Opinion
No. 2-259 / 01-1695.
Filed June 19, 2002.
Appeal from the Iowa District Court for Des Moines County, CYNTHIA H. DANIELSON, Judge.
Citifinancial, Inc. appeals from the district court's denial of its motion to compel arbitration. AFFIRMED.
James R. Swanger, Edward M. Mansfield, and Michael R. Beck of Belin, Lamson, McCormick, Zumbach and Flynn, P.C., Des Moines, for appellant.
Gerald D. Goddard of Cray, Goddard, Miller Taylor, L.L.P., Burlington, for appellee.
Considered by HUITINK, P.J., and VOGEL and EISENHAUER, JJ.
Citifinancial, Inc. appeals from the district court's denial of its motion to compel arbitration. It contends the parties' dispute over a severance agreement is an employment related dispute, requiring arbitration pursuant to an executed employment contract between the parties. We review the district court's ruling for correction of errors at law. Wesley Ret. Services, Inc. v. Hansen Lind Meyer, Inc., 594 N.W.2d 22, 29 (Iowa 1999).
Dan Mitchell entered into an employment agreement with Citifinancial, Inc. (Citifinancial) on March 25, 1999. The agreement required the parties to arbitrate all employment related disputes. Mitchell resigned his position with Citifinancial in February 2001 after Citifinancial accused him of improperly booking three loans. In March 2001, Citifinancial offered Mitchell $10,000 in exchange for releasing Citifinancial from various potential claims Mitchell alleged were the real reasons he was forced to resign. Mitchell refused to sign this first offer. On March 22, 2001, Citifinancial executed a document offering Mitchell $75,000 to settle his claims. Mitchell accepted and signed the settlement agreement on March 23, 2001. Citifinancial then attempted to rescind this offer, claiming the $75,000 figure was a scrivener's error.
Mitchell filed a petition against Citifinancial, seeking to enforce the March 22, 2001 settlement agreement. Citifinancial answered, claiming the contract was void for unilateral mistake. Citifinancial filed a motion to compel arbitration, arguing the 1999 employment agreement required an arbitrator decide the issue. The motion was denied and Citifinancial appeals.
A district court's role in considering a motion to compel arbitration is to determine whether a valid agreement to arbitrate exists and whether the controversy alleged is embraced by that agreement. Lewis Cent. Educ. Ass'n v. Lewis Cent. Cmty. School Dist., 559 N.W.2d 19, 21 (Iowa 1997). Here, the district court found no agreement to arbitrate existed because the March 22, 2001 settlement agreement superceded the March 25, 1999 employment agreement. While the 1999 agreement required the parties to arbitrate all employment related disputes, the 2001 agreement expressly stated any rights under the Travelers Group Inc. dispute resolution procedure, including the employment arbitration policy, were being released by signing the agreement.
Citifinancial argues the district court erred. It argues the question of whether the subsequent agreement of the parties had the effect of canceling the earlier agreement, including the arbitration clause, is for the arbitrator to decide. Citifiancial cites the case of Wilson Wear, Inc. v. United Merchants Mfrs., Inc., 713 F.2d 324 (7th Cir. 1983). Wilson Wear states:
[W]hen the dispute of mutual cancellation relates to the entire contract, rather than the arbitration clause, the question of cancellation is referable to the arbitrator, provided of course that the dispute falls within the scope of the arbitration clause and the parties have not otherwise demonstrated an intention to the contrary.Wilson Wear, 713 F.2d at 328. Here, Citifinancial argues the entire agreement is void due to unilateral mistake. Our inquiry then turns to whether the dispute at hand falls within the scope of the arbitration clause.
The employment contract of the parties requires all employment related claims be arbitrated. We must decide whether the issue of the parties' settlement being void for unilateral mistake is an employment related question. We find it is not. Although the settlement agreement purports to resolve a dispute relating to Mitchell's employment with Citifinancial, the issue now is one of contract construction. Whether the agreement is void due to Citifinancial's unilateral mistake is unrelated to Mitchell's employment with Citifinancial. Because the dispute falls outside the scope of the parties' agreement to arbitrate, the district court properly denied Citifinancial's motion to compel arbitration.
AFFIRMED.