Case Information
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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Hillsborough-northern judicial district
No. 2018-0182
HOYLE, TANNER & ASSOCIATES, INC.
v.
150 REALTY, LLC & a.; MCLEAN COMMUNICATIONS, LLC v.
150 REALTY, LLC & a.;
AT COMM CORPORATION
v.
150 REALTY, LLC & a. Argued: March 6, 2019 Oрinion Issued: July 30, 2019 Sheehan, Phinney, Bass & Green, PA, of Manchester (James F.
Ogorchock, Megan C. Carrier, and Bryanna K. Devonshire on the brief, and Ms. Devonshire orally), for the plaintiffs.
*2 Hinckley, Allen & Snyder, LLP, of Manchester (Christopher H.M. Carter and Jamie S. Myers on the brief, and Mr. Carter orally), for the defendants.
DONOVAN, J. The defendants, 150 Realty, LLC and Harbour Links Estates, LLC, appeal orders of the Superior Court (Brown and Schulman, JJ.) denying their motions to dismiss or stay actions filed by the plaintiffs, Hoyle, Tanner & Associates, Inc. (HTA), McLean Communications, LLC (McLean), and At Comm Corporation. The trial court ruled that the plaintiffs’ claims relating to the defendants’ imposition of certain parking rules and fees did not fall within the scoрe of identical arbitration clauses included in each of the plaintiffs’ lease agreements. The Trial Court (Brown, J.) also granted partial summary judgment to HTA and McLean on their declaratory judgment claims, concluding that the defendants’ parking rules that assess fees for certain parking spaces were unenforceable. We affirm.
Accepting the allegations in the plaintiffs’ complaints to be true, Cluff-
Landry v. Roman Catholic Bishop of Manchester,
The agreements also contain identical provisions in a section captioned “applicable law,” that state:
a. In the event of default on the part of lessee under the terms of this Lease, lessor shall be entitled to choose the forum lessor deems appropriate for purposes of enforcing its rights under this agreement and collecting any sums due lessor hereunder. Specifically, lessor shall be able to, at lessor’s option, pursue collection and enforcement in the appropriate District or Superior Court, or lessor shall be entitled to pursue binding arbitration at lessor’s sole determination.
b. If lessor decides to submit any dispute between the parties pertaining to this leаse to binding arbitration, lessor shall still be entitled to prejudgment attachment remedies in District or Superior Court for purposes of securing any future judgment obtained through the arbitration process. . . . Lessor shall, in the first instance, have the right to select an arbitrator from the American Arbitration Association, with said arbitration to be *3 governed under the rules of the American Arbitration Association. Arbitration proceedings, including the selection of an arbitrator, shall be conducted pursuant to the rules, regulations and procedures in effect as promulgated by the American Arbitration Association.
. . . .
d. In the event that lessee initiаtes an action against lessor, whether by suit or by arbitration, lessee shall be required to bring such action in the appropriate forum in New Hampshire.
(Capitalization omitted).
In the years following the execution of the lease agreements, ODC assigned HTA and McLean additional parking spaces at 150 Dow Street pursuant to certain lease amendments. However, ODC never charged the plaintiffs a fee for parking. According to the plaintiffs, the original property owner included the cost of parking in the base rent paid by the lessees.
In early 2017, the defendants purchased 150 Dow Street from ODC and thus assumed a landlord-tenant relationship with the plaintiffs. In August 2017, the defendants notified the plaintiffs of new parking rules effective as of October 1, 2017. The new rules require tenant employee vehicles to display a valid front parking tag and a valid rear window parking sticker, and impose monthly fees upon the tenants to validate the parking tags and stickers.
In September 2017, HTA filed a complaint against the defendants in the trial court contesting the new parking rules. The complaint alleges breach of contract and anticipatory breach and requests, inter alia, an injunction, declaratory judgment, and damages. McLean filed a similar complaint, with an additional claim of breach of the covenant of good faith and fair dealing. In October 2017, At Comm also filed a complaint against the defendants in another trial court, alleging the same claims as those alleged in McLean’s complaint. After HTA and McLean initiated suit, the defendants filed demands for arbitration with the American Arbitration Association (AAA) alleging that the plaintiffs failed to comply with the new parking rules. Shortly thereafter, the Trial Court (Brown, J.) in the HTA action stayed the implementation of the new parking rules until the resolution of the underlying contractual disputes.
