TPR, Inc. v. Paychex, Inc. , 2020 ME 79 ( 2020 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2020 ME 79
Docket: Yor-19-229
Submitted
On Briefs: April 14, 2020
Decided: June 2, 2020
Panel: MEAD, GORMAN, JABAR, and HUMPHREY, JJ., and HJELM, A.R.J.
TPR, INC.
v.
PAYCHEX, INC.
HUMPHREY, J.
[¶1] Paychex, Inc., appeals from an order entered by the Superior Court
(York County, O’Neil, J.) denying its motion to compel arbitration of, and dismiss
all counts in, a complaint filed against it by TPR, Inc. Because the court did not
make the statutorily required determination as to whether the parties agreed
to arbitrate the dispute, we vacate the order and remand for further
proceedings.
I. BACKGROUND
[¶2] We derive the following undisputed facts and procedure from the
parties’ pleadings and affidavits and the court’s record. See Snow v. Bernstein,
Shur, Sawyer & Nelson, P.A., 2017 ME 239, ¶ 2, 176 A.3d 729; Stenzel v. Dell, Inc.,
2005 ME 27, ¶ 6, 870 A.2d 133.
2
[¶3] In 2017, TPR and Paychex entered into a contract whereby Paychex
would provide payroll services to TPR. In January of 2019, TPR filed a
complaint against Paychex in which it asserted claims for breach of contract,
fraud, and negligence.
[¶4] Paychex moved to dismiss TPR’s complaint and to compel
arbitration, see 14 M.R.S. § 5928 (2020), arguing that its contract with TPR
contains an arbitration clause that covers TPR’s claims. With its motion,
Paychex submitted an affidavit with an attached exhibit that Paychex
represented to be the operative contract between it and TPR and that contains
an arbitration clause. TPR, opposing Paychex’s motion, submitted its own
affidavit asserting that the exhibit submitted by Paychex is not the operative
agreement between the parties. At a nontestimonial hearing on the matter, TPR
presented the court with a different document—which it represented to be the
actual operative agreement—that does not contain any arbitration clause.1
[¶5] On May 14, 2019, the court denied Paychex’s motion, explaining
that, because the parties continue to dispute which document constitutes the
1 To further complicate matters, at the hearing, Paychex acknowledged that the exhibit it
submitted with its motion was not the operative agreement but was instead a prior contract between
the parties; with the court’s permission, Paychex then introduced a third version of the document—
again containing an arbitration provision—that it asserts is the true agreement. Thus, the parties
continue to dispute, and the court has not yet resolved, which of these documents constitutes the
operative agreement between TPR and Paychex.
3
operative agreement, “[a]t this preliminary stage—when factual disputes must
be resolved in favor of the non-moving party—the Court cannot conclude as a
matter of law that the parties entered into a valid agreement to arbitrate.”
[¶6] TPR timely appealed.2 See M.R. App. 2B(c)(2)(D).
II. DISCUSSION
[¶7] “We review a trial court’s decision on a motion to compel arbitration
for errors of law and for facts not supported by substantial evidence in the
record.” Stenzel, 2005 ME 37, ¶ 6, 870 A.2d 133 (quotation marks omitted).
[¶8] Title 14 M.R.S. § 5928(1) provides that if a party opposing a motion
to compel arbitration “denies the existence of [an] agreement to arbitrate, the
court shall proceed summarily to the determination of the issue so raised.”
Although we have never explained the process by which a court ruling on a
motion to compel arbitration should “summarily” resolve quintessentially
factual disputes—such as the one presented here—at this stage, we have
repeatedly affirmed trial court determinations reached at this stage of
proceedings regarding the existence and enforceability of arbitration
2 As the parties agree, interlocutory orders denying motions to compel arbitration are
immediately appealable. See 14 M.R.S. § 5945(1)(A) (2020).
4
agreements based on affidavits and exhibits. See, e.g., Snow, 2017 ME 239, ¶¶ 7,
20-23, 176 A.3d 729; Stenzel, 2005 ME 37, ¶¶ 6, 9-13, 870 A.2d 133.
[¶9] The trial court denied Paychex’s motion without making the finding
regarding arbitrability required by section 5928(1). Rather, perhaps because
Paychex misleadingly framed its motion as primarily a motion to dismiss the
complaint, see infra n.3, the court denied the motion based entirely on the mere
existence of a material factual dispute between the parties. We agree with the
trial court that the sparse record developed thus far does not permit such a
determination as a matter of law; rather, in the confusing record presented to
the court, the only clarity is that the parties dispute which of two exhibits—the
one with the arbitration clause or the one without—constitutes their 2017
agreement.3 Accordingly, we vacate the judgment and remand for the court to
“proceed summarily” to determine whether the parties agreed to arbitrate
TPR’s claims. 14 M.R.S. § 5928(1). This summary procedure may include, if the
3 In addition to the manner in which the parties presented multiple versions of the purported
agreement to the court, the confusion seems to have been exacerbated by the conjunction of
Paychex’s motion to compel arbitration with its motion to dismiss TPR’s complaint. The substance
of Paychex’s motion, however, makes clear that its motion to dismiss was predicated upon the court
granting its motion to compel arbitration—essentially, Paychex asked the court to compel arbitration
of all of TPR’s claims and then dismiss the (resulting empty) complaint. We do not address whether
dismissal, rather than a stay, would be proper in such a circumstance, see 14 M.R.S. § 5928(4) (2020);
we note the issue only to explain why the pendency of the motion to dismiss did not obviate
resolution of the factual dispute regarding the existence of an arbitration agreement.
5
court deems it necessary, a period of limited discovery followed by adjudication
pursuant to a summary judgment standard or even, should a genuine dispute
remain, a testimonial hearing.4 See Guidotti v. Legal Helpers Debt Resolution,
L.L.C., 716 F.3d 764, 773-76 (3d Cir. 2013).
The entry is:
Judgment vacated. Remanded for further
proceedings consistent with this opinion.
Dawn M. Harmon, Esq., Perkins Thompson, P.A., Portland, for appellant
Paychex, Inc.
Neal L. Weinstein, Esq., Old Orchard Beach, for appellee TPR, Inc.
York County Superior Court docket number CV-2019-11
FOR CLERK REFERENCE ONLY
4 Because the very existence of an agreement to arbitrate remains unproved, we do not, despite
TPR’s urging, address whether TPR’s fraud claim would fall within the scope of the arbitration
provision in Paychex’s version of the contract nor, indeed, whether the initial resolution of that
question belongs to a court rather than to an arbitrator. See Snow v. Bernstein, Shur, Sawyer & Nelson,
P.A., 2017 ME 239, ¶ 10, 176 A.3d 729; V.I.P., Inc. v. First Tree Dev. Ltd. Liab. Co., 2001 ME 73, ¶ 4, 770
A.2d 95.