Opinion
No. C2-02-266.
Filed September 10, 2002.
Appeal from the District Court, Ramsey County, File No. CX995327.
John R. Dorgan, (for appellant)
Alan R. Nettles, (for respondents Mark B. Schepers, et al.)
Leonard V. Crowley, (for respondent Dayton's Bluff Neighborhood Housing Services)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In this arbitration dispute, appellant John McMahon, d/b/a Macker's Mohawk Construction Co. (Mohawk), argues that an arbitration award must be vacated because the arbitrator exceeded the scope of his authority, the award is based on an inapplicable arbitration clause, and the failure to continue the arbitration hearing prejudiced Mohawk. Alternatively, Mohawk argues that the award must be modified to omit reference to a mechanics' lien, the existence of which Mohawk did not agree to arbitrate. Mohawk also argues that the district court's award of attorney fees to respondents Mark Schepers, et al., is not allowed by the applicable arbitration clause. We affirm.
FACTS
Schepers hired Mohawk to remodel Schepers's home. Schepers's retention of Mohawk involved documents signed on both November 13, 1998, and December 1, 1998. While both documents had arbitration clauses, those clauses differed. The parties' subsequent disputes caused Mohawk to sue to foreclose a mechanics' lien on the home. Later, the district court, by letter, referred the non-attorney-fee aspects of the case to arbitration. The arbitrator ruled that Mohawk's mechanics' lien was defective for lack of the prelien notice, credited each side with certain amounts, and made a net award to Mohawk. Schepers moved the district court to confirm the award and for attorney fees. Mohawk moved to vacate the award, alleging that the arbitrator had exceeded the scope of his authority by, among other things, addressing the validity of the mechanics' lien. In separate orders, the district court confirmed the arbitration award and awarded Schepers attorney fees. Mohawk appeals.
DECISION I.
The district court "shall" vacate an arbitration award if the arbitrator exceeded his authority. Minn. Stat. § 572.19, subd. 1(3) (2000). Here, Mohawk argues that the district court should not have confirmed the arbitration award because Mohawk did not agree that the existence of the mechanics' lien was arbitrable.
The district court's letter referring this matter to arbitration stated both that "all" issues other than attorney fees "are left to the arbitration process" and that "if there is an issue relating to the scope of the arbitrator's authority, that matter must first be submitted to and then determined by the arbitrator." In the arbitration, Schepers's March 1, 2001, "Statement of the Case" alleged that because the parties' November 13 document lacked prelien notice, "Mohawk ha[d] no statutory lien remedies." While Schepers's argument that Mohawk lacks a valid mechanics' lien necessarily assumes that the existence of a valid mechanics' lien was arbitrable, Mohawk's March 2 "summary letter" to the arbitrator alleged that whether Mohawk had a valid mechanics' lien was "not properly a part of this arbitration action." Thus, the parties' submissions to the arbitrator differed on whether the existence of a valid mechanics' lien was arbitrable.
On March 8, six days after Mohawk's submission to the arbitrator alleged that the existence of a valid mechanics' lien was not arbitrable, the parties signed an arbitration agreement that used the provision describing the scope of the arbitrator's powers from the parties' December 1 document. The arbitration agreement states that "[a]ny disagreement arising out of this contract or from the breach thereof shall be submitted to arbitration." It continues:
Although the extent of the arbitrator's authority is governed by the above-referenced arbitration clause, the extent of said authority may further be limited by agreement of the parties. For example, the parties hereto agreed that the arbitrator is not to decide (i) the amount of attorney's fees, if any, to be awarded herein, or (ii) the priority of any mechanic's liens herein.
Thus, after the district court explicitly referred questions about the scope of the arbitrator's powers to the arbitrator, and after it was unmistakable that the parties differed on whether the scope of the arbitrator's powers allowed him to address the existence of a valid mechanics' lien, the parties signed an arbitration agreement indicating that "[a]ny disagreement" arising out of their contract "or from the breach thereof" was to be arbitrated. The only exceptions to this broad grant of authority to the arbitrator were the questions of attorney fees and the priority of any mechanics' liens.
Arbitration is contractual in nature. Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790, 795 (Minn. 1995). And "[t]he expression in a contract of one or more things of a class implies the exclusion of all not expressed." Wm. Lindeke Land Co. v. Kalman, 190 Minn. 601, 607, 252 N.W. 650, 653 (1934). Therefore, the arbitration agreement's broad "any disagreement" language combined with its failure to exclude the questions about the existence of a mechanics' lien compels the conclusion that the parties agreed to arbitrate the existence of a valid mechanics' lien. And the arbitrator's ruling that Mohawk lacked a valid mechanics' lien necessarily implies that the arbitrator concluded that the existence of a valid mechanics' lien was arbitrable. When Mohawk later sought to vacate the arbitration award based, in part, on allegations that the arbitrator exceeded his authority, the district court denied that motion and confirmed the arbitration award. Thus, both the arbitrator and the district court ruled that the existence of a valid mechanics' lien was arbitrable. Those rulings are supported by (a) the district court's reference of the question to the arbitrator; (b) the parties' placing of the question before the arbitrator by disagreeing on the extent of the arbitrator's authority; (c) the arbitration agreement's grant to the arbitrator of authority to resolve "any disagreement" except those regarding attorney fees and lien priority; (d) case law; and (e) the fact that the parties signed their arbitration agreement after their dispute regarding arbitrability was manifest. We conclude that the arbitrator did not exceed his powers by addressing the existence of a mechanics' lien.