The defendants moved to dismiss the plaintiffs’ actions or, in thе alternative, stay the actions pending arbitration. They argued that the incorporation in the lease agreements of the AAA rules required that an arbitrator, rather than the court, decide whether the dispute was subject to arbitration. They also argued that, regardless of which forum decides this threshold question, the underlying dispute falls within the scope of the *4 arbitration clause and therefore must be resolved in arbitration. These motions were denied. Shortly thereafter, the Trial Court (Brown, J.) granted a motion for
summary judgment filed by HTA and McLean on their requests for declaratory judgment. Eventually, all three actions were consоlidated, and the parties filed a joint motion requesting the trial court’s approval of, inter alia, the plaintiffs’ nonsuit, without prejudice, of all remaining claims, and the parties’ stipulation that the trial court’s orders on the motions to dismiss and summary judgment applied to all of the consolidated cases. The trial court granted the motion, and this appeal followed.
On appeal, the defendants contend that the trial court erred in two respects. First, they argue that the parties “clearly and unmistakably intended that an arbitrator, not the court, determine any question of arbitrability.” Second, they argue that the dispute falls within the scope of the arbitration clause because the lease agreements allow the defendants to submit “any dispute” between the parties “pertaining to this Lease” to binding arbitration.
The defendants’ arguments require that we interpret the language of the
lease agreements. Because a lease is a form of contract, we construe a lease by
applying the standard rules of contract interpretation. Town of Ossipee v.
Whittier Lifts Trust,
When parties enter into an agreement to arbitrate certain disputes, the
resolution of those disputes falls within the jurisdiction of the arbitrator, rather
than the сourt. See RSA 542:2 (2007); see also John A. Cookson Co. v. N.H.
Ball Bearings,
We have long held that the court, and not the arbitrator, determines the
question of arbitrability. See Aetna Life & Cas. Co. v. Martin,
Accordingly, we must determine whether the parties “clearly and
unmistakably” provided for an arbitrator to decide arbitrability. In making this
determination, we do not consider either the scope of the аrbitration agreement
or the merits of the dispute. See Henry Schein, Inc. v. Archer and White Sales,
Inc.,
The lease agreements do not expressly state that an arbitrator must decide the question of arbitrability. However, in arguing that the question must be decided by an arbitrator, the defendants point to the reference to the AAA rules in subparagraph (b) of the lease agreement provisions that requires any arbitration proceeding initiated by the defendants to be governed by the AAA rules. Rule R-7(a) of the AAA’s Commercial Arbitration Rules and Mediation Procedures provides that the arbitrator “shall have the power to rule *6 on . . . the arbitrability of any claim or counterclaim.” Accordingly, the defendants contend that Rule R-7(a) “plainly delegates the issue of arbitrability to an arbitrator.” Therefore, according to the defendants, the lease agreements’ “incorporat[ion of] the AAA rules” demonstrates that the parties “clearly and unmistakably intended that an arbitrator, not the court, [would] determine any question of arbitrability.”
We have stated that the parties may agree to submit the arbitrability of
the dispute to the arbitrator either expressly or “implicitly by an arbitration
clause written broadly enough to include the issue of arbitrability within its
general subject matter.” School Dist. #42 v. Murray,
The defendants contend that courts in other jurisdictions have
“overwhelmingly [concluded] that arbitration clauses incorporating [the] AAA
rules by reference delegate jurisdictional questions to the arbitrator.” Indeed,
numerous federal circuit courts have concluded that an arbitration
agreement’s incorporation of the AAA rules “constitutes clear and unmistakable
evidence that the parties agreed to arbitrate arbitrability.” Oracle America, Inc.
