DocketNumber: No. ED 99290
Citation Numbers: 412 S.W.3d 285
Judges: Cohen, Mooney, Odenwald
Filed Date: 7/9/2013
Status: Precedential
Modified Date: 10/2/2021
Introduction
Lucas Lofts Investors LLC (Seller), Mark Cofman, Realty Exchange, Inc., and Apartment Exchange, Inc. (collectively, Defendants), along with Realtex, Inc. d/b/a Coldwell Banker Premier Group (Third-Party Defendant),
Factual and Procedural Background
In 2008, Plaintiff purchased the Units from Seller. The Units, along with approximately one hundred other residential condominium units, are located in a seven-story building at 1114 Lucas Avenue in the City of St. Louis. The Lucas Lofts condominium declaration defines “Unit” as “a physical portion of the Condominium designated for separate ownership or occupancy.” The declaration provides that the upper horizontal boundary of a Unit is “the undecorated surfaces of the ceiling facing the interior of the Unit.” The declaration defines “common elements” as “all portions of the Condominium other than the Units” and provides that the roof of the building is a common element.
The contract for Plaintiffs purchase of the Units provided:
In the event, that after Closing, any disputes or disagreements between Seller and Purchaser arise with respect to the construction of Unit [sic] sold hereunder and/or this Contract (collectively, “Disputes”), then in any such event the Disputes shall be submitted to binding arbitration for resolution and determination. All such arbitration proceedings shall be conducted in accordance with the procedures contained in the Missouri Uniform Arbitration Act, Chapter 435 RSMo. 1994, as amended, and shall be determined in accordance with the substantive law of the State of Missouri.
Realty Exchange, Inc. was the selling agent in the transaction, and Apartment Exchange, Inc. was the condominium’s management company at the time of purchase.
Plaintiff filed a petition against Defendants, whom Plaintiff described in another pleading as “Mark Cofman and his enter
Defendants moved the trial court to compel arbitration of Plaintiffs claims and stay the proceedings pending arbitration, citing the arbitration provision in the contract between Seller and Plaintiff. Defendants asserted that all of Plaintiffs claims against Defendants “rely on” the contract because: (1) Plaintiff attached the contract as an exhibit to his petition; and (2) Plaintiff asserted that he relied on Defendants’ representations when deciding to purchase the Units. Defendants also contended that because they made the alleged representations while acting as authorized agents of Seller, all Defendants were “sellers” under the contract and entitled to enforce the arbitration provision. In response, Plaintiff argued that his claims were not subject to the arbitration provision because they did not arise out of the contract and that Defendants other than Seller could not enforce the arbitration provision.
After conducting a hearing on. Defendants’ motion, the trial court found that “an agreement to arbitrate certain types of claims exists” but that Plaintiffs tort claims did not fall within the substantive scope of the arbitration agreement. The trial court also found that Plaintiff could not be compelled to arbitrate his claims against Defendants other than Seller because Plaintiff sued them in their individual capacitiés, not as agents of Seller. The trial court entered an order and judgment denying Defendants’ motion to compel arbitration. Defendants and Third-Party Defendant appeal.
Standard of Review
“When faced with a motion to compel arbitration, the motion court must determine whether a valid arbitration agreement exists and, if so, whether, the specific dispute falls within the scope of the arbitration agreement.” Nitro Distrib., Inc. v. Dunn, 194 S.W.3d 339, 345 (Mo. banc 2006). “In making these determinations, the court should apply the usual rules of state contract law and canons of contract interpretation.” Id. ‘Whether the trial court should have granted a motion to compel arbitration is a question of law that
Discussion
In their sole point on appeal, Defendants and Third-Party Defendant assert that the trial court erred in denying Defendants’ motion to compel arbitration because the contract between Seller and Plaintiff contained an enforceable arbitration provision applicable to Plaintiffs claims. In response, Plaintiff contends that: ' (1) his claims are independent torts that fall outside the scope of the arbitration clause; (2) he never agreed to arbitrate any claims against Mr. Cofman, Apartment Exchange, Inc., Realty Exchange, Inc., or Realtex, Inc.; and (3) the arbitration clause is unenforceable because the contract was procured by fraud.
The Missouri Uniform Arbitration Act
Here, Plaintiff asserted that Seller and Mr. Cofman fraudulently induced him to enter into the contract to purchase the Units. Rather than seeking rescission of the contract, Plaintiff sought actual and punitive damages. Thus, Plaintiff implicitly affirmed the contract and its arbitration clause. Accordingly, the trial court did not err in determining that a valid arbitration agreement exists between Seller and Plaintiff.
