Beeson v. Erickson, 73243

• Decision Date: 07 June 1996
• Docket Number: No. 73243,73243
• Citation: 917 P.2d 901,22 Kan.App.2d 452
• Parties: Larry BEESON and Connie Beeson, Appellees, v. Jim ERICKSON, d/b/a Bullock Garages and Bullock Garages, Inc., Appellants.
• Court: Kansas Court of Appeals

Page 901

917 P.2d 901

22 Kan.App.2d 452

Larry BEESON and Connie Beeson, Appellees, v. Jim ERICKSON, d/b/a Bullock Garages and Bullock Garages Inc., Appellants.

No. 73243.

Court of Appeals of Kansas.

June 7, 1996.

Review Denied Sept. 6, 1996.

Syllabus by the Court

1. To be construed as waiving the right to arbitrate, a party's conduct must unequivocally demonstrate the intent to waive.

2. When a contract is clear and unambiguous and no claim of fraud or overreaching is made and there is no claim that the agreement is unconscionable, it will generally be enforced as written.

3. When the dispute between two contracting parties arises out of or relates to their underlying agreement, the resulting claim of one party against the other arises out of the contract and may not be maintained as a tort action.

4. An action arising out of an agreement between the parties may not be maintained as a tort action in order to avoid compulsory arbitration provided for in the agreement of the parties.

5. A contracting party may not be held responsible for the breach of a duty in a tort action where the breach of that duty under the contract between the parties is not also a breach of contract. In such a case, the terms of the contract govern the parties' rights and duties.

Gregory S. Hill and James F. Ralls, Jr., of Feldhausen & Ralls, P.C., Kansas City, Missouri, for appellants.

Patrick E. Henderson, of Duncan-Senecal Law Offices, Chartered, Atchison, for appellees.

Before RULON, P.J., and LEWIS, J., and JANICE D. RUSSELL, District Judge, Assigned.

LEWIS, Judge:

In 1990, the protagonists in this lawsuit entered into a written construction agreement. Defendants Jim Erickson, d/b/a Bullock Garages and Bullock Garages, Inc., agreed to build a new garage for plaintiffs, Larry and Connie Beeson, to enclose the old detached garage face with a wall, a door, and a window, and to pour a new concrete driveway to replace a gravel drive. Plaintiffs specifically asked defendants to construct the driveway in such a manner as to direct water away from the house.

Defendants completed the work. Two years later, plaintiffs found water flooding their basement. The water ruined their carpet, linoleum, paneling, and the sheetrock in a renovated room.

After an exchange of letters, plaintiffs sued defendants for damages, claiming defendants were negligent in that they "altered the drainage and plugged the drain tile around the residence of the Plaintiffs."

After the matter was tried, the trial court entered judgment in favor of plaintiffs, finding that defendants were negligent in crushing a drain tile located under the driveway and in failing to make the driveway slope in such a manner as to direct water away from the house. The court then awarded plaintiffs the sum of $6,247.92. All of the damages were caused during the performance of the parties' agreement.

The agreement between the parties contained the following clause:

"Customer agrees that in the event Bullock must enforce or defend Bullock's rights under this contract, or any matters relating thereto, that Bullock may, at Bullock's option, choose to arbitrate any controversy or claim arising out of or relating to this contract, or the breach thereof, before the Better Business Bureau's arbitration system, the American Arbitration Association or any other nationally recognized arbitration association. Customer hereby agrees to submit to binding arbitration as provided herein if Bullock so elects and judgement [sic ] upon the award rendered by the arbitrator(s) may be entered in any appropriate Illinois court. Customer further agrees to put the entire purchase price of this contract into escrow with the arbitrator(s) selected before arbitration begins."

Defendants argued at the trial level and on appeal that the contractual provision set forth above should have been enforced and that the matter should have been referred to arbitration. They suggest that plaintiffs should not have been permitted to assert tort theories in a contract case. They also maintain that liability was imposed upon them under the tort cause of action for violation of a duty which was expressly negated by the contract.

The trial court refused to refer the matter to binding arbitration on the grounds that plaintiffs' action was framed in tort and that under Kansas law, there can be no mandatory arbitration of an action sounding in tort. The trial court apparently did not deal with defendants' contractually based defenses.

Plaintiffs do not assert that the arbitration clause in the agreement between the parties was against public policy or unconscionable. They take the position on appeal that they can nullify the arbitration clause by pleading a cause of action in tort. They also argue that defendants have waived the right to enforce their contractual right to arbitration.