v. Myriad Group A.G.,
By contrast, the lease agreements here give the parties the ability to
decide whether to submit a claim to arbitration or pursue the claim in a court
of law. Subparagraph (a) within the “applicable laws” provisions of the lease
agreements provides that, “[i]n the event of default on the part of [the plaintiffs]
under the terms of [the lease],” the defendants are entitlеd “to choose the forum
*7
[they] deem[] appropriate,” including “District or Superior Court,” for “purposes
of enforcing [their] rights under this agreement and collecting any sums” due to
them. Subparagraph (b) provides that the AAA rules govern only when the
defendants choose to pursue binding arbitration. Thus, reading these
provisions as a whole, see Moore v. Grau,
We recognize that subsection (a), by providing the defendants with the option to pursue a claim in court or in arbitration at their “sole determination,” arguably gives the defendants the power to compel arbitration. It is unclear whether subsection (d) gives the plaintiffs a similar power to сompel the defendants to submit to the forum of the plaintiffs’ choice. This observation, however, further highlights the lack of clarity as to the parties’ rights and obligations under the agreements, and, consequently, the intent of the parties when entering into the agreements. In light of these considerations, we cannot say that it is clear and unmistakable that the parties agreed, at the time of contracting, that an arbitrator, rather than the court, would decide the question of arbitrability based upon the reference to the AAA rules in subsection (b) alone.
The defendants argue that the forum selection provisions are “not sо
substantial as to defeat the obvious intent reflected in the Leases to delegate
issues of arbitrability to the arbitrator.” They cite cases from other
jurisdictions holding that the incorporation of the AAA or similar rules clearly
and unmistakably demonstrates the parties’ intent to arbitrate arbitrability,
even though the arbitration agreements also permit the parties to seek judicial
intervention under certain circumstances. See Oracle,
Here, the lease agreements do not require arbitration. Rather, they give
the parties the option to choose between submitting a dispute to arbitration or
pursuing a claim in a court of law. The provisions that permit thе parties to
bring an action in court, therefore, are not an exception to an arbitration
requirement; they are an alternative to arbitration altogether. Because of the
broad access to judicial relief provided by this alternative, we disagree with the
defendants that the forum selection provisions should be given little weight in
determining whether the parties intended to arbitrate arbitrability. Cf. BAYPO
Ltd. Partnership,
We conclude that, in the absence of any additional language
demonstrating an intent that the AAA rules govern the threshold question, it is
neither clear nor unmistakable that the parties intended to delegate the
arbitrability determination to an arbitrator given that the agreements expressly
provide each of the parties with the option of filing suit in court or seeking
arbitration. If the parties had intended that the references to the AAA rules be
construed to delegate the question of arbitrability to an arbitrator, regardless of
the choice of forum provisions, the parties could have included language that
clearly expressed that intent. The absence of such language is particularly
significant given our long-standing recognition that the court, rather than an
arbitrator, decides arbitration in the absence of clear and unmistakable
evidence providing otherwise. See Appeal of Town of Durham,
The defendants next argue that the trial court erred in concluding that the dispute was not subject to arbitration under the lease agreements. Reading select parts of subparagraphs (a) and (b) together, the defendants contend that these provisions entitle them to pursue binding arbitration to resolve “any dispute between the parties pertaining to” the lease agreements. Because the disputes at issue in the plaintiffs’ trial court actions and in the *9 defendants’ demands for arbitration “pertain” to the lease agreements, the defendants argue that the disputes must be arbitrated.
The defendants’ argument concerning the scope of the arbitration
provisions in the lease agreements presents a question of law for this court.
State v. Philip Morris USA,
Subparagraph (a) entitles the defendants to pursue binding arbitration at their “sole determination.” However, reading subparagraph (a) in its entirety establishes that the defendants have the right to compel arbitration “[i]n the event of default on the part of [the plaintiffs] under the terms of [the lease agreements], . . . for purposes of enforcing [their] rights under the agreement[s] and collecting any sums due [to the defendants] hereunder.” Thus, the scope of the defendants’ right to pursue binding arbitration under subparagraph (a) is limited to disputes that arise when the defendants seek to remedy a tenant’s default under the terms of the lease agreements.
Subparagraph (b) applies when the defendants “decide[] to submit any dispute between the parties pertaining to this Lease to binding arbitration.” However, subparagraрh (b) does not contain any substantive language indicating what types of disputes can be arbitrated. In particular, it contains no language that authorizes the defendants to compel binding arbitration with respect to any additional disputes beyond those disputes included in subparagraph (a). Thus, reading subparagraphs (a) and (b) together, we conclude that the lease agreements authorize the defendants to compel arbitration only when the dispute relates to a lessee’s default.
