Wilson v. McGrow, Pridgeon & Co., P.A.

⁶⁸ RODOWSKY, Judge. Enforceability of a covenant to arbitrate future disputes arising under an employment contract between a professional corporation and an individual is at issue on this appeal. The problem is one of statutory construction involving the Maryland Uniform Arbitration Act (the Act), Md. Code (1974, 1980 Repl.Vol.), §§ 3-201 through 3-234 of the Courts and Judicial Proceedings Article (Courts Article). The Act is all of Subtitle 2 of Title 3 of the Courts Article, and in § 3-206 provides: (a) Validity. — A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy arising between the parties in the future is valid and enforceable, and is irrevocable, except upon grounds that exist at law or in equity for the revocation of a contract.

(b) Agreement between employers and employees. —This subtitle does not apply to an arbitration agreement between employers and employees or between their respective representatives unless it is expressly provided in the agreement that this subtitle shall apply. The professional corporation contends, and the courts below held, that the exclusion from the Act effected by § 3-206(b) applies to an employment contract between an employer and an individual employee, and that no other Maryland statute alters, as to individual employment contracts, the common law rule under which agreements to arbitrate future disputes are unenforceable. The employee contends that § 3-206(b) was intended by the General Assembly to be limited to arbitration provisions contained in collective bargaining agreements. Because the statute is ambiguous in this respect and because the legislative history reflects an intent to limit the exclusion to collective bargaining agreements, we shall reverse.

Respondent, McGrow, Pridgeon & Company, P.A. (McGrow), was incorporated July 1,1978 and has engaged in providing accounting services. Petitioner, Robert F. Wilson ⁶⁹ (Wilson), is a CPA and was an original principal, stockholder, officer and director of McGrow. McGrow and Wilson entered into a written employment agreement dated July 1, 1978 which provided in part that “[a]ny controversy or claim arising out of or relating to [that] Agreement, or the breach thereof, shall be settled by arbitration in Maryland and in accordance with the rules of the American Arbitration Association.” The employment contract was for an initial term of one year ending June 30,1979 and automatically renewed for successive one year periods unless terminated by, inter alia, written notice given 30 days prior to the end of a term.

Wilson terminated his relationship with McGrow effective June 30, 1981 and established his own accounting firm. On December 2, 1981 McGrow filed a complaint against Wilson alleging that Wilson had breached fiduciary duties owing by him to McGrow by the manner in which Wilson had prepared for his departure from McGrow and for entry into business with the new accounting firm. Wilson petitioned the trial court for an order compelling arbitration of the dispute. Enforcement of the arbitration clause was denied and the denial was affirmed by the Court of Special Appeals in an unreported opinion.

We granted Wilson’s petition for certiorari. As the intermediate appellate court read § 3-206(b), the statute is “an unambiguous and unequivocal provision of the law.” That court reasoned that because the subject arbitration clause was in a contract between an employer and an employee, the agreement to arbitrate could be brought under the Act only by express provision in the contract. This had not been done. 1 However, § 3-206(b) speaks of “an agreement” in the singular number as the subject of the exclusion while the number of the employer party and the number of the employee party are each expressed in the ⁷⁰ plural. Section 3-206(b) also embraces an alternative form of arbitration agreement in which employers and employees respectively have representatives as signatories.

A literal reading of the exclusion would require multiple employers, or their representative, on one side of a single agreement and multiple employees, or their representative, on the other side of that agreement. This reading describes a collective bargaining agreement of a kind found in the construction industry where it is not uncommon for an association of contractors to bargain on behalf of employers with unions representing various trades. An example of such a collective bargaining agreement was involved in National Electrical Industry Fund v. Bethlehem Steel Corp., 296 Md. 541 , 463 A.2d 858 (1983). McGrow does not dispute that § 3-206(b) embraces collective bargaining agreements.

Its position is that that subsection is not limited to collective bargaining agreements and includes individual employment contracts as well. This is because, under the rule of interpretation of Md.Code (1957, 1981 Repl.Vol.), Art. 1, § 8, “[t]he singular always includes the plural, and vice versa, except where such construction would be unreasonable.” Consequently, it is said § 3-206(b) reaches an agreement between a single employer and a single employee. Of course, invocation of Art. 1, § 8 is a recognition that the words of Courts Article, § 3-206(b) are not dispositive by direct application here. Elsewhere in the Act, references to those who are bound on one side or the other of an arbitration agreement are made in the singular number. 2 Indeed, throughout the Act it is the singular number which is likewise used to state the number of those on one side or the other when an arbitration proceeding or a court proceeding is being described.

Generally, the parties to those proceedings are the parties to ⁷¹ an arbitration agreement. This use of the singular is simply a reflection of a uniform style guideline — “[u]se the singular number” — recommended for the recodification project which has produced, inter alia, the Courts Article. See Governor’s Commission to Revise the Annotated Code of Maryland, Revisor’s Manual 42 (2d ed. 1973). Prior to recodification the comparable provision to § 3- 206(b) read: This article does not apply to an arbitration agreement between employers and employees or between their respective representatives unless it is expressly provided in such agreement that this article shall apply. [Md.Code (1957, 1968 Repl.Vol.), Art. 7, § 1.] The Revisor’s Note to the recodification of this language states that “[t]he only changes made are in style.” See Revisor’s Note to Md.Code (1974), § 3-206 of the Courts Article.

