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Security Alarm Financing Enterprises, L.P. v. Fuller

Court of Appeals of Arizona, First Division

July 6, 2017

SECURITY ALARM FINANCING ENTERPRISES, L.P., Plaintiff/Appellee,
v.
AMY FULLER, et al. Defendants/Appellants.

         Appeal from the Superior Court in Maricopa County No. CV2015-007680 The Honorable Christopher T. Whitten, Judge

          Baskin, Richards, PLC, Phoenix By William A. Richards, Nicole C. Davis Counsel for Plaintiff/Appellee

          Limon-Wynn Law, PLLC, Tempe By Monica A. Limon-Wynn Counsel for Defendants/Appellants

          Presiding Judge Diane M. Johnsen delivered the opinion of the Court, in which Judge Patricia K. Norris and Judge Jennifer B. Campbell joined.

          OPINION

          JOHNSEN, Judge

         ¶1 The superior court denied a motion to dismiss in favor of arbitration under the Federal Arbitration Act, holding the moving parties waived their right to compel arbitration by failing to raise it as an affirmative defense in their answer. Exercising our discretion to accept special action review and applying federal law, we hold there was no waiver and reverse the order denying the motion to dismiss.

         FACTS AND PROCEDURAL BACKGROUND

         ¶2 Security Alarm Financing Enterprises, L.P. filed a complaint alleging contract and tort claims against several former employees and their new employer. The complaint alleged breach of contract, misappropriation of trade secrets, unfair competition and tortious interference with business expectancies. In answering the complaint, Amy Fuller, Molly Griffis, and Carlee and Darryl Reeves (collectively "Appellants") did not raise any affirmative defense concerning arbitration.

         ¶3 Security acknowledges that 29 days after Appellants answered the complaint, their counsel contacted Security to raise the existence of arbitration agreements Appellants each had signed when they started work with Security. (The arbitration agreements were stand-alone contracts separate from the confidentiality agreements on which Security's contract claims were based.) Each of the identical three-page arbitration agreements specified that it "is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq., " and that it would apply "to any dispute arising out of or related to" the employee's "employment with . . . [Security] . . . or termination of employment." Appellants asked whether Security would agree to arbitration; a month later, Security responded that it would not agree. Four days after receiving Security's response, Appellants moved to dismiss the complaint and to compel arbitration. The superior court denied the motion, finding Appellants waived their right to compel arbitration by failing to cite the arbitration agreement as an affirmative defense in their answer. Appellants then appealed.

         DISCUSSION

         A. Jurisdiction.

         ¶4 This court derives its jurisdiction wholly from statute. See Garza v. Swift Transp. Co., 222 Ariz. 281, 283, ¶ 12 (2009). Generally speaking, an order denying a motion to dismiss is not reviewable by appeal because it is not a final judgment. See Brumett v. MGA Home Healthcare, L.L.C., 240 Ariz. 420, 426, ¶ 4 (App. 2016).

         ¶5 Appellants, however, suggest Arizona Revised Statutes ("A.R.S.") section 12-2101.01(A)(1) (2017) grants this court jurisdiction over the denial of their motion to dismiss and to compel arbitration.[1] That statute grants the court of appeals jurisdiction to hear an appeal from "[a]n order denying an application to compel arbitration made under § 12-1502 or 12-3007." But Appellants did not move to compel arbitration under either A.R.S. § 12-1502 (2017) (adopted from the Uniform Arbitration Act) or A.R.S. § 12-3007 (2017) (adopted from the Revised Uniform Arbitration Act). Indeed, Arizona's versions of the Uniform Arbitration Act and the Revised Uniform Arbitration Act expressly do not apply to arbitration agreements, such as the one at issue here, between an employer and its employee. A.R.S. §§ 12-1517 (2017), -3003(B)(1) (2017). Instead, Appellants moved to compel arbitration under the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16 (2017), which the arbitration agreement expressly adopted. Because Appellants did not move to compel arbitration under A.R.S. §§ 12-1502 or -3007, and because no other statute grants this court appellate jurisdiction, we lack jurisdiction to consider Appellants' appeal from the order denying their motion.

         ¶6 Alternatively, Appellants ask us to treat their appeal as a petition for special action. In our discretion and pursuant to A.R.S. § 12-120.21(A)(4) (2017), we may exercise special action jurisdiction "under appropriate circumstances." Phillips v. Garcia, 237 Ariz. 407, 410, ΒΆ 6 (App. 2015). Special action jurisdiction is proper when a party has no "equally plain, speedy, and adequate remedy by appeal, " Arizona Rule of Procedure for Special Actions 1(a), and in cases "involving a matter of first impression, statewide ...


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