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Klein v. Klein

Superior Court of Maine, Cumberland

March 9, 2017

JAMES D. KLEIN and MARGARET L. K. SELIAK Plaintiffs, MARK C. KLEIN Defendant, GEROLD K. V. KLEIN, JR., ELEANOR K. IYER, KATE E. KLEIN, PETER L. KLEIN, and MARGARET L. KLEIN Parties-in-Interest.

          ORDER ON PLAINTIFFS' MOTION TO CONFIRM ARBITRATION AWARD AND DEFENDANT'S MOTION TO STAY ARBITRATION OR VACATE ARBITRATION AWARD.

          Lance E. Walker Justice, Superior Court.

         Before the court is Plaintiffs' motion to confirm an arbitration award, and Defendant's motion to stay arbitration, deny Plaintiffs' motion to confirm, and/or vacate the arbitration award.

         I. Procedural History

         On August 1, 2016, attorney William Robitzek conducted mediation to settle a lawsuit regarding, inter alia, the division of royalties from a burn treatment. (D.'s Opp'n and Mot. Stay 1.) The mediation resulted in a Term Sheet with provisions whereby the parties indicated their intent to draft a settlement agreement, and to submit disputes as to the terms or implementation of the Term Sheet to Robitzek for binding arbitration. (Pl/s Mot Confirm, Arbitration Award ¶¶ 2-3.) The Term Sheet was signed by Plaintiffs, Defendant, and all Parties-in-Interest except Gerold K. V. Klein, Jr. (Id. ¶ 2 n. 1.)

         When disputes arose on the final language of the settlement agreement, the parties requested arbitration. (Id. ¶¶ 4-5; D.'s Opp'n and Mot. Stay 2.) By agreement, in lieu of a hearing, the parties submitted written materials to Robitzek. (D.'s Opp'n and Mot. Stay 2.) Robitzek issued his Arbitrator's Award on November 3, 2016.[1] (Pl's Mot. Confirm Arbitration Award ¶ 19.) On November 14, 2016, after several telephonic conferences following November 3, 2016 during which he considered requested changes to his Arbitrator's Award, Robitzek announced he would issue a final Amended Award on November 15, 2016. (Id. ¶¶ 21-23.) On that morning, Defendant contacted Robitzek to object to the issuance. (D.'s Opp'n and Mot. Stay 2-3.)

         On November 17, 2016, Plaintiffs filed a motion to confirm the Arbitrator's Award. On December 7, 2016, Defendant filed his opposition and a motion to stay arbitration and/or vacate the Arbitrator's Award. On December 20, 2016, Plaintiffs filed a reply in support of their motion to confirm.

         II. Discussion

         Maine strongly favors arbitration. Barrett v. McDonald Invs., Inc., 2005 ME 43, ¶ 16, 870 A.2d 146. An arbitration agreement or an arbitration provision in a written contract is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for contract revocation. 14 M.R.S. § 5927. The agreement can be a single document or writings exchanged between the parties. Roosa v. Tillotson, 1997 ME 121, ¶ 4, 695 A.2d 1196. General rules of contract interpretation apply, and the contract is interpreted to effect the parties' intentions as reflected in the written instrument, construed with regard for the subject matter, motive, and purpose of the agreement, as well as the object to be accomplished. Reg'l Sch. Unit No. 5 v. Coastal Educ. Ass'n, 2015 ME 98, ¶ 15, 121 A.3d 98. Part of what is bargained for is the arbitrator's contract interpretation. City of Lewiston v. Lewiston Firefighters Ass'n, 1AG, Local #785, 629 A.2d 50, 52-53 (Me. 1993.) The court will uphold the arbitrator's interpretation if it is a rational construction of the contract. Westbrook v. Teamsters Local No. 48, 578 A.2d 716, 717 (Me. 1990.)

The Term Sheet from the August 1, 2016 mediation provides, in pertinent part: (6) Disputes as to the meaning of these terms or its implementation, the parties agree to submit them to William Robitzek for binding arbitration, who shall have discretion to award attorneys' fees to the prevailing party.

         a. Stay of arbitration

         1. Validity of the Term Sheet

         The court may grant a stay of arbitration on a showing that there is no agreement to arbitrate. 14 M.R.S. § 5928(2). Parties are not ordered to arbitrate their dispute unless they have agreed to do so in writing. Patrick v. Moron, 2001 ME 6, ¶ 5, 764 A.2d 256. Determining substantive arbitrability, i.e., whether parties have made an arbitration agreement, is a function of the court. Westbrook Sch. Comm. v. Westbrook Teachers Asso., 404 A.2d 204, 207 (Me. 1979). However, the absence of a signature goes to the validity of an entire contract, and the validity of the whole contract is a question properly subject to arbitration. Stenzel v. Dell, Inc., 2005 ME 37, ¶ 15, 870 A.2d 133; see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 1806 (1967).

         Defendant argues there was no valid arbitration agreement because the Term Sheet was not signed by Gerold who was listed as one of the "Parties" on the Term Sheet, and that a November 16, 2016 email from Robitzek saying "whether there was ever a valid agreement to arbitrate" was "a matter that needed to be litigated" implied the arbitration provision may not be valid. (D.'s Opp'n and Mot. Stay 9-10.)

         Here, Robitzek's interpretation that the Term Sheet was a valid contract, implied by his performance of the arbitration despite the absence of Gerold's signature, was reasonable where the Term Sheet, including the arbitration provision, was negotiated during a long day of mediation, see Barrett,2005 ME 43, ¶ 22, 870 A.2d 146, and did not explicitly require all parties to sign to establish its validity. All parties, including Defendant, were aware Gerold did not sign, and yet they voluntarily invoked and participated in the subsequent arbitration, when they exchanged emails to establish a non-testimonial arbitration process and then submitted written materials as directed by Robitzek's September 30, 2016 arbitration order, evidencing their agreement to arbitrate their disputes as described in the Term Sheet. (Pl's Mot. Confirm Arbitration Award ¶¶ 2, 6, 8; D.'s Opp'n and Mot. Stay 2); Roosa,1997 ME 121, ¶ 3, 695 A.2d 1196. Defendant did not object to the arbitration process until November 15, 2016, after teleconferencing several times with Robitzek following the November 3, 2016 issuance of the Arbitrator's Award to press for amendments. (D.'s Opp'n and Mot. Stay 2.) Robitzek's email that the arbitration agreement's validity must be litigated is only a restatement of law which says the courts decide substantive arbitrability via either a motion to compel or stay, or a motion to vacate. 14 M.R.S. §§ 5928(2), 5938(1)(E); Anderson v. Banks,2012 ME 6, ¶ 13, 37 A.3d 915. The language of the arbitration provision ...


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