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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lexington Marketing Group v. Goldbelt Eagle, LLC (05/04/2007) sp-6122
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| LEXINGTON MARKETING | ) |
| GROUP, INC., | ) Supreme Court No. S- 12171 |
| ) | |
| Appellant, | ) Superior Court No. |
| ) 1JU-05-00446 CI | |
| v. | ) |
| ) O P I N I O N | |
| GOLDBELT EAGLE, LLC, | ) |
| ) No. 6122 - May 4, 2007 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Patricia A. Collins, Judge.
Appearances: William F. Cummings and Douglas
K. Mertz, Juneau, for Appellant. Eric A.
Kueffner, Faulkner Banfield, P.C., Juneau,
for Appellee.
Before: Fabe, Chief Justice, Matthews,
Bryner, and Carpeneti, Justices. [Eastaugh,
Justice, not participating.]
FABE, Chief Justice.
I. INTRODUCTION
Goldbelt Corporation is a majority shareholder of both
Goldbelt Eagle, LLC and CP Leasing, Inc. Goldbelt Eagle entered
into a contract for marketing services with Lexington Marketing
Group (Lexington), a Virginia corporation wholly owned by Lisbeth
Gnugnoli. The agreement contained an arbitration clause. In May
2005 Lexington filed a complaint in superior court, requesting
that the court compel arbitration of a dispute over whether
Goldbelt Eagle owed it compensation for a referral under the
marketing contract. The superior court granted summary judgment
to Goldbelt Eagle, ruling that Lexingtons agreement with Goldbelt
Eagle became unenforceable on public policy grounds when Gnugnoli
became an employee of CP Leasing. Lexington appeals, claiming
the superior court erred under federal and state law when it
adjudicated the validity of the underlying contract. We conclude
that federal and state arbitration law prohibit courts from
adjudicating the validity of the underlying contract when
determining arbitrability. We hold that the arbitration
agreement covers Lexingtons claim, and we reverse the decision of
the superior court.
II. FACTS AND PROCEEDINGS
Goldbelt is a corporation formed pursuant to the Alaska
Native Claims Settlement Act. Goldbelt is a majority shareholder
in several business entities, including Goldbelt Eagle, LLC and
CP Leasing, Inc. Goldbelt Eagle and CP Leasing are eligible to
receive preferences in government contracts under the United
States Small Business Administrations Section 8(a) program, which
is designed to assist eligible small disadvantaged business
concerns [to] compete in the American economy through business
development.1
In August 2001 Lisbeth Gnugnoli incorporated Lexington
Marketing Group, Inc. (Lexington), a Virginia corporation
licensed to do business in Alaska and wholly owned by Gnugnoli.
Lexington provides marketing services to assist corporations in
obtaining government contracts. On August 27, 2001, Lexington
entered into an agreement with CP Leasing to provide marketing
services related to Section 8(a) contracts.
Goldbelt formed Goldbelt Eagle in December 2001 as a
vehicle for Section 8(a) contracts. In October 2002 Goldbelt
Eagle entered into an agreement with Lexington for marketing
services. The agreement provided that Goldbelt Eagle would pay
Lexington a commission of twenty percent of gross profits from
business opportunities registered by Lexington.
In October 2003 Gary Droubay, the Chief Operating
Officer of Goldbelt, Inc., offered Gnugnoli employment with CP
Leasing. Her job was to identify opportunities for CP Leasing to
obtain Section 8(a) contracts. The parties agreed that when
Gnugnoli became an employee of CP Leasing, she would no longer be
paid commissions on the Lexington contract with CP Leasing. The
parties dispute whether this agreement also terminated Lexingtons
contract with Goldbelt Eagle.
In the spring of 2004 Gnugnoli learned of a contract
opportunity to provide training for Army personnel. She met with
representatives of a Virginia corporation willing and able to
subcontract the work for a Section 8(a) entity such as Goldbelt
Eagle or CP Leasing. Gnugnoli referred the opportunity to
Goldbelt Eagle. In an evidentiary hearing before the superior
court, Gnugnoli claimed she referred the opportunity to Goldbelt
Eagle because the contract called for personnel services, which
she claimed CP Leasing was not equipped to provide. Gnugnoli
then requested a commission for the referral. Goldbelt Eagle
refused payment on the ground that the agreement between Goldbelt
Eagle and Lexington was void as of October 2003, when Gnugnoli
became an employee of CP Leasing.
