Ogden v. Disys ( 2018 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
MARTIN OGDEN,
Plaintiff/Appellant,
v.
DIGITAL INTELLIGENCE SYSTEMS LLC,
Defendant/Appellee.
No. 1 CA-CV 17-0406
FILED 12-13-2018
Appeal from the Superior Court in Maricopa County
No. CV2016-052899
The Honorable John R. Hannah, Jr., Judge
AFFIRMED
COUNSEL
Martin Ogden, Glendale
Plaintiff/Appellant
Littler Mendelson, PC, Phoenix
By Joshua Waltman
Counsel for Defendant/Appellee
OGDEN v. DISYS
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Diane M. Johnsen delivered the decision of the Court, in
which Judge Maria Elena Cruz and Judge Randall M. Howe joined.
J O H N S E N, Judge:
¶1 Martin Ogden appeals the superior court's dismissal of his
petition to compel arbitration of claims against Digital Intelligence Systems,
LLC ("DISYS"). For the following reasons, we affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Ogden began working for DISYS in December 2013. Shortly
thereafter, he executed an arbitration agreement with the company, which
stated:
1. Arbitration Agreement & Procedures. As a condition of
Employee's employment at DISYS, Employee agrees that any
controversy or claim arising out of, or relating to, Employee's
employment relationship with DISYS or the termination of
that relationship, must be submitted for non-binding
mediation before a third-party neutral and, if necessary, for
final and binding resolution by a private and impartial
arbitrator . . . .
¶3 DISYS terminated Ogden's employment in June 2015. Shortly
thereafter, Ogden asserted various claims against DISYS and pursued them
as provided in the arbitration agreement. Eventually, Ogden and DISYS
agreed to settle Ogden's claims. They executed a Settlement and Release
Agreement (the "Settlement Agreement"), which provided in relevant part:
The Parties have agreed to resolve any and all disputes and
claims that Ogden now has or has ever had against DISYS,
whether known or unknown, including the Litigation,
pursuant to the terms of this Agreement.
* * *
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OGDEN v. DISYS
Decision of the Court
2. Release and Covenant Not To Sue
a. Ogden . . . hereby fully and without limitation releases,
covenants not to sue, and forever discharges DISYS . . . from
any and all rights, claims, demands, liabilities, actions, and
causes of action, whether in law or in equity, suits, damages,
losses, attorneys' fees, costs, and expenses, of whatever nature
whatsoever, known or unknown, fixed or contingent,
suspected or unsuspected ("Claims"), that Ogden . . . now
have, or may ever have, against DISYS . . . or are in any way
related to: (i) Ogden's employment by DISYS; and (ii) any acts
or omissions by DISYS or the DISYS Releasees occurring prior
to the date that Ogden executes this Agreement.
¶4 Sometime after signing the Settlement Agreement and
receiving payment from DISYS, Ogden attempted to initiate an arbitration.
DISYS, however, refused to pay the required arbitration filing fee, asserting
that nothing was left to arbitrate after Ogden released his claims in the
Settlement Agreement.
¶5 Ogden then filed a petition in the superior court to compel
DISYS to arbitrate. His petition asserted that his termination "will result in
a number" of claims against DISYS, including claims for unpaid wages,
wrongful termination, unjust enrichment, breach of contract and breach of
the duty of good faith and fair dealing in an employment agreement.
¶6 In response, DISYS argued that by signing the Settlement
Agreement, Ogden had released the claims he identified for arbitration. In
his reply, Ogden admitted that the Settlement Agreement would constitute
a release of all of his claims against DISYS but argued DISYS had breached
its payment obligation under the Settlement Agreement.
¶7 The court denied Ogden's motion to compel arbitration and
entered a final judgment. Ogden timely appealed. We have jurisdiction
pursuant to Article 6, Section 9, of the Arizona Constitution, and Arizona
Revised Statutes ("A.R.S.") sections 12-120.21(A)(1) (2018) and -2101(A)(1)
(2018).1
1 Absent material revision, we cite the current version of a statute or
rule.
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OGDEN v. DISYS
Decision of the Court
DISCUSSION
A. Denial of the Motion to Compel Arbitration.
¶8 We review the denial of a motion to compel arbitration de
novo. Sun Valley Ranch 308 Ltd. P'ship v. Robson, 231 Ariz. 287, 291, ¶ 9 (App.
2012). Contract interpretation is a question of law we review de novo.
Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App. 2009). We
consider the plain meaning of the words in the context of the contract as a
whole. United Cal. Bank v. Prudential Ins. Co. of Am., 140 Ariz. 238, 259 (App.
