Anne Arundel County v. Fraternal Order of Anne Arundel Detention Officers & Personnel

ELDRIDGE, Judge. This case concerns the validity of a provision in a collective bargaining agreement between Anne Arundel County and a union to resolve certain disputes that may arise in the future through arbitration. I. Article 8, Title 4, of the Anne Arundel County Code authorizes the County to bargain collectively with certified representatives of the County’s employees with regard to various matters. The local ordinance, in §§ 4-107 and 4-110 of Article 8, Title 4, also authorizes arbitration to resolve certain types of disputes between the County and the employees’ representative.

Pursuant to the statutory authorization for collective bargaining, Anne Arundel County and the Fraternal Order of Anne Arundel Detention Officers and Personnel (the Union) entered into a collective bargaining agreement on March 21, 1984. This agreement became effective on July 1, 1984, and continued through June 30, 1987, after which it became “self-renewing for yearly periods unless written notice of intention to terminate or modify this Agreement is given by either party ... not later than January 1st of any calendar year.” Article 1, § 1.2(a), of the agreement sets forth the employee positions that are currently represented by the Union. These positions are Detention Officer I, Detention Officer II, and nurse. Section 1.2(b) of the agreement ¹⁰¹ provides that if a position is newly-created or retitled, whether it is included in the unit represented by the Union depends upon “the mutual agreement of the County and the Union.” 1 This section further provides that if an agreement cannot be reached, the dispute shall be resolved in accordance with the provisions of § 4-107(e) of Article 8 of the Anne Arundel County Code.

Under § 4-107(e), “[whenever the [County] Personnel Officer and the petitioning employee organization are in disagreement as to the determination of the appropriate representation unit, the issue shall be submitted to arbitration at the request of either party.” According to § 4-107(e)(2), the decision of the arbitrator “shall be final and binding on the parties.” 2 On March 15, 1985, Anne Arundel County established an additional position, Detention Officer III (lieutenant), to be assigned to the Detention Center. The Union sought to include this new position in the same representation unit. The County Office of Personnel, however, considered the lieutenants “management and confidential employees” and therefore not proper members of this representation unit. See Article 8, § 4-107(d) of the Anne Arundel County Code.

Pursuant to the collective bargaining agreement, the Union sought arbitration to resolve this issue. On June 24, 1985, the Acting Personnel Officer of the County informed the ¹⁰² Union that the County would not enter into arbitration, apparently deciding that the Personnel Office’s conclusion that the Detention Officer III position was “management and confidential” resolved the matter of the appropriate representation unit. 3 On September 9, 1985, the Union filed suit in the Circuit Court for Anne Arundel County seeking an order compelling arbitration, and on June 26, 1986, the Union moved for summary judgment. The County filed an opposition to the motion, as well as a cross-motion for summary judgment, contending, inter alia, that “[t]he requested arbitration is not authorized” and that the arbitration provision in the collective bargaining agreement was “ultra vires.” The circuit court granted the Union’s motion, denied the County’s motion, and issued an order compelling arbitration. The circuit court viewed the issue to be arbitrated as unlike “the amount of compensation to be set for employees or the hours to be set.” Instead, the court characterized the representation issue as “ministerial in nature.” The County appealed the order to the Court of Special Appeals.

Before any proceedings began in that court, we issued a writ of certiorari. In support of its contention that arbitration is inappropriate, the County makes two alternate arguments. First, the County asserts that, because this agreement to arbitrate is not within the Maryland Uniform Arbitration Act, 4 the common law rule applies, rendering unenforceable agreements to arbitrate disputes which, at the time the agreement was entered into, were not yet in existence. Alternatively, the County argues that, even if an agreement to ¹⁰³ arbitrate future disputes is generally enforceable, submitting this collective bargaining dispute to arbitration is invalid under this Court’s opinions in Office & Prof.

Employees Int’l v. MTA, 295 Md. 88 , 453 A.2d 1191 (1982); Maryland Cl. Emp. Ass’n v. Anderson, 281 Md. 496 , 380 A.2d 1032 (1977); and Mugford v. City of Baltimore, 185 Md. 266 , 44 A.2d 745 (1945). The County claims that arbitration of a collective bargaining dispute such as the one involved in this case is invalid unless authorized by the County Charter or by an act of the General Assembly, and that no charter provision or act of the General Assembly authorizes the arbitration.

Therefore, the County concludes, the circuit court should not have issued an order compelling arbitration.