Indeed, the priority questions that the arbitrator was precluded from addressing presume the existence of valid liens.
II.
Mohawk argues that (a) the November 13 and December 1 documents are separate contracts; (b) the provision of the arbitration agreement defining the scope of the arbitration as "[a]ny disagreements" arising from "this contract" was taken from the December 1 document; and (c) the arbitrator's ruling that the mechanics' lien was defective for lack of the prelien notice combined with the fact that the December 1 document included a notice provision means that the arbitrator must have improperly addressed questions arising out of the November 13 document under the arbitration clause of the December 1 document. Thus, Mohawk concludes, the arbitration award exceeded that arbitrator's authority and should be vacated under Minn. Stat. § 572.19, subd. 1(3) (2000).
The parties offer different versions of the December 1 document as the operative version of that document. While the version offered by Mohawk does not contain all of the parties' signatures, the August 21 affidavit of Schepers's counsel indicates that the version attached thereto, which is signed by all the parties, was " Arbitration Exhibit 3." Thus, Schepers's version of the December 1 document was apparently the version of the document presented to the arbitrator. Therefore, it is the document we consider here. In addressing the "TIME OF COMPLETION" clause, that document referred to "Article 2 of 1st contract." Article 2 of the November 13 document indicated the completion date to be March 8, 1999. Thus, the December 1 and November 13 documents should be construed together:
Where several instruments are made as part of one transaction, they will be read together, and each will be construed with reference to the other. This is true, although the instruments do not in terms refer to each other. So if two or more agreements are executed at different times as part of the same transaction they will be taken and construed together.
Fleisher Eng'g Constr. Co. v. Winston Bros. Co., 230 Minn. 554, 557, 42 N.W.2d 396, 398 (1950) (quoting 13 C.J. Contracts § 487) (citation omitted)). Reading the documents in light of each other requires the conclusion that the December 1 document supplements the November 13 document and that the mechanics' lien claim arises under a single contract that is evidenced by the combination of the two documents.
Indeed, because the November 13 and December 1 documents involve the same transaction and because documents involved in the same transaction need not explicitly refer to each other to be construed together, even if Mohawk's version of the December 1 document, which does not refer to the "1st contract," is the effective version of that document, construing the November 13 and December 1 documents together would be appropriate. See Autrey v. Trkla, 350 N.W.2d 409, 413 (Minn.App. 1984) (stating "[w]here instruments are executed as part of one transaction, we will construe each with reference to the others, even though the instruments do not refer to one another" (citation omitted)). We note, however, that ruling that Mohawk's version of the December 1 document is the effective version of that document would create questions about Schepers's status in the litigation as he signed the November 13 document but not the version of the December 1 document offered by Mohawk.
That the November 13 and December 1 documents must be read together addresses Mohawk's argument that the arbitration award is ambiguous because the record leaves it unclear what the arbitrator considered to be the parties' contract.
III.
An arbitrator may adjourn a hearing on a party's request if the party shows "good cause." Minn. Stat. § 572.12(a) (2000). A district court "shall" vacate an arbitration award if the arbitrator
refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of section 572.12, as to prejudice substantially the rights of a party.
Minn. Stat. § 572.19, subd. 1(4) (2000).
Mohawk argues that the arbitration award should be vacated because it was surprised that, at the arbitration hearing, Schepers alleged that Mohawk's work to make the attic habitable and to put in a stairway to the attic was not up to code. The record shows that (a) in February 2000, the parties had a significant disagreement about the attic and stairway; (b) Schepers's February 2000 "punch list" cited, among other alleged defects in Mohawk's work, the attic (items 14-19) and stairway (item 17); (c) Mohawk alleges that at about that time, it produced an inspection report indicating that the work was up to code and that after producing the report, the attic and stairway work were no longer points of contention; (d) the "[p]unch list" was an exhibit Schepers proposed submitting to the arbitrator; (e) Mohawk objected to the submission of that exhibit; and (f) the arbitrator refused to continue the hearing, and deducted $5,000 from Mohawk's alleged claim as an "Attic `Living' Space deduction." The record, especially Schepers's attempt to get the "punch list" submitted as an exhibit, should either have indicated to Mohawk that the attic and stairway claims were at issue or prompted Mohawk to ask whether those claims were still at issue. Because Mohawk knew or should have known that the attic and stairway claims were or might have been at issue, we reject its claim of surprise and conclude that the district court did not err in refusing to vacate the arbitration award on this ground.
IV.
Mohawk challenges the attorney fee award, arguing that if the December 1 document is the parties' contract, it does not provide for attorney fees and the fee award should be reversed. Because the parties' contract includes both the November 13 and December 1 documents and because the November 13 document allows attorney fee awards, we affirm the district court's fee award.