Waldron v. Goddess, 41 N.Y.2d 182 (1976)

An agreement to arbitrate will not be extended to parties beyond the explicit terms of the agreement, and the intent to arbitrate must be clear, explicit, and unequivocal, especially when compelling arbitration between non-contracting parties.

Summary

This case involves a dispute between two real estate brokers, Waldron and Goddess, employed by the same firm, Cross and Brown. Goddess sought to compel arbitration of their commission dispute based on arbitration clauses in their employment contracts. Waldron’s contract was active, but Goddess’s had expired, and she declined a new one. The New York Court of Appeals held that Waldron could not be compelled to arbitrate with Goddess. The court reasoned that arbitration is a matter of consent, and the arbitration agreements in the separate employment contracts did not clearly extend the right to compel arbitration to another employee outside of a direct agreement between the two disputing employees or between the employee and the employer. Continued employment alone does not extend an expired arbitration agreement.

Facts

Waldron and Goddess were real estate brokers at Cross and Brown. Waldron had a current employment contract with an arbitration clause. Goddess’s employment contract with Cross and Brown had expired before the commission dispute arose. Although she continued to work for Cross and Brown, she did not sign a new contract. Both employment contracts contained separate arbitration clauses.

Procedural History

Waldron moved to vacate Goddess’s demand for arbitration. The Supreme Court, Special Term, denied Waldron’s motion and granted Goddess’s cross-motion to compel arbitration. The Appellate Division affirmed. The New York Court of Appeals reversed the Appellate Division’s decision.

Issue(s)

1. Whether Waldron can be compelled to arbitrate a dispute with Goddess based on separate arbitration agreements with their mutual employer, where Goddess’s agreement had expired and the agreements did not explicitly allow one employee to compel another to arbitrate.

2. Whether the continuation of Goddess’s employment after the expiration of her contract, without a new written agreement, served to extend the arbitration provision of the expired contract.

Holding

1. No, because the arbitration agreements in Waldron’s and Goddess’s separate employment contracts did not clearly and explicitly provide a basis for compelling arbitration between the two employees, especially given the absence of a current agreement with Goddess. The only option for compelling arbitration between employees within Waldron’s contract was a mutually agreed-upon procedure, which did not exist here.

2. No, because the threshold for clarity of agreement to arbitrate is high, and the mere continuation of employment does not automatically extend an arbitration agreement from an expired contract.

Court’s Reasoning

The court emphasized that arbitration is a matter of consent, and a party cannot be compelled to arbitrate absent clear and explicit evidence of their agreement to do so. The court stated, “[T]he threshold for clarity of agreement to arbitrate is greater than with respect to other contractual terms.” The court examined the language of Waldron’s employment contract, finding that it primarily addressed disputes between Waldron and Cross and Brown, not disputes between employees. While the contract mentioned disputes involving other employees, it did not give those employees the right to compel arbitration. The court refused to extend the arbitration agreement by implication or construction. Regarding Goddess’s expired contract, the court held that continued employment did not automatically extend the arbitration provision. Absent a clearly expressed intention to renew the arbitration agreement or adopt one contained elsewhere, Goddess could not compel Waldron to arbitrate, nor was she bound to arbitrate herself. The court noted, “Absent a clearly expressed intention to renew the arbitration agreement contained in the otherwise expired employment contract or to adopt one contained elsewhere, Goddess was neither bound thereto…nor could she derive any reciprocal right therefrom to compel Waldron to arbitrate.” Because there was no clear commitment obligating the parties to compulsory arbitration, the court reversed the order compelling arbitration.