Mariposa v. United Shipping

2013 UT App 28
_________________________________________________________
THE U TAH COURT OF A PPEALS
MARIPOSA EXPRESS , INC.; C OLD SPRING INVESTMENTS, LLC;
C OLD SPRING INVESTMENTS NO . 1, LP; C OLD SPRING INVESTMENTS
NO . 2, LP; NEWBURYPORT C APITAL , LLC; HANNAH ENTERPRISES,
INC.; USS HOLDINGS , LLC; USS C OLUMBIA, LLC; METRO MAR
VENTURES LLC; MICHAEL J ONES, LLC; STIRLING LLC;
MICHAELSON VENTURES INC.; USS O’BRIEN, INC.; USS HIGHLAND
P ARK, INC.; SHARON MCWILLIAMS; G EORGE A MMIRATO ; WILLIAM
D EMET; R OBERT HARRIS; MICHAEL J ONES; T ED MICHAELSON; J IM
O’BRIEN; AND STEFAN T RIANDAFILOU,
Plaintiffs and Appellants,
v.
U NITED SHIPPING SOLUTIONS, LLC; USS LOGISTICS , LLC;
R OBERT R OSS; C HARLES D ERR ; AND J ESSE MOORE ,
Defendants and Appellees.
Opinion
No. 20110829‐CA
Filed January 31, 2013
Third District, Salt Lake Department
The Honorable William W. Barrett
No. 110915908
Karthik Nadesan and Ivan W. Lependu,
Attorneys for Appellants
David J. Jordan, Cameron L. Sabin, and Joseph W. Loosle,
Attorneys for Appellees
J UDGE G REGORY K. ORME authored this Opinion,
in which J UDGE MICHELE M. C HRISTIANSEN concurred.
J UDGE C AROLYN B. MCHUGH concurred in the result.

Mariposa v. United Shipping
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ORME, Judge:
¶1 	While many of the plaintiffs (collectively, the Mariposa
franchisees) have now settled, the remaining plaintiffs appeal from
a district court order dismissing their complaint and compelling
them to participate in arbitration with United Shipping Solutions,
LLC (USS). We affirm the district court’s basic ruling but remand
to the district court for further proceedings.
BACKGROUND
¶2 	USS operates a franchising system in which franchisees
resell small parcel shipping services. USS and its affiliate USS
Logistics, LLC (USSL) (collectively, the USS parties) arranged for
shipping services primarily from DHL Express USA, Inc. (DHL).
DHL provided its services to the USS franchise system under a
reseller agreement, which required that each of the Mariposa
franchisees pay USS for DHL’s services and then USS would
provide an aggregate payment to DHL.
¶3 	On November 10, 2008, DHL announced that it was
discontinuing its express and ground domestic shipping services
effective January 30, 2009—a breach of the reseller agreement. The
non‐compete provisions of the franchise agreements apparently
foreclosed the Mariposa franchisees from contracting with other
providers for replacement services or products. Following DHL’s
breach of the reseller agreement, the Mariposa franchisees stopped
paying USS for the DHL services still being utilized by their
customers. As a result, USS terminated the franchises of the
Mariposa franchisees.
¶4 	On December 3, 2008, the Mariposa franchisees brought suit
against the USS parties in Utah state court (the Mariposa lawsuit),
seeking to avoid all obligations under their franchise agreements.
The USS parties counterclaimed, seeking enforcement of the
franchise obligations and payment for the freight and DHL