In May 2005 Lexington filed a complaint in superior
court, requesting that the court compel arbitration under AS
09.43.020.2 Lexington invoked an arbitration clause in its
agreement with Goldbelt Eagle. That clause provides: All
disputes or claims arising under this Agreement shall be
submitted to binding arbitration before a single arbitrator in
Juneau, Alaska if demand for arbitration is made in a notice
given by either party.
Goldbelt Eagle filed a motion for summary judgment on
July 6, 2005, arguing that the entire agreement including the
arbitration provision became void when Gnugnoli became an
employee of CP Leasing. On July 21, 2005, Lexington filed a
cross-motion for summary judgment, claiming genuine issues of
material fact should prevent Goldbelt Eagle from prevailing and
requesting that the court refer the matter to an arbitrator.
The superior court initially found that there was an
apparent factual dispute as to whether the parties agreed to
terminate the Lexington Agreement between Gnugnoli and Goldbelt
Eagle, which in turn contains the arbitration agreement, when Ms.
Gnugnoli accepted employment with CP Leasing. The court held an
evidentiary hearing on October 24, 2005. On November 8, 2005,
the superior court granted Goldbelt Eagles motion for summary
judgment. The court found that Goldbelt Eagles agreement with
Lexington was unenforceable on public policy grounds. It
reasoned that Gnugnoli could not ethically seek opportunities for
Goldbelt Eagle and be privately remunerated pursuant to the
Lexington Agreement without in turn violating her duty of loyalty
to CP Leasing since both 8(a) firms are capable of bidding on the
same projects. The superior court concluded that the agreement
became impossible to perform without violation of fiduciary duty
following Gnugolis employment with CP Leasing and ruled that
there was no duty to arbitrate claims related to an unenforceable
agreement.
Lexington filed this appeal of the superior courts
ruling. Lexington claims that the trial court violated federal
and state law by refusing to compel arbitration and further
contends that the trial court erred in granting summary judgment.
III. DISCUSSION
A. Standard of Review
Whether Lexingtons claim is arbitrable is a question of
law subject to de novo review.3 We adopt the rule of law that is
most persuasive in light of precedent, reason, and policy.4 We
affirm a grant of summary judgment if there are no genuine issues
of material fact and if the movant is entitled to judgment as a
matter of law. When making this determination, we draw all
reasonable inferences in favor of the non-movant.5
B. The Superior Court Had Jurisdiction To Decide
Arbitrability.
Lexington first challenges the superior courts
jurisdiction to decide the question of arbitrability in other
words, to decide whether the terms of the agreement called for
the dispute to be referred to an arbitrator. It argues that in
the absence of allegations of fraud or unconscionability with
respect to the arbitration agreement itself, only the arbitrator
can determine arbitrability. Goldbelt Eagle responds that the
court properly decided arbitrability. Because federal and state
arbitration law provide courts with jurisdiction to decide
arbitrability, we agree with Goldbelt Eagle that the superior
court had jurisdiction to decide arbitrability.
A dispute is arbitrable under federal law if the
agreement creates a duty for the parties to arbitrate the
particular dispute.6 The United States Supreme Court has
repeatedly held that courts are the proper forum to decide
arbitrability unless the parties agreement explicitly provides
that the issue of arbitrability is for the arbitrator. In AT&T
Technologies, Inc. v. Communications Workers of America, the
Court held that the question of arbitrability . . . is undeniably
an issue for judicial determination [u]nless the parties clearly
and unmistakably provide otherwise.7
Alaska state law mirrors federal law and provides that
courts are the proper forum to determine whether a dispute is
arbitrable. In State of Alaska v. Public Safety Employees Assn,
we adopted the federal rule that arbitrability is a question for
the courts [u]nless the parties clearly and unmistakably provide
otherwise. 8
Because the arbitration clause in the agreement between
Lexington and Goldbelt Eagle is silent on the proper forum to
decide arbitrability, it does not clearly and unmistakably rebut
the presumption that the courts decide whether a dispute is
arbitrable under the terms of the agreement. The superior court
thus correctly determined that it had jurisdiction to decide
whether the dispute should be referred to an arbitrator.
