AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

The Plaintiffs, a class of royalty owners in the Bravo Dome Carbon Dioxide Unit in New Mexico, alleged that the Defendant, Kinder Morgan CO2 Company, underpaid royalties for carbon dioxide extracted from the Unit. The dispute arose from Kinder Morgan's use of non-qualified contracts and alleged failure to disclose their use, which Plaintiffs claimed violated a 1998 settlement agreement and other legal obligations (paras 2-3).

Procedural History

• District Court, March 2005: Denied Kinder Morgan's motion to compel arbitration, ruling that the claims involved breach of contract and were not subject to the arbitration clause in the 1998 settlement agreement (para 6).

Parties' Submissions

• Appellant (Kinder Morgan): Argued that all claims, including those for breach of contract, were subject to the arbitration clause in the 1998 settlement agreement. Kinder Morgan contended that the claims inherently involved disputes over the prices of non-qualified contracts, which fell within the scope of the arbitration clause (paras 3, 7).
• Appellees (Plaintiffs): Asserted that the claims were for breach of the settlement agreement, which was explicitly excluded from arbitration. They also argued that Kinder Morgan failed to provide the required notice of its use of non-qualified contracts, a prerequisite for invoking arbitration (paras 3, 8).

Legal Issues

• Whether the claims for breach of the settlement agreement, violation of the Unfair Practices Act, fraud, and unjust enrichment were subject to the arbitration clause in the 1998 settlement agreement.
• Whether the arbitration clause's exception for breach of the settlement agreement applied to the claims (paras 3, 14-15).

Disposition

• The Court of Appeals affirmed the district court's denial of Kinder Morgan's motion to compel arbitration but instructed that claims for violation of the Unfair Practices Act, fraud, and unjust enrichment must proceed to arbitration if they ultimately concern the prices of non-qualified contracts or transportation charges (paras 25-27).

Reasons

Per Wechsler J. (Alarid and Sutin JJ. concurring):

• The Court emphasized that arbitration is a matter of contract, and parties cannot be compelled to arbitrate disputes they did not agree to submit to arbitration (paras 13, 25).
• The arbitration clause in the 1998 settlement agreement was narrow, applying only to disputes over the prices of non-qualified contracts and transportation charges, and explicitly excluded claims for breach of the settlement agreement (paras 14, 20).
• The Plaintiffs' claims for breach of contract and breach of the implied covenant to market were clearly for breach of the settlement agreement and thus fell outside the scope of the arbitration clause (paras 18-19).
• The claims for violation of the Unfair Practices Act, fraud, and unjust enrichment were framed in general terms, making it unclear whether they involved disputes over non-qualified contract prices. The Court held that these claims were not subject to arbitration unless it became evident during proceedings that they concerned non-qualified contract prices (paras 22-25).
• The Court resolved ambiguities in favor of arbitration but declined to compel arbitration without clear evidence that the claims fell within the scope of the arbitration clause (paras 13, 25-26).