Easterling v. ROYAL MANUFACTURED HOUSING

• Decision Date: 06 June 2007
• Docket Number: No. 07-192.,07-192.
• Citation: 963 So.2d 399
• Parties: Chad EASTERLING, et al. v. ROYAL MANUFACTURED HOUSING, LLC, et al.
• Court: Court of Appeal of Louisiana — District of US

963 So.2d 399

Chad EASTERLING, et al. v. ROYAL MANUFACTURED HOUSING, LLC, et al.

No. 07-192.

Court of Appeal of Louisiana, Third Circuit.

June 6, 2007.

Lamont Paul Domingue, Voorhies & Labbe, Bruce David Beach, Ungarino & Eckert, L.L.C., F. Douglas Ortego, Juneau Law Firm, Lafayette, LA, for Defendant/Appellant-Royal Manufactured Housing, LLC.

Andrea D. Aymond, Riddle & Moreau, L.L.C., Marksville, LA, for Plaintiffs/Appellees-Chad Easterling and Lisa Easterling.

Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JIMMIE C. PETERS, and ELIZABETH A. PICKETT, Judges.

THIBODEAUX, Chief Judge.

This case involves a challenge to an arbitration agreement between the plaintiff in a redhibition suit, Chad Easterling ("Easterling"), and the defendant who sold Easterling a manufactured home, Royal Manufactured Homes, L.L.C. ("Royal"). Following a hearing in June of 2006 on Royal's Motion to Compel Arbitration, the trial court entered a judgment denying the defendant's motion based upon confusion created by the arbitration document which tied it to a specific "contemporaneously" executed transaction that did not exist. Subsequently, Royal filed a Motion for Reconsideration that was also denied. For the following reasons, we affirm the trial court's judgment denying Royal's Motion to Compel Arbitration, and the trial court's denial of Royal's Motion for Reconsideration.

I. ISSUES

We must decide whether the trial court erred as a matter of law in denying Royal's Motion to Compel Arbitration and its Motion for Reconsideration.

II. FACTS AND PROCEDURAL HISTORY

On February 16, 2004, Chad Easterling signed an agreement to purchase a particular manufactured home from Royal after viewing the home on Royal's lot. The agreement provided the serial number and model name of the home, the "Brandywine" model, and provided a breakdown of the base price of the unit and the price of each piece of optional equipment, such as skirting, foundation, pole, hook-ups, etc., for a total "Cash Purchase Price" of $85,080.00. The document was also signed by Danny Richard, agent for Royal, and further provided that "this agreement contains the entire understanding between you and me and no other representation or document, verbal or written, has been made which is not contained in this contract." The agreement also provided that part of the deposit would be retained by Royal if Easterling failed to complete the purchase. However, no money changed hands that day; no deposit or down-payment was indicated; and the full balance due was shown as $85,080.00. The document further provided that if the buyer did not complete a cash transaction, he would enter into a retail installment contract with the seller. That never occurred. Easterling obtained financing elsewhere and paid cash for the home five months later in July 2004. Between February and July, Easterling's wife, Lisa, apparently made frequent calls to Royal to make sure that the home they had selected was still on the lot.

On February 23, 2004, Easterling signed a Placement and Service Agreement along with several one-page information sheets outlining the requirements for permits, installation, skirting, hook-up, debris removal, air conditioning, etc. One of the documents contained an acceptance of the "Brandywine" model as seen on the lot. The last document consisted of one page as well, and was entitled "Arbitration Agreement Addendum." The first paragraph of the agreement states as follows:

This Arbitration Agreement ("Agreement") is executed contemporaneously with, and becomes part of, the Retail Installment of Sales Contract ("Contract") for the purchase of a manufactured home ("Home") as described in the Contract by the purchaser ("Purchaser") from the selling retailer ("Retailer"). This Agreement is for, and inures to, the benefit of the parties here, their successors and assigns, and additionally for the benefit of the manufacturer of the Home, and of the lender or mortgagee which provides the financing for the purchase of the Home, their successors and assigns, as fully as if the manufacturer and lender mortgagee were signatories hereto. The lender or mortgagee may elect at any time not to submit to binding arbitration by providing written notice to the Retailer and Purchaser at the addresses set forth in this Agreement.

