Anthony Healy v. Seattle Rugby, Llc

476 P.3d 583, 15 Wash. App. 2d 539

• Court: Court of Appeals of Washington
• Decided: November 23, 2020
• Docket: 79658-5
• Status: Published

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

ANTHONY HEALY, an individual, DIVISION ONE Petitioner, No. 79658-5-I v. PUBLISHED OPINION SEATTLE RUGBY, LLC, a Washington Limited Liability Company; and ADRIAN BALFOUR, individually and together with his marital community, if any,

Respondent.

DWYER, J. — This is a discretionary review of an order compelling

arbitration to resolve an employment dispute. Seattle Rugby, LLC and its chief

executive officer (CEO), Adrian Balfour, agreed to employ Anthony Healy as

head coach of the Seattle Seawolves, a United States Major League Rugby

team. After Healy, a Canadian, was unable to obtain a necessary visa, his

employment was terminated. He brought suit in King County Superior Court.

This review arises from an order, upon the motion of Seattle Rugby and Balfour,

compelling arbitration in New York.

Healy asserts that a governing law clause in the employment agreement

conflicts with the agreement’s arbitration clause, rendering the arbitration clause

ambiguous and, therefore, unenforceable. We disagree. The terms of the

agreement clearly require the parties to arbitrate disputes. However, the superior No. 79658-5-I/2

court’s order must be modified to provide that the proper venue for the arbitration

is a matter for the arbitrator to determine. Venue is not a gateway dispute to be

decided by the superior court.

I

Seattle Rugby, LLC, a Washington limited liability company, owns and

operates Seattle’s United States Major League Rugby team, the Seattle

Seawolves. 1 Adrian Balfour is the CEO of Seattle Rugby. In September 2017,

Balfour and Seattle Rugby hired Anthony Healy, a Canadian citizen residing in

Victoria, British Columbia, to serve as head coach of the Seawolves. Balfour, in

his capacity as CEO of Seattle Rugby, presented Healy with an employment

agreement, which both parties executed on September 25, 2017. The

agreement included the following arbitration clause:

9) Arbitration of Controversies. Any claim or controversy that arises out of or relates to this Agreement, or the breach of this Agreement, shall be settled by arbitration in New York State under the rules then in effect of the American Arbitration Association. All claims shall be determined by one arbitrator. All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon showing good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written statement of reasons for the award. Judgment upon the award rendered by arbitration may be entered in any court possessing jurisdiction over the parties.

Additionally, the agreement included a governing law clause, listed as

subsection (c) under section 10, entitled “General Provisions”:

1 The facts set forth are derived from the parties’ pleadings.

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(c) Governing Law. This Agreement shall be construed under and governed by the laws of the State of Washington. Company and Coach agree that all actions arising directly or indirectly out of this Agreement shall be litigated only in the State of Washington and the parties hereto consent to that jurisdiction and venue.

Healy’s term of employment was to begin January 1, 2018. With the

assistance of Seattle Rugby, Healy applied for an O-1 work visa. While awaiting

the issuance of the visa, Healy worked for several months to “set up” the team,

traveling frequently to Seattle. During this time, Healy expressed to Balfour that

it was financially difficult for him to be traveling to and from Canada without any

income. In response, Balfour wrote Healy’s wife a check for $7,500. In March

2018, Healy’s visa application was denied by the United States Citizen and

Immigration Services. Approximately one week later, Healy was informed that he

would no longer be able to serve as head coach of the Seattle Seawolves and

that his employment was terminated.

In June 2018, Healy filed a complaint in King County Superior Court

against Seattle Rugby and Balfour, alleging breach of contract, failure to pay

wages, and willful withholding of wages. On August 8, Seattle Rugby and

Balfour filed their answer and asserted affirmative defenses. Balfour also filed a

counterclaim alleging that Healy had breached the agreement by failing to repay

a personal loan of $7,500. The parties dispute the relationship between the

check and Healy’s employment. Healy claims that it was a “lump-sum payment”

for his work “set[ting] up” the team. Balfour asserts that it was a personal loan

that “had nothing to do with Plaintiff’s employment by Seattle Rugby.”

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After twice giving notice of their intent to do so, Balfour and Seattle Rugby

filed a motion to compel arbitration on January 28, 2019. Healy opposed the

motion, arguing that (1) the governing law provision of the agreement requires

the dispute to be litigated in Washington, (2) Seattle Rugby and Balfour waived

the right to arbitrate by engaging in litigation, and (3) the arbitration provision is

unconscionable because it requires Healy to arbitrate in New York.

The superior court granted Seattle Rugby and Balfour’s motion to compel

arbitration and stayed proceedings pending the completion of arbitration in New

York. Healy sought discretionary review of that order pursuant to RAP 2.3(b)(2).

