Gratech Co., Ltd. v. Wold Eng'g, 2003 ND 200

Summary

The North Dakota Supreme Court held that N.D.C.C. § 24-02-26 requires arbitration of Gratech's tort claims against Wold Engineering because the claims were directly and closely related to performance of a highway construction contract. The court affirmed summary judgment requiring arbitration but reversed the dismissal with prejudice, concluding that dismissal was inconsistent with arbitration being the exclusive remedy. A partial dissent would have excluded intentional tort claims from arbitration.

Holdings

1. N.D.C.C. § 24-02-26 requires controversies between a contractor and a third party arising out of a contract for the construction or repair of a highway entered into by the Department of Transportation's director to be submitted to arbitration; the statute is not limited to claims against the Department or the prime contractor.
2. Whether a claim is arbitrable depends on its relationship to the subject matter of the arbitration clause, not on whether the claim is labeled a tort or contract claim. Gratech's claims were arbitrable because they were directly and closely related to performance of the highway-construction contract.
3. The district court erred by dismissing Gratech's claims with prejudice because that disposition was inconsistent with its conclusion that arbitration was Gratech's exclusive remedy.

Questions Presented

1. Whether N.D.C.C. § 24-02-26 requires arbitration of controversies between a highway contractor and a private engineering firm arising from highway-construction contracts.
2. Whether the arbitration requirement applies to claims pleaded as tort claims when those claims are directly and closely related to performance of the construction contract.
3. Whether the district court erred by dismissing Gratech's claims with prejudice after determining that arbitration was the exclusive remedy.

Disposition

reversed_and_remanded