The defendants, however, argue that subparagraphs (a) and (b) provide two distinct triggers of arbitration rights. They assert that subpаragraph (a) provides arbitration rights in the event of a default, and subparagraph (b) provides arbitration rights in any dispute that pertains to the lease agreements. Although subparagraph (b) explains what happens if the defendants decide to submit a dispute to binding arbitration, subparagraph (a) is the only provision that provides the defendants with any right to compel arbitration, and limits that right to disputes relating to a lessee’s default. Subparagraph (b) provides the rules and procedures that apply when the defendants choose to submit a dispute to arbitration; its reference to “any dispute . . . pertaining to this Lеase” refers to the defendants’ ability to submit disputes to arbitration as set forth in subparagraph (a). Thus, subparagraph (a) provides the right to pursue *10 arbitration, while subparagraph (b) provides the rules that apply if the defendants elect to pursue arbitration.
These provisions, when read as a whole, demonstrate that subparagraph (b) applies only if the defendants choose to pursue arbitration under subparagraph (a), and cannot be read as providing a right to arbitration independent of that set forth in subparagraph (a). Therefore, we conclude that the agreements authorize the dеfendants to compel arbitration only in the event of a default. Reading subparagraph (b) as providing a separate right to pursue arbitration in broader circumstances than the right to pursue arbitration in subparagraph (a) would render the express language in subparagraph (a) superfluous. Because this interpretation is contrary to our canons of contract interpretation, we decline to adopt it. See Moore, 171 N.H. at 194 (“[When] interpreting a contract, we consider the contract as a whole . . . .” (quotation omitted)).
The inquiry does not end here, however, because the partiеs’ dispute
may fall within the provisions of subsections (a) and (b) if it involves a default
by the plaintiffs under the terms of the lease agreements. See Philip Morris
USA,
The defendants do not appear to directly challenge the substance of the trial court’s ruling. Rather, they argue that the trial court erred in deciding this issue because it “impermissibly considered the merits of [the defendants’] underlying claims.” They contend that the trial court should have considered whether the issue, “on [its] face,” fell within the lease agreements’ arbitration provisions. In other words, they argue that the court should have limited its arbitrability analysis to the parties’ allegations — concerning the enforceability of the new parking rules and whether the plaintiffs violated thеm — to determine whether the dispute falls within the arbitration agreement. In Appeal of AFSCME Local 3657, we rejected a similar argument. See
Appeal of AFSCME Local 3657,
Here, the defendants can compel the plaintiffs to arbitrate a dispute, but only if the dispute relates to a default on the part of the plaintiffs of a term of the lease agreements. The defendants’ allegation that the plaintiffs refuse to comply with the new parking rules forms the basis of their demands for arbitration. Accordingly, it was proper for the trial court to interpret the terms of the lease agreements to the extent necessary to determine whether the defendants’ claim presents a colorable issue of contract interpretation — specifically, whether the new parking rules upon which the alleged default is based constitute enforceable terms of the lease agreements. We fail to see how the defendants’ claim presents a colorable issue of contract interpretation when their arbitration claim is based upon alleged violations of new, unilaterally- imposed rules that would alter a material benefit previously bargained for by requiring each plaintiff to pay hundreds of dollars every month to maintain their current use of parking spaces. See In the Matter of Larue & Bedard, 156 N.H. 378, 381 (2007) (“It is a fundamental principle of contract law that one party to a contract cannot alter its terms without the assent of the other party.” (quotation omitted)). Moreover, given that the defendants do not challenge the substance of the trial court’s ruling that the new parking rules are not enforceable terms of the lease agreements, we conclude that, under the circumstances before us, the defendants’ claim fails to present a colorable claim of contract interpretation subject to arbitration under the lease agreements. The defendants point to the unpublished decision in Private Jet Services
Group, Inc. v. Marquette University, No. 14-cv-436-PB,
Accordingly, we affirm the trial courts’ orders denying the defendants’
motions to dismiss or stay pending arbitration. All arguments the defendants
raised in their notice of appeal, but did not brief, are deemed waived. In re
Estate of King,
Affirmed.
LYNN, C.J., and HICKS and BASSETT, JJ., concurred.
Notes
[1] In Appeal of Town of Durham, we looked to the scope of the agreement to determine whether the
arbitrator had jurisdiction to decide the arbitrability of the dispute. See Appeal of Town of
Durham,