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Ladymon v. Lewis

Court of Appeals of Texas, Fifth District, Dallas

July 21, 2017

BLANE LADYMON, METRO TOWNHOMES LIMITED PARTNERSHIP, METRO TOWNHOMES AND HOMES, INC. AND LADYMON & ASSOCIATES, INC., Appellants
v.
JACK LEWIS AND ALAN COLVIN, Appellees

         On Appeal from the County Court at Law No. 2 Dallas County, Texas Trial Court Cause No. CC-15-02323-B

          Before Justices Bridges, Evans, and Stoddart

          MEMORANDUM OPINION

          DAVID L. BRIDGES, JUSTICE

         Blane Ladymon, Metro Townhomes Limited Partnership, Metro Townhomes and Homes, Inc. (Metro), and Ladymon & Associates (Ladymon) appeal the trial court's denial of their motion to compel arbitration in the underlying lawsuit. In two issues, Metro and Ladymon argue the trial court erred in denying its motion to compel arbitration, and appellees' attempt to enforce performance under the construction contract constitutes estoppel of any defense to the arbitration clause. We reverse and remand for further proceedings consistent with this opinion.

         In May 2015, appellees sued Metro and Ladymon, alleging they contracted with Metro for the construction of a home, but the home was not as represented, not of proper quality, and was not designed and/or constructed in a good and workmanlike manner. Specifically, appellees alleged their home was damaged by failure of the supports from the second to third floors of the home. Appellees further alleged Ladymon designed the home, including the supports from the second to third floors, but did not have the design reviewed by a licensed architect or a structural engineer.

         Appellees asserted against Metro claims of negligence, gross negligence, negligent misrepresentation, breach of contract, breach of warranty, violation of the Texas Deceptive Trade Practices Act (DTPA), fraud, fraudulent inducement, and fraud in a real estate transaction. Appellees asserted against Ladymon claims of negligence and breach of warranty.

         Metro and Ladymon filed an original answer and a motion to abate the case until appellees complied with the requirements of the Residential Construction Liability Act. On September 21, 2015, the trial court granted Metro's motion to abate. In January 2016, Metro and Ladymon filed their motion to compel binding arbitration in which they argued, pursuant to the contracts between the parties, that all disputes were subject to binding arbitration. However, due to the passage of time, Metro and Ladymon were unable to produce copies of the design contract or the builder construction contract. Instead, Metro and Ladymon attached copies of contracts they claimed accurately represented the contracts signed by appellees. The motion was supported by the affidavit of Blane Ladymon which stated, in part, as follows:

8. After a diligent search, I could not locate a fully executed copy of the Design Contract, in part, due to passage of more than fourteen years since creation of the Design Contract and more than twelve years since execution of same. However, after examining Exhibit B attached to Defendants' Plea in Abatement and Motion to Compel Arbitration, I am of the belief that Exhibit B truly and accurately represents the Design Contract that Plaintiffs signed and otherwise agreed to prior to start of any design work by Designer.
11. Prior to the start of construction, Builder prepared the NEW RESIDENTIAL CONSTRUCTION CONTRACT WITH BUILDER'S AND MECHANIC'S LIEN - FIXED PRICE ("Builder Construction Contract"), attached to Defendants' Plea in Abatement and Motion to Compel Arbitration as Exhibit "E" and presented the same to Plaintiffs along with its standard Customer Service Manual, Restrictive Covenant and Agreement, the applicable performance standards under NAHB, and the Limited Warranty.
13. At the closing, I signed the documents discussed in the preceding paragraph on behalf of the Builder, and thereafter received a copy of the fully executed contract documents after Plaintiffs also executed the same, including the Builder Construction Contract, the Homeowner's Guide, the Restrictive Covenant Agreement, Builder's Limited Warranty, as well as the Bank's Lien Contract.

         The Builder Construction Contract contained the following provision regarding arbitration:

18. MEDIATION-ARBITRATION/LIMITATION OF CLAIMS. It is the policy of the State of Texas to encourage the peaceable resolution of disputes through alternative dispute resolution procedures. Owner and Contractor hereby agree that any controversy or claim or matters in question between the parties including, but not limited to, any matter arising out of or relating to (a) this Contract, and any amendments thereto, (b) any breach thereof, (c) the construction transaction reflected in the Contract, (d) the design or construction of the Improvements, (e) any alleged fraud, misrepresentations or breach of warranties, express or implied, (f) claims for defective design or construction of the Improvements, (g) intentional and/or negligent infliction of emotional distress, (h) violations of the Texas Deceptive Trade Practices-Consumer Protection Act, (i) violations of the Texas Residential Construction Liability Act, and/or (j) any other cause of action relating to or arising out of the construction and/or sale of the Improvements by Contractor, (herein referred to collectively as a "Dispute"), shall be submitted to mediation with the American Arbitration Association ("AAA") where the parties will endeavor to resolve the Dispute in an amicable manner. In the event any Dispute cannot be resolved by mediation, the Dispute shall be submitted to the AAA for binding arbitration pursuant to Title 9 of the United States Code, which the parties hereto acknowledge and agree applies to the transaction involved herein, and in accordance with the Construction Industry Arbitration Rules of the AAA or such other rules as the AAA may deem applicable. If Title 9 of the United States Code is in applicable to any such claim, dispute or controversy for any reason, such arbitration shall be conducted by the AAA pursuant to Chapter 171 of the Texas Civil Practice and Remedies Code and in accordance with the Construction Industry Arbitration Rules of the AAA or such other rules as the AAA may deem applicable. In any such arbitration proceeding: (i) all federal and state law (including Chapter 27 of the Texas Property Code) and all statutes of limitations which would otherwise be applicable shall apply, and (ii) the proceeding shall be conducted by a single arbitrator. The arbitrator shall be selected by the process of appointment from a panel pursuant to the applicable procedures of the AAA. Any award rendered in any such arbitration proceeding shall be final and binding, and judgment upon any such award may be entered in any court having jurisdiction.

         The limited warranty contained in the Home Owner's Guide also provided for arbitration of disputes:

17. Any disputes between YOU and US, or parties acting on OUR behalf, related to or arising from this AGREEMENT, the design or construction of the HOME or the COMMON ELEMENTS or the sale of this HOME or transfer of to the COMMON ELEMENTS will be resolved by binding arbitration. Binding arbitration shall be sole remedy for resolving any and all disputes between YOU and US, or OUR representatives, employees, subcontractors, ...

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