Contract Law

Bethany M. Whitmarsh, LeClairRyan Providence, R.I.
Experienced litigator represented clients in a wide range of financial service and real estate litigation.

Carroll, No. 2017-0673, September 18, 2018

Affirmed and remanded.

  • Whether a contractual provision provided for mandatory arbitration for all claims arising under the contract.

The court considered the interlocutory appeal of L.B.O. Holding, Inc. d/b/a Attitash Mountain Resort (Attitash) from the trial court’s denial of its motion to dismiss the complaint of Grand Summit Hotel Condominium Unit Owners’ Association (Association).

The Association contracted with Attitash to perform management functions for the Association, including negotiating and arranging equipment maintenance. In its role as manager, Attitash retained a commercial heating and cooling contractor to, in part, winterize the cooling tower each year beginning in 2011. In 2013, Attitash failed to arrange the winterization of the cooling tower and the tower sustained damage as a result. In 2014, Attitash rented a temporary cooling tower and in 2015, Attitash had the damaged cooling tower repaired. Attitash incurred more than $200,000 in costs, which the Association paid as “Actual Costs” pursuant to its contract with Attitash.

Subsequently, the Association filed a complaint against Attitash for its failure to arrange for the maintenance of the cooling tower. The Association asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, negligence and violation of the Consumer Protection Act. Attitash moved to dismiss the Association’s complaint based on a purported arbitration clause in the parties’ contract that provided for an independent public accountant review of a challenge to the “nature, amount or method” of an amount charged by Attitash. The trial court denied the motion to dismiss and approved Attitash’s interlocutory appeal.

The court agreed with the trial court’s conclusion that the purported arbitration clause did not require mandatory arbitration for all matters that lead to the incurrence of actual costs. As an initial matter, Attitash argued for the first time on appeal that the Federal Arbitration Act (FAA) should apply.  The court avoided determination of whether or not the choice of law issue properly was before the court by assuming that it was since the FAA and the New Hampshire arbitration statute were the same with regard to the issues on appeal and both provide for the presumption of arbitrability to apply to arbitration clauses.

The court further assumed that the subject provision was an arbitration clause, but found that the Association’s claims did not come within the scope of the provision and so arbitration was not mandatory.  The court agreed with the Association that its claims did “not challenge the nature, amount or method” of the calculation of the actual costs related to the cooling tower, but rather were based on the misconduct of Attitash in not properly maintaining the tower, and its later misrepresentations regarding the cause of the damage. The court found the purported arbitration clause to be narrow in scope based on the language in the provision, and the presumption of arbitrability does not override the intention of the parties as expressed in the agreement.

 

Michael D. Ramsdell, Ramsdell Law Firm, Concord, for the plaintiff; Thomas Quarles, Jr. and Brendan P. Mitchell, Devine, Millimet & Branch, Manchester, for defendant.