Day on Torts
A defendant’s failure to seek appropriate relief when filing a motion to dismiss deprived the Tennessee Court of Appeals of jurisdiction to hear the dispute.
Plaintiff was a family owned limited partnership that held a rare collection of William Eggleston photography. The family partnership contracted with Defendant Christie’s Inc., the world renowned auction company, to sell a dozen Eggleston’s photos. After the works arrived for auction in New York, Christie’s decided to remove five of the prints from the scheduled list of items up for sale, and then later Christie’s withdrew six more after their authenticity was called into question by the Eggleston Artistic Trust. Only one of the partnership’s photographs was auctioned and allegedly the other eleven were not returned by Christie’s. The family partnership then sued Christie’s for its refusal to honor the agreement to auction the Eggleston photographs.
The agreement between the parties had an alternative dispute resolution provision. Christie’s moved to dismiss but did not ask the court to compel arbitration or stay the litigation. The trial court denied Christie’s motion, finding that the language in the agreement bound only Christie’s, and not the family partnership, to submit a dispute to mediation. The court ruled that, because mediation was a condition precedent to arbitration, the family partnership was not required to arbitrate the dispute.
On appeal, the appellate court reviewed Tenn. Code Ann. § 29-5-319, which gives the appeals courts subject matter jurisdiction to (1) review orders denying applications to compel arbitration or (2) review orders granting applications to stay arbitration. The appellate court found that it lacked jurisdiction because the order appealed simply denied Christie’s motion to dismiss on the ground that the agreement required Christie’s, and not the family partnership, to arbitrate any disputes. The appellate court refused to go so far as to infer from the order that the trial court denied an application to compel arbitration or granted an application to stay arbitration. Christie’s could have moved to compel arbitration but, for reasons unknown, simply chose not to request that relief. Therefore, the appeal was dismissed for lack of subject matter jurisdiction.
The opinion makes it clear that the Court of Appeals will look closely at issues of subject matter jurisdiction in appeals where arbitration clauses are at issue.
What happens now? Can the defendant file a motion to compel arbitration in the trial court? Or did it lose that right when it failed to specifically request that relief when it filed its motion to dismiss?
I don’t know the answer to the question, but I do know that lots of money has been spent that has absolutely nothing to do with the merits of the claim.
The case is The SJR Limited Partnership v. Christie’s Inc., No. W2013-01606-COA-R3-CV (Tenn. Ct. App. March 5, 2014).