Rhode Island Council on Postsecondary Education v. Hellenic Society Paideia

Background

In 2005 URI and the Rhode Island Council on Postsecondary Education (plaintiffs) executed a long-term ground lease with Hellenic Society Paideia (defendant) to build a Hellenic Studies Center; construction stalled after foundation work and was never completed.
Lease term: initial 99 years with options to extend; plaintiffs issued notices in 2012–2013 declaring default and demanding restoration because construction was not completed within the contractually required period.
Plaintiffs sued in Superior Court seeking declaratory relief, damages, and/or an order to restore the premises; defendant moved to stay litigation in favor of arbitration under R.I. Gen. Laws § 10-3-3.
Section 14.3 of the Lease contains a two-part dispute-resolution clause: (1) conciliation for “any controversy, claim or dispute arising out of or relating to this Lease or with respect to any breach hereof,” and (2) arbitration if “the parties fail to resolve any such controversy, claim or dispute” after 30 days.
Superior Court denied the motion to stay, reasoning the arbitration clause omitted the phrase “with respect to any breach hereof” and thus did not cover lease-breach claims; defendant appealed to the Rhode Island Supreme Court.
The Supreme Court reversed: reading §14.3 as a whole, the term “such” in the arbitration subsection incorporates the conciliation clause’s scope (including breaches); plaintiffs’ reservation of “rights and remedies” did not evince an intent to litigate rather than arbitrate.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Lease requires arbitration of all disputes arising out of or relating to the Lease, including alleged breaches	The reservation of "rights and remedies" (Art. X §10.2.1) and specific default remedies show parties may litigate breach claims; arbitration clause omits "with respect to any breach hereof," so breaches are excluded	Section 14.3 mandates conciliation for any controversy arising from the Lease (including breaches) and, if conciliation fails, the parties must arbitrate such disputes; the word "such" ties arbitration to the conciliation scope	The Court held arbitration applies to any controversy, claim, or dispute arising out of or relating to the Lease, including alleged breaches, after the conciliation step fails.
Whether the reservation-of-remedies clause negates exclusivity/mandatoriness of arbitration	Plaintiffs: §10.2.1’s "rights and remedies" language preserves access to courts and shows no clear agreement to arbitrate breaches	Defendant: "rights and remedies" refers to the substantive relief available (damages, specific performance), not the forum; arbitrary reservation doesn’t override arbitration clause	The Court held the reservation merely preserves the spectrum of remedies (including equitable relief) available to an arbitrator and does not negate the arbitration requirement.
Whether the parties satisfied the conciliation prerequisite before arbitration	Plaintiffs argued conciliation was satisfied or that arbitration still should not be mandatory	Defendant pointed to years of attempts to reconcile and the notices exchanged, satisfying §14.3.1	The Court found the parties had attempted conciliation over several years; therefore, the dispute is ripe for arbitration under §14.3.2.
Whether the denial of a stay under §10-3-3 is an appealable final order	Plaintiffs: Denial means no arbitrable issue exists so the Arbitration Act doesn’t apply; appeal not available	Defendant: §10-3-19 permits direct appeals from any ruling authorized by chapter 3, including denial orders	The Court held §10-3-19 allows a party aggrieved by an order denying a §10-3-3 stay to appeal as of right.

Key Cases Cited

Town of Johnston v. Rhode Island Council 94, AFSCME, Local 1491, 159 A.3d 83 (R.I. 2017) (arbitrability is reviewed de novo)
AVCORR Management, LLC v. Central Falls Detention Facility Corp., 41 A.3d 1007 (R.I. 2012) (contract language can limit arbitration to specific disputes)
State Department of Corrections v. Rhode Island Brotherhood of Correctional Officers, 866 A.2d 1241 (R.I. 2005) (duty to arbitrate arises only from clear and unequivocal contractual language)
Radiation Oncology Associates, Inc. v. Roger Williams Hospital, 899 A.2d 511 (R.I. 2006) (apply general contract-construction rules to arbitration clauses)
School Committee of Town of North Kingstown v. Crouch, 808 A.2d 1074 (R.I. 2002) (resolve doubts about arbitrability in favor of arbitration)
United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593 (1960) (federal policy favors arbitration where parties agreed)