Opinion
No. 60406-6-I.
November 3, 2008.
Appeal from a judgment of the Superior Court for King County, No. 07-2-08907-1, John P. Erlick, J., entered July 3, 2007.
Affirmed by unpublished opinion per Leach, J., concurred in by Appelwick and Lau, JJ.
UNPUBLISHED OPINION.
Leslie Parrish appeals a superior court order denying her motion to vacate an arbitration award. We hold that Parrish waived her right to appeal this award and, in the alternative, that her appeal fails on its merits. We affirm.
Background
Richard Bach is the author of the popular novella Jonathan Livingston Seagull, for which he obtained a copyright in 1972. Shortly after he married Leslie Parrish in 1981, Bach filed for federal bankruptcy protection. All of Bach's copyrights, including Jonathan Livingston Seagull, were to be sold in the bankruptcy proceedings. Parrish purchased Jonathan Livingston Seagull and another of Bach's copyrights from the bankruptcy estate with $50,000 of her separate funds. At that time, she arranged to give Bach 50 percent of her ownership in the copyrights.
The couple divorced in 1999. They entered a property settlement agreement in which they agreed to own several items of property, including the Jonathan Livingston Seagull copyright, as tenants in common. A year later, they entered into a mediated settlement agreement, dividing the property they held as co-owners and tenants in common under the original property settlement agreement. On March 3, 2000, they signed a settlement agreement outlining the terms of their mediated agreement, which stated that "[t]he parties contemplate the preparation of more formal documents to memorialize this agreement." The agreement also provided:
Richard will receive all rights to the books he has written (whenever earned), except for the production of Jonathan Livingston Seagull ice/ballet/aerial show inclusive of live TV and other theatrical rights of the production, which will be assigned to Leslie. The parties have reviewed paragraph 1 of the attached assignment of rights and are in agreement with the scope of the assignment set forth in that paragraph. On September 12, 2000, the parties signed an amended settlement agreement, which stated, "Parrish hereby quitclaims to Bach pursuant to the Mediated Settlement Agreement, all of those items listed on Exhibit B hereto and incorporated herein by this reference." Exhibit B stated, in pertinent part,
Bach retains all rights to Jonathan Livingston Seagull, except those rights granted to Parrish under the Assignment of Rights in the Novel Jonathan Livingston Seagull signed by Bach on June 16, 2000, attached hereto as Exhibit G. . . . Bach is entitled to receive all future income from Jonathan Livingston Seagull from rights he has retained. Parrish is entitled to all income from Jonathan Livingston Seagull from the rights she has retained as defined in Exhibit G.
The only rights related to Jonathan Livingston Seagull that Bach assigned to Parrish were exclusive theatrical rights to produce an "ice/ballet/aerial show" based on the novel. Both agreements provided that future disputes would be resolved in arbitration by Judge Burdell.
In 2005, Bach sued Forever Living Products (FLP) for copyright infringements, including infringements that occurred before the parties executed their settlement agreement. Parrish moved to intervene as a plaintiff on February 13, 2007. Before the court ruled on Parrish's motion, Bach and FLP settled, and the action was dismissed. Bach then filed a motion to compel Parrish to arbitrate her right to share in the proceeds of the settlement. Parrish opposed the motion on two alternative grounds: (1) the issue was not arbitrable because, as a matter of federal law, the parties' agreement did not assign Parrish's interest in accrued causes of action to Bach or (2) the ownership of accrued causes of action was not covered by the parties' agreement and therefore not subject to the agreement's arbitration clause.
The superior court granted Bach's motion and ordered the parties to arbitrate the issue before Judge Burdell. Judge Burdell awarded the accrued causes of action to Bach. Parrish moved to vacate the arbitrator's award, arguing that the arbitrator exceeded his powers by committing an error of law on the face of the award, or, in the alternative, there was evident partiality by the arbitrator. The superior court denied the motion. Parrish appeals the order denying vacation of the arbitrator's award and the order compelling arbitration.
Discussion
Appellate courts review the arbitrability of a dispute de novo. The sole question before the court is whether the parties bound themselves to arbitrate the particular dispute. The party opposing arbitration bears the burden of showing that there is no enforceable arbitration agreement.
Nelson v. Westport Shipyard, Inc., 140 Wn. App. 102, 116, 163 P.3d 807 (2007), review granted, 163 Wn.2d 1033, 187 P.3d 268 (2008).
