T.R. Mills Contractors v. Wrh Enterprises

• Decision Date: 13 February 2002
• Citation: 93 S.W.3d 861
• Parties: T.R. MILLS CONTRACTORS, INC. v. WRH ENTERPRISES, LLC, et al.
• Court: Tennessee Court of Appeals

Page 861

93 S.W.3d 861

T.R. MILLS CONTRACTORS, INC. v. WRH ENTERPRISES, LLC, et al.

Court of Appeals of Tennessee, at Jackson.

February 13, 2002.

Application for Permission to Appeal Denied by Supreme Court September 23, 2002.

COPYRIGHT MATERIAL OMITTED

Ted M. Hayden, Memphis, Tennessee, for the appellant, T.R. Mills Contractors, Inc.

William M. Jeter, Memphis, Tennessee, for the appellees, WRH Enterprises, LLC and North South, LLC.

DAVID R. FARMER, J., delivered the opinion of the court, in which W. FRANK CRAWFORD, P.J., W.S., and HOLLY K. LILLARD, J., joined.

OPINION

This appeal raises an issue of first impression in Tennessee, requiring us to address whether an arbitration clause in a written but unsigned contract is enforceable under Tennessee's version of the Uniform Arbitration Act. We join the majority of jurisdictions which have adopted the Act in holding that an arbitration clause contained in a written contract may be enforced absent a signature where the contract is otherwise found to be binding on the parties.

This appeal arises from an agreement between T.R. Mills Contractors, Inc. ("Mills") and North South, LLC and WRH Enterprises, LLC (WRH) to develop the Cordova Ridge Subdivision. The basic facts are undisputed. In February of 1999, Mr. William Hyneman, the managing partner of North South, contacted Mr. Tommy Mills, president of Mills Contractors, regarding work to be done on the project. After preliminary discussions and the submission of line-item prices by Mills, Mills submitted a standard American Institute of Architects A101 Form Contract ("AIA contract") to Mr. Hyneman in late February or early March. The AIA form contract incorporates by reference the 1987 edition of AIA document A201 General Conditions of the Contract for Construction, which includes a clause requiring the parties to submit disputes to arbitration. At the time Mills submitted the contract, Mr. Hyneman was involved as a partner in North South with Crossman Communities. The partners subsequently dissolved North South, and Mr. Hyneman developed the project independently as WRH Enterprises. The AIA contract was signed by Mr. Mills, but neither Mr. Hyneman nor any representative of either North South or WRH signed the agreement.

On September 26, 2000, Mills filed a complaint in Shelby County Chancery Court to enforce his mechanics' and materialmen's lien and for other relief against WRH and North South.¹ On September 27, 2000, Mills moved to stay litigation for arbitration pursuant to the A201 General Conditions incorporated by reference into the AIA contract. WRH moved to preclude arbitration on January 30, 2001. After hearing the matter on February 12, 2001, the chancellor denied Mills' motion to stay for arbitration. The chancellor found, in pertinent part, "that there is no binding arbitration required in this case, in that there is not an executed contract requiring arbitration, and while certain portions of the contract have been performed, this agreement between the parties is valid only to the extent of the portions of the contract that were actually performed." This appeal followed.

Standard of Review

In a nonjury trial, our standard of review is de novo. See Wright v. City of Knoxville, 898 S.W.2d 177, 181 (Tenn. 1995). There is a presumption of correctness as to the trial court's findings of fact, unless the preponderance of the evidence is otherwise. Tenn. R.App. P. 13(d). With respect to the trial court's legal conclusions, however, there is no presumption of correctness. See Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn.2000); Tenn. R.App. P. 13(d).

Issue

The issue presented by the parties is whether the trial court erred in denying Mills' motion to stay litigation for arbitration. This requires us to determine, as an initial matter, whether this appeal is permissible absent a final judgment on the merits. If it is so permissible, we must then determine whether the parties were in fact operating under the AIA contract and, if they were, whether an arbitration clause contained in the A201 General Conditions, and incorporated by reference into the written AIA contract, is enforceable notwithstanding the fact that no representative of either North South or WRH signed the contract.

