DOUBLE DIAMOND CONSTRUCTION v. FARMERS COOPERATIVE ELEVATOR and MOLLER CONSTRUCTION, INC 2003 SD 9

DOUBLE DIAMOND CONSTRUCTION
Plaintiff and Appellant
 v.
FARMERS COOPERATIVE ELEVATOR
 ASSOCIATION OF BERESFORD, SOUTH
 DAKOTA, a cooperative corporation,
Defendant and Appellee
and
 MOLLER CONSTRUCTION, INC.,
 Defendant
 
[2003 SD 9]

South Dakota Supreme Court
Appeal from the Circuit Court of
The Second Judicial Circuit
Minnehaha County, South Dakota

Hon. Glen A. Severson, Judge

CHAD SWENSON of
 Swenson Law Firm
Sioux Falls, South Dakota
Attorneys for plaintiff and appellant.

ROGER DAMGAARD of
Woods, Fuller, Shultz and Smith
 Sioux Falls, South Dakota
Attorneys for defendant and appellee.

Considered on Briefs December 13, 2002

Opinion Filed 1/22/2003

PER CURIAM

[¶1.] Double Diamond Construction (Double Diamond) attempts to appeal from an order of the circuit court vacating an arbitration award and ordering the arbitration proceeding to be reopened for the purpose of considering Farmers Elevator’s damage claim against Double Diamond.  For the reasons recited below, we dismiss Double Diamond’s appeal for lack of appellate jurisdiction.

FACTS AND PROCEDURE

[¶2.] Double Diamond filed a notice of appeal and docketing statement seeking to appeal an order of the circuit court vacating an arbitration award.  The circuit court ordered that:

1)                  The application to vacate the arbitration award is granted for the reasons stated by the court at the hearing held before the court on July 29, 2002;

2)                  The arbitration award dated February 4, 2002, and the arbitrator’s memorandum decision dated February 4, 2002, are vacated to the extent they fail to address on the merits the damage claim of Farmers Elevator against Double Diamond, which claim Farmers Elevator took by assignment from Jerke Construction, Inc.;

3)                  The arbitration proceeding be reopened before Arbitrator E.W. Hertz for the limited purpose of considering the merits of Farmers Elevator’s damage claim against Double Diamond.

[¶3.] Double Diamond’s docketing statement indicates that the order entered is appealable because:

The trial court’s order is either a judgment, or an order that affects a substantial right, and the order in effect determines the action and prevents a judgment from which an appeal might be taken.  SDCL 15-26A-3(1) and (2).

ISSUE

[¶4.] Whether the order vacating the arbitration award and remanding for hearing is appealable.

[¶5.] SDCL ch 21-25A (Uniform Arbitration Act) governs the enforceability of arbitration agreements and arbitration awards.  Following an arbitration award, the parties may apply to the circuit court to have the award confirmed, vacated, modified or corrected.  SDCL 21-25A-23.  Additionally, SDCL 21-25A-35 provides:

Appeals from orders, judgments and decrees.  An appeal may be taken from:

1.      An order denying an application to compel arbitration made under § 21-21A-5;

2.      An order granting an application to stay arbitration made under § 21-25A-8;

3.      An order confirming or denying confirmation of an award; An order modifying or correcting an award;

4.      An order vacating an award without directing a rehearing; or

5.      A judgment or decree entered pursuant to the provisions of this chapter.     

            The appeal shall be taken in the manner and to the same extent as from orders or judgments in a civil action.

SDCL 21-25A-35 (emphasis added).  This Court has not previously addressed the appellate jurisdictional requirements contained in this statute.

[¶6.] “We are required to take notice of jurisdictional questions, whether presented by the parties or not.  The appellate jurisdiction of this Court will not be presumed but must affirmatively appear from the record.”  State v. Hare, 260 NW2d 224, 226 (SD 1977).  The question of jurisdiction to hear an appeal may be raised sua sponte.  Id.