Our commissioner granted discretionary review solely on the issue of whether

the superior court erred by compelling arbitration in New York in light of an

apparent conflict between the arbitration and governing law clauses of the

agreement.

II

A

We review de novo a trial court’s decision to compel or deny

arbitration. Burnett v. Pagliacci Pizza, Inc., 196 Wn.2d 38, 46, 470 P.3d 486

(2020). Arbitration is a matter of contract. Accordingly, parties cannot be

compelled to arbitrate unless they agreed to do so. Weiss v. Lonnquist, 153 Wn.

App 502, 510, 224 P.3d 787 (2009) (citing AT&T Techs., Inc. v. Commc’ns

Workers of Am., 475 U.S. 643, 648, 106 S. Ct. 1415, 89 L. Ed. 2d 648

(1986)); see also RCW 7.04A.070(1) (providing that a court shall order parties to

arbitrate upon “a showing [of] an agreement to arbitrate”).

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The purpose of contract interpretation is to ascertain the intent of the

parties. Roats v. Blakely Island Maint. Comm’n, Inc., 169 Wn. App. 263, 274,

279 P.3d 943 (2012). Washington courts “follow the objective manifestation

theory of contracts.” Hearst Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d

493, 503, 115 P.3d 262 (2005). Under this approach, courts “focus on the

agreement’s objective manifestations to ascertain the parties’ intent.” Martin v.

Smith, 192 Wn. App. 527, 532, 368 P.3d 227 (2016). When considering the

language of a written agreement, we “impute an intention corresponding to the

reasonable meaning of the words used.” Hearst Commc’ns, Inc., 154 Wn.2d at

503 (citing Lynott v. Nat’l Union Fire Ins. Co. of Pittsburgh, 123 Wn.2d 678, 684,

871 P.2d 146 (1994)).

The intent of the parties may be discovered from “‘the contract as a whole,

the subject matter and objective of the contract, all the circumstances

surrounding the making of the contract, the subsequent acts and conduct of the

parties to the contract, and the reasonableness of respective interpretations

advocated by the parties.’” Tanner Elec. Coop. v. Puget Sound Power & Light

Co., 128 Wn.2d 656, 674, 911 P.2d 1301 (1996) (internal quotation marks

omitted) (quoting Scott Galvanizing, Inc. v. Nw. EnviroServices, Inc., 120 Wn.2d

573, 580-81, 844 P.2d 428 (1993)).

When contract provisions conflict, we will harmonize them to the extent

possible. Kut Suen Lui v. Essex Ins. Co., 185 Wn.2d 703, 710, 375 P.3d 596

(2016). The purpose of this “harmonization” is to interpret the agreement in a

manner that gives effect to all of the contract’s provisions. Nishikawa v. U.S.

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Eagle High, LLC, 138 Wn. App. 841, 850-51, 158 P.3d 1265 (2007). When the

terms of an agreement truly conflict and, thus, harmonizing them is impossible,

courts must “give effect to the manifest intent of the parties.” Green River Valley

Found., Inc. v. Foster, 78 Wn.2d 245, 249, 473 P.2d 844 (1970) (citing Starr v.

Mut. Life Ins. Co. of New York, 41 Wash. 228, 83 P.116 (1905)). Accordingly,

effect is given to that provision which more nearly effectuates the purpose of the

entire contract. Vance v. Ingram, 16 Wn.2d 399, 416, 133 P.2d 938 (1943). A

contract term is ambiguous only when, viewed in context, two or more meanings

are reasonable. GMAC v. Everett Chevrolet, Inc., 179 Wn. App. 126, 135, 317

P.3d 1074 (2014). When multiple meanings are reasonable, which meaning

reflects the parties’ intent is a question of fact. GMAC, 179 Wn. App at 135.

B

Here, the two provisions at issue each contain multiple terms. Together,

they address (1) who decides disputes, (2) what law applies, (3) what state’s

court has ultimate jurisdiction, and (4) where disputes should be resolved.

Neither clause speaks to all four. The arbitration clause provides that disputes

will be decided by one arbitrator, under the rules of the American Arbitration

Association, and in New York. The governing law clause provides that

Washington law governs, and that jurisdiction and venue are in Washington.

Because the arbitration clause contains an agreement to arbitrate, and no clear

contrary indication is found elsewhere in the agreement, we conclude that the

terms of the agreement include an agreement to arbitrate.

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Healy argues that the word “litigated,” used in the governing law provision,

evidences a conflict as to who the agreement designates as decision-maker.

However, he is mistaken as to the narrow meaning he imbues to the word

“litigated.”

