Rico v. Cappaert Manufactured Housing, Inc.

• Decision Date: 01 June 2005
• Docket Number: No. 2005-141.,2005-141.
• Citation: 903 So.2d 1284
• Parties: Buster RICO, et ux. v. CAPPAERT MANUFACTURED HOUSING, INC., et al.
• Court: Louisiana Supreme Court

903 So.2d 1284

Buster RICO, et ux. v. CAPPAERT MANUFACTURED HOUSING, INC., et al.

No. 2005-141.

Court of Appeal of Louisiana, Third Circuit.

June 1, 2005.

COPYRIGHT MATERIAL OMITTED

Fred A. Pharis, Pharis Law Offices, Alexandria, LA, for Plaintiffs/Appellees, Buster Rico, Marilyn Rico.

Walter K. Jamison, III, Marjorie B. Breaux, Daigle, Scofield, Rivera & Crawford, Lafayette, LA, for Defendant/Appellant Cappaert Manufactured Housing, Inc.

Court composed of JIMMIE C. PETERS, MICHAEL G. SULLIVAN, and ELIZABETH A. PICKETT, Judges.

SULLIVAN, Judge.

The plaintiffs sued the manufacturer and the retailer of an allegedly defective mobile home. The manufacturer filed an exception of prematurity, contending that the plaintiffs' claims were subject to binding arbitration. The trial court overruled the exception, and the manufacturer has appealed. For the following reasons, we affirm.

Discussion of the Record

On November 11, 2002, Buster and Marilyn Rico (the Ricos) purchased a new, manufactured home built by Cappaert Manufactured Housing, Inc. (Cappaert) from Chatelain's Bayou Housing, Inc. (Chatelain's). The Ricos filed the present suit on May 24, 2004, alleging that the ceiling sheet rock had begun to sag throughout the home due to improper construction and that any repair attempts were tardy and ineffective.

On July 12, 2004, Cappaert filed an exception of prematurity, arguing that the Ricos were bound by an arbitration agreement contained in the homeowner's manual that was delivered with the home. That manual has two references to arbitration. The first page of the manual is entitled "BINDING ARBITRATION AGREEMENT" and has signature lines for the buyer, for representatives of both the retailer and the manufacturer, and for witnesses. The language of the arbitration agreement is also found on pages eight and nine of the manual, within the terms of the "ONE YEAR LIMITED WARRANTY."¹ The limited warranty provisions also require that the purchaser complete and return an "Owner Registration Card" before any warranty service can be scheduled. There is no evidence that the Ricos or any other party signed the "BINDING ARBITRATION AGREEMENT" or that the Ricos completed and returned the "Owner Registration Card," although it is undisputed that Cappaert did perform some warranty repairs on the home.

At trial of the exception, Harold Mouser, a Cappaert representative, testified that the homeowner's manual would have been located in the kitchen drawer of the home. Susan Chatelain, who sold the home to the Ricos, testified that the Ricos would not have seen a copy of the homeowner's manual until the home was delivered to them sometime after the sale. Ms. Chatelain also testified that the only document generated at the time of the sale was an "Invoice" that did not mention arbitration. According to Ms. Chatelain, arbitration was not discussed at the time of the sale, and the Ricos did not sign an arbitration agreement at that time. Ms. Chatelain also indicated that several of her other customers have refused to sign such agreements.

At the conclusion of the hearing on the exception, the trial court ruled in favor of the Ricos, finding that they did not consent to arbitration, as they were not provided with notice of the arbitration agreement until after the sale. On appeal, Cappaert argues that the trial court erred in overruling the exception of prematurity, given that the Ricos sought to enforce the provisions of the limited warranty in which the arbitration agreement was contained.

