Jenkins v. Atelier Homes Inc.

62 So.3d 504

Jennifer Pera JENKINS and John H. Jenkins

v.ATELIER HOMES, INC., and Frank Wallace.

1081628.

Supreme Court of Alabama.

Sept. 30, 2010.Rehearing Denied Nov. 19, 2010.

Melissa D. Endsley and Thomas S. McGrath of McGrath Law Firm, Huntsville, for appellants Jennifer Pera Jenkins and John H. Jenkins.Robert V. Wood, Jr., and Matthew T. Dukes of Wilmer & Lee, P.A., Huntsville, for appellees Atelier Homes, Inc., and Frank Wallace.John J. Callahan, Jr., and Lisa M. McCormack of Richardson Callahan & Frederick LLP, Huntsville, for Juan J. Barcenas d/b/a Morro's Masonry.SMITH, Justice.

Jennifer Pera Jenkins and John H. Jenkins appeal from an order of the Madison Circuit Court granting the motion to compel arbitration filed by Atelier Homes, Inc., and Frank Wallace. We reverse and remand.

I. Facts and Procedural History

On May 4, 2009, the Jenkinses filed a complaint against Atelier Homes, Inc.; Frank Wallace (“Wallace”); Green Mountain Construction, Inc.; Frakes Insulation & Fireplaces, Inc.; and Juan J. Barcenas d/b/a Morro's Masonry (“Barcenas”). The complaint alleged, in pertinent part, that, in September 2005, Atelier Homes, Inc., “by and through its designated representative, Wallace, obtained a building permit from the City of Huntsville ... to construct a residence ... for the [Jenkinses]”; that Atelier Homes, Inc., and Wallace “verbally represented to the [Jenkinses] that this residence was constructed to meet or exceed all of the best standards for residential construction in Huntsville”; that Atelier Homes, Inc., and Wallace “represented to the [Jenkinses] that everything in the [residence] would meet or exceed the building code requirements of the City of Huntsville before the [residence] was finished”; and that “the installation of the block foundation and brick veneer exterior was subcontracted by Atelier Homes[, Inc.,] and Wallace to [Barcenas].”

On May 1, 2006, the Jenkinses closed on the purchase of the residence. Shortly after moving into the residence, the Jenkinses noticed “water leaking through the vent for the range in the kitchen.” According to the complaint, a licensed structural engineer examined the residence and discovered numerous “defects and building code violations.” Thereafter, the Jenkinses presented two separate written requests to Atelier Homes, Inc., and Wallace requesting that they “cure the defects and deficiencies” in the residence; however, the Jenkinses claim, Atelier Homes, Inc., and Wallace failed to respond to either of the requests for repairs.

The complaint stated the following counts against Atelier Homes, Inc., and Wallace: suppression; reckless misrepresentation; fraudulent misrepresentation; innocent misrepresentation; negligence; wantonness; breach of the implied warranty of habitability; breach of the implied warranty of good workmanship; and violations of the Deceptive Trade Practices Act, § 8–19–1 et seq., Ala.Code 1975.

On June 15, 2009, Atelier Homes, Inc., and Wallace moved the trial court to compel arbitration of the Jenkinses' claims against them and to stay the trial court proceedings pending arbitration; defendants Green Mountain Construction, Inc., Frakes Insulation & Fireplaces, Inc., and Barcenas neither joined Atelier Homes, Inc., and Wallace's motion to compel arbitration nor did they, individually or collectively, file separate motions to compel arbitration. In their motion, Atelier Homes, Inc., and Wallace contended that the Jenkinses “entered into a contract for the construction of a residence in Madison County” and that, “[i]n the construction contract, the Jenkins[es] agreed to arbitrate any disputes between them and [Atelier Homes, Inc., and Wallace].”

Atelier Homes, Inc., and Wallace attached certain exhibits to their motion, including the affidavit of Adam Wallace. In his affidavit, Adam Wallace testified, in pertinent part:

“2. I am the Operations Manager of Atelier Homes, Inc. and Atelier Custom Homes, L.L.C. (collectively ‘Atelier Homes'), and I am fully authorized to make this affidavit on behalf of these entities.

“3. In my present position, I am a custodian of Atelier Homes' books and records concerning the business dealings between Atelier Custom Homes, L.L.C. and John H. Jenkins and Jennifer Pera Jenkins (the ‘Jenkins'), and the transactions alleged as the basis of the above-styled action. I have reviewed said business books and records.

