Berhorst v. J.L. Mason of Missouri, Inc.

• Decision Date: 27 September 1988
• Docket Number: Nos. 53698,53702,s. 53698
• Citation: 764 S.W.2d 659
• Parties: Jerome and Irene BERHORST, Respondents, v. J.L. MASON of MISSOURI, INC., and the J.L. Mason Group, Inc., Appellants.
• Court: Missouri Court of Appeals

Page 659

764 S.W.2d 659

Jerome and Irene BERHORST, Respondents, v. J.L. MASON of MISSOURI, INC., and the J.L. Mason Group Inc., Appellants.

Nos. 53698, 53702.

Missouri Court of Appeals,

Eastern District,

Division Four.

Sept. 27, 1988.

Joe Bill Carter, Kirkwood, for respondents.

John Lawrence Davidson, St. Louis, for appellants.

SIMON, Presiding Judge.

Appellants, J.L. Mason of Missouri, Inc. (Mason of Missouri), and The J.L. Mason Group, Inc. (Mason Group), appeal from an order denying their separate motions to stay proceedings and compel arbitration in an action filed by respondents, Jerome and Irene Berhorst alleging fraud and deceit in the sale of a new home and breach of implied warranty of habitability. Mason Group was formerly Mason-Cassilly, Inc. (Mason-Cassilly) and Mason of Missouri is a wholly owned subsidiary of Mason Group.

On appeal, appellants claim that the trial court erred in: (1) denying appellants' request of findings of facts and conclusions of law, specifically: (a) whether the contract between the parties involved commerce under the Federal Arbitration Act; (b) whether the contract had a written provision requiring arbitration; and, (c) that the dispute between the parties has not been arbitrated; (2) failing to order arbitration of all claims because the limited home warranty agreement contained an arbitration provision which must be enforced either under the Federal Arbitration Act, 9 U.S.C. § 1 et seq., or the Uniform Arbitration Act, § 435.350 et seq. RSMo (1986); (3) finding appellants had waived their right to arbitration; and, finally, (4) not granting Mason of Missouri's motion to dismiss in that respondents' petition failed to state a claim upon which relief can be granted. Order denying stay of proceedings is set aside and cause remanded for arbitration in accordance with the agreement.

Initially, we shall consider appellants' motion to strike certain portions of Berhorsts' brief on the grounds that the issues raised in those portions were not presented to the trial court for its consideration and are not preserved for review. The portions in question are directed to appellants' name changes and the timeliness of filing their motions to compel arbitration due to the name changes. We have searched the record and find nothing to indicate that these matters were presented to the trial court for its consideration. Therefore, we sustain appellants' motion and strike those portions of Berhorsts' brief pertaining to those issues. Bunting v. McDonnell Aircraft Corporation, 522 S.W.2d 161, 168 (Mo. banc 1975).

On September 14, 1979, Berhorsts closed with Mason Group, formerly Mason-Cassilly, for the purchase of a new home in St. Charles, Missouri. The sales contract provides for the waiver of all implied warranties and, in lieu thereof, through enrollment in the home warranty program, the home was warranted under a two part ten year limited home warranty agreement against major construction defects. The limited home warranty agreement provides for the assignment of insurance coverage to the Berhorsts. The insurance coverage from the builder, Mason Group, is extended to Berhorsts through a certificate of participation or policy. Once the policy is received, the insurance covered any defects back to the commencement date of September 14, 1979. The warranty agreement and the insurance policy provides for arbitration of claims of defect. The premium for the program was paid by Mason Group.

The warranty provides that claims of defect arising within the initial two year period from the date of purchase must be filed with the builder. Any resolution of the claims arising in this initial period was to be performed by the builder. If Berhorsts were not satisfied with the builder's response, Berhorsts could file their claim with the Local HOW Council (a local organization licensed and authorized to administer the home warranty program of Home Owners Warranty Corporation (HOW)) accompanied by a $75.00 deposit as designated in the agreement. The Local HOW Council would then attempt to effect a conciliation and if a conciliation could not be reached, Local HOW Council would arrange for arbitration. If the arbitrator finds warranted defects, Mason Group is required to repair, replace, or repay Berhorsts the cost of repairing or replacing the defects within sixty days following such finding. In the event of nonperformance by Mason Group, Local HOW Council will arrange through the National Council (HOW) for the insurer, Insurance Company of North America (INA), to pay the costs of the repairs.