1983). "A written agreement to submit any existing controversy to
arbitration or a provision in a written contract to submit to arbitration any
controversy thereafter arising between the parties is valid, enforceable and
irrevocable, save upon such grounds as exist at law or in equity for the
revocation of any contract." A.R.S. § 12-1501 (2018).
¶9 As Ogden argues, the arbitration agreement he executed
when he began work at DISYS applied to "any controversy or claim arising
out of, or relating to [Ogden's] employment relationship with DISYS or the
termination of that relationship." The employment-based claims that
Ogden identified in his petition to compel arbitration arguably would fall
within the arbitration agreement because they arose out of his employment
relationship with DISYS. In the Settlement Agreement, however, Ogden
explicitly "agreed to resolve any and all disputes and claims that [he] now
has or has ever had against DISYS." In the Settlement Agreement, he
released, discharged and promised not to sue DISYS and all of its agents
from or for "any and all rights, claims, demands, liabilities, actions, and
causes of action." Given his release and discharge of DISYS from all his
employment-related claims, the superior court did not err by denying his
motion to compel arbitration of those claims. Simply put, none of those
claims remained to be arbitrated.
¶10 Ogden nevertheless argues that DISYS breached the
Settlement Agreement by failing to pay him what it had agreed to pay. He
argues that DISYS's asserted breach of the Settlement Agreement is an issue
to be arbitrated because it is a claim that arises out of his employment
relationship with DISYS. We take judicial notice that, as shown in the
record in a companion appeal between these same two parties, Ogden has
filed a civil complaint alleging that DISYS breached the Settlement
Agreement by paying him $10,341 when it had promised to pay him
$13,810.
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OGDEN v. DISYS
Decision of the Court
¶11 Ogden's claim for breach of the Settlement Agreement,
however, does not arise out of the employment relationship but instead
arises solely out of the Settlement Agreement, which itself has no
arbitration provision. Cf. S. Cal. Edison Co. v. Peabody W. Coal Co., 194 Ariz.
47, 51, ¶ 11 (1999) ("Although it is commonly said that the law favors
arbitration, it is more accurate to say that the law favors arbitration of
disputes that the parties have agreed to arbitrate."). The Settlement
Agreement in effect constituted a novation of all prior agreements
respecting Ogden's employment with DISYS, including the arbitration
agreement. See Western Coach Corp. v. Roscoe, 133 Ariz. 147, 152 (1982)
(novation is "a new, valid contract" that extinguishes previous obligations).
B. Attorney's Fees.
¶12 DISYS asks for attorney's fees on appeal under A.R.S. § 12-
341.01 (2018) and the arbitration agreement. Although § 12-341.01 allows a
court to grant attorney's fees to the successful party in an action arising out
of a contract, it does not allow a fees award that would be contrary to "an
express contractual provision governing recovery of attorney's fees." Am.
Power Prods., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 368, ¶ 14 (2017) (quotation
omitted).
¶13 The relevant provision in the parties' arbitration agreement is
in § 1(F)(ii), which provides:
Excluding the initial filing fee, which shall be borne by the
claimant, DISYS agrees to pay the administrative fees and the
arbitrator's fees and expenses as provided in the AAA
Employment Arbitration Rules and Mediation Procedures.
All other costs and expenses associated with the arbitration,
including, without limitation, each party's respective
attorneys' fees, shall be borne by the party incurring the
expense.
¶14 Ogden argues this provision bars DISYS's claim for fees
because it states that each party will bear its own fees "associated with the
arbitration." To be sure, any attorney's fees that DISYS incurred in the
arbitration would be "associated with the arbitration" and would be borne
by DISYS under the terms of the arbitration agreement. But fees incurred
in responding to a petition to compel arbitration filed in superior court are
not "associated with the arbitration." See WB, The Bldg. Co., LLC v. El Destino,
LP, 227 Ariz. 302, 311-13, ¶¶ 23-31 (App. 2011) (superior court may award
fees under § 12-341.01 to a defendant who successfully challenged
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OGDEN v. DISYS
Decision of the Court
applicability of an arbitration agreement); City of Cottonwood v. James L. Fann
Contracting, Inc., 179 Ariz. 185, 195 (App. 1994) (affirming award under §
12-341.01 of fees "associated with the judicial proceedings to defeat the
motion for stay [of arbitration]").
¶15 Accordingly, DISYS is entitled to its costs and, in the exercise
of our discretion, we award DISYS its reasonable attorney's fees incurred
on appeal, contingent on compliance with Arizona Rule of Civil Appellate
Procedure 21.
CONCLUSION
¶16 For the foregoing reasons, we affirm the superior court's order
denying Ogden's motion to compel arbitration.
AMY M. WOOD • Clerk of the Court
FILED: AA
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