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Carter v. Cathedral Ave. Co-op.

DISTRICT OF COLUMBIA COURT OF APPEALS


May 31, 1995

HOPE H. CARTER, ET AL., APPELLANTS,
v.
CATHEDRAL AVENUE COOPERATIVE, INC., APPELLEE.

Appeal from the Superior Court of the District of Columbia. (Hon. Nan R. Shuker, Trial Judge).

Before Wagner, Chief Judge,* Terry, Associate Judge, and Kern, Senior Judge.

PER CURIAM: This matter has been before us on two prior occasions and this court has set forth the basic facts in its prior decisions. See Carter v. Cathedral Avenue Cooperative, Inc., 532 A.2d 681 (D.C. 1987) (Carter I), and Carter v. Cathedral Avenue Cooperative, Inc., 566 A.2d 716 (D.C. 1989) (hereinafter Carter II).

This appeal involves a dispute over the procedure described in an arbitration provision - whether one party's failure to name an arbitrator within the thirty days allowed under the arbitration clause contained in a lease mandates that a court order arbitration before a single arbitrator or is itself an arbitrable issue to be ruled on by the three member panel the lease's arbitration clause provides.

Briefly, Hope H. Carter and John Hemphill, Jr. (the "Landlords") are parties to a ninety-nine year ground lease with the Cathedral Avenue Cooperative, Inc. (the "Tenant"). In November 1984, the Landlords notified the Tenant of their intention to increase the ground rent. A dispute ensued, and on April 12, 1985, the Landlords demanded of the Tenant that the dispute regarding the rent increase be resolved in accordance with the arbitration provisions of the ground lease. The Landlords in this letter named an arbitrator. In response, the Tenant filed a civil action seeking an injunction to enjoin the operation of the arbitration clause in the lease. The trial court granted a temporary restraining order and then a permanent injunction, precluding the Landlords from arbitrating the rent dispute.

In Carter II, supra, 566 A.2d 716, we held that the timeliness of notice as well as the rent dispute were arbitrable and we thereby effectively dissolved the trial court's injunction. The Tenant filed a petition for rehearing and rehearing en banc, which this court denied on December 21, 1989. On March 21, 1990, the trial court denied the Tenant's Rule 60 (b) motion to reinstate the injunction.

On May 22, 1990, the Landlords notified the Tenant that they intended to arbitrate all of the issues in dispute before the sole arbitrator named in their April 12, 1985 letter. The Landlords asserted that the Tenant had waived its right to appoint an arbitrator by letting the thirty-day time period in the arbitration clause expire. *fn1

The parties dispute whether the Landlords' May 22, 1990, letter constituted a new demand for arbitration, giving the Tenant thirty days to appoint an arbitrator, or whether the Tenant had waived its choice of an arbitrator because, despite the ongoing litigation during the proceeding five years, any tolling of the thirty days since the original April 12, 1985, demand for arbitration had expired.

The Landlords moved in the trial court to compel arbitration before a sole arbitrator - the person they had chosen under the arbitration clause. The trial court ruled that the arbitration should proceed before a three-member arbitration panel and that the panel could decide the issue of the timeliness of the arbitration selection. Importantly to this appeal, the court's order dated November 21, 1990, also states "that this Order is without prejudice to the right of the Applicants to submit to the arbitrators the question of whether Mr. Kevin Curnyn [named by the Landlords] should act as the sole arbitrator due to the Cooperative's alleged failure to appoint its arbitrator in a timely fashion." We affirm the trial court.

The Landlords argue that the trial court erred in not ordering arbitration before a single arbitrator under the terms of the arbitration clause in the lease agreement. They argue that the trial court relied upon Texas Eastern Transmission Corp. v. Barnard, 285 F.2d 536 (6th Cir. 1960), which they assert is distinguishable from the instant case. In Texas Eastern, a party was three days late in naming an arbitrator. One party proceeded to arbitration ex parte before one arbitrator. The other party moved to compel arbitration before a three member panel. The court held that time was not of the essence in the contract and that it would be unfair and against the general principles of arbitration to strictly apply the thirty-day provision. The Landlords argue that the three-day delay in Texas Eastern is quite different from the several-month delay here. We are not persuaded that the delay in the instant case, under the unusual circumstances of two separate court appeals, renders Texas Eastern distinguishable from this case. *fn2 More importantly, here the arbitration agreement specifically provides that procedural issues arising from an arbitrable issue be determined by the three-member arbitration panel.

