Adams et al v. United-Bilt Homes, LLC
Filing
15
OPINION AND ORDER by Judge John E Dowdell ; administratively closing the case (terminates case) ; staying case; granting 5 Motion to Compel Arbitration (Re: 2 Complaint ) (SAS, Chambers)
UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
ROBERT RAY ADAMS and
MINDY KAY ADAMS,
)
)
)
)
)
)
)
)
)
)
Plaintiffs,
v.
UNITED-BILT HOMES, LLC,
Defendant.
Case No. 13-CV-262-JED-PJC
OPINION AND ORDER
The Court has for its consideration the defendant’s Motion to Abate Proceedings
Directing Arbitration (Doc. 5). The defendant, United-Bilt Homes, LLC (“United”), seeks to
enforce what it characterizes as a mandatory arbitration provision within the contract between
the parties. The plaintiffs, Robert Ray Adams and Mindy Kay Adams, dispute that the contract
mandates arbitration of their claims.
BACKGROUND
On September 23, 2010, the parties entered into a Home Building Agreement (the
“Agreement”) whereby United would build a home for the plaintiffs in Delaware County,
Oklahoma. Pursuant to the Agreement, United would construct a custom home in exchange for
an agreed price of $149,530. The Agreement contains a provision (the “ADR provision”), which
has been reproduced below, in part, as it appears in the agreement:
(Doc. 5-1, at 12). The Agreement goes on to state that it applies “to any dispute, disagreement,
action, cause of action, lawsuit, claim, counterclaim, or controversy of any kind….” (Id., bold,
all-caps typeface converted to unbolded, lowercase typeface). The parties disagree as to the
meaning of this portion of the Agreement. United asks that the Court construe this provision as a
mandatory arbitration provision, stay these proceedings, and direct the parties to AAA for
resolution of the dispute. The plaintiffs argue that, based upon the way this provision is written,
it is simply mandating that, if the parties choose to mediate or arbitrate, that they must do so
before the AAA if either party requests it.
In other words, plaintiffs argue that “[a]ctive
mediation or arbitration is a condition precedent to [invoke] the ADR provision.” (Doc. 10, at
4).
STANDARDS
The Federal Arbitration Act (FAA) represents a strong public policy in favor of
arbitration, and states that a “written provision in any ... contract evidencing a transaction
involving commerce to settle by arbitration a controversy thereafter arising out of such
contract…shall be valid, irrevocable, and enforceable....” 9 U.S.C. § 2; Stolt–Nielsen S.A. v.
AnimalFeeds Int'l Corp., 559 U.S. 662, 682 (2010); Vaden v. Discover Bank, 556 U.S. 49, 58
(2009).
The FAA “requires a district court to stay judicial proceedings where a written
agreement provides for the arbitration of the dispute that is the subject of the litigation.” Coors
2
Brewing Co. v. Molson Breweries, 51 F.3d 1511, 1514 (10th Cir. 1995). In considering a motion
to compel arbitration, the court must determine (1) whether a valid agreement to arbitrate exists,
and (2) whether the subject matter of the dispute is covered by the arbitration agreement. Id. at
1515–16.
DISCUSSION
Pursuant to Tenth Circuit precedent, the Court must first consider whether the ADR
provision constitutes a valid agreement to arbitrate. Generally, the courts will enforce arbitration
agreements according to the terms of the parties' contract, since arbitration “is a matter of
consent, not coercion.” Volt Info. Sciences, Inc. v. Board of Trustees, 489 U.S. 468, 479 (1989).
The interpretation of an arbitration agreement is a matter of state contract law. Stolt-Nielsen, 559
U.S. at 681.
The parties agree that the Agreement mandates application of Louisiana law with respect
to contract interpretation. (Docs. 10, at 2 and 11, at 8). “Under Louisiana law, the interpretation
of an unambiguous contract is an issue of law for the court.” Amoco Prod. Co. v. Tx. Meridian
Res. Exploration Inc., 180 F.3d 664, 668 (5th Cir. 1999).
Louisiana’s rules of contract
interpretation are largely defined by the Louisiana Civil Code. See Dore Energy Corp. v.
Prospective Inv. & Trading Co. Ltd., 570 F.3d 219, 225 (5th Cir. 2009). Under the Code,
“[w]hen the words of the contract are clear and explicit and lead to no absurd consequences, no
further interpretation may be made in search of the parties' intent.” La. Civ. Code Art. 2046.
“Words susceptible of different meanings must be interpreted as having the meaning that best
conforms to the object of the contract.” Id. at 2048. In addition, “[a] provision susceptible of
different meanings must be interpreted with a meaning that renders it effective and not with one
that renders it ineffective. Id. at 2049. “Each provision in a contract must be interpreted in light
3
of the other provisions so that each is given the meaning suggested by the contract as a whole.”
Id. at 2050.
“A contract provision is not ambiguous where only one of two competing
interpretations is reasonable or merely because one party can create a dispute in hindsight.”
Amoco Prod., 180 F.3d at 668–69 (quoting Tx. Eastern Transmission Corp. v. Amerada Hess
Corp., 145 F.3d 737, 741 (5th Cir.1998)) (internal quotation marks omitted).
Under Louisiana principles of contract interpretation, the Court finds that the ADR
provision in the Agreement to be a mandatory arbitration provision under the FAA.
The
interpretation of the provision urged by the plaintiffs is strained and illogical. Under their
interpretation, the parties would have to already be engaged in mediation or arbitration before the
ADR provision could be triggered at the request of either party which would essentially render it
meaningless. The Adams’ interpretation simply does not mesh with the language of the ADR
provision, which plainly states that it “applies to any dispute, disagreement, action, cause of
action, lawsuit, claim, counterclaim, or controversy of any kind…” (see page 2, supra), but
contains no limitation that the parties must be engaged in mediation or arbitration for the
provision to be applied. Indeed, there is absolutely no basis for plaintiff’s position that the ADR
provision is anything other than a mandatory arbitration provision.1 No rational reading of the
provision could lead to any other outcome. Having found that the ADR provision constitutes a
binding arbitration provision, the Court also finds that the parties’ dispute is covered by the
1
The only potential confusion as to the meaning of the ADR provision stems from the possible
omission of a period, which may belong in the first line following the word “claims”.
Throughout the Agreement, paragraph headings appear bolded, in all caps, with a period at the
end of the heading. The ADR provision is entirely bolded and in all-caps, but there is not a
period at what appears to be the end of the heading, which takes up the entirety of the first line.
(See page 2, supra). The Court notes that United took the liberty of incorrectly (and perhaps
overzealously) inserting this period while quoting the provision in its reply brief. However, even
were a period never intended to be inserted where United suggests, plaintiff’s reading of the
provision would still be well beyond any stretch of the imagination.
4
broad, all-encompassing provision and that the dispute should be submitted to AAA in
accordance with United’s request.
IT IS THEREFORE ORDERED that defendant’s Motion to Abate Proceedings
Directing Arbitration (Doc. 5) is granted, and all claims alleged in the complaint (Doc. 2) shall
be submitted to arbitration pursuant to the parties' Agreement. In addition, this case is stayed
pending completion of the arbitration proceedings. The parties shall file a joint statement
advising the Court of the arbitrator's decision within 21 days of the completion of the arbitration
proceedings.
IT IS FURTHER ORDERED that, pursuant to LCvR 41.1, the Court Clerk is directed
to administratively close this case pending either an order of the Court reopening the action, or
until this case is dismissed with prejudice by stipulation of the parties.
SO ORDERED this 7th day of March, 2014.
5
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?