Eddings v. Southern Orthopedic & Musculoskeletal Associates, P.A.

GREENE, Judge,

dissenting.

I agree with the majority that under the Federal Arbitration Act (the FAA), “a claim for fraud in the inducement of the entire contract is an issue to be referred to arbitration.” Because I believe, however, that it is impossible for this Court to initially determine whether the transaction in this case involves interstate commerce, thus making the FAA applicable, I respectfully dissent.

Before the FAA applies to a contract, the contract must either relate to a maritime transaction or evidence “a transaction involving commerce.” 9 U.S.C. § 2 (2000). Whether a contract “evidenced ‘a transaction involving commerce’ within the meaning of § 2 of the [FAA]” is a question of fact which an appellate court should not initially decide. Merritt-Chapman & Scott Corp. v. Pennsylvania Turnpike Comm’n, 387 F.2d 768, 772 (3d Cir. 1967).

In this case, neither of the parties argue the FAA applies to the SOMA Employment Agreement or the SOMA Employment Agreement evidences “a transaction involving commerce.” With the exception of the fact plaintiff was in Tennessee before moving to Asheville to join AOA, there is no evidence in this case that the transaction involved multiple states. Indeed, the record to this Court is devoid of any evidence the SOMA Employment Agreement or plaintiff’s employment *386 “involvefd] interstate commerce and [is] within the scope of the FAA.” Although this Court “may speculate on what may have been the nature of the performance required by the contract, it is impossible for us to determine on appeal whether the [FAA] applies” due to the contract in question involving interstate commerce. See id. Accordingly, I would remand this case to the trial court for the initial determination of whether the SOMA Employment Agreement involved interstate commerce. If the trial court determines the SOMA Employment Agreement does not involve interstate commerce, state law governs the enforcement of the agreement and, thus, any allegations of fraud are to be determined by the trial court instead of by arbitration. See Paramore v. Inter-Regional Fin. Group Leasing Co., 68 N.C. App. 659, 662-63 , 316 S.E.2d 90, 92 (1984) (if the agreement was obtained by fraud, “there would be no contract to enforce by arbitration or otherwise,” thus, the validity of the supporting contract should be determined by the courts before proceeding with arbitration).