Opinion
No. COA08-1173.
Filed May 5, 2009.
Catawba County No. 06 CVS 3993.
Appeal by defendant from order entered 30 July 2009 by Judge Nathaniel J. Poovey in Catawba County Superior Court. Heard in the Court of Appeals 11 March 2009.
Sigmon, Sigmon Isenhower, by C. Randall Isenhower, for plaintiff appellee. Patrick, Harper Dixon, L.L.P., by Stephen M. Thomas, for defendant appellant.
Healthsoft, Inc. ("defendant"), appeals from order entered denying its motion to compel arbitration. We affirm.
I. Background
Christopher Brown BS, Dent, DDS, PA ("plaintiff") operates a dental practice located in Catawba County, North Carolina. Defendant is a Texas corporation, with its office in Richardson, Texas. In January 2001, plaintiff originally contracted with defendant for a new computer system with software and corresponding hardware to operate the computer and network system ("January 2001 contract"). Between August 2001 and October 2003, the parties entered into six subsequent contracts ("subsequent contracts") for hardware and software maintenance and services, support, and equipment. The contracts contained clauses stating that they were governed under the laws of the State of Texas. The January 2001 contract did not contain an arbitration clause; the subsequent contracts did.
Plaintiff filed complaint on 5 December 2006, alleging breach of express warranties, breach of implied warranties, negligence, and unfair and deceptive trade practices. Plaintiff alleged: (1) it experienced "difficulties and problems" with the "computer system"; (2) "[i]n attempting to correct the errors and problems . . . Defendant . . . allowed a virus to run through the Plaintiff's system"; (3) it "had to purchase two new servers . . . at a cost of approximately $15,000.00"; (4) "Defendant . . . attempted several other methods to correct the deficiencies and problems . . . but to date has failed and refused to correct the problems"; and (5) "due to one attempt by the Defendant to correct the problems, 999,999 duplicate x-rays appeared in Plaintiff's computer system . . . slowing the system to a point where it was virtually unworkable[.]"
On 9 March 2007 defendant filed a motion to stay the proceeding and compel arbitration. Defendant attached copies of the subsequent contracts, claiming those contracts' arbitration provisions applied to this dispute. The trial court denied defendant's motion on 30 July 2008. Defendant appeals.
II. Issue
The sole issue on appeal is whether the trial court erred by denying defendant's motion to stay the action and compel arbitration. We conclude that the trial court properly denied defendant's motion.
III. Interlocutory Appeal
As a preliminary matter, we address the interlocutory nature of this appeal. "An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy." Veazey v. Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381, reh'g denied, 232 N.C. 744, 59 S.E.2d 429 (1950).
A party may appeal an interlocutory order under two circumstances. First, the trial court may certify that there is no just reason to delay the appeal after it enters a final judgment as to fewer than all of the claims or parties in an action. N.C.G.S. § 1A-1, Rule 54(b) (1990). Second, a party may appeal an interlocutory order that "affects some substantial right claimed by the appellant and will work an injury to him if not corrected before an appeal from the final judgment." Dep't of Transp. v. Rowe, 351 N.C. 172, 174-75, 521 S.E.2d 707, 709 (1999) (quoting Veazey, 231 N.C. at 362, 57 S.E.2d at 381).
In Sciolino v. TD Waterhouse Investor Servs. Inc., this Court stated "`an order denying arbitration is immediately appealable because it involves a substantial right, the right to arbitrate claims, which might be lost if appeal is delayed.'" 149 N.C. App. 642, 644, 562 S.E.2d 64, 66, disc. review denied, 356 N.C. 167, 568 S.E.2d 611 (2002) (quoting Martin v. Vance, 133 N.C. App. 116, 119, 514 S.E.2d 306, 308 (1999)). Accordingly, we review the merits of defendant's appeal.
IV. Motion to Compel Arbitration
Defendant argues the trial court erred when it denied its motion to compel arbitration. Noting North Carolina's public policy favoring settling disputes by arbitration, defendant contends that the trial court should have compelled arbitration because "the disputes described in plaintiff's complaint are `disputes arising out of or relating to' the many agreements entered into after the initial purchase and are subject to the arbitration provisions of those agreements." We disagree.
