY, an Arizona corporation, as subrogee for Richard Lewis and Dawn Lewis, husband and wife, Plaintiff-Appellant, v. CHRYSLER CORPORATION, a Delaware corporation licensed to do business in the State of Arizona; Tom Jones and Jane Doe Jones, husband and wife d/b/a Jones Auto Center, an Arizona corporation, Defendants-Appellees.

No. -0451.

Court of Appeals of Arizona, Division 1, Department D.

July 13, 2000.

Holloway Odegard & Sweeney, P.C. By Kevin B. Sweeney, Phoenix, for Plaintiff-Appellant.

Kimble, Nelson, Audilett, McDonough & Molla, P.C. By Lawrence McDonough, Negatu Molla, Tucson, for Defendants-Appellees.

OPINION

WEISBERG, Judge.

¶ 1 In this appeal, we consider whether a court-appointed arbitrator's denial of a motion to compel binding arbitration may be appealed to the superior court. We hold that it can. We also consider whether the subject arbitration agreement controls this dispute where one of the defendants was not a party to that agreement but the other defendant, who was a party to the agreement, had agreed to indemnify and assume the defense of the first defendant based upon its statutory obligation to do so. We hold that it does.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 A Jeep Grand Cherokee owned by Richard and Dawn Lewis and insured by appellant Western Agricultural Insurance Company ("Western") was destroyed by a fire that started within the vehicle. The vehicle was manufactured by the Chrysler Corporation ("Chrysler") and purchased by the Lewises from Tom Jones Ford ("the dealership"). Western paid $27,056.24 to the Lewises for their damages.

¶ 3 Western, as subrogee for the Lewises, sued Chrysler and the dealership (collectively, "appellees") seeking to recover the amount it had paid as the insurer. Because the amount in controversy was less than $50,000, the case was referred to compulsory, albeit non-binding, arbitration pursuant to Arizona Revised Statutes Annotated ("A.R.S.") section 12-133 and Maricopa County Local Rule of Practice 3.10(a), and an arbitrator was appointed.

¶ 4 Chrysler subsequently agreed to indemnify the dealership and assumed its defense. Appellees then filed a motion to compel binding arbitration pursuant to an arbitration agreement to which Western and Chrysler were parties. Appellees argued that, although the dealership was not a signatory, the arbitration agreement controlled the dispute because Chrysler was indemnifying and defending it. Western responded that the arbitration agreement applied only if all parties in the dispute were signatories. The arbitrator denied the motion.¹

¶ 5 Appellees then filed an interlocutory appeal in the trial court of the arbitrator's ruling, claiming that the court had jurisdiction pursuant to A.R.S. section 12-2101.01(A)(1). Western disagreed, arguing that no award existed from which an appeal to the trial court could be taken and that, even if the order could be considered an award for appeal purposes, the twenty-day appeal period had expired before appellees filed their appeal.

¶ 6 The trial court granted the interlocutory appeal, ordering that the case be decided by binding arbitration pursuant to the arbitration agreement. Western timely appealed from that order. DISCUSSION

I. APPELLATE JURISDICTION OF THIS COURT

¶ 7 As a preliminary issue, appellees argue that the trial court order is not an order from which an appeal can be taken because it is not final pursuant to Arizona Rule of Civil Procedure 54(b) or A.R.S. section 12-2101. Appellees raised this issue in this court both in a motion to dismiss the appeal and in their brief.

¶ 8 This court has held that an order that compels arbitration, dismisses the arbitrable claims and includes a Rule 54(b) certification of finality is appealable. See Dusold v. Porta-John Corp., 167 Ariz. 358, 361, 807 P.2d 526, 529 (1990). Here, the dismissal order compelling arbitration did not contain Rule 54(b) certification. However, the motions panel that previously considered appellees' argument concluded that, if the order were intended to be final, no claims would then remain pending in the trial court. In that event, Rule 54(b) language would be unnecessary and the appeal could proceed. It therefore stayed the appeal and asked the trial court to clarify whether it had intended the order to be a final order of dismissal or an interlocutory order by which it retained jurisdiction over the action.

¶ 9 By minute entry, the trial court explained that the intent of the order was to dismiss the case from further superior court consideration and that there were no further issues pending or parties remaining in the action. Accordingly, appellees' motion to dismiss this appeal was denied, and we need not address the arguments raised in appellees' brief concerning our jurisdiction over this appeal. See Johnson v. Mofford, 193 Ariz. 540, 546, ¶ 31, 975 P.2d 130, 136 (1998) (appellate court decision is law of the case that binds all courts of same or lower level in subsequent proceedings in same case).