We next determine whether the trial court erred in concluding that the dispute does not fall within the scope of the arbitration agreement. See Nitro Distrib., 194 S.W.3d at 345. “Arbitration is fundamentally a matter of consent, and thus a party cannot be required to arbitrate a dispute that it has not agreed to arbitrate.” Jones v. Parodies, 380 S.W.3d 13, 17 (Mo.App. E.D.2012). Under Missouri law, arbitration proceedings are favored and encouraged to further the public policy of dispute resolution without resort to the courts. McCracken v. Green Tree Semcing, LLC, 279 S.W.3d 226, 227 (Mo.App. W.D.2009); McCarney v. Nearing, Staats, Prelogar & Jones, 866 S.W.2d 881, 887 (Mo.App. W.D.1993). However, “[p]ol-icies favoring arbitration are not enough, standing alone, to extend an arbitration agreement beyond its intended scope because arbitration is a matter of contract.” Manfredi v. Blue Cross & Blue Shield of Kansas City, 340 S.W.3d 126, 131 (Mo.App. W.D.2011) (quotation omitted).
“Whether a dispute is covered by an arbitration clause is relegated to the courts as a matter of law and is to be
“At the very least, for a tort claim to be subject to arbitration under a broad arbitration clause, it must raise some issue the resolution of which requires reference to or construction of some portion of the parties’ contract.” Nw. Chrysler-Plymouth, Inc. v. DaimlerChrysler Corp., 168 S.W.3d 693, 696 (Mo.App. E.D.2005). “Where a tort claim is independent of the contract terms and does not require reference to the underlying contract, arbitration is not compelled.” Id. “The relationship between the tort claim and the contract is not satisfied simply because the dispute would not have arisen absent the existence of the contract between the parties.” Greenwood, 895 S.W.2d at 174.
Here, the contract between Seller and Plaintiff provided: “In the event that after Closing, any disputes or disagreements between Seller and Purchaser arise with respect to the construction of Unit [sic] sold hereunder and/or this Contract (collectively, ‘Disputes’), then in any such event the Disputes shall be submitted to binding arbitration for resolution and determination.” (emphasis added.) Thus, the parties agreed to arbitrate disputes arising with respect to: (1) the construction of the Units sold to Plaintiff; and (2) the contract.
Plaintiff based his claims on his assertion that Defendants falsely represented to him that they would repair the leaking roof of the building at their expense and pay the damages Plaintiff incurred as a result of the leaks. The contract governed Plaintiffs purchase of two “Units” of the Lucas Lofts condominium. The Lucas Lofts condominium declaration defines “Unit” as “a-physical portion of the Condominium designated for separate ownership or occupancy.”' The upper horizontal boundary of a Unit is “the undecorated surfaces of the ceiling facing the interior of the Unit.” By contrast, the declaration defines “common elements” as “all portions of the Condominium other than the Units” and expressly provides that the roof of the ■ building is a common element. Therefore, Plaintiffs claims do not fall into the first category of arbitrable disputes because his claims arise out of the condition of the building’s roof rather than construction of the Units he purchased.
Plaintiff did not assert any breach of contract claims against Defendants. Instead, Plaintiff asserted tort claims of fraud, negligent misrepresentation, fraudulent inducement, and breach of the Missouri Merchandising Practices Act based on Defendants’ allegedly false representations about the building’s leaking roof. Although Plaintiff referenced the contract in his petition and attached it as an exhibit, he did not rely on any provision of the contract as a basis for liability. See Nw. Chrysler-Plymouth, 168 S.W.3d at 697.
Defendants correctly point out that a party cannot avoid the language of an arbitration provision by casting its complaint in tort. See Estate of Athon v. Conseco Fin. Servicing Corp., 88 S.W.3d 26, 30 (Mo.App. W.D.2002). However, a party’s tort claim is subject to arbitration only if resolution of the claim requires
Defendants contend that resolution of Plaintiffs tort claims requires reference to Seller’s express limited warranty, attached as an exhibit to the contract. In the warranty, Seller agreed, subject to certain limitations, to repair or replace “part or parts of the Unit made necessary due to damage as a result of defective materials or defective workmanship.” (emphasis added). The warranty further provided:
[E]xcept as expressly set forth in Section A of this Express Limited Warranty, Seller makes no warranties or representations, express or implied, concerning the condition of the Unit and the Unit is sold “as is.” Any other representations, statements or promises made by any person are unauthorized and are not binding on Seller,
(emphasis added). The warranty makes no mention of Seller’s representations or obligations with regard to the building’s roof, which is a common element separate from the Units. In addition, Plaintiff did not rely on the warranty as a basis for Defendants’ liability. Thus,, the resolution of Plaintiffs claims does not require reference to or construction of the warranty language. Moreover, the warranty provides only that representations by persons other than Seller are not binding on Seller. The warranty neither purports to exclude liability for Seller’s own representations nor prevents liability for the representations made by another person as to that person.