II

Historically, when two parties entered into an agreement to arbitrate disputes, courts generally distinguished between agreements to arbitrate existing disputes and agreements to arbitrate disputes that might arise in the future. While the former agreements would be judicially enforceable, courts generally took the position, with some exceptions, that agreements to arbitrate future disputes were voidable at any time by either party before an award was made. Thus, equity courts refused to specifically enforce agreements to arbitrate future disputes, and such an agreement would not be a defense to a suit in law or equity with respect to the matter agreed to be arbitrated. See, e.g., 16 Williston on Contracts § 1923 (3d ed. 1976); Brantley on Contracts 227 (2d ed. 1912); Mullen, Arbitration Under Maryland Law, 2 Md.L.Rev. 326 (1938).

See also Insurance Company v. Morse, 20 Wall. 445, 451 , 22 L.Ed. 365 (1874); Tomlinson v. Dille, 147 Md. 161, 167 , 127 A. 746 (1925); Wilson & Co. v. Curlett, 140 Md. 147, 153-154 , 117 A. 6 (1922); Allegre v. Maryland Ins. Co., 6 H. & J. 408, 413 (1823); Contee v. Dawson, 2 Bland 264, 275-276 (1826); W.H. Blodgett Co. v. Bebe Co., 190 Cal. 665, 671 , 214 P. 38, 41 (1923); Cocalis v. Nazlides, 308 Ill. 152, 158-159 , 139 ¹⁰⁴ N.E. 95, 98 (1923); Oskaloosa Sav. Bank v. Mahaska County State Bank, 205 Iowa 1351 , 1359, 219 N.W. 530, 533-534 (1928), overruled, Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317 (Iowa 1977); Dugan v. Thomas, 79 Me. 221, 223 , 9 A. 354, 354-355 (1887); Sanford v. Boston Edison Co., 316 Mass. 631, 636 , 56 N.E.2d 1, 4 (1944); Pres’t, etc., D. & H. Canal Co. v. Pa. Coal Co., 50 N.Y. 250, 258 (1872); Pepin v. Societe St. Jean Baptiste, 23 R.I. 81, 83-84 , 49 A. 387, 388 (1901); Johnson v. Brinkerhoff, 89 Utah 530, 544-545 , 57 P.2d 1132, 1139 (1936); Kinney v. Relief Assn., 35 W.Va. 385, 387 , 14 S.E. 8 (1891), overruled, Board of Education v. W. Harley Miller, Inc., 160 W.Va. 473 , 236 S.E.2d 439 (1977); Avery v. Scott, 8 Exch. 497, 500, 155 Eng.Rep. 1447, 1448 (1853).

See additionally, Restatement of Contracts, §§ 550, 551 (1932). The Maryland Uniform Arbitration Act, Code (1974, 1984 Repl.Vol.), § 3-206(a) of the Courts and Judicial Proceedings Article, in contrast, provides that agreements to arbitrate future disputes are “valid and enforceable.” Section 3-206(b), however, provides that the Maryland Uniform Arbitration Act does not apply to an arbitration agreement between employers and employees unless the agreement expressly states that the Act applies. See Wilson v. McGrow, Pridgeon & Co., P.A., 298 Md. 66 , 467 A.2d 1025 (1983). Unless the terms of the collective bargaining agreement between Anne Arundel County and the Union make the Maryland Uniform Arbitration Act applicable, which they do not, § 3-206(a) will not apply to validate the agreement to arbitrate future disputes.

Neither side in this case has pointed to any other statute which would make the arbitration agreement between the County and the Union enforceable. 5 Consequently, if the arbitration provision is ¹⁰⁵ to be enforced, it must be enforceable as a matter of Maryland common law. See Bd. of Educ. v. P.G. Co. Educators’ Ass’n, 309 Md. 85, 95-98 , 522 A.2d 931 (1987). Many types of arbitration agreements have traditionally been enforceable in Maryland; indeed, arbitration agreements were and are encouraged by the courts and the General Assembly. See, e.g., Ch.

XXI of the Acts of 1778, § VIII; Ch. 379 of the Acts of 1878, § 1. See also Code (1974, 1984 Repl.Vol.), § 3-201 through § 3-234 of the Courts and Judicial Proceedings Article; Code (1957), Art. 7, § 1 through § 5. This Court has consistently stated that arbitration is a favored method of dispute resolution. See, e.g., Bd. of Educ. v. P.G. Co. Educators’ Ass’n, supra, 309 Md. 85 , 522 A.2d 931 , and cases there cited; Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96 , 468 A.2d 91 (1983). 6 Only one type of arbitration agreement—an agreement to arbitrate disputes that might arise in the future—has been deemed unenforceable under Maryland common law principles.