C. The Superior Court Erred When It Adjudicated the
Validity of the Underlying Contract.
After determining that it had jurisdiction to decide
arbitrability, the superior court ruled that the marketing
agreement became impossible to perform when Gnugnoli began
employment with CP Leasing because performance would require
Gnugnoli to breach a fiduciary duty to CP Leasing. Reasoning
that an agreement to breach a fiduciary duty would be
unenforceable on public policy grounds, the court concluded that
it would be improper to enforce the arbitration clause of an
unenforceable agreement and granted summary judgment to Goldbelt
Eagle. Lexington argues that the superior court erred when it
addressed the validity of the underlying contract. Because
federal and state arbitration law do not allow courts deciding
arbitrability to adjudicate the validity of the underlying
contract, we agree.9
1. Federal law does not permit a court deciding
arbitrability to adjudicate the enforceability of
the underlying contract.
The United States Supreme Court has emphasized that the
Federal Arbitration Act (FAA) reflects a liberal federal policy
favoring arbitration agreements and has directed that any doubts
concerning the scope of arbitrable issues should be resolved in
favor of arbitration.10 This policy favoring arbitration, coupled
with the statutory language, has led the United States Supreme
Court to interpret the FAA to forbid courts determining
arbitrability from adjudicating the validity of the underlying
contract.
In Prima Paint Corp. v. Conklin Manufacturing Co.,
Prima Paint filed suit in federal district court seeking
rescission on fraudulent inducement grounds of a contract under
which Flood & Conklin agreed to provide consulting services.11
Flood & Conklin moved to stay the proceedings pending arbitration
on the grounds that the consulting contract contained a valid
arbitration clause.12 The case required the United States Supreme
Court to interpret 9 U.S.C. 2, which states that arbitration
provisions shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation
of any contract,13 and 9 U.S.C. 4, which the Court noted requires
a court to order arbitration once it is satisfied that the making
of the agreement for arbitration or the failure to comply (with
the arbitration agreement) is not in issue.14 The Court concluded
that in passing upon [an FAA] application for a stay while the
parties arbitrate, a federal court may consider only issues
relating to the making and performance of the agreement to
arbitrate.15 Because Prima Paints fraudulent inducement claims
related to the entire contract, rather than merely the
arbitration clause itself, the Court concluded that the claims
should be adjudicated by arbitrators.16
In Southland Corp. v. Keating,17 the Supreme Court
fortified the Prima Paint holding and clarified that it applies
equally to state courts considering arbitrability under the FAA.
The Court emphasized:
We discern only two limitations on the
enforceability of arbitration provisions
governed by the Federal Arbitration Act: they
must be part of a written contract evidencing
a transaction involving commerce and such
clauses may be revoked upon grounds as exist
at law or in equity for the revocation of any
contract.[18]
The Court then concluded that the FAA created a
substantive rule in both federal and state courts, foreclosing
state legislative attempts to undercut the enforceability of
arbitration agreements.19
The United States Supreme Court recently reaffirmed
this rule in Buckeye Check Cashing, Inc. v. Cardegna, a decision
issued after the superior courts ruling in the case now before
us.20 In Buckeye, John Cardegna brought a class action in state
court against Buckeye Check Cashing, alleging that Buckeye
charged usurious interest rates in violation of state laws.21 In
response, Buckeye moved to compel arbitration on the ground that
the loan agreements contained an arbitration clause providing
that [a]ny claim, dispute, or controversy . . . arising from or
relating to this Agreement . . . or the validity, enforceability,
or scope of this Arbitration Provision or the entire
Agreement . . . shall be resolved . . . by binding arbitration.22
The Florida Supreme Court upheld a denial of a motion to compel
arbitration on the grounds that (1) the underlying contract was
illegal, and (2) an arbitration clause in an illegal contract
could not be enforced.23 The United States Supreme Court
reversed.
