Pavkovich v. Shenouda

280 S.W.3d 584, 2009 Ky. App. LEXIS 40, 2009 WL 792488
CourtCourt of Appeals of Kentucky
DecidedMarch 27, 2009
Docket2005-CA-000866-MR, 2006-CA-001334-MR
StatusPublished
Cited by4 cases

This text of 280 S.W.3d 584 (Pavkovich v. Shenouda) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pavkovich v. Shenouda, 280 S.W.3d 584, 2009 Ky. App. LEXIS 40, 2009 WL 792488 (Ky. Ct. App. 2009).

Opinion

OPINION AND ORDER

ACREE, Judge.

In the first of two consolidated appeals, Peter and Donna Pavkovich seek review of the Jefferson Circuit Court’s dismissal of their breach of contract and fraudulent misrepresentation claims. These claims were dismissed because the parties had agreed to arbitrate such claims. In their second appeal, the Pavkoviches seek review of the arbitrator’s decision, affirmed by the circuit court, that the demand for arbitration was not timely. Because this Court is without jurisdiction, as described infra, we dismiss both appeals.

FACTS AND PROCEDURAL HISTORY

The procedural history of this case is at least as important as its factual history. Therefore, we proceed with a chronological description of both the factual and procedural events of this case.

On November 10, 2001, the Pavkoviches agreed to purchase real property from Hany and Therese Shenouda. The She-noudas were assisted by real estate agent Liz Hudson, an agent with the brokerage firm of Bob Hayes Realty Company. The parties used a standardized “Sales and Purchasing Contract” form provided by the Greater Louisville Association of Realtors for use by its members, including Hudson. The contract included an arbitration clause that read, in pertinent part:

17. BINDING ARBITRATION: All claims or disputes ... arising out of this contract or the breach thereof or arising out of or relating to the physical condition of the property covered by this purchase agreement (including without limitation, claims of fraud, misrepresentation, warranty and negligence) shall be decided by binding arbitration in accordance with the rules for the real estate industry, then in effect, adopted by the American Arbitration Association unless the parties agree otherwise.

This language was followed by terms defining how and when an arbitration was to be commenced.

Notice of the demand for arbitration shall be filed in writing by registered or certified mail with the other parties to the contract and with a register arbitrator (a list of which is available at the Greater Louisville Association of Realtors main office) or other arbitrators which the parties may agree upon and shall be made within one (1) year after the dispute has arisen.... [T]he agents ... and their brokers, agree to be bound by this arbitration clause, but are not parties to this contract for any other purpose. The terms of this Paragraph 17 shall survive the closing.

Subsequent to the closing and transfer of title, the Pavkoviches came to believe that the Shenoudas, Hudson and Hayes Realty had defrauded them in their purchase, and that the Shenoudas had also breached the sales and purchase contract. On July 19, 2002, they filed a civil action in Jefferson Circuit Court alleging breach of *586 contract against the Shenoudas and fraud against the Shenoudas, Hudson and Hayes Realty.

On December 2, 2003, Hudson and Hayes Realty moved to dismiss the complaint and send the matter to arbitration. The Pavkoviches responded, citing Marks v. Bean, 57 S.W.3d 303 (Ky.App.2001), overruled by Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky.2004), and its reference to “a legislative intent that innocent parties not be forced to comply with an arbitration provision in contracts tainted by fraud.” Id. at 307. Hudson’s and Hayes’ motion to dismiss was denied on January 7, 2004.

On May 13, 2004, the case of Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky.2004), became final. As noted supra, Pet-erbilt reversed Marks in favor of a more limited view. The Supreme Court in Pet-erbilt held that “a claim of fraud in the inducement of the underlying contract in general is arbitrable, unless the claim goes to the making or performance of the arbitration agreement itself.” Peterbilt at 852. The Pavkoviches’s claim of fraud did not go to the making or performance of the arbitration agreement itself.

On July 26, 2004, citing Peterbilt, the Shenoudas filed a motion to dismiss the Pavkoviches’s complaint on grounds that the parties had agreed to submit the matter to arbitration. The Pavkoviches filed no response to the motion but, on August 4, 2004, they did file a motion “to amend their Complaint to include a claim for fraudulent inducement in to [sic] entering in to [sic] the arbitration clause of the subject Contract.” This motion was heard on August 9, 2004, at which time the circuit judge wrote, by hand, on the Pavoko-viches tendered order “Motion denied[;] Cancel 8/24 jury trial[;] Refer to Arbitration[.]” The Pavkoviches did not appeal this order.

On August 17, 2004, the Jefferson Circuit Court “ORDERED AND ADJUDGED that the Plaintiffs’ Complaint be and hereby is DISMISSED WITH PREJUDICE.” The judge then wrote in, by hand, “and the parties are referred to arbitration.” This was a final and appeal-able judgment. Kentucky Rules of Civil Procedure (CR) 54.01. The Pavkoviches did not file a motion to alter, amend or vacate this judgment within ten (10) days as required by CR 59.05. Nor did they file a notice of appeal of this judgment within thirty (30) days of its entry as required by CR 73.02(l)(a).

Instead, on February 2, 2005, nearly five months after the order dismissing their complaint became final, the Pavkoviches filed a motion asking the circuit court to order the parties to commence arbitration and asking that the “Court find that the contractual requirement for notice of arbitration was tolled until August of 2004 at which time, via the Court’s order, notice to arbitrate was given.” The motion ended with the request that the circuit court “amend its August Order to read as such.” The Shenoudas responded by asserting that the circuit court no longer had subject matter jurisdiction.

On February 8, 2005, the circuit court ordered the parties to brief the issue, which they did. On March 24, 2005, the circuit court entered an order holding as follows:

The new question of whether the sales and purchasing contract’s requirement that notice for [sic] demand for arbitration be given within one year of the dispute had been tolled until this Court’s ruling in August 2004 is a procedural matter reserved for the decision of an arbitrator, not the courts. [Citation omitted].... This court finds that it no longer has jurisdiction over any of the issues outlined in this action and, ac *587 cordingly, will refer all claims to arbitration.

The Pavkoviches filed a Notice of Appeal of this order on April 7, 2005.

On June 24, 2005, the Pavkoviches complied with the arbitration agreement and gave the proper parties notice of their demand for arbitration. This was some three and one-half years after discovering their claim.

The Shenoudas filed a motion with the arbitrator to dismiss the arbitration on grounds that the Pavkoviches failed to make a timely demand for arbitration.

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Cite This Page — Counsel Stack

Bluebook (online)
280 S.W.3d 584, 2009 Ky. App. LEXIS 40, 2009 WL 792488, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pavkovich-v-shenouda-kyctapp-2009.