McMurray Contracting, LLC v. Hardy

1

McMurray Contracting, LLC v. Kenneth Hardy and Helen Hardy

No. SC-2023-0287

Supreme Court of Alabama

November 3, 2023

Appeal from Baldwin Circuit Court (CV-22-901301)

MENDHEIM, JUSTICE.

McMurray Contracting, LLC ("McMurray"), appeals from the Baldwin Circuit Court's order denying its second motion to compel arbitration of this action commenced by Kenneth Hardy and his wife Helen Hardy. We dismiss the appeal.

I. Facts

The Hardys commenced this action on December 6, 2022, by filing a complaint against McMurray in the Baldwin Circuit Court. The Hardys alleged that on September 16, 2020, their house was damaged by Hurricane Sally and that, in October of the same year, they "retained" McMurray "to provide restoration work" to their house. The Hardys specifically alleged that McMurray "did not complete all restoration work in a good and workmanlike manner, and has refused to correct numerous deficiencies through [the Hardys'] property," and that McMurray "performed work and charged for materials that were never approved." The Hardys asserted claims alleging breach of contract, breach of warranty, negligence, and a violation of the Alabama Deceptive Trade Practices Act, Ala Code 1975, § 8-19-1 et seq. The Hardys' original complaint did not request a jury trial.

On January 31, 2023, McMurray filed a "Motion to Dismiss" in which it asserted:

"3. The Contract at issue requires that disputes between the parties be resolved 'under the Construction Mediation Rules of the American Arbitration Association' within 30 days of service of a written demand for mediation. The Contract further states that if 'the mediation does not result in settlement of the disputes, then any unresolved controversy or claim arising or relating to this contract or breach thereof shall be settled by arbitration administered by the American Arbitration Association....'

"4. [The Hardys] have never made a demand to [McMurray] for mediation and[,] by filing [their] Complaint with this Court, have failed to abide by the Arbitration clause of the Contract [they] allege[] has been breached.

"5. The Contract that [the Hardys] allege has been breached requires that this matter be mediated before the American Arbitration Association[;] therefore, the [Hardys'] Complaint is due to be dismissed or, in the alternative, the parties should be ordered to arbitration before the American Arbitration Association, as required by the Contract.

"Wherefore, premises considered, [McMurray] prays that the [Hardys'] Complaint will be dismissed or in the alternative that the parties be ordered to arbitration pursuant to the terms of the attached Contract."

McMurray attached as an exhibit to its motion to dismiss/compel arbitration a copy of the contract that it asserted required the parties to submit disputes to mediation and then to arbitration. That contract was titled "Authorization Agreement," and it provided that it was a contract between McMurray and Kenneth Hardy. The Authorization Agreement stated that the "Contracted Service" was for "Mitigation" and "Restoration Work." The Authorization Agreement primarily purported to give McMurray the authority to work with the Hardys' homeowners' insurer on the claim to repair their house by allowing McMurray to be "a payee on all drafts issued for the repairs of this claim" and to be "[t]he main contact for the property repair process." Additionally, the Authorization Agreement contained the following paragraph:

"Except as to the collection of delinquent payments, any controversy, claim, defense of counterclaim arising out of or relating to this contract or breach thereof, shall be settled by mediation under the Construction Industry Mediation Rules of the American Arbitration Association. If within 30 days after service of a written demand for mediation, the mediation does not result in settlement of the dispute, then any unresolved controversy or claim arising or relating to this contract or breach thereof shall be settled by arbitration administered by the American Arbitration Association in accordance with its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof."

McMurray refers to that paragraph as "the arbitration provision," and, for ease of reference, we will do so as well.

On February 8, 2023, the circuit court entered an order that provided: "Motion to Dismiss pursuant to Rule 12(b)[, Ala. R. Civ. P.,] filed by McMurray Contracting, LLC, is hereby denied. Motion to Compel Arbitration is denied."^[1]

On February 27, 2023, McMurray filed an answer to the Hardys' complaint. McMurray's first affirmative defense in that answer asserted that, "[p]ursuant to this contract [entered into by the parties,] all claims arising from the subject restoration/construction work are subject to a binding arbitration agreement." The answer then quoted the arbitration provision in the Authorization Agreement, and it stated: "This case is an arbitrable dispute and thus should be sent to arbitration to be administered by the American Arbitration Association in accordance with the Construction Industry Arbitration Rules."

