David Fiala, Ltd. v. Harrison

Nebraska Advance Sheets
418 290 NEBRASKA REPORTS
preclude Golnick from presenting evidence relevant to how
Callender’s negligence caused Golnick’s injuries.
We further conclude that the court’s jury instructions either
were correct or did not prejudice Golnick. Finally, we con-
clude that the court did not abuse its discretion in denying
Golnick’s request for juror contact information after the jurors
completed their service. Because rule 606(2) prohibits evi-
dence of the jurors’ deliberations, the court did not err in deny-
ing Golnick’s request to investigate the jurors’ reasoning and
thought processes.
Affirmed.
David Fiala, Ltd., a Nebraska corporation, doing business
as FuturesOne, appellee, v. I an H arrison et al.,
appellees, and William Gross, appellant.
___ N.W.2d ___
Filed March 20, 2015. No. S-14-178.
1. Arbitration and Award. Arbitrability presents a question of law.
2. Contracts. The meaning of a contract and whether a contract is ambiguous are
questions of law.
3. Judgments: Appeal and Error. When reviewing questions of law, an appellate
court has an obligation to resolve the questions independently of the conclusion
reached by the trial court.
4. Arbitration and Award: Federal Acts: Contracts. If a contract containing an
arbitration clause involves interstate commerce, the Federal Arbitration Act gov-
erns the contract.
5. Contracts: States. Contracts involving interstate commerce include contracts for
services between parties of different states.
6. Contracts. In interpreting a contract, a court must first determine, as a matter of
law, whether the contract is ambiguous.
7. Contracts: Words and Phrases. A contract is ambiguous when a word, phrase,
or provision in the contract has, or is susceptible of, at least two reasonable but
conflicting interpretations or meanings.
8. Contracts. When a court has determined that ambiguity exists in a document, an
interpretative meaning for the ambiguous word, phrase, or provision in the docu-
ment is a question of fact for the fact finder.
9. Contracts: Evidence. If a contract is ambiguous, the meaning of the contract is
a question of fact and a court may consider extrinsic evidence to determine the
meaning of the contract.
Nebraska Advance Sheets
DAVID FIALA, LTD. v. HARRISON 419
Cite as 290 Neb. 418
Appeal from the District Court for Lancaster County: Paul
D. Merritt, Jr., Judge. Reversed and remanded for further
proceedings.
Kevin R. McManaman and Charles E. Wilbrand, of Knudsen,
Berkheimer, Richardson & Endacott, L.L.P., for appellant.
Robert B. Seybert and Stephen J. Schutz, of Baylor, Evnen,
Curtiss, Grimit & Witt, L.L.P., for appellee David Fiala, Ltd.
Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
Miller-Lerman, J.
NATURE OF CASE
William Gross appeals the order of the district court for
Lancaster County which denied his motion to compel arbitra-
tion. The court concluded that the claims in this action were
not subject to arbitration under the arbitration provision in the
parties’ employment agreement. We conclude that the district
court erred as a matter of law when it failed to determine
that the arbitration provision was ambiguous and to thereafter
resolve the ambiguity with extrinsic evidence. We therefore
reverse the order denying Gross’ motion, and we remand the
cause to the district court for further proceedings to resolve the
ambiguity and determine the meaning and scope of the arbitra-
tion provision.
STATEMENT OF FACTS
In September 2006, Gross executed an “Associated
Person/Individual Agreement/Procedures and Rules” (agree-
ment) with David Fiala, Ltd., doing business as FuturesOne
(FuturesOne), which set forth the terms of Gross’ employment
with FuturesOne. Section 6.B. of the agreement contained the
following arbitration provision:
[Gross] and [FuturesOne] agree to arbitrate any dispute,
claim, or controversy that may arise between themselves
or a customer or any other person that is subject to arbi-
tration under the rules, constitution or by-laws of the
Nebraska Advance Sheets
420 290 NEBRASKA REPORTS
CFTC or NFA or any other self-regulatory organization
with which [Gross] registers, from time to time.
In November 2012, FuturesOne filed a complaint in the dis-
trict court for Lancaster County against Gross and three other
individuals who had signed the same or a similar agreement
with FuturesOne. FuturesOne alleged that each of the defend­
ants had resigned from FuturesOne in late 2007 or early 2008;
that in the year after resigning, two of the defendants had set
up a firm to compete with FuturesOne; and that Gross and
the fourth defendant were employed by the competing firm.