Thus, “article” was changed to “subtitle” and “such” agreement became “the” agreement. But the reference to the number of persons on each side of an agreement continue to be referred to by use of the plural. One inference is that conversion to the singular in conformity with the code revision style guideline would not be a change in style, but one of substance. The phraseology of the statute on its face, in relation to the style used in other portions, raises a question of whether the contract between an individual employee and the employer is intended to be embraced within the exclusion from the Act.

Further § 3-232 of the Act directs that it “shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of the states which enact it.” However, § 1 of the Uniform Arbitration Apt, approved by the National Conference of Commissioners on Uniform State Laws and by the American Bar Association in 1955, is contrary to § 3-206(b) of the Maryland Act. The promulgated version reads (Unif. Arbitration Act § 1, 7 U.L.A. 4 (1978)): This act also applies to arbitration agreements between employers and employees or between their respective rep ⁷² resentatives [unless otherwise provided in the agreement].[ 3 ] One aspect of the issue in the case at bar is the extent to which the General Assembly intended its departure from the recommended version of the Uniform Arbitration Act to go. The directive in § 3-232 seems to dictate that the meaning to be placed on the words, “an agreement between employers and employees,” in § 3-206(b) be limited so as to keep the admittedly variant Maryland version as close to the promulgated version as the words used in the Maryland variation would reasonably permit.

Wilson’s interpretation of § 3-206(b) which limits the exclusion to arbitration provisions in collective bargaining agreements would give some meaning to § 3-232. McGrow’s position which has the exclusion applying to all arbitration agreements between employers and employees, including an arbitration clause in the employment contract of a single individual, enlarges the conflict between the Uniform Arbitration Act and § 3-206(b) of the Maryland version, and gives no effect to § 3-232. The issue presented in this appeal is not one which can be resolved merely by reading the text of the statute. Reference to the usual aids for statutory construction makes clear that the purpose of § 3-206(b) was to exclude arbitration provisions in collective bargaining agreements.

The Maryland Act is derived from the uniform law. See Frederick Contractors v. Bel Pre Medical Center, 274 Md. 307, 314 , 334 A.2d 526, 530 (1975). As noted above, the uniform law is drafted to apply “to arbitration agreements between employers and employees or between their respective representatives [unless otherwise provided in the agreement].” In their Prefatory Note to the uniform law the commissioners state that the statute “covers labor-management agreements to arbitrate unless the agreement otherwise provides.” Prefatory Note to Unif. Arbitration Act, 7 U.L.A., supra, at 2. ⁷³ Application of the proposed uniform law to arbitration provisions in collective bargaining agreements met with opposition from organized labor and from professional labor arbitrators.

The concern seems to have been that formalizing the procedure would impede the efficacy of the arbitration process in the labor relations context and that judicial review would restrict the ability of arbitrators to fashion practical resolutions based on their experience with the problems in a given industry. See Frey, The Proposed Uniform Arbitration Act Should Not Be Adopted, 10 Vand.L.Rev. 709 (1957); Howard, The Proposed Uniform Arbitration Act: Yes or No, 22 Mo.L.Rev. 233 (1957); Howard, Labor-Management Arbitration: “There Ought To Be a Law” — or Ought There?, 21 Mo.L.Rev. 1 (1956); Syme, Voluntary Labor Arbitration Is Threatened!, 7 Lab.L.J. 142 (1956). See generally Gregory and Orlikoff, The Enforcement of Labor Arbitration Agreements, 17 U.Chi.L.Rev. 233, 245-48 (1950). In June of 1962 the Committee on Laws of the Maryland State Bar Association proposed at the annual meeting a “State Arbitration Act based upon the provisions of the Uniform Act and the laws of other states. . .. ” 67 Transactions of the Md. State Bar Ass’n 255 (1962).

The motion was approved. Id. at 97. Thereafter the Committee on Laws drafted a proposed bill. It was sent to the Legislative Council of the General Assembly and on June 5, 1963 referred to the Judiciary Committee of that body.

Legislative Council of Maryland, Report to the General Assembly of 1964 255. The proposal was designated as Item No. 161. Action on Item 161 was deferred to 1964. Legislative Council of Maryland, Report to the General Assembly of 1965 270.

The Judiciary Committee reported favorably to the Council on August 12, 1964 on the proposed Maryland Arbitration Act and stated that [t]he Committee is approving a draft, submitted by the State Bar Association Committee, which contains an exclusion for labor disputes. [Id. at 290 (emphasis added).] ⁷⁴ The Legislative Council’s explanation accompanying the text of the bill in the Council’s report to the General Assembly stated in part (italics converted to regular case): The uniform act repeals several existing Maryland statutes which conflict with the uniform act. An exclusion was placed into the act in Section 1 excluding the applicability of the entire act to arbitration agreements between employers and employees. This was done at the specific request of labor union representatives. [Id. at 1.] This bill was enacted as Chapter 231 of the Acts of 1965 and codified as Art. 7 of the Code. The change which the General Assembly made from the Uniform Arbitration Act in order to exclude “labor disputes” and so as to give effect to “the specific request of labor union representatives” is now § 3-206(b) of the Courts Article.

The Maryland Act expressly “does not apply” to that to which the Uniform Arbitration Act expressly applies. Both the “arbitration agreements” included in the Uniform Arbitration Act and the “arbitration agreement”