*1 SD 30 UNIVERSITY, DAKOTA WESLEYAN Appellee,
Plaintiff INC., INTERNATIONAL, Appellant.
Defendant and 19484, 19485.
Nos.
Supreme Court Dec. 1996. on Briefs
Considered March 1997.
Decided Theeler, Cogley, F. Melissa S. John
John Theeler, Cogley Morgan, & Pet- O’Rourke Mitchell, appellee. ersen, plaintiff for Marso of Pashby and Hansen Gary J. Lisa Greenfield, Boyce, Murphy, McDowell & Falls, appellant. for defendant and Sioux MILLER, Justice. Chief (DWU) University Wesleyan Dakota against HPG Interna- an action commenced (HPG), tional, corporation, a New York alleged damages breach for to recover roofing project warranty in connection with concluded campus. The trial court on its dispute that the agreement of the to the written pursuant However, found the the trial court parties. provision of the arbitration *2 922 jurisdiction our in this mat- [¶ 5.] unreasonable and ordered that arbitra- Because
to be § precluded by pro- which apply ter is USC place in South Dakota and tion take interlocutory appeals hibits immediate of or- appeals York law. HPG the trial New we dismiss the ders ruling regarding of the arbitra- court’s situs appeal. appeal. tion. dismiss the We DECISION
FACTS The Federal Arbitration Act [¶ 6.] surrounding quality 2.] The facts (FAA) preempts governs state law and all subject or in the roof are immaterial defects agreements written arbitration in contracts say, appeal. specifi- to it to this Suffice involving interstate Allied- commerce. project required cations of the roof bidders Cos., Inc. Bruce Terminix and Terminix ten-year provide to a roof membrane with a Co., Dobson, 265,-, Int’l v. 513 U.S. warranty watertightness renewable to cov- (1995). 834, 838, 130 L.Ed.2d S.Ct. required materials and labor to re- er both parties clearly As the contract between these pair by leaks caused structural movement. commerce, involves interstate we turn to the provided by Dynam- The roof membrane was guidance determining FAA for in whether America, (Dynamit) it Nobel of and war- compel the circuit court’s order to arbitration interest, by Dynamit’s in ranted successor appealable. HPG. warranty con- [¶ 3.] roof membrane FAA, [¶ 7.] The codified as amended “ provision disputes tained a for arbitration of 1-16, §§ at 9 evidences a fed USC ‘liberal ” arising agreements from the which policy favoring agreements.’ eral arbitration Co., provided: Thorp v. Discount Gammaro Consumer (8thCir.1994) (quoting Gilmer below, provided any controversy Except as Corp., Lane Interstate/Johnson arising relating or claims out of or to this 20, 25, 1647, 1651, S.Ct. L.Ed.2d thereof, Agreement, or the breach shall be (1991)). pro-arbitration policy This “en by settled arbitration in accordance with promote appeals to deavor[s] from orders Industry the Construction Arbitration barring appeals arbitration and limit from Rules of the American Arbitration Associa- Filanto, directing orders arbitration.” tion, Office, Regional at the New York and S.P.A v. Chilewich Int’l judgment upon by the award rendered (2dCir.1993). Appeals from orders con Arbitrator(s) may any be entered in Court cerning agreements are limited having thereof. specifically § enumerated at 9 USC 16: Shortly completion pro- after of the (a) may An be taken from— ject, began experience problems DWU to (1) an order— leakage. problems with roof These contin- (A) refusing any action un- years repairs ued for a number of to the title, der section 3 of this remedy problem. roof failed to Eventu- ally, replaced DWU the roof membrane and (B) denying petition under section repaired damage at the water its own ex- to order this title pense. brought against suit al- HPG proceed, leging warranty. (C) denying application an under sec- mandatory enforce the in arbitration clause compel tion 206 of this title to arbitra- documents. The trial court tion, compelled arbitration but concluded that the (D) confirming denying confirma- or provision of the was unrea- award, partial tion of an award or or court, therefore, sonable. The trial ordered (E) place that the arbitration in Da- modifying, correcting, vacating take or award; apply kota and New York law. an proceedings (2) con- “Embedded” interlocutory granting, an “ modifying injunction in seeks ‘some which tinuing, or requiring pro that is other than an order or against an arbitration relief title; (typically hibiting some relief con *3 cerning allegedly the merits of the arbitrable (3) respect an with to a final decision ” Gammaro, (quot F.3d at 95 dispute).’ 