Permissibility of Appeal

Generally, an appeal to this Court is permissible only from a final judgment adjudicating all the claims, rights and liabilities of all parties. Tenn. R.App. P. 3(a). The Uniform Arbitration Act ("UAA") as adopted in Tennessee and codified at sections 29-5-301 to -320 of the Tennessee Code, however, creates limited exceptions to this rule. Section 29-5-319 of the Tennessee Code provides:

(a) An appeal may be taken from:

(1) An order denying an application to compel arbitration made under § 29-5303;

(2) An order granting an application to stay arbitration made under § 29-5303(b);

(b) The appeal shall be taken in the

manner and to the same extent as from

orders or judgments in a civil action. An order to compel arbitration, however, is not appealable under the statute. Peters v. Commonwealth Assoc., No. 03A01-9508-CV-00295, 1996 WL 93768, at *2 (Tenn.Ct.App. March 5, 1996) (no perm. app. filed).

Mills' motion in the court below was titled "Motion to Stay For Arbitration." In the motion, Mills requested that the court below "enter an Order staying all proceedings ... so that all disputes from which the lawsuit arises may be determined in arbitration...." When construing a motion, courts looks to the substance rather than the form of the motion. Tennessee Farmers Mut. Ins. Co. v. Farmer, 970 S.W.2d 453, 455 (Tenn 1998). This approach gives the broadest effect to the underlying policy of the Tennessee Rules of Appellate Procedure that mere technicality of form be disregarded in order to assure a just and speedy determination of proceedings on the merits. See Tenn. R.App. P. 1, Advisory Commission Comment. A motion to stay litigation for arbitration, however, is not substantively identical to a motion to compel arbitration. See Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 27, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). An order granting a stay of litigation compels the parties to do nothing. Id. As is the case here, if the party opposing arbitration is the party from whom payment or performance is demanded, an order granting a stay allows that party to withhold performance while refusing to arbitrate. Id. The party seeking performance has no way to proceed other than to return to the court seeking an order to compel arbitration. Id.

Paragraph five of Mills' motion to stay requests the court to enter an order compelling arbitration subject to the arbitration provision of the contract and pursuant to section 29-5-303(d) of the Tennessee Code. Reading the motion as a whole, however, we will consider it a motion to stay litigation and compel arbitration. As such, the order denying this motion is appealable under section 29-5-319 of the Tennessee Code.²

Enforceability of the AIA Contract

It is well established in Tennessee that, in order to be enforceable, a contract must represent mutual assent to its terms, be supported by sufficient consideration, be free from fraud and undue influence, be sufficiently definite, and must not be contrary to public policy. Johnson v. Central Nat'l Ins. Co., 210 Tenn. 24, 356 S.W.2d 277, 281 (1961). Such a contract can be expressed or implied, written or oral. Id. A written contract does not have to be signed to be binding on the parties. See Remco Equip. Sales, Inc. v. Manz, 952 S.W.2d 437, 439 (Tenn.App.1997). Similarly when an agreement is reduced to writing but is signed by only one of the parties, it is binding on the non-signing party if that party has manifested consent to its terms. Southern Motor Car Co. v. Talliaferro, 14 Tenn.App. 276, 1931 WL 1595, at *3, (Tenn.Ct.App. March 5, 1932) (cert.denied). What is critical is mutual assent to be bound. In determining mutuality of assent, courts use an objective standard based on the manifestations of the parties. 11 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 30:6 (4th ed.1999). Assent can be established by the course of dealing of the parties. Remco Equip. Sales, 952 S.W.2d at 439. In determining whether a contract exists, the court also can consider relevant evidence such as whether the parties performed under its terms. 11 Williston & Lord, § 30:3. When a party who has not signed a contract has nonetheless manifested consent by performing under it and making payments conforming to its terms, that party is estopped from denying that the parties had a meeting of the minds sufficient to bind them to the contract. R.J. Betterton Management Serv., Inc. v. Whittemore, 769 S.W.2d 214, 216 (Tenn.Ct. App.1989).

WRH asserts that the trial court found that there was no binding written contract between North South/WRH and Mills. We disagree with WRH's interpretation of this portion of the trial court's order. We interpret the trial court's order to state, in essence, that the parties did in fact perform under the written AIA contract, that the contract was valid insofar as it was performed, but that the arbitration clause was not binding because the contract was unsigned. Regardless of which interpretation of the trial court's order is correct, after reviewing the record, including testimony of Mr. Mills, Mr. Hyneman, and members of their staffs, we find that the evidence preponderates in support of a finding that the parties performed under the AIA contract and manifested assent to its terms.

It is undisputed that Mills signed and delivered the AIA contract to Mr. Hyneman in response to Mr. Hyneman's request for a bid on the Cordova Ridge project, but that Mr. Hyneman never signed the contract. It is also undisputed that Mills previously had worked for Mr. Hyneman on other projects, that written AIA contracts also were submitted for these projects, and that these contracts were...