The Supreme Court rejected the Florida courts
conclusion that enforceability of the arbitration clause could
turn on application of state public policy to the underlying
contract24 and held that a challenge to the validity of the
contract as a whole, and not specifically to the arbitration
clause, must go to the arbitrator.25 The Court emphasized that
under federal law, the arbitration agreement is to be considered
separately from the remainder of the contract in determining
arbitrability.26 The Buckeye decision makes it clear that courts
may consider challenges of illegality to arbitration agreements
but not to the underlying contracts.27
Goldbelt Eagle attempts to distinguish Buckeye by
arguing that the arbitration clause in Buckeye was more
exhaustive than the clause at issue in this case. Although
Goldbelt Eagle is correct that this arbitration agreement is
drafted differently from the clause at issue in Buckeye, the
Supreme Courts holding in Buckeye was broad. It was not
predicated on a close reading of the agreement at issue in that
case; the Court did not parse the language of the agreement, nor
did it refer back to the language of the clause after initially
quoting it. Instead, the Court relied on several broad
principles: (1) an arbitration provision is severable from the
remainder of the contract; (2) the issue of the contracts
validity is considered by the arbitrator in the first instance;
and (3) this arbitration law applies in state as well as federal
courts.28 Thus, regardless of whether the arbitration agreement
at issue is identical to the agreement before the Court in
Buckeye, the Courts holding applies.
Buckeye does not change the basic rule that courts
determining arbitrability must interpret the agreement and
determine whether it governs the dispute at issue. However,
where the parties have agreed to submit a dispute to arbitration,
federal law does not permit a court to refuse to compel
arbitration based on a holding that the entire contract is void
for public policy.29
2. State arbitration law does not permit a court
deciding arbitrability to adjudicate the
enforceability of the underlying contract.
Lexington also argues that the superior court erred
under state law when it declared the underlying contract void.
We agree. Based on both the statutory language and the policy
behind Alaskas Arbitration Act, we hold that state arbitration
law aligns with federal law and does not permit a court
determining arbitrability to consider the validity of the
underlying agreement.
The language of the state statute supports our holding
that state arbitration law does not permit adjudication on the
merits of the underlying agreement. The text of AS 09.43.010(a),
which mirrors FAA 2, suggests that a court may only resolve
public policy challenges when such claims are directed at the
arbitration clause itself. Buckeye30 and Prima Paint31 have
interpreted the analogous federal provision to require a court to
enforce the arbitration clause unless a party asserts standard
contract defenses, such as fraudulent inducement or void for
public policy, against the arbitration clause itself. Alaska
Statute 09.43.010(a) provides:
[A] provision in a written contract to submit
to arbitration a subsequent controversy
between the parties is valid, enforceable,
and irrevocable, except upon grounds that
exist at law or in equity for the revocation
of a contract.[32]
This provision does not provide that the arbitration agreement is
not enforceable if grounds exist for revocation of the contract
that underlies the agreement. Instead, it dictates that the
agreement is not enforceable if grounds . . . exist . . . for
revocation . . . of a contract.33 In other words, under AS
09.43.010, a court may properly adjudicate claims that the
arbitration clause itself is void, but not claims that the entire
contract is void.
Alaska Statute 09.43.020 also indicates that courts
deciding arbitrability should not adjudicate the enforceability
of the underlying contract. Subsection (a) indicates that courts
should address arbitration provisions separately from the
underlying contract. The statute mirrors FAA 4 and states that
if the opposing party denies the existence of the agreement to
arbitrate, the court shall proceed summarily to the determination
of the issue and if the agreement is found to exist shall order
arbitration.34 Similarly, under subsection (b) of the statute,
the court may stay an arbitration proceeding commenced or
threatened on a showing that there is no agreement to arbitrate.35
Like FAA 4, this provision provides for the court to decide
issues related to the arbitration agreement itself, but does not
provide jurisdiction to decide separate issues relating to the
validity of the underlying contract. These provisions support
the view that arbitration clauses are severable from the entire
contract and thus may be properly enforced even when it is
claimed that the underlying contract is void.
Strong public policy rationales support this position.