Mariposa v. United Shipping
20110829‐CA 	2013 UT App 28	3
shipments 	provided 	to 	the 	Mariposa 	franchisees 	and 	their
customers through the USS franchise system. A couple of weeks
after the suit was filed, the district court entered a temporary
restraining order that required, inter alia, (1) that the Mariposa
franchisees stop soliciting employees of the USS parties; (2) that the
Mariposa franchisees not use or disclose any of the USS parties’
confidential or proprietary information in any way; and (3) that the
Mariposa franchisees discontinue all use of the USS parties’
trademarks and any claimed association with the USS franchise
system.
¶5 	Later that same month, USSL—and through a later amended
complaint, USS and some of its franchisees—filed suit against DHL
in Utah state court (the DHL lawsuit). The DHL lawsuit alleged,
inter alia, that DHL breached the reseller agreement and thereby
caused significant damages to the USS franchise system. DHL
counterclaimed, asserting that USSL was liable for the unpaid
shipping services received by the Mariposa franchisees. The
Mariposa franchisees also filed their own lawsuit against DHL in
New York (the franchisee lawsuit) in March 2009, claiming that
DHL was liable to the Mariposa franchisees for DHL’s breach of
the reseller agreement.
¶6 	In 	June 	2009, 	the 	district 	court 	in 	the 	Mariposa
lawsuit—having been provided evidence indicating that certain
Mariposa franchisees had violated the temporary restraining
order—entered an order enjoining the Mariposa franchisees “from
using or charging shipments to USS’s accounts with its shipping
providers.” 	The 	court 	scheduled 	an 	evidentiary 	hearing 	to
determine whether those Mariposa franchisees should be held in
contempt.
¶7 	The district court held the evidentiary hearing in September
2009 and ruled that those Mariposa franchisees had violated the
temporary restraining order. After granting the USS parties’
motion for contempt, the district court took the question of
appropriate sanctions under advisement and proceeded with a

Mariposa v. United Shipping
20110829‐CA 	2013 UT App 28	4
multi‐day evidentiary hearing on the parties’ cross‐motions for a
preliminary injunction. Near the end of that hearing, the Mariposa
franchisees approached the USS parties about settling the Mariposa
lawsuit.
¶8 	Two 	weeks 	later, 	the 	USS 	parties 	and 	the 	Mariposa
franchisees settled the Mariposa lawsuit by entering into a
settlement agreement in which the Mariposa franchisees agreed,
inter alia, to make three types of payments to the USS parties. The
Mariposa franchisees agreed (1) to pay the USS parties a settlement
payment, (2) to pay USS for all amounts owed for unpaid freight
shipments, and (3) to indemnify the USS parties against any
amounts that the USS parties were determined to owe DHL for
shipping services provided to the Mariposa franchisees or their
customers, regardless of whether the determination was made
through adjudication or settlement of the DHL lawsuit. All other
issues between the Mariposa franchisees and the USS parties were
resolved, and the Mariposa lawsuit was dismissed.
¶9 	As part of the settlement agreement, the USS parties and the
Mariposa franchisees agreed that the USS parties would provide
the Mariposa franchisees with access to certain shipping data,
consistently referred to by the parties in the course of their dealing
as the CAMS data, as a means to determine the outstanding
amount owed for freight services. After the CAMS data was
disclosed, the Mariposa franchisees were to be given time to review
the data and indicate whether they disputed the amounts owed, in
accordance 	with 	procedures 	and 	deadlines 	set 	forth 	in 	the
settlement agreement. If there was a dispute regarding the amounts
due for freight, the parties agreed to resolve it through binding
arbitration. Paragraph 3 of the settlement agreement provides:
[T]he 	respective 	Mariposa 	Franchisees 	agree 	to
indemnify and hold USS harmless for any and all
amounts the USS Parties are determined to owe DHL
through judgment or settlement for DHL services
provided to the respective Mariposa Franchisees

