NRT Mid-Atlantic, Inc. v. Innovative Properties, Inc.

DEBORAH S. EYLER, J. The Circuit Court for Anne Arundel County denied a motion to stay and petition to compel arbitration filed by NRT Mid-Atlantic, Inc. t/a O’Connor, Piper & Flynn/ERA (“OPF”), one of the appellants, in a suit brought against it and against Robert M. Beall and Margaret K. Beall, the other appellants, by Innovative Properties, Inc. (“Innovative”), the appellee. OPF noted this interlocutory appeal, presenting two questions for review, which we have combined and rephrased as follows: Did the circuit court err in concluding that the claims asserted by Innovative were not within the scope of the parties’ arbitration agreement, and denying the motion to stay and petition to compel arbitration on that basis? For the following reasons, we shall vacate the order of the circuit court. FACTS AND PROCEEDINGS Our recitation of the alleged facts is based on the amended complaint filed by Innovative and undisputed facts presented to the circuit court in the motion to stay and petition to compel arbitration. 1 OPF and Innovative are real estate brokerage companies.

On September 29, 2000, OPF entered into an “Exclusive Right To Sell Listing Contract” (“Listing Contract”) with the owner ²⁷⁰ of certain commercial property located outside the City of Annapolis, in Anne Arundel County (“the Property”). The Listing Contract authorized OPF to market and sell the Property and provided that, upon the satisfaction of certain conditions, the owner would pay OPF a.commission of 4% of the sales price for marketing and negotiating and an additional 4% of the sales price for selling services. The Listing. Contract authorized OPF to cooperate with other real estate brokers, either as subagents of OPF or as buyer’s agents, and provided that OPF “shall pay” to any subagent or buyer’s agent “who has earned and is entitled to share in the fee” the one-half of the 8% commission denoted for “selling services.” The Listing Contract also authorized OPF to use the Multiple Listing Service (“MLS”) to advertise the Property.

OPF placed the Property on the MLS on October 10, 2000. The MLS listing described the Property and gave the name of the OPF listing agent and of James Hoffman, an OPF agent with information about, and access to, the Property. In addition, the MLS listing stated, “Sub Comp 4” and “Buy Comp 4,” meaning that subagents and buyer’s agents were being offered a 4% sales commission to bring the buyer to the Property, i.e., to be the procuring cause of the sale of the Property. On October 23, 2000, Richard Neville, a Maryland real estate agent associated with Innovative, contacted Hoffman, at OPF, about the Property.

Hoffman provided Neville with written materials about the Property. Neville organized the materials, distilled the financial information from them, and put them in a form to distribute to prospective purchasers. A week later, on October 30, 2000, Neville had a conversation with Robert M. Beall, Jr., the son of appellants Robert M. Beall, Sr., and Margaret Beall. Beall, Jr. was representing his parents in their search for new office space for their company, Ledo Pizza System, Inc. (“Ledo”).

In that conversation, Neville told Beall, Jr. that the Property was for sale, and agreed to furnish him with information about it. On ²⁷¹ November 2, 2000, Neville sent written information about the Property to Beall, Jr., by facsimile. The next day, November 3, Neville received a telephone call from Beall, Sr., who said he personally would be making the decisions for Ledo’s about purchasing property for office space. Beall, Sr. advised Neville that he had read the materials Neville had faxed to Beall, Jr., and was very interested in the Property.

Beall, Sr. explained, however, that he was leaving the next day for Florida and would be away for about two weeks. He said that upon his return he would call Neville for the purpose of submitting an offer to purchase the Property- Several weeks passed and Neville did not hear from Beall, Sr. (or Jr.). On November 27, 2000, Neville called Beall, Sr. who said he had lost Neville’s telephone number and so he had called the OPF listing agent on the Property directly and had made an offer on it. The offer had not yet been accepted.

Immediately thereafter, Neville sent a facsimile to Hoffman stating that he had introduced the Bealls to the Property, and asking OPF to acknowledge that he was a cooperating broker; he also left a telephone message to the same effect. OPF did not respond to either the facsimile or the telephone message. For the next two weeks, Neville made several more telephone calls to OPF communicating the same information, but none were returned. On December 11, 2000, Neville contacted Beall, Sr., and was told that the Bealls already had signed a contract to purchase the Property, subject to a thirty day feasibility study period.