As previously indicated, courts would neither order specific performance of such agreements, Contee v. Dawson, supra, 2 Bland at 275-276, nor was the existence of an arbitration agreement a defense to a court action, Tomlinson v. Dille, supra, 147 Md. at 167 , 127 A. 746 ; Wilson & Co. v. Curlett, supra, 140 Md. at 153-154 , 117 A. 6 ; ¹⁰⁶ Allegre v. Maryland Ins. Co, supra, 6 H. & J. at 413 ; Contee, supra, 2 Bland at 276. Under many circumstances, however, even agreements to arbitrate disputes that may arise in the future have been considered enforceable under Maryland common law principles. For example, a court will enforce an arbitration agreement if the issue to be arbitrated is only a condition precedent to the bringing of an action in court.

See, e.g., Eisel v. Howell, 220 Md. 584, 588-589 , 155 A.2d 509 (1959); Wilson & Co., supra, 140 Md. at 153 , 117 A. at 8-9 ; M. & C.C. of Balt. v. Clark, 128 Md. 291 , 97 A. 911 (1916); Aetna Indem. Co. v. Waters, 110 Md. 673 , 73 A. 712 (1909); Home Ins. Co. v. Schiffs’ Sons, 103 Md. 648 , 64 A. 63 (1906); Randall v. Glenn, 2 Gill. 430, 438 (1844). See also Avery v. Scott, supra, 8 Exch. at 502, 155 Eng.Rep. at 1449.

Moreover, when a dispute arises, if the parties voluntarily proceed to arbitration pursuant to an earlier arbitration agreement, and if an award is entered, the court will enforce the award. See Cont. Mill. Co. v. Doughnut Corp., 186 Md. 669 , 48 A.2d 447 (1946); Tomlinson v. Dille, supra, 147 Md. at 167 , 127 A. at 748 .

Additionally, a court of chancery, “from the difficulty it finds in dealing with the subject in dispute without great loss or total ruin, has earnestly recommended and insisted upon the parties, submitting the matter in controversy to arbitration, according to the terms of their previous express agreement.” Contee v. Dawson, supra, 2 Bland at 276. See also Waters v. Taylor, 15 Ves.Jr. 10, 33 Eng. Rep. 658 (1808). Because the agreement between the County and the Union does not fit within any of the above-mentioned exceptions, the agreement would not have been enforceable under the earlier cases.

The Union argues, however, that even if the arbitration clause were not enforceable under prior case law, this Court should now, in accordance with contemporary views, hold that agreements to arbitrate future disputes are enforceable. In appropriate instances, as the Union points out, we have modified common law principles to reflect contemporary conditions or views. See, e.g., ¹⁰⁷ Kelley v. R.G. Industries, Inc., 304 Md. 124 , 497 A.2d 1143 (1985); Jones v. State, 302 Md. 153, 161 , 486 A.2d 184 (1985); Boblitz v. Boblitz, 296 Md. 242 , 462 A.2d 506 (1983); Adler v. American Standard Corp., 291 Md. 31, 42-43 , 432 A.2d 464 (1981); Kline v. Ansell, 287 Md. 585 , 414 A.2d 929 (1980). We agree with the Union that the earlier refusal of courts to enforce agreements to arbitrate future disputes is no longer a sensible approach.

The old rule was based on reasoning that does not withstand analysis. There is no sound public policy for distinguishing between the enforceability of some agreements to arbitrate disputes that might arise in the future and the enforceability of all other arbitration agreements. We believe that agreements to arbitrate future disputes generally should be enforceable even in the absence of a specific statutory provision. Moreover, we note that a number of jurisdictions have declined to follow the common law rule with regard to agreements to arbitrate future disputes, some overruling prior decisions. 7 The West Virginia Supreme Court of Appeals, in Bd. of Ed., Etc. v. W. Harley Miller, Inc., 160 W.Va. 473, 482 , 236 S.E.2d 439, 445 (1977), held that agreements to arbitrate future disputes would be enforceable, stating that “the weight of modern, enlightened authority favors arbitration as a preferred means of conflict resolution.” Similarly, the Minnesota Supreme Court, in Park Const.

Co. v. Independent School Dist. No. 32, 209 Minn. 182 , 296 N.W. 475 (1941), overruled prior Minnesota cases to hold that agreements to arbitrate future disputes are enforceable at common law. See Pettinaro Const. Co. v. ¹⁰⁸ Harry C. Partridge, Etc., 408 A.2d 957 (Del.Ch.1979); Ass’n of Owners v. Swinerton & Walberg Co., 705 P.2d 28, 34-35 (Hawaii 1985); United Ass’n of Journ. & App. of Plumbing, Etc. v. Stine, 76 Nev. 189 , 351 P.2d 965 (I960); Borough of Ambridge Water Authority v. Columbia, 458 Pa. 546, 548-549 , 328 A.2d 498, 500 (1974).