When a party disputes the existence of a valid arbitration agreement, the trial judge must determine whether an agreement to arbitrate exists. The trial court's findings regarding the existence of an arbitration agreement are conclusive on appeal where supported by competent evidence, even where the evidence might have supported findings to the contrary. Accordingly, upon appellate review, we must determine whether there is evidence in the record supporting the trial court's findings of fact and if so, whether these findings of fact in turn support the conclusion that there was no agreement to arbitrate. Id. at 645, 562 S.E.2d at 66 (citations omitted); see N.C. Gen. Stat. § 1-569.3 (2007).
Defendant challenges the trial court's findings of fact numbered 11 through 16:
11. That Exhibit "C" . . . contained a Binding Arbitration clause in Paragraph 22. Exhibit "C" dealt with telephone software support, and software updates, which are not the subject of this action.
12. That Exhibit "D" . . . dealt with Telephone Software Support and Software Updates, which are not the subject of this action, and also contains an arbitration clause in Paragraph 22.
13. That Exhibit "E" . . . contained an arbitration clause in Paragraph 22. Said Exhibit "E", which was a Sales Order for a WYSE Terminal, in the amount of $550.00, is not the subject of this action.
14. That Exhibit "F" . . . is the same as Exhibit "E".
15. That Exhibit "G" . . . which contained an arbitration clause in Paragraph 22, was complimentary (at no charge), and dealt with removing Dr. Holt's name from a statement. The removal of Dr. Holt's name from the statement is not the subject of this action.
16. That each of the Arbitration clauses in the Exhibits . . . limited arbitration to disputes arising out of, or relating to, each of the said individual agreements.
After reviewing the contracts contained in the record on appeal, we hold "there is evidence in the record supporting the trial court's findings of fact" numbered 11 through 16. Id. We now turn to whether these findings of fact, together with the unchallenged findings of fact "support the conclusion that there was no agreement to arbitrate."
Id.
The determination of "whether a dispute is subject to arbitration involves a two pronged analysis; the court must ascertain both (1) whether the parties had a valid agreement to arbitrate, and also (2) whether `the specific dispute falls within the substantive scope of that agreement.'" Raspet v. Buck, 147 N.C. App. 133, 136, 554 S.E.2d 676, 678 (2001) (citation omitted); see also Certain Underwriters at Lloyd's v. Celebrity, Inc., 950 S.W.2d 375, 377 (Tex.App. Tyler 1996) ("Under Texas law, in order to compel arbitration, a party must establish: (1) the existence of a valid agreement to arbitrate; and (2) that the claims asserted by the plaintiff are within the scope of the arbitration agreement.") (citation omitted), writ of error dismissed for want of jurisdiction, 988 S.W.2d 731 (Tex. 1998).
Both parties present the arbitration provision as an issue of North Carolina law. When, and to what extent, the Texas choice-of-law provision will become controlling is not discussed by either party. North Carolina has adopted the Revised Uniform Arbitration Act, at N.C. Gen. Stat. § 1-569.1, et. seq. (2005). "Texas [has] adopted the Uniform Arbitration Act with minor changes." Holk v. Biard, 920 S.W.2d 803, 808 (Tex.App. Texarkana 1996) Despite textual differences, the rule to compel arbitration under both North Carolina and Texas law is the same. See N.C. Gen. Stat. § 1-569.6 (2005); Tex. Civ. Prac. Rem. Code § 171.021 (2005).
Provision 11.7 of the January 2001 contract states "[t]he express terms of this Agreement control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing." The subsequent contracts' use of the words "or relating to" is insufficient to modify the original January 2001 contract. Defendant has failed to show "a valid agreement to arbitrate[.]" Raspet, 147 N.C. App. at 136, 554 S.E.2d at 678; see also Certain Underwriters, 950 S.W.2d at 378 ("[T]here is a strong presumption favoring the arbitration of disputes, such a presumption cannot be applied to stretch a contractual clause beyond the scope intended by the parties or to allow modification of the plain and unambiguous provisions of anagreement.") (emphasis supplied). The trial court's conclusion of law stating "[d]efendant's Motion to Compel Arbitration should be denied" is therefore supported by its findings of fact. This assignment of error is overruled.
V. Conclusion
Defendant's argument attempts to stretch the terms "relating to" beyond a reasonable interpretation. Incorporating the subsequent contracts is prohibited under the express terms of the January 2001 contract. The trial court's conclusion of law that "[d]efendant's Motion to Compel Arbitration should be denied" is supported by its findings of fact and its order is affirmed.
Affirmed.
Judges HUNTER, Robert C., and CALABRIA concur.
Report per Rule 30(e).