A similar procedure is followed for claims arising after the initial two year period, years three through ten. However, claims of defects are to be initially submitted to Local HOW Council accompanied by a $75.00 deposit. If Local HOW Council finds, by conciliation procedures, all or a portion of the claim to be invalid, and Berhorsts are not satisfied with such findings, the Local HOW Council shall arrange for arbitration. If for any reason Local HOW Council shall not proceed to obtain for the Berhorsts payment sufficient to comply with the decision of the arbitrator, Berhorsts are to notify the National Council and if the National Council does not obtain payment within thirty days of such notice, the decision of the arbitrator may be submitted to a court of appropriate jurisdiction for enforcement.

In the summer of 1983, the Berhorsts made a claim to Mason Group concerning the alignment of the french doors in their home. The doors were repaired to the Berhorsts' satisfaction. Later, in 1983, the Berhorsts made a second claim about the alignment of the french doors. They were informed by a superintendent that because the initial warranty period had expired, they would "have to turn it over to HOW." Berhorsts received a claim form from HOW and submitted it. The claim was turned over to INA.

On November 26, 1983, INA sent Dennis A. Bolazino, an inspector, to the Berhorst home. In the company of Mr. Berhorst, Bolazino made an extensive inspection of the Berhorst home. He placed monitors on the exterior foundation wall to determine the extent of current movement or shifting. On December 8, 1983, Bolazino sent a six page report with his conclusions and recommendations to Larry Cagle of INA. Bolazino's final recommendation, based upon his inspection, was that the Berhorsts "inspect the monitors periodically, and if no changes are observed, I [Bolazino] would recommend a revisit to the site in approximately three months." The Berhorsts received no further communications. No revisit or follow up was requested by either the Berhorsts or INA. The record does not indicate that appellants, Mason Group or Mason of Missouri, were informed of INA's involvement or the inspection.

On October 22, 1984, the Berhorsts filed suit against Mason of Missouri. On August 5, 1985, Mason of Missouri filed its answer denying it had entered into a contract for the sale of the home to the Berhorsts. On September 29, 1986, Mason of Missouri filed a motion for summary judgment which was denied and Berhorsts were granted leave to file a second amended petition. In their second amended petition on October 7, 1986, Mason Group was added as a defendant.

On November 12, 1986, Mason of Missouri filed a motion to dismiss for failure to state a claim. The trial court did not rule on this matter. Appellants' request for findings of facts and conclusions of law was denied.

On January 20, 1987, Mason Group filed a motion to stay proceedings and compel arbitration. Mason of Missouri joined in the motion to stay proceedings and compel arbitration on July 14, 1987. The order denying the motion provided:

Defendants' request for findings of fact and conclusions of law are denied, inasmuch, as the matter presented to the court was not the final submission of the case as is contemplated under the provisions of Rule of Civil Procedure 73.01(a)(2).

However, the Court does find that the failure to hold as invalid or even to act upon the claim of plaintiffs, filed in the latter part of 1983, other than the inspection conducted on November 26, 1983, constituted a repudication [sic] or waiver any right to arbitrate, whether under the provisions of Section IV of Terms and Conditions of Certificate of Participation No. B-362773 in Home Warranty Insurance Policy No. 1978 HW, or otherwise. See Village of Cairo v. Bodine Contracting Co., 685 S.W.2d 253.

Defendants' motion to stay proceedings and to compel arbitration is overruled and denied.

In appellants' first point on appeal, they contend the trial court erred in denying their motion requesting findings of facts and conclusions of law, specifically: (1) whether the contract between the parties involved commerce under the Federal Arbitration Act; (2) whether the contract had a written arbitration provision requiring arbitration; and (3) that the dispute between the parties has not been arbitrated.

However, in their brief and in oral argument, the parties have agreed that: (1) the contract contains an arbitration provision; (2) commerce was involved; and (3) the Federal Arbitration Act does apply. Thus, both parties now agree that the Federal Arbitration Act applies, as does the federal substantive law. Further, we note that the record indicates that arbitration of this dispute did not occur. Thus, it is not necessary to further review this point.

In appellants' second and third points on appeal, they contend that the trial court erred in failing to order arbitration because the warranty agreement contained an arbitration provision which must be enforced under the Federal Arbitration Act, and in finding that appellants waived their right to arbitration.

The United States Supreme Court in Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-26, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185, 193 (1987), stated "the [Federal Arbitration] Act [9 U.S.C. § 1 et seq.] was intended to reverse...