DOCUTEL OLIVETTI CORPORATION, Plаintiff and Respondent, v. DICK BRADY SYSTEMS, INC., and Richard Brady, Defendants and Appellants.
No. 20835.
Supreme Court of Utah.
Dec. 15, 1986.
731 P.2d 475
The Board of Review found support for its excuse of the claimant‘s lack of self-control in the statement made by her employer which is quoted in the majority opinion. That reliance was misplaced. His statement was only that he did not think the claimant was “malicious” or that her actions were “willful.” Those comments, coming from a relieved employer, were charitable but in no way form a basis for the Board‘s conclusion that claimant was unable to conform her speech and conduct to a standard of acceptable behavior. Even the claimant did not testify that she was unable to control herself. Moreover, to constitute “just cause” for discharge, the employee‘s conduct need not rise to the level of “malicious” or “willful.”
I find that the culpability, knowledge, and control factors outlined in Kehl v. Board of Review, 700 P.2d 1129, 1133-34 (Utah 1985), were met and satisfied here, and that therefore just cause existed for the claimant‘s discharge. She had knowledge that her behavior was unacceptable. She had been counselled on previous occasions. Her outbursts of temper and ill-mannered remarks to customers and employees were clearly within her power to control, if she wanted to do so. Her failure to conform after repeated warnings constituted culpable behavior that was clearly adverse to the employer‘s interests. In a competitive marketplace, customer goodwill and employee loyalty and morale are valuable assets. An employer cannot allow those assets to be put in jeopardy because а manager refuses to act civilly toward others. The majority argues that because her ill behavior did not reduce gross receipts in 1984, there is no reason to think that her behavior was responsible for the drop in receipts in early 1985. That does not follow. The seeds of misconduct sown in 1984 produced their harvest in 1985. Even at the time of the hearing on claimant‘s application for benefits, which was held two months after her discharge, the receipts had not rebounded although other restaurants owned by the employer had recovered from a seasonal slump. The employer had an independent firm make a market-track study of the restaurant and found considerable negative customer reaction. The claimant was at the core of the problem and the employer had every “just cause” to remove her.
Lynn G. Foster, John R. Merkling, Salt Lake City, for defendants and appellants.
Gordon R. McDowell, Jr., Salt Lake City, for plaintiff and respondent.
Defendants Dick Brady Systems, Inc., and Richard Brady appeal from an order of the Third District Court denying a motion to dismiss or stay this action pending arbitration.1 We reverse.
On February 17, 1982, Dick Brady Systems, Inc. (“Systems“), and Olivetti Corporation (“Olivetti“), a predecessor to plaintiff Docutel Olivetti Corporation (“Doсutel“), entered into a contract under which Systems became an authorized Olivetti dealer. Paragraphs 10 and 12 of that agreement are at issue in this controversy. Paragraph 10 provides:
Dealer [Dick Brady Systems] hereby grants Olivetti a security interest in all Olivetti brand equipment and inventory which Dealer presently owns or may hereafter acquire and any additions or accessions thereto and the proceeds thereof. Dealer authorizes Olivetti to sign and file financing statements in favor of Olivetti. Upon request, Dealer agrees to execute such financing statement(s). If an event of default by Dealer occurs under any credit agreement with Olivetti, Olivetti may, among other remedies, avail itself of any remedy in effect now or at the time of default under the Uniform Commercial Code or any similar statute. In the event Olivetti successfully brings legal action against Dealer for the collection of an unpaid account, Dealer agrees to pay all reasonable collection costs and legal expenses including reasonable attorney‘s fees.
Paragraph 12 states:
All disputes arising under this Agreement or pertaining in any manner to the dealership created by this Agreement shall be resolved by arbitration by an Appeal Board in aсcordance with the then-current Commercial Arbitration Rules of the American Arbitration Association (“A.A.A.“).
On the same day the agreement was signed, Richard Brady signed a personal guaranty for all debts owed to Olivetti by Systems.
