Order Homes, LLC v. Iverson

• Citation: 300 Ga. App. 332,685 S.E.2d 304
• Decision Date: 19 August 2009
• Docket Number: No. A09A0931.,A09A0931.
• Parties: ORDER HOMES, LLC et al. v. IVERSON et al.
• Court: United States Court of Appeals (Georgia)

685 S.E.2d 304

300 Ga. App. 332

ORDER HOMES, LLC et al. v. IVERSON et al.

No. A09A0931.

Court of Appeals of Georgia.

August 19, 2009.

Moore, Ingram, Johnson & Steele, Clay S. O'Daniel, Marietta, Alexander T. Galloway III, Shapiro, Fussell, Wedge & Smotherman, Ronald A. Williamson, Atlanta, for appellants.

Hutto & Cochling, Eric D. Cochling, Buford, Charles D. Joyner, Freeman, Mathis & Gary, Neil L. Wilcove, Carlock, Copeland & Stair, David F. Root, Swift, Currie, McGhee & Hiers, Brian W. Burkhalter, Stephen M. Schatz, Atlanta, Kurt R. Hilbert, Sandra Gray, for appellees.

MIKELL, Judge.

In this action by appellees Allen and Tawanna Iverson seeking redress for construction defects in their new home, we granted this interlocutory appeal to consider whether the trial court erred in denying in part appellant Order Homes, LLC's motion to compel arbitration and in denying in whole the motions to compel arbitration filed by appellants Order Construction, Inc., Saeid L. Sadri, Nasser Golshani, and Parisian Homes, Inc. Because the arbitration clause at issue shows that the parties intended to submit the types of claims in dispute to an arbitrator, and because we conclude that the nonsignatory appellants may compel arbitration under the doctrine of equitable estoppel, we reverse the trial court's ruling insofar as it denied appellants' motions to compel.

"[T]he question of arbitrability, i.e., whether an agreement creates a duty for the parties to arbitrate the particular grievance, is undeniably an issue for judicial determination."¹ The standard of review of a trial court's ruling on a motion to compel arbitration is "whether the trial court was correct as a matter of law."² "[T]he construction of an arbitration agreement, like any other contract, presents a question of law, which is subject to de novo review."³

The record reflects that in June 2006, Order Homes and the Iversons entered into a New Construction Purchase and Sale Agreement (the Agreement), pursuant to which Order Homes was to construct and sell a new home to the Iversons. Paragraph 14(B) of the Agreement contained the following clause concerning arbitration:

Buyer and Seller agree that any construction defect claim not resolved after following the procedure described in OCGA § 8-2-38 and all other claims between the parties shall be settled by arbitration through the services of an arbitrator mutually agreed upon by the parties. The decision of the arbitrator shall be final and may be enforced by any court having jurisdiction thereof. The arbitration shall be conducted in accordance with OCGA § 9-9-1 et seq. Notwithstanding the provisions of this subparagraph, if Buyer is claiming under a warranty provided by Seller, the terms and procedures of that warranty shall first apply to the resolution of the claim. In order for this paragraph to be a part of this Agreement it must be initialed by Buyer and Seller; if not initialed it shall be void and unenforceable.⁴

This paragraph was initialed by the Iversons and by Order Homes, who were the only signatories to the Agreement.

In October 2007, the Iversons filed a 15-count complaint against Order Homes, the other appellants, and several other defendants.⁵ In their complaint, the Iversons alleged that, after closing the sale and occupying the home for a short time, they found the house to be uninhabitable due to defective construction, and they moved out. The Iversons asserted claims against all defendants based on fraud, deceit, misrepresentation, and equitable rescission of the contract (Counts 1-4); breach of contract (Count 5); negligence, gross negligence, and negligent hire (Counts 6-8); continuing nuisance (Count 9); breach of warranty (Count 10); strict products liability (Count 11); declaratory judgment (Count 12); unjust enrichment (Count 13); and violation of the Uniform Deceptive Trade Practices Act and of the Fair Business Practices Act (FBPA)⁶ (Counts 14, 15).

On November 7, 2007, Order Homes, Order Construction, Sadri, and Golshani jointly filed an answer, specifically asserting their right to arbitration under the Agreement; and that same day Order Homes filed a motion to compel arbitration. Order Construction, Sadri, and Golshani filed a motion to compel arbitration under the Agreement on January 9, 2008. Parisian Homes filed its answer to the complaint on March 10, 2008, specifically asserting its right to arbitration, and on March 21, 2008, filed its motion to compel arbitration.

