CONTRACT LAW

Stacie Ayn Murphy Corcoran
2011 graduate of Suffolk University,
practicing in Mass. and NH

No. 2018-0182

July 30, 2019

Affirmed

  • Issue: Did the trial court err in deciding that the plaintiffs claims that parking rules and fees did not fall within the scope of the arbitration clause in their leases.
  • Issue: Did the trial court err in determining that they could determine questions of arbitrability.

The plaintiff’s leased commercial space included parking spaces. The original owners sold the unit to the defendants who put new parking rules into effect assessing fees for parking spaces. The plaintiff’s filed suit and the defendants filed arbitration demands. The trial court granted a motion for summary judgement and the defendant appealed on the grounds that the arbitrator, not the court, could determine issues of arbitrability.

The Court applied contract law, whose proper interpretation is a question of law. On appeal, related to the question of arbitrability, the Court found unless there is contractual language to the contrary, courts not arbitrators decide the “threshold issue” of arbitrability. Absent any additional language that arbitration governs, such as forum, the “mere reference” of the AAA rules is insufficient. Here, the language of the agreement gave the parties the choice to submit to arbitration or pursue a claim at law.

Next, the Court turned to whether the dispute was subject to arbitration. The Court found that where there is an arbitration clause, there is the presumption of arbitrability, but the Court can determine that a “particular grievance” is not arbitrable based on the interpretation of the contract. Here, in reading paragraphs together, the Court found that arbitration can only be compelled when it’s related to the lessee’s default. The Court interpreted the relevant language of the CBA to determine if it is “susceptible to an interpretation that covers the dispute” but fails to see how the defendant’s claim “presents a colorable issue of contract interpretation” when the arbitration claim is based on violations of new unilaterally imposed rules that would alter a “material benefit previously bargained for” that the defendant did not challenge were unenforceable. Therefore, the Court affirmed the trial court’s decision.

Sheehan, Phinney, Bass & Green, of Manchester (James F. Ogorchock, Megan C. Carrier and Bryanna K. Devonshire, on the brief and Ms. Devonshire orally), for the plaintiffs. Hinckley, Allen & Snyder, of Manchester (Christopher H.M. Carter and Jamie S. Meyers on the brief and Mr. Carter orally) for the defendants.