Meat Cutters Local No. 494 v. Rosauer's Super Markets Inc., 29 Wn. App. 150, 154, 627 P.2d 1330 (1981).
Adler v. Fred Lind Manor, 153 Wn.2d 331, 342, 103 P.3d 773 (2004).
Judicial review of an arbitration award is restricted to grounds identified by statute. Judicial review does not include a review of the merits of the case, and the court will not ordinarily consider the evidence that was before the arbitrator. Appellate review of an arbitrator's award is limited to review of the decision by the court that confirmed, vacated, modified, or corrected the award.
Barnett v. Hicks, 119 Wn.2d 151, 153-54, 829 P.2d 1087 (1992).
Davidson v. Hensen, 135 Wn.2d 112, 119, 954 P.2d 1327 (1998).
Expert Drywall, Inc. v. Ellis-Don Constr., Inc., 86 Wn. App. 884, 888, 939 P.2d 1258 (1997).
1. Arbitrability
The original mediated settlement agreement provided that "[a]ny further disputes between the parties will be decided in binding arbitration with no appeal by Charles S. Burdell, Jr. with discretion to award attorney fees and costs to either side." The amended agreement stated:
This Amended Property Settlement Agreement, the underlying Mediated Settlement Agreement, and the March 8, 1999 Decree of Dissolution . . . are incorporated herein by this reference . . . and there are no other agreements existing between the parties with reference to such matters. If the parties have a dispute as to the language or the terms of this Agreement and/or the underlying Settlement Agreement, unless otherwise set forth herein, they shall submit the dispute to the Honorable Charles S. Burdell (ret.) of Judicial Dispute Resolution LLC, Seattle, Washington, for binding arbitration, or if he is unavailable, to another arbitrator with Judicial Dispute Resolution.
Parrish maintains the position that the amended agreement conflicts with the original agreement and that the later agreement controls. She argues that the provision in the amended agreement providing that "[i]f the parties have a dispute as to the language or the terms of this Agreement and/or the underlying Settlement Agreement . . . they shall submit the dispute to [Judge Burdell] for binding arbitration" overrides the original provision that "[a]ny further disputes between the parties will be decided in binding arbitration with no appeal." Thus, Parrish concludes, because accrued causes of action were not in "the language or the terms" of the agreement, they are not subject to arbitration. We disagree.
The amended agreement incorporates by reference the original agreement, and it neither revokes nor contradicts the general arbitration clause in the original agreement. The amended agreement expressly states that the original agreement, the amended agreement, and other documents comprise a single "entire agreement" between the parties. Thus, the parties' "entire agreement" includes their agreement to arbitrate "any further disputes" between them. Finally, whether a particular asset is covered by the dissolution agreement is necessarily a dispute "as to the language or terms" of the agreement. This includes a dispute as to whether the transaction constituted a "comprehensive and unrestricted" transfer of assets. We affirm the trial court's order compelling arbitration.
Nat'l Council of Young Israel, Inc. v. FEIT Co., 347 F. Supp. 1293, 1295 n. 3 (S.D.N.Y. 1972). See also SAPC, Inc. v. Lotus Dev. Corp., 921 F.2d 360, 363-64 (1st Cir. 1990).
2. Waiver of Right to Appeal
Bach argues that Parrish waived the right to any judicial review of the award, including the right to move to vacate the award under chapter 7.04A RCW. In Harvey v. University of Washington, this court declined to review an arbitration award under an agreement that provided in part, "The parties agree that the private trial judge shall decide all issues presented in the case. . . . The private trial decision shall be binding upon the parties, and no appeal shall be permitted." The court held that "a provision in an arbitration agreement that knowingly and voluntarily waives the right to appellate review is enforceable, and accordingly we decline to review the arbitration award in this case."
118 Wn. App. 315, 76 P.3d 276 (2003).
Harvey, 118 Wn. App. at 319 (alteration in original).
Harvey, 118 Wn. App. at 323.
Parrish attempts to distinguish Harvey because the agreement in that case expressly referenced chapter 7.04 RCW, evidencing the parties' knowing waiver of a statutory right. However, Harvey does not require parties to reference a specific statute. Rather, it requires that parties knowingly and voluntarily waive "the right to appellate review," which Parrish did when she agreed that "[a]ny further disputes between the parties will be decided in binding arbitration with no appeal."