After hearing oral argument on appellants' motion to compel arbitration, the trial court granted the motion as to the Iversons' claims against Order Homes for breach of contract, negligence, gross negligence, and breach of warranty; however, the trial court denied arbitration as to the Iversons' claims against Order Homes for equitable rescission of contract, violation of the FBPA, fraud, deceit, misrepresentation, negligent hire, continuing nuisance, strict products liability, unjust enrichment and violation of the Uniform Deceptive Trade Practices Act. The trial court also denied altogether the other appellants' motions to compel arbitration. Appellants appeal from the order of the trial court.

1. Appellants assert that the trial court erred in refusing to compel arbitration as to all counts of the Iversons' complaint against Order Homes. We agree.

Where contract language is unambiguous, that is, where it is capable of only one reasonable interpretation, "construction is unnecessary and the court simply enforces the contract according to its clear terms."⁷ The arbitration clause in the Agreement provides that the arbitration shall be conducted in accordance with the Georgia Arbitration Code (GAC), OCGA § 9-9-1 et seq. In enacting the GAC, the General Assembly established "a clear public policy in favor of arbitration."⁸ Under OCGA § 9-9-6(a), "[a] party aggrieved by the failure of another to arbitrate" may move the court to compel arbitration; and "[i]f the court determines there is no substantial issue concerning the validity of the agreement to submit to arbitration or compliance therewith and the claim sought to be arbitrated is not barred by limitation of time, the court shall order the parties to arbitrate." Further, "[b]ecause our state arbitration code closely tracks federal arbitration law, we look to federal cases for guidance in construing our own statutes."⁹

(a) In the Agreement, the parties agreed to submit to arbitration not only construction defect claims, but also "all other claims between the parties." The subject matter of the Agreement was the construction and sale of a new home by Order Homes to the Iversons. The faulty construction of the house formed the basis for the Iversons' lawsuit against Order Homes. The Iversons' claims, including those for fraud, deceit, misrepresentation, negligent hire, continuing nuisance, strict products liability, unjust enrichment, and violation of the Uniform Deceptive Trade Practices Act, all constituted "other claims between the parties," falling within the scope of the broad arbitration clause in the Agreement. This Court has ruled that claims for fraud and deceit are within the scope of an arbitration clause which expressly covered "all claims or disputes arising out of or relating to the contract documents, or the breach thereof."¹⁰ The arbitration clause in the Agreement was not limited to claims sounding in contract, but applied to "all other claims" without limitation. Moreover, "where a broad arbitration clause is in effect, even the question of whether the controversy relates to the agreement containing the clause is subject to arbitration."¹¹ The trial court erred in denying Order Homes's motion to compel arbitration as to these claims.

(b) Under this Court's decision in D.S. Ameri,¹² the Iversons' claim for equitable rescission is also subject to arbitration. In that case, defendants agreed to construct a home and sell it to plaintiffs.¹³ Alleging defects in construction, plaintiffs sought rescission of the contract, based on fraud in the inducement.¹⁴ There, as here, in opposing defendant's motion to compel arbitration, plaintiffs did not argue that the arbitration clause itself was invalid or that they had been fraudulently induced to enter into the agreement to arbitrate; instead, they argued that the arbitration clause would be rendered void by a rescission of the contract, and therefore that the issue of rescission should not be submitted to an arbitrator.¹⁵ Citing OCGA § 9-9-3, this Court reversed the trial court's denial of the defendants' motion to compel arbitration.¹⁶

In denying Order Homes's motion to compel, the trial court distinguished D.S. Ameri on the ground that the arbitration clause in that case specifically provided for arbitration of "any claim for rescission,"¹⁷ which this Court deemed to be "unambiguous language ... express[ing] the parties' intent to arbitrate even claims or disputes seeking the remedy of rescission."¹⁸ Because the Agreement at issue here did not contain such an express mention of a rescission claim, the trial court concluded that the Agreement's arbitration clause "did not state or contemplate claims for equitable rescission." The trial court denied Order Homes's motion for arbitration as to the rescission claim "because the [arbitration] clause [did] not expressly include such a claim."

We conclude, to the contrary, that the arbitration clause in the Agreement was broad enough to cover the Iversons' claims for equitable rescission. Under OCGA § 9-9-3, "a provision in a written contract to submit any controversy thereafter arising to arbitration is enforceable without regard to the justiciable character of the controversy and confers jurisdiction on the courts of the state to enforce it and to enter judgment on an award." Even absent any specific mention of claims for rescission in the arbitration clause in the Agreement, we conclude that D.S. Ameri applies and is controlling, because...