In Carter II, supra, 566 A.2d at 717-18, we recognized the principle that "arbitration clauses should be broadly construed." The instant arbitration clause states in relevant part:

In case any dispute, disagreement, difference, or question shall arise at any time hereafter between the Landlord and the Tenant, or any person claiming under either of them, in connection with or in relation to the value of any property, ability or capacity of any property to produce net rentals, the amount of insurance coverage, the lawful use of the demised premises or the Improvements or any matter which is expressly referable to arbitration under the terms hereof, then such dispute, disagreement, difference or question shall be submitted to and determined by arbitration at the choice of either the Landlord or the Tenant. [Emphasis added.]

As we noted in Carter II:

To be sure, the arbitration clause in the instant case is less expansive than a clause providing for arbitration of "any differences arising with respect to the interpretation of this contract or the performance of any obligation hereunder," [AT & T Technologies v. Communications Workers, 475 U.S. 643, 650, 89 L. Ed. 2d 648, 106 S. Ct. 1415 (1986)]; or providing that "any controversy or claim arising out of or resulting from this agreement or the breach thereof, shall be settled by arbitration," Sindler v. Batleman, [416 A.2d 238, 239 (D.C. 1980)], in that the parties agreed that only certain delineated areas of controversy would be subject to arbitration. However, in specifying these areas, the agreement sweepingly brought within the ambit of arbitrable issues "any dispute, disagreement, difference or question" arising "in connection with or in relation to" the specified areas.

566 A.2d at 719 (footnote omitted). Thus, we held in Carter II that the language of the arbitration clause embraces the timeliness of the notice as well as the actual rent dispute. Id. The basis of this appeal is a further dispute that now has arisen between the parties over the composition of the arbitration panel.

The Supreme Court, in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909 (1964), addressed the procedural posture of a labor arbitration - whether certain steps had to be followed in order even to initiate an arbitration. The Court concluded: "Once it is determined, as we have, that the parties are obligated to submit the subject matter of a dispute to arbitration, 'procedural' questions which grow out of the dispute and bear on its final Disposition should be left to the arbitrator." Id. at 557. This court has already decided in the instant case that the rent increase and timeliness of the notice are subject to arbitration. Carter II, supra, 566 A.2d 716. Thus, under Wiley, other procedural issues involving the instant dispute should be decided by that body described in the arbitration agreement, viz, a three-member arbitration panel.

In addition, many courts have determined that issues of timing under an arbitration clause are procedural issues to be determined by the arbitrators and not the courts. See, e.g., Washington-Baltimore Newspaper Guild, Local 35 v. Washington Post, 294 U.S. App. D.C. 342, 345, 959 F.2d 288, 291 (1992) (ruling that timeliness is an issue for the arbitrator); Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 121 (2d Cir. 1991) (statute of limitations/time-bar defense is issue for arbitrators not the courts); In re Arbitration No. AAA13-161-0511-85 Under Grain Arbitration Rules v. Cargill Inc., 867 F.2d 130, 133 (2d Cir. 1989) (stating same); Nursing Home & Hosp. Union No. 434 AFL-CIO-LDIU v. Sky Vue Terrace, Inc., 759 F.2d 1094, 1097 (3d Cir. 1985) (time limits are for the arbitrators); Washington Hosp. Center v. Service Employees Int'l Union Local 722, 241 U.S. App. D.C. 186, 191, 746 F.2d 1503, 1507-08 (1984) (procedural requirements are issues for the arbitrators); Daiei, Inc. v. U.S. Shoe Corp., 755 F. Supp. 299, 303 (D. Haw. 1991) (arbitrability is an issue for the arbitrator); Exber, Inc. v. Sletten Constr. Co., 92 Nev. 721, 558 P.2d 517, 520-21 (Nev. 1976) ("question of the timeliness of the demand for arbitration should have been resolved by arbitration"); County of Rockland v. Primiano Constr. Co., 51 N.Y.2d 1, 409 N.E.2d 951, 431 N.Y.S.2d 478 (N.Y. 1980) (concluding same). *fn3

The instant case, like all these cases, involves a determination of the conditions for conducting an arbitration. These conditions, including whether a party has waived the three-member panel by failing to name an arbitrator within 30 days, are all part of the arbitration process itself and thus subject to arbitration. Consistent with our analysis in Carter II we again conclude that the instant dispute regarding the composition of the arbitration panel is a "dispute, disagreement, difference or question" arising in connection with or in relation to" an arbitrable issue and therefore is embraced by the arbitration clause. *fn4 Our Conclusion is consistent with the arbitration clause and the general philosophy that encourages arbitration and that arbitration clauses should be broadly construed.

In sum, the trial court correctly determined that the issue whether the Tenant waived its option to have the rent dispute resolved before a three-member arbitration panel by failing to name its arbitrator within thirty days is an issue to be resolved by a panel of three arbitrators. Therefore, the decision of the trial court must be and is

Affirmed. *fn5


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