Both parties raise claims of error. For reasons that will become obvious, we focus on the arbitration issue.

WAIVER

Plaintiffs argue that defendants waived their right to invoke the arbitration clause in the agreement. They base this claim on the fact that defendants were tardy in asserting their arbitration rights. We disagree.

We do not dispute the fact that a right to arbitration may be waived. This principle was recognized by this court in D.M. Ward Constr. Co. v. Electric Corp. of Kansas City, 15 Kan.App.2d 114, 803 P.2d 593 (1990), rev. denied 248 Kan. 994 (1991), and by our Supreme Court in Jackson Trak Group, Inc. v. Mid States Port Authority, 242 Kan. 683, 751 P.2d 122 (1988). In Jackson Trak, the Supreme Court said: "To be construed as waiving the right to arbitrate, the party's conduct must unequivocally demonstrate the intent to waive." 242 Kan. 683, Syl. p 2, 751 P.2d 122.

In this case, plaintiffs maintain defendants' waiver arises because defendants took no steps regarding arbitration until after suit was filed. That is an accurate statement of the facts. However, the record also shows that defendants raised their right to arbitration in their answer and that they thereafter objected to the trial court's denial of motions to compel arbitration and otherwise pursued the issue throughout the litigation.

We have read the record, and the defendants' conduct on the issue of arbitration unequivocally demonstrates their intent to rely on and insist upon enforcing their right to arbitration.

There is no substantial competent evidence in the record that defendants waived their right to arbitrate. The issue was timely raised at the time the suit was filed and was pursued by defendants thereafter. We hold there was no evidence that defendants waived the right to enforce mandatory arbitration under their agreement with plaintiffs.

ARE PLAINTIFFS' TORT CLAIMS MAINTAINABLE?

We agree that plaintiffs' petition in this case is framed upon a tort theory. The term used in the petition to describe defendants' misconduct is negligence, which is a tort concept and a tort term. We do not disagree that the legal semantics employed in drafting plaintiffs' petition pleads a cause of action in tort. We do conclude, however, that under the circumstances shown in this action, plaintiffs should not have been permitted to maintain an action in tort.

The parties all agree that the Kansas Uniform Arbitration Act is applicable. We note that the term "uniform" is a misnomer when it is applied to the Kansas Act, which indeed is not uniform at all with the "uniform acts" in place in most of our sister states.

The key provisions of the Kansas Act are found in K.S.A.1995 Supp. 5-401(b) and (c) and read as follows:

"(b) Except as provided in subsection (c), a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable except upon such grounds as exist at law or in equity for the revocation of any contract.

"(c) The provisions of subsection (b) shall not apply to ... (3) any provision of a contract providing for arbitration of a claim in tort." (Emphasis added.)

The Kansas Act clearly prohibits parties from enforcing a contractual provision to arbitrate a claim in tort. The trial court seized upon this provision of the Kansas Act to declare that arbitration was unavailable in this case since plaintiffs' cause of action sounded in tort. In exempting tort actions from its arbitration provisions, the Kansas Act differs from the Uniform Arbitration Act and the Federal Arbitration Act. Under both the Uniform Arbitration Act and the Federal Arbitration Act, a contractual provision to arbitrate applies regardless of whether the action sounds in tort or in contract. R.J. Palmer Constr. Co. v. Wichita Band Instrument Co., 7 Kan.App.2d 363, 365, 642 P.2d 127 (1982).

Indeed, it appears to us that under R.J. Palmer, this action may have been one where "commerce" was involved. If that is true, then the Federal Act would have preempted the Kansas Act and would have applied, and the tort exception would not exist. This particular proposition was not raised by the parties, and we note it now only in passing.

At one time, only Kansas and Arkansas exempted tort actions from their "uniform arbitration acts." See Fowks, So You Thought You Knew What a Tort Was?, 49 J.K.B.A. 31 (1980). It is possible that other states have joined this select group in the past several years, but we have not extended our research in that direction.

All of this is relevant to the issue which we must decide. Plaintiffs were aware of the arbitration clause in the contract and were equally aware of the tort exception set forth in the Kansas Uniform Arbitration Act. Plaintiffs did not desire to become involved in arbitration, so they framed their petition in tort in order to nullify the arbitration clause in their agreement with defendants. Plaintiffs' counsel candidly admitted as much in oral argument to this court. We do not fault plaintiffs for the decision or for their strategy. They made...