Evangelistic Outreach v. General Steel

• Decision Date: 20 February 2007
• Docket Number: No. COA06-558.,COA06-558.
• Citation: 640 S.E.2d 840
• Court: North Carolina Court of Appeals
• Parties: EVANGELISTIC OUTREACH CENTER, a North Carolina Corporation, Plaintiff, v. GENERAL STEEL CORPORATION, Defendant.

640 S.E.2d 840

EVANGELISTIC OUTREACH CENTER, a North Carolina Corporation, Plaintiff, v. GENERAL STEEL CORPORATION, Defendant.

No. COA06-558.

Court of Appeals of North Carolina.

February 20, 2007.

Appeal by defendant from order entered 7 February 2006 by Judge Ripley Rand in Anson County Superior Court. Heard in the Court of Appeals 16 November 2006.

Law Office of Henry T. Drake, by Henry T. Drake, Wadesboro, for plaintiff-appellee.

Kitchin, Neal, Webb, Webb, & Futrell, P.A., by Stephan R. Futrell, Rockingham, for defendant-appellant.

LEVINSON, Judge.

Defendant appeals from an order denying its motion to compel arbitration, to stay proceedings pending arbitration, and to dismiss plaintiff's lawsuit for lack of subject matter jurisdiction. We affirm.

Defendant, General Steel Corporation, is a Colorado company that sells prefabricated steel buildings. Plaintiff, Evangelistic Outreach Center, is a religious institution organized as a North Carolina non-profit corporation. In June 2004, plaintiff signed an agreement to buy a building from defendant. Thereafter, a dispute arose regarding the amount that plaintiff owed for the steel building. On 25 May 2005 plaintiff filed a complaint against defendant alleging fraud, unfair and deceptive trade practices, and breach of contract.

On 18 July 2005 defendant filed a motion to compel arbitration and to stay the proceedings pending arbitration, citing N.C. Gen.Stat. §§ 1-569.5 and 1-569.7. Defendant also moved to dismiss plaintiff's lawsuit for lack of subject matter jurisdiction, under N.C. Gen.Stat. § 1A-1, Rule 12(b)(1). On 7 February 2006 the trial court entered an order denying defendant's motion to compel arbitration and to dismiss plaintiff's complaint. Defendant appeals from this order.

Defendant argues first that the trial court erred by denying its motion to dismiss, on the grounds that "North Carolina courts have no in personam jurisdiction over defendant[.]" We conclude that defendant waived the right to challenge the exercise of personal jurisdiction over it.

In the instant case, defendant moved to dismiss for lack of subject matter jurisdiction, pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(1) (2005). However, defendant did not cite Rule 12(b)(2) or move to dismiss for lack of personal jurisdiction. Indeed, the record does not contain any defense motion to dismiss for lack of personal jurisdiction. The effect of this omission is addressed in N.C. Gen.Stat. § 1A-1, Rule 12 (2005), which provides in pertinent part that:

(b) . . . Every defense, in law or fact, to a claim for relief in any pleading, . . . shall be asserted in the responsive pleading . . . except that the following defenses may at the option of the pleader be made by motion:

(1) Lack of jurisdiction over the subject matter,

(2) Lack of jurisdiction over the person,

. . . .

(g) . . . If a party makes a motion under this rule but omits therefrom any defense or objection then available to him which this rule permits to be raised by motion, he shall not thereafter make a motion based on the defense or objection so omitted[.] . . .

(h) . . . (1) A defense of lack of jurisdiction over the person . . . is waived (i) if omitted from a motion in the circumstances described in section (g)[.]

Rule 12(g) and (h) establish that, by failing to include a motion for dismissal under Rule 12(b)(2) with its motion under Rule 12(b)(1), defendant waived any challenge to personal jurisdiction.

Because defendant waived the issue of personal jurisdiction at the trial level, it is not properly before us for review. The pertinent assignments of error are overruled.

Defendant argues next that the trial court erred by denying its motion to compel arbitration and stay the proceedings pending arbitration. We disagree.

Preliminarily we note that, although defendant appeals from an interlocutory order, "an order denying arbitration is immediately appealable because it involves a substantial right, the right to arbitrate claims, which might be lost if appeal is delayed." Tillman v. Commercial Credit Loans, Inc., ___ N.C.App. ___, ___, 629 S.E.2d 865, 869 (2006) (citing Burke v. Wilkins, 131 N.C.App. 687, 688, 507 S.E.2d 913; 914 (1998)).

