REAL ESTATE BROKERS BOUND BY ARBITRATION CLAUSE CONTAINED CODE OF ETHICS AND ARBITRATION MANUAL OF NATIONAL ASSOCIATION OF REALTORS, WHICH HAD BEEN ADOPTED BY COUNTY REALTORS ASSOCIATION

 NRT Mid-Atlantic, Inc. v. Innovative Properties, Inc., No. 951, September Term, 2001 (Court of Special Appeals of Maryland)

 The Court of Special Appeals vacated the circuit court’s denial of a real estate broker’s petition to stay and compel arbitration.  The disputants were two real estate brokerage firms which disagreed as to the division of a large sales commission.  One of the brokerage firms filed suit against the other for unjust enrichment, intentional interference with business relations, and conspiracy.  The other brokerage firm filed a motion to stay and petition to compel arbitration, alleging that both firms belonged to the County Association of Realtors, which in turn had by-laws adopting the Code of Ethics and Arbitration Manual of the National Association of Realtors.  The plaintiff firm opposed the petition on the grounds that its claims did not fall within the scope of the parties’ arbitration agreement.

 The Circuit Court denied the petition to compel arbitration.  It found that the arbitration clause only covered “contractual disputes”, not torts.  The defendant noted an appeal from the order.

 As a preliminary matter the Court of Special Appeals discussed the subject of appeals from an order denying a petition to compel arbitration.  The Court noted that a trial court’s order denying a petition to compel arbitration is a final judgment.  Once the court orders arbitration, or denies it, there is nothing left for it to do with regard to the independent action to compel arbitration.  The strong legislative policy in favor of enforcing arbitration agreements favors treating as final an order denying a petition to compel arbitration filed in an already pending case.  The Court stated:

 “The question whether parties agreed to arbitrate their dispute, whether raised in an independent action either to stay or compel arbitration or in a petition to stay or compel arbitration filed by one of the parties in an existing suit involving the same dispute, concerns the proper forum in which the dispute is to be resolved.  A final resolution of that predicate issue will prevent future piecemeal appeals, repeated litigation of the disputed issue in a public and private form, and needless expense to the parties.  In the case of a petition to compel arbitration filed in an already pending action, that finality only can be obtained by permitting an appeal from an order denying such a petition.”

  The Court of Special Appeals exercised its discretion under Rule 8-602(e)(1) to certify the order as final.

 The Court of Special Appeals continued on to hold that in this case, the phrase “contractual dispute” encompassed the dispute whether the plaintiff was entitled to the 4% sales commission.  The dispute between the parties was contractual, because the tort claims could not be litigated unless the contractual dispute is resolved.

 The Court also held that the civil suit should have been stayed pending arbitration, because there were litigants who were not parties to the arbitration agreement, and because the arbitration would not dispose of the tort claims.   

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