II. THE APPEAL FROM THE ARBITRATOR'S RULING TO THE SUPERIOR COURT

¶ 10 Western argues that there is no procedural mechanism that allows an appeal to the superior court from the court-appointed arbitrator's denial of a motion to compel arbitration. It maintains that Uniform Rule of Procedure for Arbitration 7(a) ("Rule 7(a)") authorizes an appeal from an arbitrator's ruling only after an award has been entered. Because the arbitrator's decision on the motion was an interlocutory ruling, Western posits that appellees had no immediate right to appeal.

¶ 11 Appellees respond that they were entitled to appeal to the superior court pursuant to A.R.S. section 12-2101.01(A), which provides that "[a]n appeal may be taken from... [a]n order denying an application to compel arbitration made under the terms of § 12-1502." We agree with appellees.

¶ 12 Section 12-1502 authorizes a trial court to order that the parties submit to arbitration when they have entered into a written agreement to do so. See also A.R.S. § 12-1501 (written agreement to arbitrate present or future controversy is valid, enforceable and irrevocable unless grounds exist for revocation of the agreement). Normally, the denial of such a motion would be the basis of an interlocutory appeal to this court. See, e.g., Rocz v. Drexel Burnham Lambert, Inc., 154 Ariz. 462, 464, 743 P.2d 971, 973 (1987) (denial of a motion to compel arbitration is substantively appealable); Rancho Pescado, Inc. v. Northwestern Mut. Life Ins. Co., 140 Ariz. 174, 181, 680 P.2d 1235, 1242 (1984) (same). Notwithstanding, we conclude that an appeal to the superior court also is contemplated by section 12-2101.01(A).

¶ 13 To begin, we note that A.R.S. section 12-2101, which authorizes appeals in a number of circumstances, provides that appeals "may be taken to the court of appeals from the superior court in the instances specified in this section." A.R.S. § 12-2101(A) (emphasis added). In contrast, A.R.S. section 12-2101.01, which provides for appeals from arbitration rulings, does not specify the court to which such an appeal can be taken. The clear implication of this distinction is that such an appeal can be taken to the superior court. See City of Flagstaff v. Mangum, 164 Ariz. 395, 398, 793 P.2d 548, 551 (1990) ("Where the legislature uses a term within one statute and excludes it from another, the term usually will not be read into the provision from which it was excluded.").

¶ 14 Further, we recognize "the strong public policy favoring arbitration as the preferred means of dispute resolution." Stevens/Leinweber/Sullens, Inc. v. Holm Dev. and Management, Inc., 165 Ariz. 25, 29, 795 P.2d 1308, 1312 (1990). Arbitration is favored because it generally disposes of disputes faster and less expensively than normal court proceedings. See Forest City Dillon, Inc. v. Superior Court in and for Pima County, 138 Ariz. 410, 411, 675 P.2d 297, 298 (1984).

¶ 15 We presume that the Arizona legislature had that policy in mind when it adopted a statute allowing appeals from the denial of a motion to compel arbitration but not from a decision granting such a motion. See A.R.S. § 12-2101.01(A); Southern California Edison Co. v. Peabody Western Coal Co., 194 Ariz. 47, 52, ¶ 16, 977 P.2d 769, 774 (1999) (arbitration statute expressly permits appeal from order denying arbitration but is silent as to order compelling arbitration); see also State v. Pennington, 149 Ariz. 167, 168, 717 P.2d 471, 472 (1985) (legislature presumed aware of existing case law when it enacts statute). Allowing an interlocutory appeal from a decision denying arbitration is reasonably calculated to prevent a case from being decided by the court when, pursuant to agreement of the parties, the dispute should have been decided by arbitration. Accordingly, judicial resources and time are saved if the denial of a motion to compel arbitration is reviewed and reversed before the case proceeds to an unnecessary disposition on the merits in the trial court. ¶ 16 This rationale also holds true in the less common circumstance of a court-appointed arbitrator's denial of an application to compel agreed-upon binding arbitration. Time and resources would be wasted if the arbitrator proceeds with the arbitration and, after the award were entered and appealed, the superior court were to rule that deference to the arbitration agreement was required. Therefore, permitting such an appeal before the arbitrator considers the merits of the case furthers the policy favoring arbitration.

III. TIMELINESS

¶ 17 Western also argues that appellees' appeal to the trial court was untimely because it was filed more than twenty days after the arbitrator's decision was rendered.² See Rule 7(a). But we disagree.

¶ 18 Rule 7(a) applies only when the court-appointed arbitrator has entered an award. A decision regarding whether a dispute is arbitrable does not constitute...