On January 22, 2001, the Bealls purchased the Property. OPF received the entire 8% commission on the sale, which allegedly came to $64,000. According to Innovative, it introduced the buyers (the Bealls) to the Property through Neville and was the procuring cause of the sale. Therefore, it was a cooperating broker that was entitled to receive a 4% sales commission on the Property, ²⁷² that is, $32,000.

Innovative made numerous demands upon OPF for payment of that sum, but the demands were refused. In its amended complaint, Innovative asserted three causes of action. In Count I, it sought recovery for “Unjust Enrichment.” It alleged that OPF knew that it had introduced the Bealls to the Property and therefore was a cooperating broker that was entitled to a 4% sales commission; nevertheless, OPF retained the full commission for itself, thereby unjustly enriching itself in the amount of $32,000. Innovative sought to recover that sum from OPF.

In Count II, Innovative sought recovery for “Interference With Business Relations.” It alleged that OPF and the Bealls knew that Innovative had introduced the Bealls to the Property and had given them important information about the Property, and further knew that Innovative expected to receive the 4% sales commission owed to a cooperating broker. Nevertheless, and for the purpose of depriving Innovative of its share of the commission, they excluded Innovative from the transaction. This conduct amounted to an intentional interference with Innovative’s economic rights, without justifiable cause or right. Innovative alleged that it had suffered actual damages of $32,000, and sought that sum from OPF and the Bealls, jointly and severally.

Finally, in Count III, Innovative sought recovery for “Conspiracy.” It alleged that OPF and the Bealls had conspired to exclude it from the transaction for the purpose of depriving it of its 4% commission as a cooperating broker, and as a result, it was damaged in the amount of $32,000. It sought to recover that sum from OPF and the Bealls, jointly and severally. OPF filed a motion to stay and petition to compel arbitration, pursuant to Md.Code (Supp.1998, Repl.2001) sections 3-207 and 3-209 of the Courts and Judicial Proceedings Article (“CJ”). It alleged that Innovative and OPF, through their brokers of record, belong to the Anne Arundel County Association of REALTORS® (“Association”); and the By-Laws of that organization require members to abide by the Code of ²⁷³ Ethics and Arbitration Manual (“Manual”) of the National Association of REALTORS®. 2 The Code imposes a duty on members to submit certain disputes between them to binding arbitration.

OPF further alleged that the dispute between the parties falls within the scope of that binding arbitration agreement. Finally, OPF asserted that Innovative was refusing to submit the dispute to arbitration, as it was required to do. OPF asked the circuit court to stay the case and compel Innovative to submit to binding arbitration. Innovative did not contest that the parties’s membership in the Association constituted an agreement to submit certain disputes between them to binding arbitration.

It opposed the motion to stay and petition to compel arbitration, however, on the ground that its claims did not fall within the scope of the parties’ arbitration agreement. The court held a hearing and took the matter under advisement. On June 18, 2001, it issued an order denying the motion to stay and petition to compel arbitration. It ruled that Innovative’s claims were not subject to arbitration because the parties’ arbitration agreement required arbitration of “contractual disputes,” and Innovative’s claims were causes of action in tort, not contractual disputes.

OPF noted an appeal from the order denying its motion to stay and petition to compel arbitration. We will include additional relevant facts in our discussion of the question presented. DISCUSSION (i) Because this appeal is taken from an interlocutory order, we must address whether we have jurisdiction over it. CJ section 12-301 provides that a party may appeal to this Court from a “final judgment.” A final judgment is “a ²⁷⁴ judgment, decree, sentence, order, determination, decision, or other action by a court, including an orphans’ court, from which an appeal, application for leave to appeal, or petition for certiorari may be taken.” CJ § 12—101 (f); Cant v. Bartlett, 292 Md. 611, 614 , 440 A.2d 388 (1982).

It is well established that “the underlying policy of the final judgment rule is that piecemeal appeals are disfavored.” Cant v. Bartlett, supra, 292 Md. at 614 , 440 A.2d 388 . As we have recognized, “it is ultimately a question for [the Court of Appeals] to decide which judgments or orders are final and therefore appealable under section 12-301.” Ashcraft & Gerel v. Shaw, 126 Md.App. 325, 340 , 728 A.2d 798 (1999)(holding that an order requiring a party to disclose documents in its possession is presently appealable under a final judgment analysis or in the alternative as a collateral order)(quoting Peat, Marwick, Mitchell & Co. v. Los Angeles Rams Football Co., 284 Md. 86, 91 , 394 A.2d 801 (1978)). See also Cant v. Bartlett, supra, 292 Md. at 614 , 440 A.2d 388 . A final judgment “must be so far final as to determine and conclude the rights involved in the action, or to deny to the party seeking redress by the appeal the means of further prosecuting or defending his rights and interests in the subject matter of the proceeding.” DSS v. Stein, 328 Md. 1, 10 , 612 A.2d 880 (1992).