[¶7.] It is settled law that appellate jurisdiction can depend on compliance with conditions precedent set by the legislature.  Schreifels v. Kottke Trucking, 2001 SD 90, ¶9, 631 NW2d 186, 188.  The Supreme Court has only such appellate jurisdiction as may be provided by the legislature and the SDConst art V, §5.  State v. Hoxeng, 315 NW2d 308 (SD 1982).  To determine whether the statutory grant of appellate jurisdiction has been met, the rules of statutory interpretation apply.  “Ultimately, the purpose of statutory interpretation is to fulfill the legislative dictate.  Intent is ordinarily ascertained by examining the express language of the statute.”  Faircloth v. Raven Industries, 2000 SD 158, ¶ 6, 620 NW2d 198, 200.  In addition, we assume no part of the statutory scheme was intended to be “mere surplusage.”  Id. 

[¶8.] In the order that Double Diamond now seeks to appeal, the circuit court has both vacated the arbitration award and directed a rehearing to consider the merits of a damage claim asserted against Double Diamond.  SDCL 21-25A-35 clearly specifies that an appeal may only be taken from an order “vacating an award without directing a rehearing.”  From this language, the legislative intent is clear; when a rehearing is ordered the decision to vacate is not appealable.  Other courts addressing this issue and interpreting nearly identical statutory language have also recognized such an attempted appeal must be dismissed for lack of jurisdiction.  See Nebraska Department of Health and Human Services v. Struss, 623 NW2d 308 (Neb. 2001); Stolhandske v. Stern, 14 SW3d 810 (TexApp 2000); Kowler Associates v. Ross, 544 NW2d 800 (MinnApp 1996); Maine Dep’t of Trans. v. Maine State Employees, 581 A2d 813 (Maine 1990).

[¶9.] The Nebraska Supreme Court recently determined that “an order vacating an award without directing a rehearing” permits an appeal because the arbitration process has been completed.  Nebraska Dep’t of Health and Human Services, 623 NW2d at 315 (quoting Nebraska Statute § 25-2620).  In so holding, the court recognized:

The language “without directing a rehearing” in [the Nebraska statute] which qualifies an order which vacates an award is meaningful and not superfluous.  Clearly, an order which vacates an award “without directing a rehearing” concludes the matter and is therefore, appealable, whereas an order which vacates an award and directs a rehearing requires that further arbitration proceedings be conducted to finally determine the rights of the parties and is not final or appealable.

Id. at 314.  See also Kowler Associates, 544 NW2d at 802 (stating that “when a rehearing is directed, appellate review is premature because the arbitration process has not been completed.”); Stolhandske, 14 SW3d at 814 (recognizing that “had the legislature intended to make all orders vacating arbitration awards immediately appealable, it could have easily done so.  In fact, the Federal Arbitration Act so provides.”).

[¶10.] This dismissal is in accord with the legislative dictate and the fact that “this Court has consistently favored the resolution of disputes by arbitration.”  Thunderstik Lodge, Inc. v. Reuer, 1998 SD 110, ¶ 14, 585 NW2d 819, 822.  The Supreme Court of Maine aptly stated that this is consistent “with the sound policy, present throughout our system of jurisprudence as well as in the arbitration statute, of preserving judicial resources and limiting appeals prior to judgment to those instances where the element of finality is present.”  Maine Dep’t of Trans., 581 A2d at 814.  This is because if the action is allowed to proceed no appeal may be necessary.  Id. at 815.  “Judicial economy demands that courts not provide time-consuming and perhaps unnecessary interlocutory appeals which delay the favored dispute-resolution process of arbitration.”  Id.

[¶11.] In this case, SDCL 21-25A-35 does not allow an appeal from the circuit court’s order vacating the award of an arbitrator and directing a rehearing.  Accordingly, we dismiss this appeal for lack of jurisdiction.

[¶12.] Appeal dismissed.

[¶13.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER and MEIERHENRY, Justices, participating.

[¶14.] SABERS, Justice, disqualified.