15 subject title. that is to this arbitration 60). Filanto, ing denying 984 F.2d at Orders (b) provided in sec- Except as otherwise proceedings im arbitration in embedded are 1292(b) 28, may appeal not tion of title 16(a)(1)(A)- § mediately appealable. 9 USC interlocutory order— taken from an be (a)(2). (C), also Assocs. v. See Com-Tech Inc., 1574, Computer Assocs. In’l 938 F.2d (1) any under granting a action (2dCir.1991) (allowing appeal of anti- title; section 3 of this case). order in embedded Orders arbitration (2) directing proceed to un- arbitration proceed compelling arbitration in embedded title; 4 of this der section ings immediately appealable. Filan are not (3) compelling under section arbitration to, effect, pro- at 60. “In the 984 F.2d title; of this that, requires tilt of the statute actions, respect with to embedded the (4) refusing enjoin an that to opposing arbitration must bear the initial subject to this title. is consequence of an district court erroneous pro-arbitration policy has not This [¶ 8.] requiring Id. at 61. decision arbitration.” the fully implemented, however. While been in The limited circumstances which [¶ 11.] may appeal “an not be provides statute that appeals allowed under the FAA are con- are interlocutory ... direct- from an order taken “strong congressional policy sistent with the proeeed[,]” 9 ing arbitration USC delay 16(b)(2), provides against appeals that the onset of arbi- § the statute also Stedor, By final appeal may taken from ... a at 728. limit- be tration.” F.2d “[a]n respect arbitration[.]” with to an ing appeals compelling decision from orders arbitra- 16(a)(3). provisions upon § These build tion, USC previously recognized distinction between
the
sought
prevent parties from
Congress
so-
‘independent’
“so-called
through lengthy
frustrating arbitration
Gammaro,
proceedings.”
called ‘embedded’
that, “if
appeals by providing
preliminary
Filanto,
at
(quoting
at 95
984 F.2d
15 F.3d
that arbi-
determine[s]
the district court
60).
for,
system’s in-
called
the court
tration is
process will
with the arbitral
terference
“independent” pro
A suit is an
[¶ 9.]
there, leaving the arbi-
then and
terminate
only
court
ceeding
the
issue before the
when
go
tration free to
forward.”
dispute
the
to arbitra
is whether
sought by the
no other relief is
tion and
Sugar
Sugar
Local
Domino
Workers
Int’l, Inc.,
parties. McDermott
v. Under
1067 (4thCir.1993)
(quoting Ste
Lloyd’s,
F.2d
writers
at
730).
dor, 947
at
F.2d
denied,
951, 113
(5thCir.),
S.Ct.
cert.
presents a
case at hand
[¶ 12.] The
Filanto,
(1993);
2442, 124
L.Ed.2d 660
on
proceeding. DWU sued
classic embedded
Armtex,
60;
Ltd. v.
F.2d at
Stedor Enters.
warranty,
contract,
alleging breach
(4thCir.1991);
Inc.,
Matter
the action.
moved to dismiss
and HPG
Chung
Enters.
and President
the arbitration clause
trial court concluded
(2dCir.1991).
only
If the
F.2d
227-28
applicable, but found the
required, the
arbitration is
issue is whether
and, accord
provision unconscionable
party op
independent and the
proceeding is
agreement to
ingly,
amended
immediately
may
posing arbitration
place in
Filanto,
arbitration to take
South
require the
compelling arbitration.
the order
not
trial court did
dismiss
Dakota. The
for the provisions, upon center
tions courts to determine.*
it is for the does not assert that
FSupp at 1022. DWU warranty contract is unconsciona
the entire
ble; only contrary, it claimed uncon- on the
scionability in relation to the situs clause.
Therefore, not to treat its there is no reason unconscionability exactly as we
claim of fraud, i.e., judicial claim of resolve it
would a See,
ly on the merits is issued. before Co.,
e.g., Deere 306 N.W.2d Johnson John (S.D.1981), court 236-37 where this dis *5 unconscionability,” which “procedural
cussed contract, making process of
deals with
including meaningful whether there was terms, and noted that “White &
choice suggests proximates it
Summers duress.”
common law of fraud and I merits of the would reach the
[¶21.]
unconscionability presents ques- it as and an will not affect
tion of law issue which arbitrability disputes that fit within (i.e., clause the breach of war- claim).
ranty KONENKAMP, J., joins this 22.]
dissent.
In Matter of the Petition for Declara-
tory Ruling of NORTHWESTERN PUB- Regard with
LIC SERVICE COMPANY City.
to Electric Service to Hub
Nos. 19528.
Supreme Court of South
Argued Sept. 1996. April
Decided 1997. * being at this time. Clearly, done in this case HPG should not be denied the benefit law, disputed question appellate review of a as