To “litigate” is to “engage in legal proceedings.” AMERICAN HERITAGE

DICTIONARY 1051 (3d ed. 1992); see also W EBSTER’S THIRD INTERNATIONAL

DICTIONARY 1322 (defining “litigation” as “the practice of taking legal action”).

Arbitration is a legal proceeding provided for and regulated by statute.

Washington’s version of the uniform arbitration act is codified in Title 7 RCW,

“Special Proceedings and Actions.” See chapter 7.04A RCW. Arbitration is a

specific mode of litigation, in which an arbitrator, defined by statute as an

“individual appointed to render an award in a controversy between persons who

are parties to an agreement to arbitrate,” RCW 7.04A.010(2), determines the

disposition of the claims at issue. Certainly, litigation can occur before a judge in

a courtroom, but the term is not limited to a designation of only courtroom

proceedings.

Consistent with this view, many jurisdictions have recognized that the so-

called “litigation privilege” includes statements made in arbitration. See, e.g.,

Rolon v. Henneman, 517 F.3d 140, 145 (2d Cir. 2008) (witness entitled to

absolute immunity for testimony at arbitration); Moore v. Conliffe, 7 Cal. 4th 634,

651, 29 Cal. Rptr. 2d 152, 871 P.2d 204 (1994) (expert witness who testified at

deposition held in connection with private arbitration proceeding immunized

against tort claims by virtue of “litigation privilege”); Odyniec v. Schneider, 322

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Md. 520, 535, 588 A.2d 786 (1991) (statements of expert witness in health claims

arbitration proceeding absolutely privileged because proceeding was equivalent

of a judicial proceeding). Similarly, the First Amendment right to public access at

litigation proceedings includes arbitration proceedings under certain

circumstances. Delaware Coal. for Open Gov’t v. Strine, 733 F.3d 510, 521 (3d

Cir. 2013).

Thus, there is no conflict between the terms, “litigation” and “arbitration.”

One is broader than the other. Here, the agreement to the narrowest meaning

controls. Similarly, because there is no conflict in the agreement as to what type

of decision-maker should preside, it is clear that the parties agreed that disputes

would be decided by an arbitrator. Accordingly, we affirm the order compelling

arbitration.

C

The parties dispute which venue provision governs the agreement—

whether venue is properly in New York State, as indicated by the arbitration

provision and ordered by the superior court, or in Washington, as indicated by

the governing law clause. Because venue is a not a gateway issue, this dispute

must be resolved by the arbitrator, not the superior court.

Courts may resolve the threshold question of whether a claim is arbitrable

as a gateway dispute. Romney v. Franciscan Med. Grp., 199 Wn. App 589, 595,

399 P.3d 1220 (2017) (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S.

79, 83, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002)); accord Hill v. Garda CL Nw.,

Inc., 179 Wn.2d 47, 53, 308 P.3d 635 (2013). This “avoids the risk of forcing

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parties to arbitrate a matter that they may well not have agreed to

arbitrate.” Howsam, 537 U.S. at 83-84.

However, when a dispute falls within a valid arbitration agreement,

procedural questions, which “‘grow out of the dispute and bear on its final

disposition,’” are decided by the arbitrator. Howsam, 537 U.S. at 84

(quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S. Ct. 909,

11 L. Ed. 2d 898 (1964)); Romney, 199 Wn. App at 595. A dispute over venue

presents an issue of where arbitration is to occur, not whether there is a

contractual duty to arbitrate. Bamberger Rosenheim, Ltd. v. OA Dev., Inc., 862

F.3d 1284, 1287-88 (11th Cir. 2017); UBS Fin. Servs., Inc. v. W. Va. Univ.

Hosps., Inc., 660 F.3d 643, 655 (2d Cir. 2011); Cent. W. Va. Energy, Inc. v.

Bayer Cropscience LP, 645 F.3d 267, 273-74 (4th Cir. 2011); Ridge at Red

Hawk, LLC v. Schneider, 493 F.3d 1174, 1178 n.3 (10th Cir. 2007); Richard C.

Young & Co. v. Leventhal, 389 F.3d 1, 5 (1st Cir. 2004).

Here, because we have determined that there is a valid agreement to

arbitrate, there is no risk that parties will be forced to arbitrate “a matter that they

may well not have agreed to arbitrate.” Howsam, 537 U.S. at 83-84. We hold

that when there is a valid agreement to arbitrate, a dispute over venue is not a

gateway issue. Thus, it is appropriately determined by the arbitrator.

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Accordingly, on remand, the superior court’s order must be modified to

order that arbitration will take place with venue to be determined by the

arbitrator. 2

Affirmed as modified.

WE CONCUR:

2Washington law will govern the arbitration proceeding and the superior courts of Washington will have ultimate authority to confirm or not confirm the arbitrator’s decision, all in accordance with the terms of the agreement.