FuturesOne also alleged that three of the defendants, includ-
ing Gross, owed money to FuturesOne for amounts that had
been paid but not earned at the time they resigned. FuturesOne
alleged that Gross owed $7,000. FuturesOne asserted two
causes of action for breach of contract. It alleged that Gross
and others had breached the agreement (1) by failing to pay
amounts owed to FuturesOne and (2) by competing with
FuturesOne in violation of the agreement. FuturesOne sought
damages against each of the defendants.
Gross filed a motion to dismiss or, in the alternative, to
stay proceedings and compel arbitration. Gross asserted that
the arbitration provision in his agreement with FuturesOne
required that any and all disputes or claims that arose between
the parties themselves be subject to arbitration. At a hearing on
Gross’ motion, the court received affidavits offered by Gross
and by FuturesOne into evidence.
The court thereafter filed an order on January 29, 2014,
denying Gross’ motion. In its order, the court quoted a por-
tion of section 6.B. and indicated that “CFTC” and “NFA” as
used in that section referred to the “U.S. Commodity Futures
Trade Commission” and the “National Futures Association,”
respectively. The court stated in its order that in section 6.B.,
the parties had “agreed to ‘arbitrate any dispute, claim or con-
troversy that may arise between themselves . . . that is subject
to arbitration under the rules, constitution or by-laws of the
CFTC or NFA or any other self-regulatory organization with
which [the defendant Gross] registers, from time to time.’”
We note that the ellipsis and brackets are in the court’s origi-
nal order.
Nebraska Advance Sheets
DAVID FIALA, LTD. v. HARRISON 421
Cite as 290 Neb. 418
In its analysis of the scope of the arbitration provision,
the court referred to the Web sites of both the CFTC and the
NFA. The court quoted a statement from the CFTC’s Web site
to the effect that the CFTC’s mission was “‘to protect market
participants and the public from fraud, manipulation, abusive
practices and systemic risk related to derivatives — both
futures and swaps — and to foster transparent, open, com-
petitive and financially sound markets.’” The court quoted a
statement from the NFA’s Web site that the NFA was “‘formed
in 1976 to become a futures industry’s self-regulatory organi-
zation’” and that its regulatory activities included, inter alia,
“‘providing an arbitration forum for futures and forex-related
[sic] disputes.’”
After referring to these sources, the court stated that it did
not believe that the parties intended that disputes between
themselves regarding money owed by Gross to FuturesOne and
regarding alleged violations of a covenant not to compete were
to be subject to arbitration pursuant to section 6.B. The court
apparently reasoned that these were not the types of disputes
that were subject to arbitration under the rules, constitution, or
bylaws of the CFTC and the NFA. The court therefore denied
Gross’ motion.
Gross appeals.
ASSIGNMENTS OF ERROR
Gross claims, restated, that the district court erred when
it (1) denied his motion to compel arbitration, (2) referred
to matters outside of the record in rendering its order, and
(3) determined that the claims were not within the scope of
the agreement.
STANDARDS OF REVIEW
[1-3] Arbitrability presents a question of law. Kremer
v. Rural Community Ins. Co., 280 Neb. 591, 788 N.W.2d
538 (2010). The meaning of a contract and whether a con-
tract is ambiguous are questions of law. See Davenport Ltd.
Partnership v. 75th & Dodge I, L.P., 279 Neb. 615, 780
N.W.2d 416 (2010). When reviewing questions of law, an
appellate court has an obligation to resolve the questions
Nebraska Advance Sheets
422 290 NEBRASKA REPORTS
independently of the conclusion reached by the trial court.
Village of Memphis v. Frahm, 287 Neb. 427, 843 N.W.2d
608 (2014).
ANALYSIS
The Agreement in This Case Is Governed by the
Federal Arbitration Act, and Therefore, the
Failure to Meet a Requirement of Nebraska’s
Uniform Arbitration Act Does Not Make the
Arbitration Provision Unenforceable.
We note first that FuturesOne contends, as an alternative to
the basis upon which the district court denied Gross’ motion,
that the court should have denied the motion on the basis that
the parties’ agreement did not meet one of the requirements of
Nebraska’s Uniform Arbitration Act (UAA), Neb. Rev. Stat.
§§ 25-2601 to 25-2622 (Reissue 2008 & Cum. Supp. 2014).
