EX PARTE INVERNESS CONSTR. CO., INC.

• Decision Date: 14 July 2000
• Citation: 775 So.2d 153
• Parties: Ex parte INVERNESS CONSTRUCTION COMPANY, INC., et al. (Re Surf Side Shores Condominium Owners Association, Inc. v. Flex Membrane International, Inc., et al.) Ex parte Inverness Construction Company, Inc., et al. (Re Ocean House Condominium Owners Association, Inc. v. Flex Membrane International Corporation et al.)
• Court: Alabama Supreme Court

775 So.2d 153

Ex parte INVERNESS CONSTRUCTION COMPANY, INC., et al.

(Re Surf Side Shores Condominium Owners Association, Inc. v. Flex Membrane International, Inc., et al.)

Ex parte Inverness Construction Company, Inc., et al.

(Re Ocean House Condominium Owners Association, Inc. v. Flex Membrane International Corporation et al.)

1909.

Supreme Court of Alabama.

July 14, 2000.

Craig W. Goolsby and Joseph H. Hilley of Carr, Allison, Pugh, Howard, Oliver & Sisson, P.C., Daphne, for petitionerInverness Construction Co., Inc.

C. William Daniels, Jr., of Pierce, Ledyard, Latta & Wasden, P.C., Mobile, for petitionersHenry Norris & Associates, Inc., and Samuel F. Johnson, Jr., P.E.

Jeffrey L. Luther and Betsy M. Turner of Luther, Oldenburg & Rainey, P.C., Mobile, for petitionerCable Concrete Structures, Inc.

Carroll H. Sullivan and Jannea S. Rogers of Clark, Scott & Sullivan, P.C., Mobile, for petitionerSurf Side Shores, Inc.

Greg D. Crosslin, Melinda K. Camp, and Daryl L. Masters of Crosslin, Slaten & O'Connor, P.C., Montgomery, for petitionerService Supply Systems, Inc.

David P. Broome, Mobile, for petitionerMilco Building Products, Inc.

David F. Daniell of Daniell, Upton & Perry, P.C., Mobile, for respondentsSurf Side Shores Condominium Owners Association and Ocean House Condominium Owners Association.

ENGLAND, Justice.

This is an arbitration dispute between on the one side, two condominium associations, and, on the other side, the defendants —the developer, the general contractor, the architect, and related subcontractors.Inverness Construction Company, Inc., Surf Side Shores, Inc., Ocean House, Inc., Cable Concrete Structures, Inc., Samuel F. Johnson, Jr., P.E., Milco Building Products, Inc., Service Supply Systems, Inc., and Henry Norris and Associates, Inc., seek mandamus review of the orders of Judges Charles C. Partin and Robert Wilters in the Baldwin Circuit Court denying their motions to compel arbitration.For the reasons stated infra,we deny the petitions.

On or about March 1, 1994, and July 8, 1991, the defendantHenry Norris and Associates, Inc., entered into agreements with Bill Littrell and Gordon Henderson(owners of the land to be developed) to provide architectural services for developments that were to become "Ocean House, Phase I" and "Surf Side, Phase I"; both are nine-story condominiums.Those agreements were contained in a document prepared by the American Institute of Architecture, known as AIA Document B161 and entitled "Standard Form of Agreement Between Owner and Architect for Designated Services (1977 Edition)."

The developers, Ocean House, Inc., and Surf Side Shores, Inc.(referred to hereafter collectively as "the developers"), entered into construction contracts with the J.W. Hartlein Construction Company, Inc.("Hartlein").By the terms of those contracts, Hartlein was to construct "Ocean House, Phase I" and "Surf Side, Phase I."In the interim between the construction and the filing of the present petitions for the writ of mandamus, Hartlein merged into Inverness Construction Company, Inc.

Without question, the contract between Henry Norris and Associates, Inc., Bill Littrell, and Gordon Henderson, and the contracts between the developers and Hartlein contained provisions explicitly requiring the parties to these contracts to submit disputes arising under the contracts to binding arbitration.Less certain, however, is whether disputes between the parties and nonparties arising under these contracts must be submitted to arbitration, even if the nonparties are third party beneficiaries of the contracts.

Ocean House Condominium Owners Association, Inc., and Surf Side Shores Condominium Owners Association, Inc.(referred to collectively as "the Associations"), filed complaints in the Baldwin Circuit Court against the architect, the general contractor, developers, and various subcontractors on December 24, 1997, and July 2, 1998 respectively.The complaints allege breach of warranties; negligence; wantonness; a violation of the Alabama Uniform Condominium Act, Ala.Code 1975, § 35-8A-101 et seq.; and breach of contract.The Associations' breach-of-contract and Uniform Condominium Act claims are based on the Associations' status as third-party beneficiaries of the contracts between the developers (Ocean House, Inc., and Surf Side Shores, Inc.), Inverness, Henry Norris and Associates, and the subcontractors.

On or about March 3, 1999, Henry Norris and Associates, Inc., filed motions to compel arbitration in both cases.¹Henry Norris and Associates alleged in its motions that the agreements between the landowners (Littrell and Henderson) and the architect, contain provisions requiring that any claims and/or disputes arising out of these contracts be submitted to arbitration.Norris contends that even though the Associations are not signatories to any of the contracts between the defendants, the Associations raised claims as third-party beneficiaries of those contracts, and, therefore, that the Associations should be equitably estopped from avoiding arbitration.

The Associations filed responses to the motions to compel arbitration, contending that they were not signatories to any of the contracts and that they were not successors-in-interest to Ocean House, Inc., and Surf Side Shores, Inc., the developers.Therefore, the Associations argued, the motions to compel arbitration should be denied.The judge assigned to the Surf Side Shores case denied the motions to compel arbitration, on April 2, 1999.The trial judge assigned to the Ocean House case also denied the motions to compel arbitration, on May 25, 1999.The May 25, 1999 order stated:

"All motions to compel arbitration are denied because the plaintiff was not a signatory to the contract which contained the arbitration agreement.It is the Court's opinion that the arbitration agreements apply only to the architect, [the] general contractor and the owner and any subcontractors[,] but not to the property owners' association."

Inverness and Cable Concrete Structures, Inc. filed motions to "reconsider" in both cases, on June 10, 1999 and June 16, 1999, respectively.The trial court denied the motions to reconsider in the Ocean House case on June 21, 1999.It is unclear from the record when the motion to...