Russell v. World Famous, Inc.

767 P.2d 456, 94 Or. App. 748

• Court: Court of Appeals of Oregon
• Decided: January 18, 1989
• Docket: 86-3795-J-3; CA A46765
• Status: Published

Opinions

JOSEPH, C. J.

Plaintiff sued defendant World Famous, Inc., for breach of contract, unlawful trade practices and misrepresentation in connection with a service contract purchased with a used car. After the purchase, the water pump failed, causing damage to the car. Before trial, the court granted defendant’s demand for arbitration under the contract.¹ In the arbitration, defendant prevailed on all three claims, and the trial court entered a judgment on the award. Plaintiff appeals, claiming that the arbitrators exceeded their authority. See ORS 33.320. We reverse and remand.²

Plaintiff excepted to the arbitration award on two grounds: The arbitrators had no power to hear the case, because it involved more than a dispute over “the amount of damages”; there was “evident partiality” on the part of two of the arbitrators. The court overruled both exceptions, but plaintiff appeals only in respect to the first.

We interpret plaintiffs assignments of error to raise two issues: whether the dispute was arbitrable and, if it was, what was the scope of the arbitrators’ power. The service contract provides:

“If there is a disagreement on the amount of damages, either party may make written demand for arbitration. In this event, each party will select an arbitrator. The two arbitrators shall select a third. If they cannot agree in thirty (30) days, either may request that a selection be made by a judge of a court having jurisdiction. Each party will pay the expenses it incurs, and bear the expenses of the third arbitrator equally. A decision agreed to by two of the arbitrators shall be binding.” (Emphasis supplied.)

Plaintiff argues that none of the dispute was arbitrable, because it involved more than the one arbitrable issue specified in the agreement: “the amount of damages.” We disagree. The service contract provides for arbitration, even though it seems to limit the scope of arbitration. ORS 33.220 - ORS 33.240; see Peter Kiewit v. Port of Portland, 291 Or 49, 62, 628 P2d 720 (1981) (semble). Furthermore, plaintiff waived the right to dispute arbitrability by participating in the arbitration without objection. Mendelson v. State Farm Mutual Auto. Ins. Co., 285 Or 269, 274, 590 P2d 726 (1979).

However, participation in an arbitration does not waive an objection to the scope of the award. Gamble et ux v. Sukul, 208 Or 480, 486-8, 302 P2d 553 (1956). The service contract is the only written agreement between the parties and, therefore, it dictates the scope of the arbitration.³ Under that agreement, arbitration is limited to “the amount of damages” and does not include the authority to decide plaintiffs claims for unfair trade practices, misrepresentation or breach of contract. It is as clear as could be that the only matter that could be arbitrated was a dispute about how much damage a covered vehicle had suffered as the consequence of a loss covered by the contract. The trial court should not have entered judgment on the award.

Reversed and remanded.

1 The arbitration order provides:

“IT IS HEREBY ORDERED that the trial in the above-entitled matter shall be continued indefinitely and that the Demand for Arbitration as requested for [sic] Defendant shall be implemented, either according to the terms of the Vehicle Service Contract, which was subject of Plaintiffs Complaint, or by agreement of the parties.”

2 A third-party complaint was filed against National Warranty Corporation, the administrator under the contract. In view of the decision on the arbitrated matter, the third party claim was treated by the trial court as moot. Although it was named as a respondent in the notice of appeal, National Warranty has not appeared in this court.

3 Agreements to arbitrate must be in writing. ORS 33.220; Halvorson-Mason Corp. v. Emerick Const. Co., 81 Or App 119, 125, 724 P2d 871 (1986), rev’d on other grounds 304 Or 407, 745 P2d 1221 (1987). The arbitrators are confined to issues contained in the written agreement. ORS 33.320; ORS 33.340; Gamble et ux v. Sukul, supra, 208 Or at 488; Coast Trading Co., Inc. v. Pacific Molasses Co., 681 F2d 1195, 1197 (9th Cir 1982).