Mariposa v. United Shipping
20110829‐CA 	2013 UT App 28	5
and/or their customers and which the respective
Mariposa Franchisees or their customers have not
already paid to USS or DHL (regardless of whether
that 	determination 	is 	by 	judgment 	or 	through
settlement, and regardless of whether the amount is
determined through set‐off amounts that may reduce
any judgment in favor of the USS Parties and against
DHL). The respective Mariposa Franchisees further
agree to pay to USS all royalties, Wasatch Billing fees,
and late fees charged by DHL resulting from non‐
payment by the respective Mariposa Franchisees, on
the shipments the USS Parties are determined to owe
to DHL.
The parties agreed that the USS parties would “provide the
Mariposa Franchisees with access to the CAMS Data . . . necessary
to show the DHL services provided to the Mariposa Franchisees
and/or their customers.” The agreement further states:
If the Mariposa Franchisees do not agree with the
amount identified by the USS Parties, the USS Parties
shall nevertheless have the right to proceed with the
settlement and any dispute between the USS Parties
and the Mariposa Franchisees concerning these
amounts shall be resolved in accordance with the
dispute resolution procedure set forth in Paragraph
1.c above. Likewise, if the USS Parties are determined
to owe DHL, through a judgment, any amount for
services provided to the Mariposa Franchisees and/or
their customers, any dispute between the USS Parties
and 	the 	Mariposa 	Franchisees 	concerning 	such
amounts shall be resolve[d] in accordance with the
dispute resolution procedure set forth in Paragraph
1.c above. In the event of such a dispute, the USS
Parties shall provide the Mariposa Franchisees with
access to the CAMS Data (of the same type and
nature set forth in Paragraph 1 above) necessary to

Mariposa v. United Shipping
20110829‐CA 	2013 UT App 28	6
show the DHL Services provided to the Mariposa
Franchisees and/or their customers.
The “dispute resolution procedures” applicable to freight disputes
and disputes concerning the Mariposa franchisees’ indemnification
obligation were set forth in paragraph 1.c of the settlement
agreement. That provision required that “any dispute” be resolved
“exclusively by binding arbitration” on an expedited basis. While
paragraph 1.c itself referred to freight payments, paragraph 1.c was
also incorporated by reference into paragraph 3.a, which addressed
dispute resolution related to the indemnification provision.
¶10 	After the execution of the settlement agreement, the USS
parties continued the DHL litigation. In September 2010, DHL
moved for partial summary judgment on its counterclaim that
USSL was liable to DHL for all amounts due for shipping,
including the amounts that had not been paid by the Mariposa
franchisees. The next month, the district court granted DHL’s
motion and ruled that USSL was liable to DHL for all unpaid
shipping services provided to the USS franchise system. The
district court did not, however, determine the amount owed to
DHL for those services.
¶11 	After the district court’s ruling on DHL’s motion, DHL and
the USS parties entered into settlement negotiations and eventually
executed a settlement agreement resolving the DHL lawsuit (the
DHL settlement agreement). That settlement agreement specified
that the payment from DHL to the USS parties was to be offset by
the amount owed to DHL for unpaid shipping services, including
the amount resulting from the Mariposa franchisees’ failure to pay.
After entering the DHL settlement agreement, the USS parties
informed the Mariposa franchisees of the agreement in a letter
dated February 16, 2011. The letter informed the 	Mariposa
franchisees of their indemnification obligation and provided the
Mariposa franchisees, for their respective franchises, with the
CAMS data showing the amounts owed for unpaid DHL services,

Mariposa v. United Shipping
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as the parties had previously done for resolving the issue of the
freight payments.
¶12 	The Mariposa franchisees responded by letter in March 2011.
The 	letter 	asked 	that 	the 	USS 	parties 	“provide 	additional
information with which [the Mariposa franchisees] can evaluate the
claims made by USS relating to the settlement of the Mariposa
action.” Two days later, the USS parties sent a second letter, which
explained that “USS and USSL received payment in an amount that
was offset by the amounts owing to DHL for shipping services
provided to USS and its franchisees.” The USS parties’ letter also
stated:
Your letter does not constitute a “dispute”
under the Mariposa Settlement Agreement. Under
that agreement, if a Mariposa Franchisee disputes
any of the amounts set forth in the CAMS data
provided by USS, he or she was required to provide
notice of the dispute, together with documentation
showing the basis for the dispute, to USS within 20
days of my letter. As they have elected not to do so,
in 	accordance 	with 	the 	Mariposa 	Settlement
Agreement, they are deemed to have not disputed
the shipping amounts contained in the CAMS data
provided to them by USS, and USS will pursue its
rights under the Mariposa Settlement Agreement.
A number of the Mariposa franchisees then started making
payments to the USS parties to satisfy their indemnification
obligation. Counsel for the still noncompliant Mariposa franchisees
sent another letter to the USS parties. In early June 2011, the USS
parties sent a third letter to the noncompliant Mariposa franchisees,
identifying the specific amounts owed by each and requesting that
each indicate whether that amount was disputed.
¶13 	After the third letter, a few more Mariposa franchisees
fulfilled their indemnification obligation by executing a promissory