On January 24, 1985, Docutel filed a complaint against Systems and Richard Brady in Third District Court, seeking recovery of a debt allegedly owed to Docutel. Docutel alleged four theories of recovery оf the same debt as separate “claims” in the complaint: (1) a $49,252.60 claim against Sys-
Defendants did not answer the complaint; instead, they filed a motion requesting that the state court dismiss or stay the state court action pending arbitration. Before the motion to dismiss or stay was heard, defendants placed their counterclaims and offsets in arbitration and filed a petition in the federal district court for Utah seeking relief pursuant to the Federal Arbitration Act,
On August 8, 1985, the federal district court judge2 issued an order and findings of fact and conclusions of law. He enjoined the parties from litigating the third cause of action in either state or federal court, but allowed litigation of the fourth cause of action. The federal judge enjoined further litigation of the first and second causes of action except to the extent that the state court determined that those claims were based on separate credit agreements for collection of unpaid accounts or otherwise, pursuant to paragraph 10 of the dealership agreement.3 The Utah district court had made nо determination in its earlier order of whether the first and second causes of action were in fact covered by paragraph 10.
Docutel contends that this Court lacks jurisdiction to review the district court‘s denial of defendants’ motion to stay. This contention is without merit. We hold, for reasons set forth below, that we have jurisdiction pursuant to
Section 78-31a-19 became effective April 29, 1985, several months before defendant filed the notice of appeal in this action; Docutel‘s position is that section 78-31a-19 is not applicable to this action because its complaint was filed before the effective
In Higgs, the State of Utah filed a complaint seeking our review of an administrative order sustaining employee grievances against the State. The State alleged error in the district court‘s refusal to apply a statute in effect at the time the action was commenced. The Grievance Procedure Act in effect at the commencement of the action allowеd appeal to the district court after the completion of a five-step administrative procedure. After the action was commenced, but before a complaint was filed in the district court seeking review of the administrative ruling, the Grievance Act was replaced by the Personnel Management Act, which required a six-step administrative procedure before a right to judicial review accrued. We determined that the method for obtaining judicial review was procedural not substantive and that the State was therefore required to complete the six-step procedure provided in the later Act prior to seeking judicial review.
In deciding Higgs, we relied upon Boucofski v. Jacobsen, 36 Utah 165, 171-72, 104 P. 117, 119 (1909), in which we held that a statute allowing trial judges to make additional findings of fact and conclusions of law after entry of judgment applied to actions pending whеn the statute became effective. We reasoned that a statute is procedural when it provides a remedy for already existing rights or merely adds to or provides a substitute for already existing remedies. Id. at 171-72, 104 P. at 119 (citation omitted). We also determined that considerations of “convenience, reasonableness and justice” should be taken into account in making determinations of legislative intent. Id. at 172, 104 P. at 119-20.
Sectiоn 78-31a-19 grants no new substantive rights to plaintiffs; it simply accelerates their already existing right to appeal and is thus procedural.
Furthermore, allowing defendants to appeal immediately the district court‘s denial of their motion to compel arbitration is in harmony with our policy of promoting arbitration when the parties have agreed to settle their disputes through that mechanism. See Lindon City v. Engineers Construction Co., 636 P.2d 1070, 1073 (Utah 1981).
Docutel also asserts that the Utah Arbitration Act conflicts with the Federal Arbitration Act,
Docutel further contends that the new Utah Arbitration Act conflicts with the Federal Arbitration Act as interpreted by the federal trial judge. By this, Docutel means that the federal court judge ordered litigation of this dispute under one of Docutel‘s claims, while leaving open for decision the question of whether separate credit agreements existed under two of the other claims. Nowhere does the Federal Arbitration Act authorize federal district courts to
Thus, we treat the issue central to this appeal: did the Utah district court err in interpreting the contract as not requiring arbitration of Docutel‘s collection claim.6 This issue is one of law, and we are not required to defer to the trial judge‘s interpretation. Jones v. Hinkle, 611 P.2d 733, 735 (Utah 1980).
The contract draftеd by Docutel is not a model of clarity. Paragraph 10 of the agreement apparently provides for litigation of claims arising under credit agreements. Paragraph 12, however, states: “All disputes arising under this Agreement or pertaining in any manner to the dealership created by this Agreement shall be resolved by arbitration by an Appeal Board....” Docutel has not presented evidence of any credit agreement; rather, it relies on a broad assertion that the money it seeks from defendants is due under the terms of the dealership agreement and therefore under a “security interest” created by paragraph 10. However, the agreement provides only for litigation of claims arising out of credit agreements. The dealership agreement itself contains no provisions granting credit to defendants; therеfore, we hold that Docutel has failed to bring its claim within paragraph 10 of the agreement.
