Lyndoe v. D.R. Horton, Inc.

• Citation: 287 P.3d 357
• Decision Date: 24 July 2012
• Docket Number: No. 30,663.,30,663.
• Parties: Loren LYNDOE, Phyllis Lyndoe, Manuel Toledo, Isabel Toledo, Glenda Council, Robert Council, Ron Armstrong, Laura Armstrong, Patricia Sanchez, Francisca Cabriales, Jake Lamfers, Marta Lamfers, Cal Palmer, Veronica Palmer, Heather James, Haamid Hakam, Baxter Backer, Carolyn Backer, Jared Hunter, Jacqueline Hunter, Silvino Suarez, Johanna Duncan, Richard Hoehne, Anabel Najera, Jeannette Paz, Robert Bruhn, Nuttall, Diane Nuttall, Ron Stone, Stella Stone, Yvonne Baldonado, Robert Robles, Tina Robles, Joseph Craig, Alisa Shtromberg, Jesse Magallanez, Pamela Tafoya, Robert Bonilla, Alicia Bonilla, Ruben Valenzuela, Yvette Valenzuela, Ignacio Sanchez, Wendy Schmidt, Marcus Declouette, Danielle Declouette, Madeleine R. Mani, Sanjay Chandran, Patrick Yokoyama, Roseanne Yokoyama, Trevor Brasel, Kristi Brasel, Jose Carter, Emily Carter, Calvin Lucero, Erin Garcia, and Lakana Sangadej, Plaintiffs–Appellees, and Elizabeth Fernandez, Gerardo Lopez, James Corwell, and Kerri Corwell, Plaintiffs, v. D.R. HORTON, INC., and DRH Southwest Construction, Inc., Defendants–Appellants, and Curb South, LLC, Defendant.
• Court: Court of Appeals of New Mexico

287 P.3d 357

Loren LYNDOE, Phyllis Lyndoe, Manuel Toledo, Isabel Toledo, Glenda Council, Robert Council, Ron Armstrong, Laura Armstrong, Patricia Sanchez, Francisca Cabriales, Jake Lamfers, Marta Lamfers, Cal Palmer, Veronica Palmer, Heather James, Haamid Hakam, Baxter Backer, Carolyn Backer, Jared Hunter, Jacqueline Hunter, Silvino Suarez, Johanna Duncan, Richard Hoehne, Anabel Najera, Jeannette Paz, Robert Bruhn, Nuttall, Diane Nuttall, Ron Stone, Stella Stone, Yvonne Baldonado, Robert Robles, Tina Robles, Joseph Craig, Alisa Shtromberg, Jesse Magallanez, Pamela Tafoya, Robert Bonilla, Alicia Bonilla, Ruben Valenzuela, Yvette Valenzuela, Ignacio Sanchez, Wendy Schmidt, Marcus Declouette, Danielle Declouette, Madeleine R. Mani, Sanjay Chandran, Patrick Yokoyama, Roseanne Yokoyama, Trevor Brasel, Kristi Brasel, Jose Carter, Emily Carter, Calvin Lucero, Erin Garcia, and Lakana Sangadej, Plaintiffs–Appellees,
and
Elizabeth Fernandez, Gerardo Lopez, James Corwell, and Kerri Corwell, Plaintiffs,
v.
D.R. HORTON, INC., and DRH Southwest Construction, Inc., Defendants–Appellants,
and
Curb South, LLC, Defendant.

No. 30,663.

Court of Appeals of New Mexico.

July 24, 2012.

[287 P.3d 358]

Guebert Bruckner P.C., Terry R. Guebert, Don Bruckner, Albuquerque, NM, for Appellees.

Collins & Collins, P.C., Alysan Boothe Collins, Albuquerque, NM, for Appellees Lucero & Erin Garcia.

[287 P.3d 359]

Crowley & Gribble, P.C., Clayton E. Crowley, Albuquerque, NM, for Appellee Lakana Sangedej.

Landry & Ludewig, L.L.P., Stephanie Landry, Margaret C. Ludewig, Albuquerque, NM, Saucedo Chavez PC, Christopher T. Saucedo, Iris L. Marshall, Albuquerque, NM, for Appellants.

OPINION
FRY, Judge.

{1} The district court ordered the consolidation of all arbitrations between Defendants D.R. Horton, Inc. and DRH Southwest Construction, Inc. (collectively, Horton) and Plaintiffs, who are owners of homes built and sold by Horton in the Sagebrush Subdivision at Huning Ranch in Los Lunas, New Mexico. We conclude that Plaintiffs satisfied all of the elements required for consolidation by NMSA 1978, Section 44–7A–11 (2001), of New Mexico's Uniform Arbitration Act (UAA), NMSA 1978, §§ 44–7A–1 to –32 (2001). Therefore, we affirm the district court's order.

I. BACKGROUND

{2} In November 2009, Plaintiffs sued Horton and other defendants seeking damages and rescission, alleging that they had experienced various deficiencies in their Horton-built homes, many of which were caused by the settlement of subsurface soils. Plaintiffs also alleged that their purchase agreements with Horton contained arbitration agreements, and they asked the district court to compel Horton to litigate their claims in a consolidated arbitration in accordance with Section 44–7A–11 of the UAA.