Recodified as ch. 7.04A RCW.
Harvey, 118 Wn. App. at 323.
We conclude that Parrish knowingly and voluntarily waived her right to appeal the arbitration award.
3. Relief on the Merits
We need not review the arbitration award in this case because the parties validly waived the right to appeal it. In the alternative, however, Parrish would not be entitled to relief under chapter 7.04A RCW even if she had not waived her right to appeal.
A reviewing court may vacate an arbitration award only for grounds enumerated by statute, and generally the grounds for vacation must appear on the face of the award. Parrish argues two statutory grounds for vacating this award: (1) the arbitrator exceeded his powers and (2) there was evident partiality by an arbitrator appointed as a neutral. An arbitrator exceeds his powers where he commits an error of law on the face of the award. The party seeking to vacate the award bears the burden of proof.
Westmark Props., Inc. v. McGuire, 53 Wn. App. 400, 402, 766 P.2d 1146 (1989).
See Boyd v. Davis, 127 Wn.2d 256, 263, 897 P.2d 1239 (1995).
Hanson v. Shim, 87 Wn. App. 538, 546, 943 P.2d 322 (1997).
In reviewing an arbitrator's award, the trial court is not permitted to search the four corners of the underlying contract to discern the parties' intent. Unless the award itself shows the adoption of an erroneous rule or mistake in applying the law, the award will not be vacated or modified.
Boyd, 127 Wn.2d at 263.
Boyd, 127 Wn.2d at 263 (quoting Northern State Constr. Co. v. Banchero, 63 Wn.2d 245, 249-50, 386 P.2d 625 (1963)).
The arbitrator's award states, in pertinent part: The overwhelming preponderance of the evidence establishes that the March 3, 2000 Settlement Agreement and the September 2000 Amended Property Settlement Agreement were comprehensive transactions which transferred to Mr. Bach, as his sole and separate property, any and all rights relating to accrued causes of action for copyright infringement. Therefore, all right, title and interest, of any nature whatsoever, relating to accrued causes of action for copyright infringement of books written by Mr. Bach are hereby awarded to him.
Parrish argues that there is clear legal error on the face of the award, because the "comprehensive transaction" exception to the general rule that transfers of accrued causes of action must be explicit does not apply to dissolution agreements.
This is not an obvious error of law. Courts have held that an assignment of a copyright generally does not include assignment of accrued causes of action for earlier infringements of the copyright, unless expressly included in the assignment. However, courts have made two exceptions to this general rule. One exception applies where the grantor of the copyright corrects the defect in the initial transfer by an express declaration that it intended to transfer the right to pursue past infringement claims. The other exception applies where there is a "comprehensive and unrestricted" transfer of assets.
Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881, 900 (9th Cir. 2005); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991).
See, e.g., Parfums Givenchy, Inc. v. C C Beauty Sales, Inc., 832 F. Supp. 1378, 1384 (C.D. Cal. 1993); Infodek, Inc. v. Meredith-Webb Printing Co., 830 F. Supp. 614, 620-21 (N.D. Ga. 1993).
See, e.g., Nat'l Council of Young Israel, 347 F. Supp. at 1295 n. 3; SAPC, 921 F.2d at 363-64.
Parrish argues that this exception applies only to sales of all business assets from assignor to assignee and never applies to the transfer of assets in a dissolution agreement. While it is true that the cases cited by Parrish all deal with transfers of business assets, Parrish does not cite any authority holding that this exception cannot also apply to transfers of property in a dissolution. Thus, it was not a clear error of law for the arbitrator to apply the exception here. This court does not have authority to reexamine the evidence before the arbitrator to determine whether he correctly determined that there were "comprehensive transactions" sufficient to convey Parrish's interest in the accrued causes of action to Bach.
Parrish also argues that the arbitrator exhibited evident partiality solely because his ruling was such an extreme departure from correct legal principles that it must have been biased. This is based on her argument that the arbitrator made a clear error of law in concluding that the parties' agreements were "comprehensive transactions" that transferred the accrued causes of action to Bach. As explained above, whether the agreements constituted a comprehensive transaction was a factual question this court is not permitted to review. No "extreme and unusual circumstances" justify an inference of bias here.
Celtech. Inc. v. Broumand, 584 A.2d 1257, 1259-60 (D.C. 1991).
Affirmed.