See also Zahn v. District Court in and for County of Weld, 169 Colo. 405 , 457 P.2d 387 (1969); Interstate Bakeries Corp. v. Bakery, Etc., Drivers U., 31 Ill.2d 317 , 201 N.E.2d 452 (1964); Joseph L. Wilmotte Co. v. Rosenman Bros., 258 N.W.2d 317, 328 (Iowa 1977); LaStella v. Garcia Estates, 66 N.J. 297 , 331 A.2d 1 (1975). These courts have generally-reasoned that not only is the theory underlying the rule against agreements to arbitrate future disputes unsound, but also, in light of the contemporary view of arbitration, agreements to arbitrate future disputes should be enforceable. In Maryland, as in other states, the reason most frequently given in early cases for refusing to enforce agreements to arbitrate future disputes was that the courts would not allow the parties to “oust the court of jurisdiction.” Tomlinson v. Dille, supra, 147 Md. at 167 , 127 A. 746 ; Wilson & Co. v. Curlett, supra, 140 Md. at 153 , 117 A. 6 ; Allegre v. Maryland Ins. Co., supra, 6 H. & J. at 413 ; Contee v. Dawson, supra, 2 Bland at 275-276.

To the extent that arbitration ousts the court of jurisdiction in any case, however, courts have only protested this “ouster” with respect to one type of arbitration agreement. In addition, the Minnesota Supreme Court has also pointed out the flaws in this reasoning (Park Const. Co. v. Independent School Dist. No. 32, supra, 209 Minn. at 186 , 296 N.W. at 477 ): “[T]here appears never to have been any factual basis for holding that an agreement to arbitrate ‘ousted’ jurisdiction.

It has no effect upon the jurisdiction of any court. Arbitration simply removes a controversy from the arena of litigation. It is no more an ouster of judicial jurisdiction than is compromise and settlement or that peculiar offspring of legal ingenuity known as the covenant not to ¹⁰⁹ sue. Each disposes of issues without litigation.

One no more than the other ousts the courts of jurisdiction. The right to a jury trial, even in a criminal case, may be waived. So, also, may the right to litigate be waived. Such waiver may be the result of contract or unilateral action.” Furthermore, to the extent that there might have been a public policy of this State against the enforcement of agreements to arbitrate future disputes, that public policy changed with the adoption by the General Assembly of the Uniform Arbitration Act.

That statute, in § 3-206(a) of the Courts and Judicial Proceedings Article, explicitly makes agreements to arbitrate future disputes enforceable. See also 7 U.L.A. 1 (1955) (Uniform Arbitration Act). 8 As the Court of Appeals of Michigan stated (E.E. Tripp, Ex. Con., Inc. v. City of Jackson, supra, 60 Mich.App. 221, 246-247 , 230 N.W.2d 556, 568 (1975)): “The heavily case-loaded courts are no longer jealous of their jurisdiction. Where the parties, by a fair agreement, have adopted a speedy and inexpensive means by which to have their disagreements adjusted, we see no public policy reasons for the courts to stand in their way.

On the contrary we have a clear expression of public policy in the legislative enactments which provide for statutory arbitration.” See also, Interstate Bakeries Corp. v. Bakery, Etc., Drivers U., 31 Ill.2d at 319-320, 201 N.E.2d at 453 ; Park Const. ¹¹⁰ Co. v. Independent School Dist., supra, 209 Minn. at 186 , 296 N.W. at 477 . Therefore, we hold that agreements to arbitrate future disputes are generally valid and enforceable under Maryland common law.

III

As previously indicated, the County makes the alternate argument that arbitration of a public employee labor dispute of the type involved in this case is invalid unless authorized by the Anne Arundel County Charter or by the General Assembly. Reliance is placed upon this Court’s opinions in Office & Prof. Employees Int’l v. MTA, supra, 295 Md. 88 , 453 A.2d 1191 ; Maryland Cl. Emp.

Ass’n v. Anderson, supra, 281 Md. 496 , 380 A.2d 1032 ; and Mugford v. City of Baltimore, supra, 185 Md. 266 , 44 A.2d 745 . The County’s argument based on these cases consists of two parts. First, the County broadly contends that the above-cited cases “clearly establish” that a county or municipality generally “may not enter into binding arbitration without specific authorization arising from a public general law or charter provision. * * * There is no public general law or charter provision authorizing Anne Arundel County to enter into binding arbitration.” Therefore, according to the County, the contract provision upon which the Union relies in demanding arbitration “is unenforceable.” (County’s Brief, pp. 4-5). Second, the County advances the somewhat narrower position that a charter county, absent authorization in its charter or from the General Assembly, may not by ordinance or contract delegate to an