H&R Block Mortgage Corp. v. White

14 Mass. L. Rptr. 280
CourtMassachusetts Superior Court
DecidedDecember 11, 2001
DocketNo. 013372C
StatusPublished

This text of 14 Mass. L. Rptr. 280 (H&R Block Mortgage Corp. v. White) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
H&R Block Mortgage Corp. v. White, 14 Mass. L. Rptr. 280 (Mass. Ct. App. 2001).

Opinion

Lauriat, J.

Jonathan B. White (“White”) seeks to submit claims for wrongful termination and improper withholding of stock options against his former employer and affiliated companies, H&R Block Mortgage Corp., H&R Block, Inc., and H&R Block Financial Advisors, Inc. (collectively “Block”), to binding arbitra[281]*281tion pursuant to the terms of an employment agreement between the parties. Block filed this action and the present motion seeking to stay the arbitration.

On April 22, 1999, White signed a one-year “Employment, Noncompetition and Confidentiality Agreement” (“Agreement”) with Assurance Mortgage Corporation of America (“Assurance”), a company that H&R Block Mortgage Corp. later purchased. Block contends that the Agreement expired by its own terms on April 22, 2000, and was never renewed. Therefore, according to Block, a stay of arbitration is justified since White was not working under any agreement that afforded him a right to arbitration when he was terminated on June 14, 2001. Additionally, Block contends that the issue of stock options was never subject to arbitration. White asserts that Block extended his employment agreement in yearly increments. White claims that these extensions were communicated to him directly by Steven Edelstein, his superior at both Assurance Mortgage and Block, and that the extensions could also be inferred from Block’s conduct.

DISCUSSION

I.

The United States Supreme Court recently held that employment contracts were among those contracts which, with narrow exceptions, fell within the provisions of the Federal Arbitration Act (“FAA”) 9 U.S.C. §1 et seq. Circuit City Stores, Inc. v. Adams, 149 L.Ed.2d 234, 249 (2001). The FAA governs the arbitrability of employment disputes in state and federal court. Carpenter v. Pomerantz, 36 Mass.App.Ct. 627, 628 n. 3. (1994). The FAA, and decisions construing the statute, “creates a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983). This body of law concludes that claims are arbitrable if they are within the scope of a written arbitration agreement that is otherwise valid and enforceable. Carpenter v. Pomerantz, 36 Mass.App.Ct. at 628.

However, the court must initially decide whether parties have agreed to arbitrate specific issues. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). There can be no assumption that the basic arbitrability of an agreement itself is a proper subject for arbitration absent “clear and unmistakable evidence” that the parties intended to include such an issue with the scope of arbitration. Coady v. Ashcroft & Gerel, 223 F.3d 1, 9 (1st Cir. 2000), quoting First Options, 514 U.S. at 944. However, “any doubts regarding arbitrability should be resolved in favor of coverage ‘unless it maybe said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.’ ” Mugnano-Bornstein v. Crowell, 42 Mass.App.Ct. 347, 351 (1997), quoting Peerless Pressed Metal Corp. v. International Union of Electrical, Radio and Machinist Workers, AFL-CIO, 451 F.2d 19, 20 (1st Cir. 1971).

General principles of contract law must be applied to determine whether a particular agreement calls for arbitration. Mugnano-Bornstein, 42 Mass.App.Ct. at 350. Among the applicable contract law principles is that which states that any ambiguities in the language should be construed against the drafter. Merrimack Valley National Bank v. Baird, 372 Mass. 721, 724 (1977). The court must also resolve any questions of arbitrability “with a healthy regard for the federal policy favoring arbitration.” Moses H. Cone Memorial Hospital, 460 U.S. at 24.

An examination of the arbitration agreement in question must proceed under these principles. The arbitration clause appears as section 8 of the Agreement executed between the parties on April 22, 1999. It provides, in pertinent part:

Arbitration. Except for equitable remedies sought to be enforced by the Employer pursuant to or in connection with sections 5, 6 or 7 hereof, any controversy or dispute arising out of or relating to this Agreement shall be settled solely and exclusively by arbitration. The parties hereto expressly waive their rights to bring any such controversy or dispute in a court of law.

On its face, the Agreement reserves certain matters as outside the scope of arbitration. Section 5, entitled “Certain Covenants of Employee,” deals with White’s acknowledgment of the special knowledge and trust he incurs as a company employee as well as non-competition agreements for the period he is employed by, and for one year after leaving, the company. Section 6, entitled “Confidentiality,” generally describes the information the company designates as confidential and White’s duty to the company with regard to that information. Section 7, entitled “Certain Remedies,” provides the company with equitable relief against White for any breach of Sections 5 and 6, and requires White to waive all requirements that the company prove that a breach caused irreparable injury or that there was no adequate remedy at law.

Having specifically placed these matters outside the scope of arbitration, it is clear that Assurance could have done the same with any other matter as well. The Agreement contains other provisions, labeled by section, as follows: (2) Term, (3) Compensation, and (4) Termination. These clauses do not fall within the specifically exempt provisions, and therefore should be construed as fit matters for arbitration so long as they are “arising out of or relating to this Agreement.” Keeping in mind that any ambiguities must be construed against Block, as successor to Assurance, the drafter in this case, and construed in favor of arbitration as a policy matter, the court concludes there is “clear and unmistakable evidence” that the parties intended to submit matters of term, compensation, and termination to the arbitrator in the event of a [282]*282dispute over these issues. This conclusion is supported by the fact that the language of the arbitration clause does not confine itself to matters contained within the four corners of the document, but extends to any disputes “relating to” the Agreement unless specifically exempted. Therefore, even the question of the Agreement’s continuing viability on the date of White’s termination must be submitted to the arbitrator.

A different conclusion would result if Block could show that White could not possibly prevail on his claim that the Agreement was still in force when he was terminated. The court, in such an instance, could determine that the contract, as well as the arbitration clause, was fully satisfied. However, Block is not entitled to judgment as a matter of law on this question because disputed questions of material fact remain unresolved.

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Related

First Options of Chicago, Inc. v. Kaplan
514 U.S. 938 (Supreme Court, 1995)
Circuit City Stores, Inc. v. Adams
532 U.S. 105 (Supreme Court, 2001)
Coady v. Ashcraft & Gerel
223 F.3d 1 (First Circuit, 2000)
Merrimack Valley National Bank v. Baird
363 N.E.2d 688 (Massachusetts Supreme Judicial Court, 1977)
McAndrew v. School Committee of Cambridge
480 N.E.2d 327 (Massachusetts Appeals Court, 1985)
Kravetz v. Merchants Distributors, Inc.
440 N.E.2d 1278 (Massachusetts Supreme Judicial Court, 1982)
Carpenter v. Pomerantz
634 N.E.2d 587 (Massachusetts Appeals Court, 1994)
Harrison v. NetCentric Corp.
744 N.E.2d 622 (Massachusetts Supreme Judicial Court, 2001)
Katz v. Belko
450 N.E.2d 630 (Massachusetts Appeals Court, 1983)
Mugnano-Bornstein v. Crowell
677 N.E.2d 242 (Massachusetts Appeals Court, 1997)

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14 Mass. L. Rptr. 280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hr-block-mortgage-corp-v-white-masssuperct-2001.