Newman v. Valleywood Associates, Inc.

874 A.2d 1286, 2005 R.I. LEXIS 122, 2005 WL 1397925
CourtSupreme Court of Rhode Island
DecidedJune 15, 2005
Docket2002-674-APPEAL
StatusPublished
Cited by20 cases

This text of 874 A.2d 1286 (Newman v. Valleywood Associates, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Newman v. Valleywood Associates, Inc., 874 A.2d 1286, 2005 R.I. LEXIS 122, 2005 WL 1397925 (R.I. 2005).

Opinion

OPINION

WILLIAMS, Chief Justice.

The defendant, Valleywood Associates, Inc. (defendant), appeals the denial of its petition to arbitrate a contractual dispute between it and the plaintiffs, John B. Newman and Linda A. Newman (collectively plaintiffs). A Superior Court motion justice determined that the defendant’s motion to arbitrate would be granted only if the defendant released its mechanic’s lien on the subject real property within two weeks. For the reasons discussed below, we hold that the motion justice erred in ultimately denying the defendant’s motion to arbitrate.

I

Facts and Travel

The defendant agreed in 2001 to construct a one-family home for plaintiffs in Lincoln, Rhode Island. The seven-page written and signed agreement included provisions governing both mechanics’ liens and binding arbitration. 1 A dispute arose between the parties, which plaintiffs attribute to defendant’s “substandard, unsatisfactory, and defective” work.

The defendant filed a notice of intention in accordance with the Rhode Island Mechanics’ Lien Law found at G.L.1956 chapter 28 of title 34. The plaintiffs then posted a bond of $58,113 to discharge that lien, which allowed them to close on a home mortgage. Then plaintiffs also filed a complaint against defendant in Superior Court, asserting a host of counts ranging from breach of contact to slander of title.

Based entirely on the binding arbitration provision in the contract, defendant *1288 moved to dismiss the complaint, asserting that the court lacked subject-matter jurisdiction, personal jurisdiction, and that venue was improper, under Rules 12(b)(1), (2) and (3) of the Superior Court Rules of Civil Procedure, respectively. The motion justice granted defendant’s motion to dismiss upon the condition that defendant release the mechanic’s hen within two weeks, otherwise defendant’s motion would be denied. When defendant failed to release that lien, the motion justice denied the motion to dismiss. The defendant appeals, asserting that the motion justice’s refusal to allow defendant to file a mechanic’s lien while arbitrating that dispute constituted reversible error.

II

Analysis

A

Propriety of the Appeal

General Laws 1956 § 10-3-19 provides the scope of appellate review of decisions pertaining to arbitration. Bradford Dyeing Association, Inc. v. J. Stog Tech GmbH, 765 A.2d 1226, 1233 n. 12 (R.I.2001). A party may appeal to this Court “upon the entry of any final order provided in § 10-3-3, or an order confirming, modifying or vacating an [arbitration] award.” Section 10-3-19. 2 In this case, rather than request a stay of litigation pursuant to § 10-3-3, defendant, in a curious move, fashioned its petition for arbitration in conjunction with a motion to dismiss plaintiffs’ complaint. The motion justice’s subsequent order, however, presented defendant with a Hobson’s choice: release the lien and proceed to arbitrate or maintain the lien and waive its right to arbitration. In the context of the strict choice imposed on defendant in this case, we will view the denial of defendant’s petition to arbitrate as the equivalent of an order denying a motion to stay litigation under § 10-3-3 and consider the appeal as properly before us pursuant to § 10-3-19.

B

Arbitration and Mechanics’ Liens

The primary question presented on appeal is whether defendant may first file a mechanic’s lien to protect its interest in allegedly unpaid services and then arbitrate the underlying contractual dispute. Since subject-matter jurisdiction is “an indispensable requisite in any judicial proceeding,” we review the question de novo. Zarrella v. Minnesota Mutual Life Insurance Co., 824 A.2d 1249, 1256 (R.I.2003).

As a preliminary matter, we note that the contract signed by the parties does not limit the parties’ ability to arbitrate a contractual dispute. The contract’s broad language stating that disputes “shall be submitted to binding arbitration” comports with the statutory requirement that an arbitration agreement be “clearly written and expressed.” Section 10-3-2. The arbitration clause does not expressly provide that defendant would waive its contractual right to arbitration if it filed a mechanic’s lien on the property. 3 In fact, the arbitra *1289 tion clause does not cross-reference the provision pertaining to mechanics’ liens. In light of this fact, we must determine whether, as a matter of contract law, defendant waived its right to arbitrate the contractual dispute when it filed a mechanic’s lien.

The gravamen of plaintiffs’ argument on appeal is that defendant’s filing of a mechanic’s hen constituted a waiver of any contractual right to arbitrate the dispute because it manifested a willingness to litigate rather than arbitrate. The defendant offers that neither the Arbitration Act nor the Mechanics’ Lien Law prevents a party from filing a mechanic’s Hen and then arbitrating the underlying contractual dispute and, therefore, urges us to read the two statutes in pari materia. Since this precise question is an issue of first impression in this jurisdiction, we briefly will review the applicable statutes and caselaw governing both arbitration agreements and mechanics’ liens.

Chapter B of title 10, entitled “The Arbitration Act,” states arbitration agreements generally are “valid, irrevocable, and enforceable.” Section 10-3-2. In giving force to that legislative mandate, we have declared, “[ajrbitration is a desirable method of dispute resolution that has long been favored by the courts.” Soprano v. American Hardware Mutual Insurance Co., 491 A.2d 1008, 1011 (R.I.1985). The statute provides for a stay of litigation while the parties arbitrate their claims. Section 10-3-3. It states:

“If any suit or proceeding be brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the suit is pending, upon being satisfied that the issue involved in the suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties, stay the trial of the action until the arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with the arbitration.” Section 10-3-3.

This favored method of dispute resolution, however, can be waived when a party “manifest[sj a willingness, if not a desire, to have the courts resolve the controversy.” North Smithfield Teachers Association v. North Smithfield School Committee, 461 A.2d 930, 934 (R.I.1983).

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Cite This Page — Counsel Stack

Bluebook (online)
874 A.2d 1286, 2005 R.I. LEXIS 122, 2005 WL 1397925, Counsel Stack Legal Research, https://law.counselstack.com/opinion/newman-v-valleywood-associates-inc-ri-2005.