See also Peat, Marwick, Mitchell & Co., supra, 284 Md. at 91 , 394 A.2d 801 . Certain interlocutory orders are appealable under CJ section 12-303. Among those is an order entered in a civil case “[granting a petition to stay arbitration pursuant to [CJ § 3-208].” CJ § 12-303(3)(ix). An order denying a petition to compel arbitration is not included in the enumerated appeal-able interlocutory orders in that statute.

Maryland Rule 2-602(a)(l) provides that, except as stated in subsection (b) of that rule, an order adjudicating fewer than all the claims in an action or less than an entire claim, or the rights and liabilities of fewer than all the parties, is not a final judgment. The exception to that rule, in subsection (b), provides, in relevant part: ²⁷⁵ If the court expressly determines in a written order that there is no just reason for delay, it may direct in the order the entry of a final judgment: (1) as to one or more but fewer than all of the claims or parties[.] The word “claim” in this rule means a complete, substantive cause of action. Suitland Dev. Corp. v. Merchants Mtg.

Co., 254 Md. 43, 54, 254 A.2d 359 (1969). The purpose of the discretionary certification procedure in Rule 2-602(b), which is to be used sparingly, is to avoid piecemeal appeals and duplication of efforts and costs in cases involving multiple parties or claims. Maryland-National Capital Park & Planning Comm’n v. Smith, 333 Md. 3, 7 , 633 A.2d 855 (1993); Diener Enters. v. Miller, 266 Md. 551, 555 , 295 A.2d 470 (1972); Allstate Ins. Co. v. Angeletti, 71 Md.App. 210, 217 , 524 A.2d 798 (1987).

Under Rule 8-602(e)(l), if an appellate court determines that the order being appealed is not a final judgment, and was not certified as one under Rule 2-602(b), but that the circuit court had discretion to enter a final judgment under Rule 2-602(b), the appellate court may, inter alia, enter a final judgment on its own initiative. If the appellate court does so, “it shall treat the notice of appeal as if filed on the date of the entry of the judgment and proceed with the appeal.” Rule 8-602(e)(3). Against that legal backdrop, we address Town of Chesapeake Beach v. Pessoa Construction Company, Inc., 330 Md. 744 , 625 A.2d 1014 (1993), which is pertinent to the issue before us. In Town of Chesapeake Beach v. Pessoa Construction Company, Inc., supra, the parties entered into a construction contract that contained a mandatory and binding arbitration clause.

About two years later, but before construction was completed, the Town declared Pessoa in default, and terminated it from the job. Two years after that, Pessoa filed suit against the Town for breach of contract, misrepresentation, and conspiracy. It also filed a motion to stay the action ²⁷⁶ pending arbitration. The Town objected to the motion, pointing out that Pessoa had not filed a demand for arbitration and had lost its right to arbitrate.

The court granted the motion to stay. About six months later, Pessoa filed its demand for arbitration with the American Arbitration Association. The Town then filed a petition to stay arbitration, under CJ section 3-208, in the pending circuit court action, contending that Pessoa’s demand for arbitration was untimely and that its delay in filing the demand acted as a relinquishment of the right to arbitrate. Pessoa filed an objection to the petition.

The circuit court determined that on the undisputed facts, Pessoa’s demand was not untimely, and therefore it had not relinquished its right to arbitrate. Accordingly, the court entered an order denying the Town’s petition to stay arbitration. The Town appealed, and this Court, in an unreported opinion, dismissed the appeal, as not being taken from a final judgment. The Court of Appeals granted certiorari and reversed, holding that the order was an appealable final judgment.

The Court explained that a petition to stay arbitration under CJ section 3-208 is a discrete claim: it may be prosecuted in a separate action and “ft]he relief sought by the moving party in such an action does not bear on the merits of the underlying claim; it relates solely to the forum to be used for the resolution of that dispute.” 330 Md. at 751 , 625 A.2d 1014 . In such a separately prosecuted action, the court’s order granting or denying the petition to stay arbitration decides the entire issue before the court, and leaves nothing more for the court to do. Thus, it is a final judgment under CJ section 12-301. The Court reasoned that the Town’s petition to stay arbitration under CJ section 3-208, while filed in the pending civil action between the parties, nevertheless constituted a separate claim; and the circuit court’s order denying the petition to stay arbitration “completely terminated the claim.” 330 Md. at 754 , 625 A.2d 1014 .