“4. Said books and records of Atelier Custom Homes, L.L.C. were made in the ordinary course of the business of, and it was the regular course of said business to make such books and records. Said books and records were made at the time of the transaction, occurrence or event referred to therein or were made within a reasonable time thereafter, and said books and records are kept under the care, supervision, and/or control of me and other employees or agents of Atelier Custom Homes, L.L.C.

“5. I am competent to testify to the matters set forth in this affidavit, which are based upon my review of said books and records of Atelier Custom Homes, L.L.C. and/or upon my own personal knowledge.

“6. The Jenkins filed the present action seeking to recover damages related to the construction of a residence in Madison County, Alabama. (See generally Compl.).

“7. The contract for construction of the residence between Atelier Custom Homes, L.L.C. and the Jenkins provided that Atelier Custom Homes, L.L.C. would construct a residence, subject to certain terms and conditions. A true and correct copy of the unexecuted Contractor Agreement (the ‘Contract’) is attached hereto as Exhibit 1. The executed Contract is currently lost. I have conducted a diligent search at every place the executed Contract would likely be found and have not located the Contract to date. Atelier Homes has not intentionally or negligently lost or destroyed the Contract. A true and correct copy of the executed Contract was provided to the Jenkins and should be in their custody or control. I will continue to diligently search for the executed Contract and, if located, will supplement this record with the document.

“8. As part of the Contract, the Jenkins entered into an arbitration agreement. The arbitration clause present in the Contract provides ‘[a]ll disputes hereunder shall be resolved by binding arbitration in accordance with rules of the American Arbitration Association.’ (See Contract at Article 5, ¶ 9).

“9. The Jenkins failed to submit this dispute to arbitration prior to filing suit, notwithstanding the arbitration clause.

“10. The Contract contains a written agreement to arbitrate and the Contract involved interstate commerce. Certain goods, funds, and documents crossed state lines in connection with the performance of the contract. For example, payments remitted by the Jenkins to Atelier Homes and by Atelier Homes to various vendors, suppliers, retailers, or subcontractors were made and applied using the interstate banking network. In addition, the transaction involved interstate commerce because Atelier Custom Homes, L.L.C. and/or other persons or entities purchased substantial quantities of goods used in the construction of the house that have moved in interstate commerce.”

(Emphasis added.)

Atelier Homes, Inc., and Wallace also attached to their motion a copy of the “unexecuted” contract, which is labeled as “Contractor Agreement” (“the contract”). Article 5, paragraph 9, of the contract (“the arbitration clause”) provides: “All disputes hereunder shall be resolved by binding arbitration in accordance with rules of the American Arbitration Association.”

After the Jenkinses filed a response to the motion to compel arbitration, the trial court, on July 22, 2009, entered an order compelling arbitration of the Jenkinses' claims against Atelier Homes, Inc., and Wallace and staying the trial court proceedings pending resolution of the arbitration proceeding. ¹ On August 11, 2009, the Jenkinses filed a “motion to reconsider.” It appears from the language of the motion to reconsider that the Jenkinses believed the trial court's July 22, 2009, order compelled arbitration of their claims against all the defendants; specifically, the Jenkinses argued that

“[Barcenas], Frakes Insulation & Fireplaces, Inc. and Green Mountain Construction, Inc. are not parties to the alleged contract before the Court and they have not filed a Motion to Compel Arbitration in this matter. The [Jenkinses] have alleged direct claims against these contractors and these parties have not moved to compel arbitration. Therefore, it is error for the Court to unilaterally compel arbitration of the claims against these Defendants.”

On August 18, 2009, Barcenas filed a document entitled “opposition to plaintiffs' motion to reconsider order compelling arbitration,” in which he asserted that the trial court should deny the Jenkinses' motion to reconsider. Additionally, Barcenas stated:

“[The Jenkinses] assert that Barcenas did not previously formally file a Motion to Compel arbitration of this matter. Therefore, let this Response in Opposition to the [Jenkinses'] Motion to Reconsider suffice [the Jenkinses'] request for such formality.”

On August 20, 2009, the trial court entered an order “reaffirm[ing] its Order of July 22, 2009.” In that order, the trial court stated, among other things:

“[T]his Court entered an Order on June 16, 2009, wherein the [Jenkinses] were ordered to respond in writing to the motion of the Defendants, Atelier Homes [, Inc.,] and Frank Wallace, concerning a motion to compel arbitration and to stay proceedings in this matter. Any opposition filed by the [Jenkinses] would then result in the Defendants (meaning Atelier Homes, Inc. and Frank Wallace) being able to supply their own responsive brief and supporting authorities to the Court. The [Jenkinses] timely filed an objection to the motion to compel arbitration, but the Court later entered an Order on July 22, 2009, compelling the request for arbitration as submitted...