Further, assuming arguendo that Docutel‘s claim is properly within paragraph 10, we would nevertheless resolve a conflict between paragraph 10 and the arbitration clause of paragraph 12 in favor of the latter. Docutel drafted the agreement, and we interpret ambiguities in it against the drafter. Park Enterprises v. New Century Realty, 652 P.2d 918, 920 (Utah 1982). This principle of interprеtation is particularly appropriate when, as here, the ambiguity could have easily been avoided. If Docutel had intended to exclude any provision from the arbitration clause, it could have done so simply by adding the phrase “except as provided in paragraph 10” to the arbitration clause.
It is our policy to interpret arbitration clauses in a manner that favors arbitration. In Lindon City v. Engineers Construction Co., we stated:
[Arbitration] is a remedy freely bargained for by the parties, and “provides a means of giving effect to the intention of the parties, easing court congestion, and providing a method more expeditious and less expensive for the resolution of disputes
....
Arbitration clauses should be liberally interpreted when the issue contested is the scope of the clause. If the scope of an arbitration clause is dеbatable or reasonably in doubt, the clause should be construed in favor of arbitration....
636 P.2d at 1073 (quoting King County v. Boeing Co., 18 Wash.App. 595, 602-03, 570 P.2d 713, 717 (1977)).
Our interpretation of the contract in favor of arbitration is therefore in keeping with our policy of encouraging extrajudicial resolution of disputes when the parties have agreed not to litigate. This policy is shared by the federal courts. Stateside Machinery Co. v. Alperin, 591 F.2d 234, 240 (3d Cir.1979);
HALL, C.J., and STEWART and ZIMMERMAN, JJ., concur.
HOWE, Justice: (concurring and dissenting).
I concur in that part of the Court‘s opinion which holds that we have jurisdiction of this appeal. However, I dissent from that part holding that the trial court erred in interpreting the contract as not requiring arbitration of plaintiff‘s collection claim.
The majority opinion gives no legal effect whatever to pаragraph 10 of the parties’ agreement. I believe that the following principle of contract interpretation found in the Restatement (Second) of Contracts § 203(c) is applicable: “Specific terms and exact terms are given greater weight than general language.” In paragraph 10 of their agreement, the parties specifically provided that in the event of default by the dealеr under any credit agreement with Olivetti, the latter may bring legal action for collection of an unpaid account and may avail itself of any remedy, including those contained in the Uniform Commercial Code. The dealer agrees to pay reasonable collection costs and legal expenses, including reasonable attorney fees. These provisions smack of court action, not arbitration.
The trial court and the U.S. District Court for the District of Utah properly interpreted paragraph 10 as not requiring arbitration of any dispute arising out of a credit agreement between the parties. Both courts concluded that the plaintiff‘s first, second, and fourth causes of action could be maintained in court. I agree with that conclusion since they appear to arise from the extension оf credit by the plaintiff to the defendants. The majority opinion argues that “Docutel has not presented evidence of any credit agreement.” That, of course, is literally true since this case has not proceeded past the pleading stage. No discovery has been conducted. However, a cursory survey of the pleadings indicates that the first, second, and fourth causes of action seek to recover money from the defendants for goods sold and delivered to them by the plaintiff under an extension of credit. This showing certainly is sufficient to get the plaintiff past a dismissal of its suit at this juncture and put the plaintiff to its proof at trial.
The majority in footnote 3 expresses concern that inconsistent results might come from court action and arbitration. That will not occur since the third cause of actiоn, which will be arbitrated, alleges that Dick Brady Systems, Inc. is the alter ego of Richard Brady. If the plaintiff prevails on this third cause of action, Richard Brady will be personally liable for such debts of Dick Brady Systems, Inc. as may be found due and owing by the Court on the other causes of action. This would produce no inconsistent result.
I would affirm the judgment below.