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City of Rochester v. Kottschade

Supreme Court of Minnesota

June 7, 2017

City of Rochester, Appellant,
v.
Franklin P. Kottschade, et al., Respondents.

         Court of Appeals Office of Appellate Courts

          Monte A. Mills, Greene Espel PLLP, Minneapolis, Minnesota, for appellant.

          Gary A. Van Cleve, Bryan J. Huntington, Larkin Hoffman Daly & Lindgren Ltd., Minneapolis, Minnesota, for respondents.

         SYLLABUS

         The district court must stay a judicial proceeding when it compels arbitration because Minnesota's Uniform Arbitration Act does not authorize the court to direct the entry of judgment after compelling arbitration. See Minn. Stat. §§ 572B.01-.31 (2016).

         Reversed and remanded.

          OPINION

          CHUTICH, Justice.

         Appellant City of Rochester (City) sued respondents Franklin P. Kottschade and S.J.C. Properties (collectively SJC) to stop arbitration proceedings after SJC demanded arbitration and an arbitrator determined that the dispute was arbitrable. The district court denied the City's motion for summary judgment, granted SJC's motion for summary judgment, and compelled arbitration. Rather than stay the underlying action, as required by Minnesota Statutes section 572B.07(f) (2016), the district court directed the entry of judgment, and judgment was entered. The City appealed. When the court of appeals questioned its jurisdiction, the City argued that the district court's order was a final judgment because it dismissed, rather than stayed, the underlying proceeding and, therefore, the court of appeals could review the district court's order compelling arbitration. The court of appeals disagreed and dismissed the appeal as taken from a nonfinal order and judgment. Rochester v. Kottschade, No. A16-1203, Order (Minn.App. filed Aug. 16, 2016).

         Although a final judgment entered as directed by the district court is generally appealable under Rule 103.03(a) of the Minnesota Rules of Civil Appellate Procedure, we conclude that the district court erred by directing the entry of that judgment rather than staying the proceeding as directed by section 572B.07(f). Accordingly, we reverse the court of appeals' dismissal and we remand to the district court with instructions to vacate the judgment and to enter a stay pending the completion of arbitration.

         FACTS

         The City and SJC have been involved in numerous land disputes. In 2010, the City and SJC entered into a settlement agreement resolving two separate lawsuits. The agreement contained an arbitration clause that required the parties to submit "[a]ny dispute regarding the interpretation of [the] [a]greement that cannot be resolved" to a specified mediator "for final binding arbitration."

         In 2015, SJC demanded arbitration with the City regarding two new parcels of land, claiming that the City had failed to comply with its obligations under the 2010 settlement agreement. The City objected to SJC's demand for arbitration because, it asserted, no interpretation of the 2010 settlement agreement was required. But, the City agreed to allow the arbitrator to decide the issue of arbitrability. The arbitrator concluded that the disputes involved the interpretation of the 2010 settlement agreement and, thus, were subject to arbitration.

         Following the arbitrator's determination, the City filed a complaint in Olmsted County District Court, challenging the arbitrator's determination that the disputes were arbitrable and moving for a temporary injunction. SJC then moved for summary judgment to compel arbitration, asking the district court to dismiss the City's action with prejudice. The City also moved for summary judgment to permanently enjoin the arbitration proceedings. The parties agreed to a temporary stay of arbitration until the court could hear the parties' motions.

         Following the hearing on the parties' motions, the district court determined that the parties had an "enforceable agreement to arbitrate and that the disputes raised fall within the scope" of the agreement, see Minnesota Statutes § 572B.06(b) (2016). The court granted SJC's motion for summary judgment, which had the effect of requiring the parties to submit the dispute to arbitration. After the court denied the City's motion, it ordered the entry of judgment, stating: "LET JUDGMENT BE ENTERED ACCORDINGLY." The district court administrator entered judgment.

         The City appealed from the district court's decision, relying on both Rule 103.03 of the Rules of Civil Appellate Procedure and Minnesota Statutes section 572B.28(a)(6) (2016) as authority for its appeal. The City argued to the court of appeals that the district court erred in compelling arbitration. Although recognizing that an appeal may be taken from a final judgment under Rule 103.03(a), the court of appeals questioned its jurisdiction because the Minnesota Uniform Arbitration Act (the Act), Minn. Stat. §§ 572B.01-.31 (2016), "does not authorize entry of judgment on an order granting a motion to compel arbitration." Rochester v. Kottschade, No. A16-1203, Order at 2-3 (Minn.App.). The court of appeals reasoned ...


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