Rawls et al v. CMH Homes Inc et al

Filing 17

ORDER granting 6 motion to dismiss or in the alternative, to stay and compel arbitration; directing the parties to proceed to arbitration in accordance with the terms of their agreement; staying this action pending arbitration; directing the parties to provide the Court a status report upon completion of arbitration; and directing the Clerk of the Court to administratively terminate this action pending the completion of arbitration. Signed by Judge James M. Moody Jr. on 11/14/2023. (ldb)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
CENTRAL DIVISION
JEFF AND LINDSEY RAWLS
V.

PLAINTIFFS
NO. 4:23CV00728JM

CMH HOMES, INC.;
FREEDOM HOMES ALEXANDER, ARKANSAS
JOHN DOE

DEFENDANTS

ORDER
Pending is Defendants’ motion to dismiss or in the alternative, to stay and compel
arbitration. (Docket No. 6). Plaintiffs have filed a response and Defendants have filed a reply.
For good cause shown, the motion to stay and compel arbitration is GRANTED.
In 2021, Plaintiffs purchased a new manufactured home from CMH Homes at its retail
location in Alexander, Arkansas for $151,420.11. The home was constructed by CMH
Manufacturing at its manufacturing facility in Savannah, Tennessee. Plaintiffs allege that not
long after the home was delivered and installed on their property in Drew County, they
discovered serious and material defects that significantly diminish the suitability and usability of
the home. Plaintiffs filed suit in Drew County, Arkansas for breach of contract, breach of
express warranty and breach of implied warranty. Defendants removed the case to this Court on
August 4, 2023 on the basis of diversity of citizenship and now ask the Court to either dismiss
the case or in the alternative, to stay and compel arbitration.
In connection with the purchase of the home, Jeff Rawls executed a Sales Agreement
along with a Binding Dispute Resolution Agreement (“BDRA”). The BDRA, which is
controlled by the Federal Arbitration Act (“FAA”), compels the Plaintiffs’ claims against CMH
Defendants to arbitration. The BDRA states: “[t]he Parties (defined below) agree to resolve all
disputes pursuant to the terms of this Binding Dispute Resolution Agreement (the "Agreement").

. . . ” The BDRA requires that all claims which cannot be settled through direct discussion and
negotiation first be decided by mediation. (BDRA § C). But, if mediation fails, “[t]he Parties
agree to mandatory, binding arbitration (“Arbitration”) of all Claims. . . . ” (BDRA § D).
The Eighth Circuit has outlined the Court’s role in determining whether to compel
arbitration: “We must determine simply whether the parties have entered a valid agreement to
arbitrate and, if so, whether the existing dispute falls under the coverage of the agreement. Once
we conclude that the parties have reached such an agreement, the FAA compels judicial
enforcement of the arbitration agreement.” Gannon v. Circuit City Stores, Inc., 262 F.3d 677,
680 (8th Cir. 2001)(internal citations omitted). Plaintiffs, relying on Arkansas law, argue that
the BDRA fails for lack of mutuality in that it expressly preserves judicial remedies for CMH but
not for Plaintiffs. Plaintiffs’ contention that Arkansas law requiring mutuality within the
arbitration paragraph itself is preempted by the FAA. See, Enderlin v. XM Satellite Radio
Holdings, Inc., Case No. 4:06CV00320 GTE, 2008 WL 830262 (E.D. Ark. Mar. 25, 2008). The
Court finds that the parties have entered a valid agreement to arbitrate and that the current
dispute falls under the coverage of the parties’ arbitration agreement.
THEREFORE, the motion to compel arbitration is GRANTED, and the parties are
directed to proceed to arbitration in accordance with the terms of their agreement. This action is
STAYED pending arbitration. The parties are directed to provide the Court a status report upon
completion of arbitration. The Clerk of the Court is directed to administratively terminate this
action pending the completion of arbitration.
It is so ordered this 14th day of November, 2023.

HONORABLE JAMES M. MOODY JR.
United States District Judge