Like federal law, state law strongly favors arbitrability. We
have previously recognized the strong public policy in favor of
arbitration.36 Given this policy, we have indicated that we . . .
allow ambiguous contract terms to be construed in favor of
arbitrability where such construction is not obviously contrary
to the parties intent.37 Forbidding courts from examining the
merits of a dispute or the validity of the underlying contract
furthers the primary benefit of arbitration expeditious and
inexpensive dispute resolution for the parties.38 This policy
would be frustrated if parties could avoid arbitration by
challenging the validity of the underlying agreement.
Although the superior court noted the states strong
presumption in favor of arbitrability, it reasoned that it would
be illogical to refer the case to an arbitrator simply so that
the arbitrator could decide that he or she lacked the power (or
jurisdiction) to arbitrate. However, arbitrability is a matter
of contract, and there is no reason to assume that submitting the
validity of the underlying contract to the arbitrator is not
appropriate where the parties so intended.39
The superior court relied on our decision in Willis
Flooring, Inc. v. Howard S. Lease Construction Co. & Associates.40
In Willis, we held that an arbitration provision was not
unenforceable for lack of mutuality where arbitration was the
sole option of one party.41 Our holding was premised upon the
notion that an arbitration clause does not require separate
consideration so long as the underlying contract is supported by
consideration because the contract and arbitration clause
constitute a unitary, integrated contract, not a series of
independent agreements.42 But this notion is consistent with the
Prima Paint and Buckeye rule that courts deciding arbitrability
are not to adjudicate the validity of the underlying agreement.
As several courts have reasoned, interpreting Prima Paint to
require separate consideration for an arbitration clause runs
contrary to the strong federal policy in favor of arbitration.43
Our holding in Willis is therefore consistent with federal law
and with our ruling today.
Alaskas arbitration law closely follows federal
arbitration law,44 and federal law has clarified that arbitration
clauses are severable from the underlying contracts for purposes
of challenges to the validity of the underlying agreement.
Determinations as to the validity of the underlying contract are
a matter for the arbitrator to decide. We therefore hold that
state arbitration law, like federal law, did not permit the
superior courts finding that the underlying contract was
unenforceable.
3. The dispute fell under the terms of the
arbitration agreement.
Our conclusion that the superior court erred under
federal and state arbitration laws when it declared the
underlying contract void does not end the matter. Because
arbitration is a matter of contract, parties can only be
compelled to arbitrate a matter where they have agreed to do so.45
Thus, we are required to decide whether the arbitration clause
covers this dispute. Goldbelt Eagle argues the superior court
correctly concluded that the dispute did not arise under the
agreement and was therefore not arbitrable under the terms of the
arbitration clause. We disagree. Although Goldbelt Eagle is
correct that arbitration is a matter of contract and a particular
dispute is not arbitrable unless the parties have agreed to
arbitrate it, we hold that this dispute falls easily within the
terms of the arbitration clause.
Although the superior court concluded that the dispute
did not arise under the contract, its ruling was predicated on
its finding that the contract was void for public policy reasons.
The superior court reasoned that [s]ince the agreement for
marketing services for commission was unenforceable following
Gnugnolis CP Leasing employ, no claims could arise under the
agreement thereafter. (Emphasis added.) The court concluded
that no disputes could arise under a void contract. As explained
above, this conclusion is precluded under both federal and state
law, which forbid courts from determining arbitrability based on
the validity of the underlying contract.
Lexington contends that its claim arise[s] directly
under the contract and fall[s] within the disputes that are
subject to the arbitration provisions. Goldbelt Eagle argues
that the arbitration clause at issue is narrow and did not extend
to the dispute at issue. Goldbelt Eagle suggests that the
agreement is narrow because it extends only to all disputes
arising under and does not include disputes as to the validity of
the agreement or related to or in connection with the agreement.
But Goldbelt Eagle cites no Alaska or federal cases declaring
that clauses that require arbitration of all disputes or claims
arising under the agreement must be narrowly read. And several
federal courts have declared that clauses referring to
arbitration disputes arising under or arising hereunder are
broad.46
Moreover, regardless of whether the clause is narrow or
broad, as a matter of contract interpretation, the arbitration
clause applies to this dispute. Goldbelt Eagle suggests that the
superior court properly concluded that the parties are disputing
whether the underlying contract was void. It reasons that such a
dispute revolves around a collateral matter. But Lexington is
seeking payment of a commission for services it contends were
provided under the contract. Thus, Lexingtons claim for payment
arises under the contract: it is seeking payment for services it
argues were provided under the terms of the agreement.