Mariposa v. United Shipping
20110829‐CA 	2013 UT App 28	8
note, as required by the settlement agreement. The remaining
noncompliant franchisees did not respond. In July 2011, the USS
parties served the remaining Mariposa franchisees with “Disputed
Notices,” initiating the expedited arbitration proceedings set forth
in the settlement agreement. In anticipation of the notices, the
Mariposa franchisees filed the complaint commencing the lawsuit
now before us on appeal. The complaint disputed the amounts
owed, the accuracy of the information provided by the USS parties,
and the Mariposa franchisees’ indemnification obligation itself. The
complaint sought declaratory and injunctive relief. Ten days later,
the Mariposa franchisees sent a letter to the USS parties’ counsel,
stating that the Mariposa franchisees would not participate in
arbitration.
¶14 	The USS parties moved to compel arbitration in early
August 2011, and the Mariposa franchisees opposed the motion.
The district court determined that, as a matter of law, the terms of
the settlement agreement required that the parties resolve their
disputes in accordance with the arbitration procedure set forth in
paragraph 1.c of the agreement. The district court then dismissed
the Mariposa franchisees’ complaint, and they appealed.
ISSUE AND STANDARD OF REVIEW
¶15 	We must determine whether the district court erred in its
interpretation 	of 	the 	parties’ 	settlement 	agreement 	and 	its
subsequent grant of the USS parties’ motion to compel mandatory
arbitration. “A determination of which claims the parties intended
to be subject to arbitration requires that we interpret the arbitration
clause of the contract. This we do as a matter of law unless we find
ambiguity in the plain language of the agreement.” See Peterson
& Simpson v. IHC Health Servs., Inc., 2009 UT 54, ¶ 18, 217 P.3d 716.
“In evaluating whether the plain language is ambiguous, we
attempt to harmonize all of the contract’s provisions and all of its
terms. . . . Accordingly, we first look to the plain language within
the four corners of the agreement to determine the intentions of the

Mariposa v. United Shipping
1. The Utah Arbitration Act was enacted in 2002, with an effective
date of May 15, 2003. See Utah Code Ann. §§ 78‐31a‐1 to ‐20
(LexisNexis 2002). The Act was renumbered in 2008. See id. §§ 78B‐
11‐101 to ‐131 (LexisNexis 2008).
20110829‐CA 	2013 UT App 28	9
parties, and we attempt to harmonize the provisions . . . of the
agreement.” Central Fla. Invs., Inc. v. Parkwest Assocs., 2002 UT 3,
¶ 12, 40 P.3d 599 (internal citations and quotation marks omitted).
ANALYSIS
I. The District Court Correctly Construed the Arbitration
Provision.
A. Utah Favors Arbitration.
¶16 	We begin our analysis with the Utah Uniform Arbitration
Act. See Utah Code Ann. §§ 78B‐11‐101 to ‐131 (LexisNexis 2012). 1
The Act provides that in the event of a disagreement about whether
there is an applicable agreement to arbitrate a dispute, “the court
shall proceed summarily to decide the issue and order the parties
to arbitrate unless it finds that there is no enforceable agreement to
arbitrate.” See id. § 78B‐11‐108(1)(b).
¶17 	Utah courts have consistently recognized Utah’s policy
favoring arbitration.
[I]f there is any question as to whether the parties
agreed to resolve their disputes through arbitration
or litigation, i.e., through the filing of a complaint
and recording of a lis pendens, we interpret the
agreement 	keeping 	in 	mind 	our 	policy 	of
encouraging arbitration. It is the policy of the law in
Utah to interpret contracts in favor of arbitration, in
keeping with our policy of encouraging extrajudicial