FuturesOne does not contend or specify that either the arbi-
tration provision or the agreement elsewhere delegates to the
arbitrator the issue of the UAA’s impact on the validity of
the arbitration provision. Compare Rent-A-Center, West, Inc.
v. Jackson, 561 U.S. 63, 130 S. Ct. 2772, 177 L. Ed. 2d 403
(2010). If the UAA applied as urged by FuturesOne, its argu-
ment could determine this appeal, and we therefore consider
this argument first. However, we conclude that the agreement
is governed by the Federal Arbitration Act (FAA) rather than
the UAA and that therefore, a purported failure to meet a
requirement of the UAA does not render the arbitration provi-
sion unenforceable.
The UAA requires that any standardized agreement in
which binding arbitration is the sole remedy for dispute
resolution include a specific statement adjoining the signature
block which states that the contract contains an arbitration
provision. § 25-2602.02. The Nebraska statute provides the
exact wording for this notice requirement and requires that
this statement be capitalized and underlined. The agreement
between FuturesOne and Gross does not contain the state-
ment, and if the agreement were governed by the UAA, the
failure to strictly comply with § 25-2602.02 would make the
arbitration clause void and unenforceable. See Kramer v.
Nebraska Advance Sheets
DAVID FIALA, LTD. v. HARRISON 423
Cite as 290 Neb. 418
Eagle Eye Home Inspections, 14 Neb. Ct. App. 691, 716 N.W.2d
749 (2006), overruled on other grounds, Knights of Columbus
Council 3152 v. KFS BD, Inc., 280 Neb. 904, 791 N.W.2d 317
(2010). However, we have stated that if an agreement is gov-
erned by the FAA, then the FAA preempts the Nebraska notice
requirement and the lack of the statutorily required state-
ment does not render the arbitration agreement unenforceable.
Aramark Uniform & Career Apparel v. Hunan, Inc., 276 Neb.
700, 757 N.W.2d 205 (2008).
[4,5] We noted in Aramark that the U.S. Supreme Court
held in Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681,
116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996), that if a contract
containing an arbitration clause involves interstate commerce,
the FAA governs the contract. Under 9 U.S.C. § 2 (2012), the
FAA applies to “a contract evidencing a transaction involving
commerce.” In Aramark, 276 Neb. at 705, 757 N.W.2d at 209,
we observed that the U.S. Supreme Court gave this phrase in
9 U.S.C. § 2 “a broad interpretation to give expansive scope
to the FAA.” See, also, Webb v. American Employers Group,
268 Neb. 473, 684 N.W.2d 33 (2004). We further noted in
Aramark that this court had determined that contracts involving
interstate commerce included “contracts for services between
parties of different states.” 276 Neb. at 706, 757 N.W.2d at 210
(citing cases).
The agreement in this case involves a contract for services
between FuturesOne, a Nebraska corporation, and Gross, a
South Dakota resident. The agreement also involves serv­
ices related to futures trading on national markets. There is
no serious claim contradicting the fact that the agreement
between FuturesOne and Gross involves interstate commerce,
and, giving expansive scope to the FAA, the agreement is
therefore governed by the FAA. Because the agreement is
governed by the FAA, the notice requirement of the UAA,
§ 25-2602.02, does not apply and the failure to include this
statement does not render the arbitration provision unenforce-
able. We therefore reject FuturesOne’s argument based on
§ 25-2602.02 of the UAA, and we consider Gross’ challenge
to the district court’s ruling on the scope of the arbitra-
tion provision.
Nebraska Advance Sheets
424 290 NEBRASKA REPORTS
The District Court Erred When It Failed to
Determine That the Arbitration Provision Is
Ambiguous and to Thereafter Consider
Appropriate Extrinsic Evidence to
Resolve the Ambiguity.
Gross claims generally that the district court erred when
it failed to compel arbitration of the parties’ disputes under
the agreement. The question whether the disputes in this case
required arbitration hinged on interpretation of the scope of the
arbitration provision in section 6.B. of the agreement.
[6] The U.S. Supreme Court has noted that 9 U.S.C. § 2 has
the effect of placing arbitration agreements on an equal foot-
ing with other contracts and to require that they be enforced
according to their terms. See Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 126 S. Ct. 1204, 163 L. Ed. 2d 1038
(2006). In interpreting a contract, a court must first determine,
as a matter of law, whether the contract is ambiguous. Bedore
v. Ranch Oil Co., 282 Neb. 553, 805 N.W.2d 68 (2011). We
determine that the district court failed to recognize an ambigu-
ity in the arbitration provision, and we conclude that the cause
must be remanded to the district court for further proceedings
to resolve the ambiguity.