Arbitration of such a claim falls squarely within the arbitration
clauses agreement to submit [a]ll disputes or claims arising
under this Agreement to arbitration. (Emphasis added.) In light
of our strong policy favoring arbitration and our rule of
construction allowing even ambiguous contract terms to be
construed in favor of arbitrability,47 this dispute would be
arbitrable even if the contract term was ambiguous. Here, the
contract term is not ambiguous, and arbitration is consistent
with the parties intent to arbitrate claims arising under the
agreement. We therefore hold that Lexingtons claim falls within
the scope of the arbitration clause. Because we hold that the
superior court erred in declining to order arbitration based on
its finding that the underlying contract was void, we do not
address Lexingtons argument that the court erred in granting
summary judgment because parol evidence was in conflict.
IV. CONCLUSION
In this case, decided before Buckeye, the superior
court declined to refer the case to arbitration based on its
finding that the underlying contract was void as a matter of
public policy. Under Buckeye, such determinations are for the
arbitrator to make. We REVERSE and REMAND for proceedings
consistent with this opinion.
_______________________________
1 See 13 C.F.R. 124.1 (2006).
2 AS 09.43.020(a) provides:
On application of a party showing an
agreement described in AS 09.43.010, and the
opposing partys refusal to arbitrate, the
court shall order the parties to proceed with
arbitration, but if the opposing party denies
the existence of the agreement to arbitrate,
the court shall proceed summarily to the
determination of the issue and if the
agreement is found to exist shall order
arbitration.
3 Ahtna, Inc. v. Ebasco Constructors, Inc., 894 P.2d 657,
660 (Alaska 1995).
4 Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
5 Alakayak v. British Columbia Packers, Ltd., 48 P.3d
432, 447 (Alaska 2002) (internal citations omitted).
6 AT&T Techs., Inc. v. Commcns Workers of Am., 475 U.S.
643, 649 (1986).
7 Id.; see also Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83 (2002) (The question whether the parties have
submitted a particular dispute to arbitration, i.e., the question
of arbitrability, is an issue for judicial determination [u]nless
the parties clearly and unmistakably provide otherwise. (citing
AT&T Techs., Inc., 475 U.S. at 649)); First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (holding that [i]f . . .
the parties did not agree to submit the arbitrability question
itself to arbitration, then the court should decide that question
. . . independently).
8 798 P.2d 1281, 1285 (Alaska 1990) (quoting AT&T Techs.,
Inc., 475 U.S. at 649).
9 The superior court did not make a finding as to whether
the Federal Arbitration Act (FAA) applied to the dispute, but it
relied on both federal and state authorities in reaching its
conclusions. Because we hold that both federal and state laws
require arbitration, we need not resolve the issue of which law
binds the parties.
10 Moses H. Cone Meml Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24-25 (1983).
11 388 U.S. 395, 398-99 (1967).
12 Id. at 399.
13 Id. at 400.
14 Id. at 403.
15 Id. at 404.
16 Id. at 406-07.
17 465 U.S. 1 (1984).
18 Id. at 10-11 (internal citation omitted).
19 Id. at 16.
20 126 S. Ct. 1204 (2006). The superior courts decision
in this case was dated November 8, 2005. Buckeye was decided on
February 21, 2006.
21 Id. at 1207.
22 Id.
23 Id.
24 Id. at 1209.
25 Id. at 1210.
26 Id. at 1209.
27 Lexington interprets this severability to limit the
courts inquiry into only whether there is fraud, duress, or
unconscionability in the arbitration clause. But in every case,
the court must interpret the arbitration clause to determine
whether it extends to the dispute at issue. As part of this
determination, the court may only consider fraud allegations
relating to the arbitration agreement itself.
28 Id. at 1209 (extracting general rules from Prima Paint
and Southland Corp.)