Defendants also assert that although Plaintiff characterized his claims as torts, all of his allegations are essentially breach of contract claims and thus disputes arising with respect to the contract. In support of this argument, Defendants cite Gregory v. Electro-Mechanical Corporation, 83 F.3d 382 (11th Cir.1996). Gregory was not decided under Missouri law and, in any event, it is not persuasive. There, the plaintiffs asserted that the defendant breached a stock purchase agreement and also committed various torts. 83 F.3d at 384. The court noted that “the complaint itself says that the facts constituting defaults under the contract are a critical part of the so-called tort claims” and held that all of the claims fell within the scope of the agreement’s arbitration clause. Id. at 384-86. By contrast, in the instant case, Plaintiff neither asserted breach of contract claims against Defendants nor alleged in his tort claims that any Defendant breached any provision of the contract.
Defendants argue that the contract’s integration clause
Finally, Defendants maintain that Plaintiff failed to properly assert any tort claims because he did not plead his fraud allegations with particularity as required by Rule 55.15 and, therefore, his claims arise out of the contract. “Assuming, without deciding,- that plaintiffs’ petition did not plead fraud with sufficient particularity, this portion of the petition would have properly been subject to a motion for a more definite statement as authorized by Rule 55.27(d).” Clark v. Olson, 726 S.W.2d 718, 719 (Mo. banc 1987). “By failing to make such a motion, defendants are deemed, pursuant to Rule 55.27(f), to have waived any objection as to the particularity of the averments of fraud.” Id. Defendants neither filed a motion for a more definite statement based on Plaintiffs alleged failure to plead fraud with sufficient particularity nor presented this argument to the trial court in support of their motion to compel arbitration. Accordingly, we decline to consider this argument.
Conclusion
The judgment of the trial court is affirmed.
. In his petition, Plaintiff did not assert claims against Realtex, Inc. Realtex, Inc. became a third-party defendant after defendant Lucas Lofts Condominium Association asserted third-party claims against it. Although Realtex, Inc. is a named appellant, it was not a party to the motion to compel arbitration. Lucas Lofts Condominium Association is not a party to this appeal.
. Defendants titled their motion a "motion to dismiss or in the alternative stay this action and compel arbitration” and, in addition to their argument for arbitration, asserted multiple grounds for dismissal. However, Defendants alleged that an arbitrator must adjudicate their dismissal arguments and requested that the trial court "remand this matter for arbitration to address the ... grounds for dismissal.” The trial court's judgment does not mention Defendants’ dismissal arguments, and Defendants' point on appeal solely concerns the trial court’s refusal to compel arbitration. Accordingly, we refer to Defen-, dants' motion as the "motion to compel arbitration” and do not address their dismissal arguments.
. Pursuant to section 435.440, the denial of a motion to compel arbitration is appealable. Jones v. Paradies, 380 S.W.3d 13, 15 n. 1 (Mo.App. E.D.2012).
. The parties do not dispute that Missouri’s Uniform Arbitration Act, sections 435.350-435.470, applies to this case.
. All statutory references are to RSMo 2Ó00 as supplemented unless otherwise indicated.
. Pursuant to several different provisions in the contract and its addenda, Seller and Plaintiff agreed that the contract constituted the, entire agreement between them and that "there are no agreements or representations except those expressly set forth herein.” The contract also provided: "The parties agree that there has been no representation or in
. Defendants also argue that the contract entitles Defendants other than Seller to compel arbitration because: (1) Plaintiff's claims concern the non-signatory Defendants’ actions in their role as "legal representatives" of Seller; and (2) Plaintiff’s claims against the non-signatory Defendants arise solely out of the contract, but even if some are true tort claims, they are inextricably intertwined with the breach of contract claims. Given our conclusion that Plaintiff's claims do not fall within the scope of the arbitration agreement between Plaintiff and Seller, we do not address these arguments.