{3} In pleadings filed with the court, Horton acknowledged that the parties' dispute was subject to the purchase agreements' arbitration clause. However, Horton opposed consolidation of all of the claims into one arbitration and instead proposed a separate arbitration with each household. Consequently, Plaintiffs filed a motion to compel a consolidated arbitration between Horton and Plaintiffs who had signed purchase agreements with Horton. Plaintiffs argued that Section 44–7A–11 of the UAA permits consolidation of separate arbitration proceedings if certain requirements are met. Section 44–7A–11 states:

(a) Except as otherwise provided in Subsection (c), upon motion of a party to an agreement to arbitrate or to an arbitration proceeding, the court may order consolidation of separate arbitration proceedings as to all or some of the claims if:

(1) there are separate agreements to arbitrate or separate arbitration proceedings between the same persons or one of them is a party to a separate agreement to arbitrate or a separate arbitration proceeding with a third person;

(2) the claims subject to the agreements to arbitrate arise in substantial part from the same transaction or series of related transactions;

(3) the existence of a common issue of law or fact creates the possibility of conflicting decisions in the separate arbitration proceedings; and

(4) prejudice resulting from a failure to consolidate is not outweighed by the risk of undue delay or prejudice to the rights of or hardship to parties opposing consolidation.

(b) The court may order consolidation of separate arbitration proceedings as to some claims and allow other claims to be resolved in separate arbitration proceedings.

(c) The court may not order consolidation of the claims of a party to an agreement to arbitrate if the agreement prohibits consolidation.

{4} Plaintiffs argued that all of the statutory elements supporting consolidation existed because the arbitration agreements were entered into with Horton; Plaintiffs' claims arose from the same series of home sales by Horton in the Sagebrush Subdivision since 2006; all of Plaintiffs' homes experienced similar problems; and Horton would not be prejudiced by a consolidated arbitration because such a proceeding would likely be more efficient than separate proceedings. Horton responded that Plaintiffs failed to establish (1) the statutory element requiring related

[287 P.3d 360]

transactions because Plaintiffs were not part of the same series of contractual negotiations; (2) the element requiring common issues of law or fact creating the possibility of conflicting decisions; and (3) the element related to prejudice because a consolidated arbitration would result in undue delay due to the widely varying claims of individual Plaintiffs.

{5} Following a hearing, the district court announced in a letter decision that it would grant Plaintiffs' motion and order a consolidated arbitration before a single arbitrator. The district court later denied Horton's motion for reconsideration, found that the order compelling consolidation was final for purposes of appeal, and stayed the proceedings pending appeal. This appeal followed.

II. DISCUSSION

{6} The parties agree that Plaintiffs' claims against Horton are subject to arbitration, and the only dispute is whether the district court properly ordered the consolidated arbitration. Horton challenges the district court's order based on three arguments, which we combine into two. First, Horton contends that the district court did not have jurisdiction to order a consolidated arbitration because there were no arbitration proceedings pending at the time of the order. Second, it argues that consolidation was improper because Plaintiffs failed to satisfy the statutory factors necessary for consolidation and because permitting consolidation would thwart federally established policy and improperly allow the arbitrator to dictate public policy.

A. Standard of Review

{7} Horton argues that all of its arguments are subject to de novo review. We disagree in part. First, as we clarify below, Horton's argument regarding the district court's alleged lack of jurisdiction is misplaced. Horton's argument has nothing to do with jurisdiction; instead, Horton's contention is that a statutory prerequisite for consolidation of the arbitrations was not met. This involves a question of statutory construction, which we review de novo. Estate of Nauert v. Morgan–Nauert, 2012–NMCA–037, ¶ 8, 274 P.3d 799.

{8} Second, we disagree with Horton's contention that the propriety of the district court's order requiring consolidated arbitrations is subject to de novo review. The statutory provision permitting consolidation uses language associated with discretion. It provides that a court “ may order consolidation of separate arbitration proceedings” under certain circumstances. Section 44–7A11(a) (emphasis added). In addition, the commentary to the uniform law on which our UAA is modeled clarifies that the provision permitting consolidation “gives courts discretion to consolidate separate arbitration proceedings.” Unif. Arbitration Act § 10 cmt. 3, 7 U.L.A. 42 (2000) (emphasis added); see Cummings v. Budget Tank Removal & Envtl. Servs, LLC, 163 Wash.App. 379, 260 P.3d 220, ¶ 14 (2011) (explaining that “[b]ecause the statute says the court ‘may’ order consolidation, [the court] review[s] the decision for an abuse of discretion”). Consequently, we review the district court's order compelling the consolidated arbitration for abuse of discretion.

B. Jurisdiction to Order Consolidated Arbitration

{9} Horton claims that the consolidation provision of the UAA, Section 44–7A–11, requires that there be pending separate arbitration proceedings before a court has the power to order a consolidated arbitration. In support, Horton relies on the title of the statute, which reads “Consolidation of separate arbitration proceedings,” and a Hawaii case, In re United Pub. Workers, AFSCME, Local 646, AFL–CIO, 124 Hawai‘i 372, 244 P.3d 609, 613 (App.2010).

{10} We are not persuaded. Despite the...