NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE BAHJAT IBRAHIM dba LA RAZA AUTO ) No. 1 CA-CV 08-0658 SALES, ) ) DEPARTMENT D Plaintiff/Appellant, ) ) MEMORANDUM DECISION v. ) (Not for Publication - ) Rule 28, Arizona Rules WESTLAKE SERVICES, INC., a ) of Civil Appellate California corporation dba ) Procedure) WESTLAKE FINANCIAL SERVICES, ) ) Defendant/Appellee. ) ) Appeal from the Superior Court in Maricopa County Cause No. CV 2008-007334 The Honorable Joseph B. Heilman, Judge AFFIRMED Law Office of Ronald W. Meyer By Ronald W. Meyer Attorneys for Plaintiff/Appellant Law Offices of Joel L. Herz By Russell B. Stowers Attorneys for Defendant/Appellee Phoenix Tucson S W A N N, Judge
1 Bahjat Ibrahim ( Ibrahim ), doing business as La Raza Auto Sales, appeals the grant of a motion to dismiss for failure to state a claim under Ariz. R. Civ. P. 12(b)(6). Ibrahim argues that the arbitration clause contained in contracts between himself and Westlake Services, Inc. ( Westlake ) does not apply with regard to his filing of an action for a declaratory judgment under Arizona Revised Statutes ( A.R.S. ) section 12-1831, part of the Uniform Declaratory Judgments Act. For the reasons set out below, we affirm the judgment of the superior court dismissing Ibrahim s action. FACTS AND PROCEDURAL HISTORY 2 Ibrahim s business sells automobiles in Maricopa County. Ibrahim entered into a master dealer agreement with Westlake, a California corporation, under which Westlake agreed to purchase Ibrahim s sales contracts, described as installment and purchase money security contracts. Clause 6 of the agreement provided that upon Westlake s demand, Ibrahim would repurchase any sales contract with regard to which Ibrahim had defaulted by breaching a representation or warranty set forth in the agreement. The agreement included a non-exhaustive list of conditions constituting such breach. 3 Clause 19 of the agreement addressed arbitration, venue and choice of law: 2
Any and all disputes that may arise out of the terms or obligations of this agreement must be resolved by a binding arbitration, and all parties understand and waive their right to a jury trial. Either party may demand the resolution of any dispute, which shall take place before a retired judge.... The parties further agree that the arbitration hearing will be held according to the substantive laws of the State of California. The agreement also provided that its terms could be modified by the parties subsequent written agreement. The parties did subsequently enter into a personal and continuing guarantee. Similar to the master dealer agreement, the guarantee required all disputes arising out of the terms and obligations of the guarantee to be resolved by binding arbitration. The personal guarantee contained the following additional language: The interpretation and construction of this Agreement, wherever made and executed and wherever to be performed, shall be governed by the laws of the State of California. Any legal action or arbitration, filed by any party to enforce any rights, duties, and obligations contained in this agreement, must be filed in the County of Los Angeles, State of California, and the parties specifically agree that jurisdiction and venue for any such action is proper in the County of Los Angeles. Neither the master dealer agreement nor the personal guarantee contained a distinct, separate choice of law and venue provision specifically covering the entire contract. 4 At some point after the executions of the master dealer agreement and personal guarantee, Westlake began sending Ibrahim notices of breach in which Westlake demanded that 3
Ibrahim, pursuant to the master dealer agreement, repurchase specific sales contracts. Pursuant to A.R.S. 12-1831, Ibrahim filed an action in the superior court to obtain a declaratory determination of his contract rights. Specifically, Ibrahim asked for a determination of the proper application of the default provisions and the proper formula for the amount of a repurchase in the event of a default. 5 Westlake filed a motion to dismiss on the basis that the terms of the master dealer agreement required all disputes to be determined through binding arbitration to be conducted under California law, by a California judge, in a California venue. By minute entry, the superior court granted the motion to dismiss 1 and Ibrahim timely appealed. 6 We have jurisdiction pursuant to A.R.S. 12-2101(B) (2003). 1 The court granted the motion to dismiss without prejudice, except as to the declaratory judgment issue, which is denied. We suspended the appeal and revested jurisdiction in the superior court for the purpose of permitting the court to clarify its minute entry so that we could determine whether we have jurisdiction, because a dismissal without prejudice is typically not appealable. The superior court clarified its minute entry nunc pro tunc, granting the motion to dismiss with prejudice with respect to the declaratory relief action. The court specifically found that the matter should be arbitrated under the provisions of the contract between the parties, and that to allow Ibrahim to seek declaratory relief to define the terms of the contract would effectively defeat the contract s arbitration clause. 4