The second paragraph of the document states as follows:

The parties agree that all claims, disputes, and controversies arising out of or relating in any way to the sale, purchase, occupancy of the Home including, but not limited to, any negotiations between the parties, the design, construction, performance, delivery, condition, installation, financing, repair or servicing of the Home and any warranties, either express or implied, pertaining to the Home, and including claims for equitable relief or claims based on contract, tort, statue sic, common law or any alleged breach, default, or misrepresentation, will be resolved by binding arbitration administered by the American Arbitration Association ("AAA") under its Commercial Arbitration Rules. The parties acknowledge that this Agreement evidences a transaction involving interstate commerce. Any contests to the validity or enforceability of this Agreement shall be determined by the provisions of the Federal Arbitration Act and the rules of the AAA. Copies of the rules may be obtained by writing the AAA at 13455 Noel Road, Suite 1750 Dallas, Texas XXXXX-XXXX.

On July 2, 2004, after Easterling had obtained financing from the United States Department of Agriculture, Rural Development, he signed a "Construction Contract" for delivery and set up of the home wherein Royal agreed to start work the next day, on July 3rd, and complete the installation by August 31, 2004, for one lump sum cash payment of the purchase price of $85,080.00. This set of documents also contained a Description of Materials with charts and diagrams, and a sheet explaining the U.S. Department of Agriculture's requirements for proof of immobilization, which changes the manufactured home from a "mobile" home to a permanent construction that exempts the buyer from paying sales tax on the purchase.

After the Easterling family moved into the home, it began to exhibit various defects such as water leaks and excessive condensation on the interior walls, which the Easterlings attributed to improper caulking and venting. Some of these conditions allegedly caused the growth of toxic mold and caused the air conditioner to run excessively. Apparently, repairs were attempted by Royal on behalf of the manufacturer, but the results were not satisfactory. In December of 2005, Chad and Lisa Easterling filed a redhibition suit alleging latent and hidden defects in the home at the time of manufacture by Indies House, and also alleging deficiencies in the set up of the home by Royal. Additionally, the Easterlings alleged personal injuries to the family members due to their exposure to the toxic mold.

Royal filed a Motion to Compel Arbitration based upon the Arbitration Agreement Addendum signed by Chad Easterling on February 23, 2004. The Easterlings opposed the motion arguing that they obtained financing for the home through Rural Development, not Royal, and that no "Retail Installment of Sales Contract" was ever executed, as referenced in Royal's arbitration agreement. They further pointed out that they did not execute the purchase from Royal until July 2, 2004, at which time they signed a "Construction Contract" and paid Royal one lump sum of $85,080.00 for the home.

The trial court subsequently denied the motion and issued written reasons explaining that the arbitration agreement would have applied to a "Retail Installment of Sales Contract" if Royal had financed the home for the Easterlings and if the parties had executed the referenced installment contract. However, the court would not apply the arbitration agreement to a lump sum purchase document, called a "Construction Contract," that was executed five months after the arbitration agreement. Nor did the court apply the arbitration agreement to the agreement to purchase that Easterling signed one week before signing the arbitration agreement, as neither the agreement to purchase nor the Construction Contract evidencing the sale were reflected in the arbitration agreement or executed "contemporaneously" with the agreement as purported in the agreement.

Based upon the trial court's denial of its Motion to Compel Arbitration, Royal filed a writ application, numbered 06-1084, and also filed an appeal. We granted the writ for the sole purpose of consolidating it with this appeal. Royal also filed a Motion for Reconsideration of the arbitration issue with the trial court, which was also denied for the same reasons as previously stated by the trial court. Again, Royal filed a writ application with this court, number 07-136, and that writ application has been consolidated as well with the instant appeal.

III.

LAW AND DISCUSSION

Standard of Review

Whether a court should compel arbitration is a question of law, and our appellate review of a question of law is simply to determine whether the trial court was legally correct or incorrect. Rico v. Cappaert Manufactured Housing, Inc., 05-141 (La.App. 3 Cir. 6/1/05), 903 So.2d 1284.

Royal contends that the trial court erred as a matter of law in denying its Motion to Compel Arbitration and its Motion for Reconsideration where the court failed to first apply the Federal Arbitration Act at 9 U.S.C. § 1, et seq, which favors arbitration and preempts state law. We disagree that the trial court erred in failing to analyze the question of federal preemption.

As this court has recognized in Abshire v. Belmont Homes, Inc., 04-1200 (La.App. 3 Cir. 3/2/05), 896 So.2d 277, writ denied, 05-862 (La.6/3/05), 903 So.2d 458, and in Rico v. Cappaert Manufactured Housing, Inc., 903 So.2d 1284, the issue of federal preemption, or application of the Federal Arbitration...