The arbitration provision in the parties’ agreement, section
6.B., provided as follows:
[Gross] and [FuturesOne] agree to arbitrate any dispute,
claim, or controversy that may arise between themselves
or a customer or any other person that is subject to arbi-
tration under the rules, constitution or by-laws of the
CFTC or NFA or any other self-regulatory organization
with which [Gross] registers, from time to time.
(Emphasis supplied.) In their arguments on appeal, the par-
ties offer differing readings of this arbitration provision.
The difference centers on the phrase that is italicized in the
above quote and that begins “that is subject to arbitration.”
In the remainder of our opinion, we sometimes refer to the
italicized portion of section 6.B. as “the phrase.” The par-
ties differ with respect to what noun or nouns the phrase
modifies. FuturesOne contends certain matters are subject to
Nebraska Advance Sheets
DAVID FIALA, LTD. v. HARRISON 425
Cite as 290 Neb. 418
arbitration, whereas Gross contends certain persons are sub-
ject to arbitration.
Under FuturesOne’s reading, the phrase modifies “any dis-
pute, claim, or controversy” and therefore the only disputes,
claims, and controversies that are subject to arbitration are
those that are subject to arbitration under the rules, con-
stitution, or bylaws of the named organizations. Under this
interpretation, the phrase describes all disputes (regardless
of the parties involved), and therefore, the present disputes
between FuturesOne and Gross would be subject to arbitra-
tion only if they are the types of disputes that are subject
to arbitration under the rules, constitution, or bylaws of the
named organizations.
Under Gross’ reading, the phrase modifies “any other per-
son” and therefore defines the persons, other than the parties
to the agreement and their customers, who may be involved in
a dispute that would be subject to arbitration. Under this read-
ing, the arbitration provision applies to all disputes between
persons identified in the provision, namely (1) the parties
“themselves,” (2) “a customer,” and (3) “any other person
that is subject to arbitration under the rules, constitution or
by-laws” of the named organizations. Under Gross’ reading,
any dispute that involves only the parties themselves, such
as the instant case, is subject to arbitration; it is simply not
necessary to consider the rules of the named organizations to
determine whether a dispute between the parties “themselves”
is subject to arbitration. Under Gross’ interpretation, the rules,
constitution, or bylaws of the named organizations are relevant
only to determine what “other person” involved in a dispute is
subject to arbitration under the agreement.
The district court in this case read the arbitration provi-
sion in the manner urged by FuturesOne; that is, the phrase
modified “dispute, claim, or controversy.” As a result, the court
found it necessary to determine whether the disputes between
FuturesOne and Gross were the types of disputes that were
subject to arbitration under the rules, constitution, or bylaws
of the CFTC and the NFA. The court concluded that the dis-
putes in this case were not the types of disputes subject to
Nebraska Advance Sheets
426 290 NEBRASKA REPORTS
arbitration under the organizations’ rules and that therefore, the
parties’ agreement did not require arbitration of the disputes in
this case.
In its analysis of the arbitration provision, the district court
stated that the parties had “agreed to ‘arbitrate any dispute,
claim or controversy that may arise between themselves . . .
that is subject to arbitration under the rules, constitution or
by-laws of the CFTC or NFA or any other self-regulatory
organization with which [the defendant Gross] registers, from
time to time.’” The ellipsis within the quote of section 6.B.
was inserted by the district court in the portion of its order
quoted above, and certain language found in section 6.B. was
removed. By including the ellipsis and eliminating a portion of
the text of the arbitration provision, the district court obscured
the ambiguity that exists in the arbitration provision. The
district court’s editing of the provision made it appear clear
that the phrase in section 6.B. which begins “that is subject to
arbitration” modifies “any dispute, claim or controversy” and
therefore applies to all disputes, including disputes between
the parties themselves, and limits the arbitration requirement to
disputes that are subject to arbitration under the named organi-
zations’ rules.
Whether a contract is ambiguous is a question of law.
Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb.
615, 780 N.W.2d 416 (2010). As an appellate court, we have
an obligation to resolve questions of law independently of the
conclusion reached by the trial court. See Village of Memphis v.
Frahm, 287 Neb. 427, 843 N.W.2d 608 (2014). Therefore, we
must independently determine whether the arbitration provision
in the agreement between FuturesOne and Gross is ambiguous.
