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State of the Arts v. Congress Property Management
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Decision: 1997 ME 18
Docket: CUM-96-728
Argued January 7, 1997
Decided January 29, 1997






	[¶1]  	State of the Arts, Inc., appeals from the judgment of the
Superior Court (Cumberland County, Fritzsche, J.) denying its request for an
order compelling arbitration with Congress Property Management
Corporation ("Congress Property"), the owner of the State Theater in
Portland.  On appeal, State of the Arts contends that the Superior Court
erred in concluding that the dispute resolution provision of its lease
agreement with Congress Property did not make arbitration proceedings
mandatory if one party requested them.  We disagree and affirm the
	[¶2]  	In July of 1996, State of the Arts became the sublessee of a lease
originally entered into by Congress Property and Perfect Pitch, Inc., for the
State Theater, located on Congress Street in Portland.  Since September 1,
1996, State of the Arts has not paid rent to Congress Property because of a
dispute over which party is responsible for repairs to the theater.  The
parties began negotiations soon after the dispute arose, and agreed on
mediation.  When State of the Arts later requested that Congress Property
submit to binding arbitration, Congress Property refused.{1}  On September
27, 1996, State of the Arts sought an order from the Superior Court
compelling arbitration of the parties' dispute.  The court denied the request. 
The issue before us is whether the dispute resolution provision of the lease
makes arbitration mandatory if one party requests it.{2}
	[¶3]  	The dispute resolution clause is written in the disjunctive:  the
parties "shall negotiate in good faith, engage in mediation in good faith or
submit to binding arbitration . . . ." This plain language requires the parties
to attempt either negotiation, mediation, or arbitration.  Although State of
the Arts asks us to envision a situation in which the parties cannot agree on
one of the specified forms of dispute resolution, and argues from this
stalemate scenario that only the ability to compel arbitration gives meaning
to the dispute resolution clause, State of the Arts overlooks the fact that the
clause is not meaningless if it is simply read as its plain language dictates. 
The parties agree to pursue alternative dispute resolution in the event of a
dispute.  Three procedures are presented as possibilities.  None of the
possibilities, however, is mandatory.  In this case the clause served its
purpose by promoting an attempt at a resolution of the dispute without
resort to litigation.  The clause does not become meaningless because this
effort may have failed, or because the clause may not adequately address
every conceivable scenario.
	[¶4]  	State of the Arts cites our holding in Orthopedic Physical
Therapy v. Sports Therapy Centers, Ltd., 621 A.2d 402 (Me. 1993), in
support of its interpretation of the dispute resolution clause.  There we
recognized "the policy in Maine . . . favoring arbitration" and held that the
contract's arbitration provision providing that a dispute "may be settled by
arbitration" was a mandatory arbitration clause.{3}  Id. at 403.  We reasoned
that since the parties could always seek arbitration if they so chose, the
clause would be meaningless unless it was read as requiring arbitration if
one party requested it.  Id.  Here, as noted, the alternative dispute
resolution clause is not meaningless without mandatory arbitration.  The
parties decided to phrase Article 32 in the disjunctive, making plain their
intent to offer three alternative dispute resolution options in the event of a
dispute.  The parties "cannot be compelled to submit their controversy to
arbitration unless they have manifested in writing a contractual intent to be
bound to do so."  Nisbet v. Faunce, 432 A.2d 779, 782 (Me. 1981).  The
parties have not done so here.
	The entry is:
		Judgment affirmed.
Attorneys for plaintiff:
Christopher C. Taintor, Esq. (orally)
Peter J. DeTroy
Norman, Hanson & DeTroy
P O Box 4600
Portland, ME 04112-4600

Attorney for defendant:

Timothy S. Keiter, Esq. (orally)
Erika L. Kennedy, Esq.
P O Box 7332
Portland, ME 04112
FOOTNOTES******************************** {1} Article 32 of the lease agreement provides: Dispute Resolution. Landlord and Tenant agree that, in the event of a dispute over any term of this lease, including any term wherein reasonableness of consent or approval of a party shall be required, and excepting (i) any action to enforce in a court of appropriate jurisdiction the binding determination of such an arbitrator against either party, or (ii) any action by Landlord for possession of the demised premises pursuant to Maine law then in effect based upon a terminable default, which default Tenant does not dispute, the parties shall negotiate in good faith, engage in mediation in good faith or submit to binding arbitration by a neutral qualified party according to the rules of the American Arbitration Association to resolve such dispute. In any dispute regarding the terms of this lease or the enforcement thereof, reasonable costs of enforcement (including attorneys fees) shall be paid to the prevailing party. {2} Congress Property raises several arguments concerning the underlying dispute between the parties, in the absence of a factual record supporting its arguments. We could not consider those arguments on the basis of this record. More importantly, we resolve the issue before us on the basis of the language in the lease. {3} The Clause in Orthopedic Physical Therapy read as follows: ARBITRATION: Any and all disputes arising out of, under, in connection with, or in relation to this Agreement may be settled by arbitration in the Commonwealth of Virginia before the American Arbitration Association in accordance with its rules then obtaining, and judgment upon the [award] rendered may be entered in any court having jurisdiction thereof. 621 A.2d at 403.