Opinion

Burden of Proof and Standard of Review

This court recently reviewed a trial court's refusal to grant an exception of prematurity that would have compelled arbitration in Abshire v. Belmont Homes, Inc., 04-1200, pp. 7-8 (La.App. 3 Cir. 3/2/05), 896 So.2d 277, 283 (citations omitted) (emphasis added), wherein we stated:

The dilatory exception of prematurity is provided for in La.Code Civ.P. art. 926(A)(1), and its function is to raise the issue that a judicial cause of action does not yet exist because of some unmet prerequisite condition. "It usually is utilized in cases where the law or a contract has provided a procedure for one aggrieved of a decision to seek relief before resorting to judicial action," and "[t]he exceptor has the initial burden of showing that an administrative remedy was available, thus making the judicial action premature." Thus, the burden is upon [the exceptor] to establish that a valid and enforceable arbitration agreement exists. In determining whether a party is bound by an arbitration agreement, we apply ordinary contract principles, and a party cannot be required to submit to arbitration a dispute that he has not agreed to submit. Whether a court should compel arbitration is a question of law. Therefore, "[a] ppellate review of questions of law is simply to determine whether the trial court was legally correct or incorrect."

Arbitration Law: State and Federal

The Louisiana Binding Arbitration Law (LBAL) is found at La.R.S. 9:4201-17. However, the arbitration agreement in the present case specifically references the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq.²

The FAA, at 9 U.S.C. § 2 (emphasis added), provides:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole of any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

As the court explained in Posadas v. The Pool Depot, Inc., 02-1819, pp. 3-4 (La.App. 1 Cir. 6/27/03), 858 So.2d 611, 613-14, writ denied, 03-2125 (La.11/7/03), 857 So.2d 502 (citations omitted) (emphasis added):

Although a state law cannot be used to invalidate an arbitration agreement [governed by the FAA] when the law applies only to arbitration agreements, a state law may be applied to invalidate an arbitration agreement if that law governs issues concerning the validity, revocability, and enforceability of contracts generally. Thus, generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening the FAA.

See also Snyder v. Belmont Homes, Inc., 04-445, p. 5 (La.App. 1 Cir. 2/16/05), 899 So.2d 57, 61, in which the court stated that "[i]n determining whether the parties agreed to arbitrate a certain matter, courts apply the contract law of the particular state that governs the agreement."

"One of the conditions of a valid contract is the consent of both parties. [La.Civ.Code art.1927.]" Rodriguez v. Ed's Mobile Homes of Bossier City, La., 04-1082, p. 3 (La.App. 3 Cir. 12/8/04), 889 So.2d 461, 464. In Rodriguez, this court found that the plaintiffs' consent to arbitration was vitiated by error, as they were under the mistaken belief that they had to sign an arbitration agreement that was not presented to them until after the terms of the sale had been agreed upon, and those terms did not include arbitration. In refusing to enforce an arbitration agreement signed under these circumstances, this court stated that "[a] party cannot, unilaterally, assign additional consideration for the perfection of a sale." Id.

In the present case, the Ricos and Chatelain's agreed to the terms of the sale on November 11, 2002, as evidenced by the "Invoice" of that date showing a price and full payment of $45,500.00. Ms. Chatelain testified that the "Invoice" did not reference an arbitration agreement, that the parties did not discuss or sign an arbitration agreement at that time, and that the Ricos would not have received the homeowner's manual, which contained the arbitration agreement, until delivery of the home sometime after the sale. Thus, as in Rodriguez, the purchasers did not receive the arbitration agreement until after the terms of the sale had been agreed upon. Unlike Rodriguez, however, there is no evidence that the Ricos ever signed such an agreement or that it was ever pointed out to them.

It is well-settled that a valid, written arbitration agreement need not be signed by the parties. Hurley v. Fox, 520 So.2d 467 (La.App. 4 Cir.1988). Absent a signature, however, "the effect or validity of the agreement may be shown by the actions and conduct of the parties." Id. at 469. Here, the trial court found that the Ricos did not consent to the arbitration agreement because they were not notified of its existence or its terms at the time of the sale. Cappaert argues, however, that the Ricos' consent is shown by their actions in seeking to enforce the written limited warranty, which contained the arbitration agreement.

Cappaert relies on two federal cases to support this argument. In Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir.1997), cert. denied, 522 U.S. 808, 118 S.Ct. 47, 139 L.Ed.2d 13 (1997), the court held that a purchaser who ordered a computer over the telephone was bound by an arbitration agreement contained in additional terms that arrived with the computer, where the purchaser kept the computer beyond thirty days as provided in those terms. The court based its decision on the "accept-or-return" offer that...