On March 1, 2023, the Hardys filed their "First Amended Complaint." In all respects, the Hardys' amended complaint was identical to their original complaint except that, at the conclusion of the amended complaint, the Hardys included a demand for a jury trial.

In response to the amended complaint, on March 9, 2023, McMurray filed a "Motion to Compel Arbitration and Stay All Proceedings." McMurray's second motion to compel arbitration was much more detailed than its first motion to compel arbitration, and McMurray attached three exhibits to that motion: a copy of the Authorization Agreement; an affidavit from Ben McMurray, the owner of McMurray; and two invoices for construction materials McMurray had ordered from different vendors for use in the restoration of the Hardys' house.

Also on March 9, 2023, the circuit court entered an order stating: "Motion to Compel filed by McMurray Contracting, LLC is hereby Pending. Opposing party is granted 7 days to file a response. Response shall be submitted as a supplement to the pending motion." (Emphasis in original.)

On March 16, 2023, the Hardys filed a response in opposition to McMurray's second motion to compel arbitration that they titled "Response to [McMurray's] Improper Second Motion to Compel Arbitration." In that response, the Hardys argued, among other things, that the circuit court had already decided the issue whether arbitration was appropriate and that the previous order denying McMurray's first motion seeking to compel arbitration was "the law of the case."

On March 20, 2023, the circuit court entered an order denying McMurray's second motion to compel arbitration. That order did not provide reasons for the circuit court's decision. On April 4, 2023, McMurray filed an answer to the Hardys' amended complaint. On April 25, 2023, McMurray appealed.

II. Standard of Review

This Court's standard of review of an order denying a motion to compel arbitration is well settled:

"'"This Court reviews de novo the denial of a motion to compel arbitration. Parkway Dodge, Inc. v. Yarbrough, 779 So.2d 1205 (Ala. 2000). A motion to compel arbitration is analogous to a motion for a summary judgment. TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala. 1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that the contract evidences a transaction affecting interstate commerce. Id. '[A]fter a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question.' Jim Burke Automotive, Inc. v. Beavers, 674 So.2d 1260, 1265 n.1 (Ala. 1995) (opinion on application for rehearing)."'"

Hoover Gen. Contractors-Homewood, Inc. v. Key, 201 So.3d 550, 552 (Ala. 2016) (quoting Elizabeth Homes, L.L.C. v. Gantt, 882 So.2d 313, 315 (Ala. 2003), quoting in turn Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala. 2000)).

III. Analysis

Before we may address any of McMurray's arguments as to why it believes that the circuit court erred in denying its second motion to compel arbitration, we must confront an issue that implicates this Court's appellate jurisdiction. Specifically, the Hardys argue that McMurray's notice of appeal was not timely filed. The Hardys observe that the circuit court denied McMurray's first motion to compel arbitration on February 8, 2023, and that, under Rule 4(d), Ala. R. App. P., that order was a final, appealable judgment.^[2] However, instead of appealing the circuit court's February 8, 2023, order, McMurray chose to file an answer to the Hardys' original complaint. The Hardys subsequently filed an amended complaint, and McMurray then filed its second motion to compel arbitration on March 9, 2023. On March 20, 2023, the circuit court denied McMurray's second motion to compel arbitration. McMurray then filed an answer to the Hardys' amended complaint. Finally, on April 25, 2023, McMurray appealed from the circuit court's order denying its second motion to compel arbitration. The Hardys note that the basis for McMurray's second motion to compel arbitration was the same as the basis for its first motion: the arbitration provision in the Authorization Agreement. The Hardys contend that McMurray's appeal was well outside the 42-day filing period provided in Rule 4(d) for appealing the circuit court's February 8, 2023, order, and so, they say, McMurray's appeal must be dismissed.

In response, McMurray argues that its appeal...