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Flandreau Public School Dist. #50-3 v. G.A. Johnson Construction7/13/2005
ailing to compel arbitration. Johnson argues that some of the issues in this dispute did not involve aesthetics, and when arbitrable issues cannot be separated from non-arbitrable issues, the entire claim should be submitted to arbitration.
Standard of Review
Conversion of a Motion to Dismiss to a Motion for Summary Judgment
[ .] In determining our standard of review, we observe that although this matter is before us on a motion to dismiss, both parties submitted matters outside the pleadings and the trial court did not explicitly exclude them. However, we also observe that neither party objected to the trial court's consideration of those matters and neither party raised the issue on appeal. Therefore, we review the trial court's ruling as a motion for summary judgment. Tibke v. McDougall, 479 NW2d 898, 903-904 (SD 1992) (stating that when the record indicates that matters outside of the pleadings were considered by the trial court, motions to dismiss are reviewed and disposed of as motions for summary judgment).
[ .] Because we review this matter as a summary judgment, we "restrict our review to determining whether the record before us discloses any genuine issues of material fact and, if not, whether the ... court committed any errors of law." Switlik v. Hardwicke Co., Inc., 651 F2d 852, 857-858 (3dCir 1981) (assuming that the trial court had converted a motion to dismiss to a motion for summary judgment). In performing that review, "the construction and legal effect of a written [arbitration] contract are to be determined by the court as a question of law except where the meaning of the language depends upon disputed extrinsic evidence." May Const. Co., Inc. v. Benton School Dist. No. 8, 895 SW2d 521, 523 (Ark 1995) (citing Duvall v. Massachusetts Indem. & Life Ins. Co., 748 SW2d 650 (1988)). We review legal questions concerning arbitration agreements de novo. First Options of Chicago , Inc. v. Kaplan, 514 US 938, 947-948, 115 SCt 1920, 1926, 131 LEd2d 985, 996 (1995).
Decision
Arbitrability and Who Should Determine It
[ .] If a valid agreement to arbitrate exists, the "court shall order the parties to proceed with arbitration." SDCL 21-25A-5. Both parties agree that there is an agreement to arbitrate but it is subject to an exception for " laims relating to aesthetic effect." Notwithstanding the aesthetic effect exception, Johnson argues that Flandreau's claim is subject to arbitration and that the arbitrator, rather than the court, should have initially determined the arbitrability of this dispute. Johnson supports his arguments by asserting that this dispute actually involves a number of non-aesthetic issues, namely: the arbitrability of this claim, and the issues of substandard material and poor workmanship. Johnson points out that the latter issues raise further non-aesthetic issues of breach of contract and compliance with industry standards.
[ .] Johnson's arguments require us to more precisely define the nature of this dispute and the rules governing a court's review of each disputed issue. As the Supreme Court has explained, this kind of case really involves three issues that require different types of judicial review. First Options, 514 US at 942, 115 SCt at 1923, 131 LEd2d at 992. First, there is a disagreement about the merits of the dispute; i.e. aesthetics and allegations of substandard material, poor workmanship, breach of contract, and compliance with industry standards. Second, there is a disagreement about whether the parties agreed to arbitrate the merits. That is an issue about the arbitrability of the dispute. Third, there is a disagreement about who should have the primary power to de
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