We conclude that it is.
[7] A contract is ambiguous when a word, phrase, or provi-
sion in the contract has, or is susceptible of, at least two rea-
sonable but conflicting interpretations or meanings. American
Fam. Mut. Ins. Co. v. Wheeler, 287 Neb. 250, 842 N.W.2d
100 (2014). Because the phrase “that is subject to arbitra-
tion” immediately follows “any other person,” it is grammati-
cally reasonable to read the arbitration provision as Gross
Nebraska Advance Sheets
DAVID FIALA, LTD. v. HARRISON 427
Cite as 290 Neb. 418
urges; that is, that the phrase refers to persons. However,
it is also reasonable, although perhaps not as grammatical,
to read the sentence in the manner urged by FuturesOne, in
which the phrase beginning “that is subject to arbitration”
modifies “any dispute, claim, or controversy.” Such reading
may be reasonable despite the lack of proximity between the
two phrases. We find both interpretations to be reasonable,
but the interpretations conflict. FuturesOne’s interpretation
would require an examination of the rules, constitution, and
bylaws of the CFTC and the NFA to determine whether the
disputes between FuturesOne and Gross are subject to arbitra-
tion, whereas Gross’ interpretation would not require such an
examination, because all disputes between FuturesOne and
Gross would be subject to arbitration.
[8,9] When a court has determined that ambiguity exists
in a document, an interpretative meaning for the ambiguous
word, phrase, or provision in the document is a question of
fact for the fact finder. Davenport Ltd. Partnership v. 75th &
Dodge I, L.P., supra. If a contract is ambiguous, the meaning
of the contract is a question of fact and a court may consider
extrinsic evidence to determine the meaning of the contract. Id.
Therefore, in the present case, the district court should have
considered extrinsic evidence to determine the meaning of the
arbitration provision in the agreement.
Without remarking on whether the court’s consideration of
the Web sites regarding the types of disputes that are subject
to arbitration under the rules, constitution, and bylaws of the
CFTC and the NFA was proper, such consideration did not
address or resolve the ambiguity in the arbitration provision.
Because the district court did not note the ambiguity discussed
above, it failed to look to appropriate extrinsic evidence to
resolve the ambiguity as to what word or words the phrase that
begins “that is subject to arbitration” modifies. We therefore
reverse the order of the district court and remand the cause for
further proceedings in which the district court shall resolve this
ambiguity in the arbitration provision, section 6.B., and there-
after determine whether the agreement requires arbitration of
the disputes between FuturesOne and Gross.
Nebraska Advance Sheets
428 290 NEBRASKA REPORTS
CONCLUSION
We conclude that the district court erred when it failed to
determine that the arbitration provision, section 6.B., was
ambiguous and to thereafter resolve the ambiguity by consid-
ering appropriate extrinsic evidence. We therefore reverse the
order of the district court which denied Gross’ motion to com-
pel arbitration, and we remand the cause for further proceed-
ings consistent with this opinion.
R eversed and remanded for
further proceedings.
Kyle K ercher, appellee and cross-appellant,
v. Board of R egents of the University
of Nebraska et al., appellants
and cross-appellees.
___ N.W.2d ___
Filed March 20, 2015. No. S-14-211.
1. Summary Judgment. Summary judgment is proper if the pleadings and admis-
sible evidence offered show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from those facts and that the
moving party is entitled to judgment as a matter of law.
2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an
appellate court views the evidence in the light most favorable to the party against
whom the judgment was granted, and gives the party the benefit of all reasonable
inferences deducible from the evidence.
3. Contracts: Judgments: Appeal and Error. The meaning of a contract is a
question of law, in connection with which an appellate court has an obliga-
tion to reach its conclusions independently of the determinations made by the
court below.
4. Attorney Fees: Appeal and Error. An appellate court reviews a court’s award
of attorney fees under Neb. Rev. Stat. § 48-1231 (Reissue 2010) for abuse
of discretion.
5. Employment Contracts: Breach of Contract: Proof. In an action for breach
of an employment contract, the burden of proving the existence of a contract
and all the facts essential to the cause of action is upon the person who asserts
the contract.
6. Contracts. When the terms of a contract are clear, a court may not resort to rules
of construction, and the terms are to be accorded their plain and ordinary mean-
ing as an ordinary or reasonable person would understand them.