The Court then exercised its discretion ²⁷⁷ to enter a final judgment on that claim, pursuant to Rule 8-602(e)(1). 3 The analysis of the Court in Town of Chesapeake Beach applies with equal force to this case. Like an action to stay arbitration, under CJ section 3-208, an action to compel arbitration under CJ section 3-207 may be prosecuted separately. That statute provides: (a) Refusal to arbitrate.—If a party to an arbitration agreement described in § 3-202 refuses to arbitrate, the other party may file a petition with a court to order arbitration. (b) Denial of existence of arbitration agreement.—If the opposing party denies existence of an arbitration agreement, the court shall proceed expeditiously to determine if the agreement exists.

(c) Determination by court.—If the court determines that the agreement exists, it shall order arbitration. Otherwise it shall deny the petition. Thus, by statute, a petition to compel arbitration may properly be filed as a free-standing action against the party refusing to submit the dispute to arbitration. Bel Pre Med.

Ctr. v. Frederick Contractors, Inc., 21 Md.App. 307, 319-20 , 320 A.2d 558 (1974), modified on other grounds, 274 Md. 307 , 334 A.2d 526 (1975) (noting that at common law suits to compel arbitration could not be brought). In that situation, a court’s order deciding such an action disposes of the action in its entirety, regardless of whether the order grants or denies the petition. Once the court orders arbitration, or denies it, there is nothing left for it to do. Accordingly, the court’s order is a final judgment under CJ section 12-301. ²⁷⁸ In the case at bar, OPF could have filed a separate action in the circuit court, petitioning the court to order Innovative to submit the parties’ dispute to arbitration.

Instead, it filed its petition to compel arbitration in the pending action between the parties. For the same reasons offered by the Court in Town of Chesapeake Beach, supra, OPF’s petition was a separate claim, concerning the proper forum for resolution of the parties’ dispute. See also Holmes v. Coverall North America, Inc., 336 Md. 534, 535 , 649 A.2d 365 (1994) (noting that an arbitration clause in a contract “is a severable contract which is enforceable independently from the contract as a whole”); Joseph Trionfo & Sons, Inc. v. Ernest B. LaRosa, Inc., 38 Md.App. 598, 609 , 381 A.2d 727 (1978) (noting, in dicta, before the joinder of law and equity, that the proper procedure for petitioning a court to compel arbitration under CJ section 3-207 was to file a separate suit in equity, and that the order deciding the issue would be appealable under CJ section 12-301). Accordingly, the circuit court’s order denying the petition resolved that claim in its entirety.

None of the parties to this case asked the circuit court to certify its order denying OPF’s claim for arbitration as a final judgment under Rule 2-602(b). As we have explained, and as the Court’s decision in Town of Chesapeake Beach exemplifies, under Rule 8-602(e)(1), if an appellate court concludes that the order being appealed is one the circuit court properly could have exercised its discretion to certify as final, under Rule 2-602(b), we may exercise our discretion to certify the order as final. “Arbitration is a ‘process whereby parties voluntarily agree to substitute a private tribunal for the public tribunal otherwise available to them.’ ” Curtis G. Testerman Co. v. Buck, 340 Md. 569, 579 , 667 A.2d 649 (1995) (quoting Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96, 103 , 468 A.2d 91 (1983)). In Maryland, suits to compel arbitration are viewed as “favored” actions. Bel Pre Medical Ctr., Inc. v. Frederick Contractors, supra, 21 Md.App. at 320 , 320 A.2d 558 .

Arbitration clauses will be freely enforced when there is ²⁷⁹ an agreement to arbitrate the subject matter of the dispute. Gold Coast Mall, Inc. v. Larmar Corp., supra, 298 Md. at 104 , 468 A.2d 91 . The strong legislative policy in favor of enforcing arbitration agreements underlies CJ section 3-207, which, as we have explained, permits an independent action to enforce an arbitration clause. For purposes of appeal, that policy also favors treating as final an order denying a petition to compel arbitration filed under CJ section 3-207 in an already pending case.

The question whether parties agreed to arbitrate their dispute, whether raised in an independent action either to stay or compel arbitration or in a petition to stay or compel arbitration filed by one of the parties in an existing suit involving the same dispute, concerns the proper forum in which the dispute is to be