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Brown v. Centex Homes7/19/2005
Centex Homes ("Centex") and Mary Kathryn Kroening ("Kroening") (collectively, "defendants") appeal order entered 11 May 2004 granting Centex's motion to stay and compel arbitration and denying Kroening's motion to stay and compel arbitration. We reverse and remand.
I. Background
On 21 January 2002, James S. Brown, Jr., and Jacky A. Rosati ("plaintiffs") met with Kroening at a sales office owned by Centex located in the Becket's Ridge Subdivision in Hillsborough, North Carolina. Plaintiffs looked at a home located adjacent to a wooded piece of property. Plaintiffs asked Kroening about future plans for the adjacent land. She replied that there were no current plans, but if the property were developed, the construction would be residential. Plaintiffs executed a contract to purchase the home (the "Contract") and paid Centex a deposit. At this time, the Town of Hillsborough had approved construction of a shopping center anchored by a Wal-Mart store on the adjacent wooded tract.
On 22 October 2003, plaintiffs filed a complaint against defendants alleging fraud and unfair and deceptive trade practices and requesting punitive damages. Defendants filed: (1) a motion to stay and compel arbitration; (2) a motion to dismiss under N.C. Gen. Stat. ยง 1A-1, Rule 12(b); and (3) an answer and affirmative defenses. Defendants' motion to stay and compel arbitration was heard in Orange County Superior Court on 3 May 2004. The trial court considered the pleadings, motions, and affidavits submitted by the parties and heard arguments by counsel. On 11 May 2004, the trial court entered an order granting Centex's motion to stay and compel arbitration and denying Kroening's motion to stay and compel arbitration. Defendants Centex and Kroening appeal.
II. Issue
The issue on appeal is whether the arbitration clause included in the Contract between plaintiffs and Centex extends to Kroening.
III. Interlocutory Appeal
This Court has repeatedly held that "an order denying arbitration, although interlocutory, is immediately appealable because it involves a substantial right which might be lost if appeal is delayed." Prime South Homes v. Byrd, 102 N.C. App. 255, 258, 401 S.E.2d 822, 825 (1991) (citations omitted). Pursuant to Rule 28(b)(4) of the North Carolina Rules of Appellate Procedure, defendants properly recognized the interlocutory nature of their appeal and argued the grounds for immediate appellate review. N.C.R. App. P. 28(b)(4) (2004); see also Chicora Country Club, Inc., et al. v. Town of Erwin, 128 N.C. App. 101, 105, 493 S.E.2d 797, 800 (1997).
IV. Standard of Review
This Court recently outlined the appropriate standard of review for considering the applicability of an arbitration provision:
"The question of whether a dispute is subject to arbitration is an issue for judicial determination. This determination involves a two-step analysis requiring the trial court to ascertain both (1) whether the parties had a valid agreement to arbitrate, and also (2) whether the specific dispute falls within the substantive scope of that agreement.
A dispute can only be settled by arbitration if a valid arbitration agreement exists. The party seeking arbitration must show that the parties mutually agreed to arbitrate their disputes. The trial court's findings regarding the existence of an arbitration agreement are conclusive on appeal wheresupported by competent evidence, even where the evidence might have supported findings to the contrary. However, the trial court's determination of whether a dispute is subject to arbitration is a conclusion of law that is reviewable de novo on appeal."
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