Mariposa v. United Shipping
2. We note that section 78B‐11‐107(3) of the Utah Arbitration Act
states: “An arbitrator shall decide whether a condition precedent
(continued...)
20110829‐CA 	2013 UT App 28	10
resolution of disputes when the parties have agreed
not to litigate.
Parkwest Assocs., 2002 UT 3, ¶ 16 (citations and internal quotation
marks omitted). In short, if the settlement agreement’s arbitration
clause supports an interpretation favoring arbitration, the district
court ruled correctly in interpreting the provision as governing the
dispute between the USS parties and the Mariposa franchisees.
B. Scope of The Settlement Agreement’s Arbitration Clause
¶18 	At 	the 	time 	of 	the 	settlement 	between 	the 	Mariposa
franchisees and the USS parties, all outstanding issues had been
resolved except for two amounts that they left for resolution at a
future date: (1) the amount that the USS parties were owed for
unpaid freight and (2) the amount that the Mariposa franchisees
were obligated to pay to indemnify the USS parties for unpaid
DHL shipments. In paragraphs 1.c and 3.a of the agreement, the
parties clearly indicated their intention that “any dispute” be
resolved through the binding arbitration procedure set out in
paragraph 1.c. Reading the agreement in its entirety in an attempt
to harmonize all provisions, see Parkwest Assocs., 2002 UT 3, ¶ 12, it
is logical to conclude that the parties intended for the settlement
agreement to resolve all the issues that could be resolved at that
time and to leave the two remaining issues to be addressed at a
later date, with ultimate resolution through arbitration in the event
of a dispute. Because the district court in the DHL lawsuit found
that the USS parties were liable for the DHL shipments resold by
the Mariposa franchisees and for which payment had not been
made, it was clear that the indemnification provision of the
settlement agreement had already been triggered. Therefore, any
dispute 	that 	the 	Mariposa 	franchisees 	had 	regarding 	that
indemnification amount was to be resolved by arbitration. 2

Mariposa v. United Shipping
2. (...continued)
to arbitrability has been fulfilled and whether a contract containing
a valid agreement to arbitrate is enforceable.” Utah Code Ann.
§ 78B‐11‐107(3) (LexisNexis 2012).
3. We were advised at oral argument that the arbitration has now
been completed. It may well be that confirmation of the arbitration
award is now in order.
20110829‐CA 	2013 UT App 28	11
II. The District Court Erred in Dismissing the Mariposa
Franchisees’ Complaint When It Compelled Arbitration.
¶19 	The Utah Arbitration Act requires that when a district court
orders arbitration, the court should stay the underlying lawsuit
rather than dismiss it. See Utah Code Ann. § 78B‐11‐108(7) (“If the
court orders arbitration, the court on just terms shall stay any
judicial 	proceeding 	that 	involves 	a 	claim 	subject 	to 	the
arbitration.”). Therefore, the district court should have stayed the
action rather than dismiss the Mariposa franchisees’ complaint
after it ordered the parties to arbitrate their dispute.
CONCLUSION
¶20 	The 	district 	court 	correctly 	ordered 	the 	parties 	into
arbitration to resolve their dispute relating to the amounts owed
for DHL shipments. We affirm that ruling. We reverse the
dismissal 	of 	the 	underlying 	complaint 	and 	remand 	with
instructions to reinstate the action, which may then be dealt with,
as appropriate, following arbitration. 3