"As a general matter, public policy favors arbitration." Sloan Fin. Grp., Inc. v Beckett, 159 N.C.App. 470, 477, 583 S.E.2d 325, 330 (2003) (citation omitted). However:

[T]his public policy does not come into play unless a court first finds that the parties entered into an enforceable agreement to arbitrate. As the United States Supreme Court has stressed, "arbitration is simply a matter of contract between the parties; it is a way to resolve those disputes-but only those disputes—that the parties have agreed to submit to arbitration."

Sears Roebuck & Co. v. Avery, 163 N.C.App. 207, 211, 593 S.E.2d 424, 428 (2004) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985, 993, (1995)).

Plaintiff herein testified by affidavit that the parties never agreed to submit their disputes to arbitration. "If a party claims that a dispute is covered by an agreement to arbitrate but the adverse party denies the existence of an arbitration agreement, the trial court shall determine whether an agreement exists. See N.C.G.S. § 1-567.3[ ]. `The question of whether a dispute is subject to arbitration is an issue for judicial determination.'" Slaughter v. Swicegood, 162 N.C.App. 457, 461, 591 S.E.2d 577, 580 (2004) (quoting Raspet v. Buck, 147 N.C.App. 133, 136, 554 S.E.2d 676, 678 (2001)) (citing N.C. Gen.Stat. § 1-567.3, now replaced by N.C. Gen.Stat. § 1-569.7(a)(2) (2005)). In the trial court's determination of this issue:

"`The party seeking arbitration must show that the parties mutually agreed to arbitrate their disputes'. . . . `The trial court's findings regarding the existence of an arbitration agreement are conclusive on appeal where supported by competent evidence, even where the evidence might have supported findings to the contrary.'"

Slaughter, 162 N.C.App. at 461, 591 S.E.2d at 580 (quoting Routh v. Snap-On Tools Corp., 108 N.C.App. 268, 271-72, 423 S.E.2d 791, 794 (1992), and Sciolino v. TD Waterhouse Investor Servs., Inc., 149 N.C.App. 642, 645, 562 S.E.2d 64, 66 (2002)) (citations omitted).

In the instant case, the parties disputed the existence of an agreement to arbitrate. In support of its unverified motion to compel arbitration, defendant submitted a copy of the one page purchase order signed by plaintiff, which includes a notation that the agreement is subject to "terms and conditions on the face and reverse hereof," and a copy of the back side of the purchase order, containing an arbitration clause. Defendant also offered the affidavit of defendant's Customer Service Manager, stating that he faxed plaintiff both the front of the purchase order and the conditions page on the reverse side, and that plaintiff faxed back a signed copy of the purchase order front page.

Plaintiff opposed defendant's motion on the grounds that it had not agreed to arbitration. Plaintiff filed a verified response to defendant's request for admissions, denying that defendant had faxed the "conditions" page on the back of the purchase order. Plaintiff also submitted the affidavit of Hattie Cash, minister of Evangelistic Outreach, who averred that: (1) defendant never faxed plaintiff a second or back page to the purchase order; (2) plaintiff never received any documents from defendant that referred to arbitration; and (3) plaintiff had not entered into a contract with defendant that included arbitration.

The trial court denied defendant's motion in an order stating in relevant part that "[t]he Defendant has failed in its burden of proof to prove that there was an agreement between the parties to arbitrate." Thus, the trial court denied defendant's motion on the grounds that proof of the very existence of an arbitration agreement was lacking. We conclude that the evidence supports this conclusion.

Defendant, however, asserts that the trial court erred by denying its motion to compel arbitration, notwithstanding plaintiff's sworn denial that it ever received a copy of the conditions page or any other document referencing arbitration. Defendant cites no authority for this contention, and the relevant precedent suggests otherwise.

For example, in Sciolino, 149 N.C.App. at 644, 562 S.E.2d at 65, plaintiffs signed an account application stating in part that their signatures represented an acknowledgment that they had "read, understand, and agree to be bound by the terms of the attached Customer Agreement" and that the "enclosed Customer Agreement" included an arbitration clause. The trial court found in part that "Plaintiffs deny having been provided with a copy of the customer agreement. [Plaintiff] testified, by affidavit, that h...