29 It is not the case that the appellee is without
recourse if the underlying contract is void. Federal law simply
dictates that such a determination is for the arbitrator not the
court. The superior court quoted the Wyoming Supreme Court and
reasoned that to refer the case to an arbitrator only to have him
determine that the contract by which he is vested with this
authority is void was illogical. See Fox v. Tanner, 101 P.3d
939, 949 (Wyo. 2004). But the United States Supreme Court
subsequently addressed this question, deciding in Buckeye that
the FAA requires such a referral.
30 126 S. Ct. at 1209.
31 388 U.S. at 404.
32 Compare 9 U.S.C. 2:
A written provision in any maritime transaction or
a contract evidencing a transaction involving
commerce to settle by arbitration a controversy
thereafter arising out of such contract or
transaction, or the refusal to perform the whole
or any part thereof, or an agreement in writing to
submit to arbitration an existing controversy
arising out of such a contract, transaction, or
refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at
law or in equity for the revocation of any
contract.
(Emphasis added.)
33 AS 09.43.010(a) (emphasis added); cf. 9 U.S.C. 2
(using the similar phrase, revocation of any contract) (emphasis
added).
34 Compare 9 U.S.C. 4:
The court shall hear the parties, and upon
being satisfied that the making of the
agreement for arbitration or the failure to
comply therewith is not in issue, the court
shall make an order directing the parties to
proceed to arbitration in accordance with the
terms of the agreement.
(Emphasis added.)
35 AS 09.43.020(b) (emphasis added).
36 Univ. of Alaska v. Modern Constr., Inc., 522 P.2d 1132,
1138 (Alaska 1974).
37 Id.; see also Ahtna, 894 P.2d at 662 n.7 ( An order to
arbitrate the particular grievance should not be denied unless it
may be said with positive assurance that the arbitration clause
is not susceptible to an interpretation that covers the dispute.
Doubts should be resolved in favor of coverage. (quoting United
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-
83 (1960))).
38 See, e.g., Prima Paint Corp., 388 U.S. at 404
(recognizing the unmistakably clear congressional purpose that
the arbitration procedure, when selected by the parties to a
contract, be speedy and not subject to delay and obstruction in
the courts).
39 During oral argument, Goldbelt Eagle suggested that the
superior courts ruling that the contract was void for public
policy could be binding on the arbitrator even if we reverse.
But because we hold that the superior court did not have
jurisdiction to rule on the merits of the underlying contract,
the ruling has no preclusive effect, and the courts vacated
determination is not binding. See 18A Charles Alan Wright &
Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure
4432 (2d ed. 2002) (There is no preclusion as to the matters
vacated or reversed . . . . [I]f the appellate court requires
dismissal of the case for want of jurisdiction in the trial
court, preclusion cannot be revived by attempting to show that
the trial led to an otherwise proper determination on the
merits.) (internal citations omitted).
40 656 P.2d 1184 (Alaska 1983).
41 Id. at 1184-85.
42 Id. at 1185.
43 See, e.g., Glazer v. Lehman Bros., Inc., 394 F.3d 444,
453-54 (6th Cir. 2005); see also Doctors Assocs., Inc. v.
Distajo, 66 F.3d 438, 452-53 (2d Cir. 1995).
44 See, e.g., Ahtna, 894 P.2d at 662 n.7 (citing with
approval the approach of the United States Supreme Court in
arbitration law).
45 AT&T Techs., 475 U.S. at 648 (Arbitration is a matter
of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.)
(internal citations and quotations omitted).
46 See, e.g., Battaglia v. McKendry, 233 F.3d 720, 723-25
(3rd Cir. 2000) (holding that clause providing for arbitration of
any controversy [that] arises hereunder was sufficiently broad to
encompass counterclaim that agreement was void since inception);
Gregory v. Electro-Mechanical Corp., 83 F.3d 382 (11th Cir. 1996)
(holding that clauses providing for arbitration of disputes
arising under a contract are broad and refusing to distinguish
between arising under and arising out of); Building Materials &
Constr. Teamsters Local No. 216 v. Granite Rock Co., 851 F.2d
1190, 1194 (9th Cir. 1988) (By providing that [a]ll disputes
arising under this agreement shall be resolved through
arbitration, the parties agreed to submit all grievances to
arbitration, not merely those which the court will deem
meritorious. ) (internal citations and quotations omitted).
47 Modern Constr., 522 P.2d at 1138.
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