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Grad v. Wetherholt Galleries

June 26, 1995


Appeal from the Superior Court of the District of Columbia. (Hon. John H. Suda, Trial Judge).

Before Schwelb and Ruiz, Associate Judges, and Belson, Senior Judge.

The opinion of the court was delivered by: Ruiz

Ruiz, Associate Judge : Appellants, Howard and Judith Grad, asked the Superior Court to vacate an arbitration award rendered against them and in favor of appellee, Wetherholt Galleries ("Wetherholt"), on the ground that they were not parties to any arbitration agreement with Wetherholt. The Superior Court denied the application and confirmed the award, holding that the arbitrator had the authority to determine who was a party to the agreement and that, in any event, the Grads had by their failure to object agreed to submit the question to arbitration. Because the trial court erred in deferring to the arbitrator's decision re garding the Grads' consent to arbitration and in finding that the Grads had participated in the arbitration proceeding without objecting, we reverse and remand for further proceedings.


Although the record in this case is incomplete, it appears that the facts material to our consideration of the case are undisputed. A corporation called Gallery Marketing, of which one or both of the Grads were either owners or officers, contracted with Wetherholt to render certain services, the nature of which is unimportant for present purposes. The contract contained a clause requiring that "any dispute between the parties shall be submitted to binding arbitration under American Arbitration Association auspices." *fn1

A dispute arose between Gallery Marketing and Wetherholt, resulting in cross-claims being filed with the American Arbitration Association. During the course of the proceedings, Wetherholt amended its claims to assert them against the Grads as well. Wetherholt's theory was that Gallery Marketing was merely the Grads' alter-ego. The arbitrator rendered a substantial award in favor of Wetherholt against Gallery Marketing and the Grads jointly and severally.

After an unsuccessful effort to have the arbitrator modify her award, the Grads and Gallery Marketing filed an application in the Superior Court to have the award modified or vacated. They contended that the arbitrator had exceeded her authority in rendering an award against the Grads. Wetherholt filed a cross-application seeking to have the award confirmed. The trial court held a hearing on the pending cross-applications. At the close of the hearing, the trial court ruled that it would confirm the award as to all parties. The Grads then noted this timely appeal. *fn2


We review the trial court's decision in this case de novo. Superior Court Civil Rule 70-I provides that proceedings on applications to confirm arbitration awards shall be conducted summarily. *fn3 Proceeding summarily means, first, determining whether material facts are disputed and then, if necessary, conducting an expedited trial. Haynes v. Kuder, 591 A.2d 1286, 1290 (D.C. 1991). The Grads did request a hearing. However, no testimony and only one undisputed document was presented at the hearing granted by the trial court. *fn4 Because the trial court was not called on to resolve any disputed facts, the question presented to this court is one of law. See Carter v. Cathedral Ave. Coop., 566 A.2d 716, 717 n.6 (D.C. 1989) (treating arbitrability issue as question of law where parties did); see also Poire v. Kaplan, 491 A.2d 529, 533 (D.C. 1985) ("The question of whether an issue is arbitrable is one of law, and a court must make its own determination on the issue.").


Wetherholt essentially contends that the trial court, and hence this court, are precluded from reviewing the arbitrator's decision that Wetherholt's claims against the Grads were subject to arbitration. It advances two theories, both adopted by the trial court: First, by participating in the arbitration proceeding, the Grads irrevocably submitted to the authority of the arbitrator. Second, the arbitrator had exclusive authority to decide who was a party to the agreement containing the arbitration clause. We disagree on both points.


The District of Columbia Uniform Arbitration Act (DCUAA) specifically contemplates a determination by a court whether an arbitration agreement requires a person to submit to arbitration. D.C. Code §§ 16-4302, *fn5 16-4311 (a)(5) (1989). Moreover, the DCUAA contemplates such proceedings either before or after the award is made. See Koch v. Waller & Co., 439 So. 2d 1041, 1043 (Fla. Dist. Ct. App. 1983) (applying the Florida version of the Uniform Arbitration Act). Under the DCUAA, the court may vacate an arbitral award where "there was no arbitration agreement and the issue was not adversely determined in proceedings under § 16-4312 and the party did not participate in the arbitration hearing without raising the objection." D.C. Code § 16-4311(a)(5). *fn6 To require the objecting party to refuse to participate in the arbitration proceeding as a prerequisite to attacking the resulting award would render part of section 16-4311 (a)(5) a nullity. That section only requires that the party seeking to vacate an award because there was no agreement between the parties to arbitrate have "raised the objection" during the proceeding. Thus, a party that participates in an arbitration over its objection is not barred from raising that objection after the award. See Hot Springs County Sch. Dist. v. Strube Constr., 715 P.2d 540, 546 (Wyo. 1986) (applying the Wyoming version of the Uniform Arbitration Act).

The record shows that the Grads did raise the objection to arbitration during the proceedings. The brief filed with the arbitrator by Howard Grad as president of Gallery Marketing vigorously and repeatedly asserts that the Grads are not parties to the arbitration ...

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