DISCUSSION 7 We review de novo an order dismissing a complaint. Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 124, 6, 970 P.2d 954, 956 (App. 1998). In reviewing the trial court s dismissal of a claim, we accept the allegations in the complaint as true and resolve all reasonable inferences in favor of the plaintiff. McDonald v. City of Prescott, 197 Ariz. 566, 567, 5, 5 P.3d 900, 901 (App. 2000) (citation omitted). The interpretation of a contract is generally a matter of law, and we are not bound by the trial court s conclusions of law. Burke v. Voicestream Wireless Corp. II, 207 Ariz. 393, 395, 11, 87 P.3d 81, 83 (App. 2004) (citation omitted). Finally, choice-of-law issues are questions of law, which we also decide de novo. Swanson v. Image Bank, Inc., 206 Ariz. 264, 266, 6, 77 P.3d 439, 441 (2003). 8 This case presents one question: whether the arbitration provision of the master dealer agreement between the parties necessitates the dismissal of Ibrahim s cause of action. Ibrahim asserts in his reply brief that his declaratory judgment action involved only the master dealer agreement. We agree, noting that the personal guarantee contains no language indicating that it is intended as an addendum to or modification of the master dealer agreement. While the guarantee references the master dealer agreement, it is apparent that it is a 5
separate contract with separate terms. We, therefore, address only the propriety of Ibrahim s action as brought under the terms of the master dealer agreement. 9 We read contracts in light of the parties intentions as reflected by their language and in view of all circumstances; if the intention of the parties is clear from such a reading, there is no ambiguity. In re Estate of Lamparella, 210 Ariz. 246, 250, 21, 109 P.3d 959, 963 (App. 2005) (quoting Harris v. Harris, 195 Ariz. 559, 562, 15, 991 P.2d 262, 265 (App. 1999)). A contract is not ambiguous merely because the parties to it disagree about its meaning. Id. Contract language is ambiguous only when it can reasonably be construed to have more than one meaning. Id. We do not find that to be the case here. 10 Clause 19 of the master dealer agreement unambiguously states that [a]ny and all disputes that may arise out of the terms or obligations of this agreement must be resolved by a binding arbitration. The parties disagree on the application of Clause 6 of the agreement, the repurchase clause. Under Clause 19, the only way such a dispute may be resolved is through binding arbitration. 11 Ibrahim argues that arbitrators are not courts of record and, therefore, lack jurisdiction to render a declaratory judgment under A.R.S. 12-1831. Ibrahim is correct 6
that an action brought under A.R.S. 12-1831 may only be brought in a court of record. See Fovargue v. Singer, 77 Ariz. 305, 309, 270 P.2d 1090, 1093 (1954). But the parties have chosen to divest the Arizona courts of jurisdiction to address any controversy arising out of the contract through both the choice of forum (i.e., binding arbitration) and choice of law (i.e., California substantive law) provisions in their agreement. Therefore, A.R.S. 12-1831 does not apply. 12 Courts of law render judgments. Arbitrators acting pursuant to a contractual arbitration clause render binding decisions between parties to the contract. 2 Even if the Arizona declaratory judgment statutes applied here, nothing in them prohibits parties from agreeing to ask an arbitrator to resolve a declaratory question of contract interpretation. 13 We further agree with Westlake that arbitration is favored in Arizona and that arbitration clauses are to be liberally construed, with any doubts about whether a matter is subject to arbitration to be resolved in favor of arbitration. See U.S. Insulation, Inc. v. Hilro Construction Co., Inc., 146 Ariz. 250, 258, 705 P.2d 490, 498 (App. 1985); Forest City Dillon, Inc. v. Superior Court, 138 Ariz. 410, 411, 675 P.2d 2 Whether such a decision could be subsequently entered in this case as a judgment by the Arizona courts or on the judgment rolls of California was not argued by the parties and we, therefore, do not confront the issue on this record. 7
297, 298 (App. 1984). Finally, the Arizona Arbitration Act, A.R.S. 12-1501 et seq., makes clear that there is no limitation on the scope of claims parties can agree to arbitrate: A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. A.R.S. 12-1501. 14 This finally brings us to the issue of choice of law and venue. The master dealer agreement clearly states that the parties agree that the arbitration hearing shall be held according to the substantive laws of the State of California. But notably absent from the agreement are any requirements that the arbitration be conducted in California or under the procedural laws of California. Considering that the later personal guarantee did contain these requirements, we conclude that the parties were aware of the possibility of including such clauses but intended to not be bound by such constraints in regard to controversies arising solely under the master dealer agreement. Accordingly, we note that Arizona may be a proper venue for binding arbitration under the master dealer agreement and that Arizona procedural law may be utilized. 8
ATTORNEYS FEES 15 On appeal, Ibrahim requests attorneys fees pursuant to Clause 18 of the master dealer agreement, which provides that in the event that any legal action is necessary to enforce any provision of the agreement, the unsuccessful party shall pay the successful party reasonable attorneys fees and costs. Westlake requests attorneys fees and costs pursuant to the agreement, ARCAP 21, and A.R.S. 12-341 and -341.01. In our discretion, we award Westlake its reasonable fees and costs pending its compliance with ARCAP 21(c). CONCLUSION 16 For the reasons set forth above, we affirm the superior court s dismissal of Ibrahim s action for declaratory relief. /S/ PETER B. SWANN, Presiding Judge CONCURRING: /S/ DIANE M. JOHNSEN, Judge /S/ JOHN C. GEMMILL, Judge 9