Breaking and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.


Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:David and Debra Loudermilk purchased a house from appellants Grand Homes 96 LP and Grand Homes Inc. In connection with the purchase, the Loudermilks signed the purchase agreement submitted to them by appellants. The agreement contained an arbitration clause. Appellants accepted the agreement and subsequently the Loudermilks and appellants, along with Home Owners Management Enterprises Inc., doing business as Home of Texas (HOME) and Warranty Underwriters Insurance Company (WUIC), all executed a limited warranty agreement. The warranty agreement also contained an arbitration clause. About a year after purchasing the home, the Loudermilks sent a letter to appellants identifying several items that needed repair, including cracks in the grout in the kitchen and around the fireplace, cracks in most rooms of the house, a severe crack at the window in the master bedroom and cracked bricks on the exterior of the home. When appellants allegedly failed to make the requested repairs, the Loudermilks filed suit on Aug. 29, 2003, in district court in Denton County, alleging negligence in the design and construction of their home’s foundation. Approximately three months after filing their original petition, the Loudermilks filed an amended petition asserting additional causes of action for malice, breach of contract and warranty; violations of the Deceptive Trade Practices Act and fraud against appellants; adding HOME and WUIC as defendants; and alleging a cause of action for negligence against HOME and WUIC. The Loudermilks’ amended pleading also sought punitive damages, mental anguish damages, attorneys’ fees, rescission of the contract for sale of the property, and prejudgment and postjudgment interest. HOME and WUIC incorporated a plea in abatement into their original answer, notifying the trial court that “HOME and WUIC are entitled to abate this matter for binding arbitration.” The basis for arbitration asserted by HOME and WUIC was that “[i]n accordance with Plaintiff’s contract, all disputes relating to the home or warranty must be submitted to binding arbitration.” Approximately six months after filing their original petition, the Loudermilks again filed an amended pleading, this time alleging only causes of action for breach of warranty and fraud against appellants and alleging only negligence and violations of the DTPA and the insurance code against HOME and WUIC. HOME and WUIC filed their motion to compel arbitration on April 26, 2004. At the hearing on the motion to compel, HOME and WUIC’s attorney requested that the trial court refer the Loudermilks’ claims against HOME and WUIC to binding arbitration and then abate these same claims until the Loudermilks’ claims against appellants were resolved. The Loudermilks’ attorney, however, pointed out that appellants were parties to the warranty agreement and argued that if the trial court compelled arbitration of the Loudermilks’ claims against HOME and WUIC, it should also compel arbitration of the Loudermilks’ claims against appellants. The trial court then, over appellants’ objections, ordered HOME, WUIC, the Loudermilks and appellants to arbitrate. Eventually, the parties went to arbitration and the arbitrator issued a final arbitration award. The arbitrator rescinded the sale of the home and ordered appellants to purchase the Loudermilks’ home for $292,000 plus closing costs. The arbitrator also ordered appellants to pay the Loudermilks’ attorney’s fees, expert fees, litigation fees and post-award interest. The award stated that “[t]he Loudermilks shall recover no damages from HOME/WUIC.” The Loudermilks filed a motion to confirm the arbitrator’s award, and appellants filed objections to the confirmation of the arbitrator’s award, along with motions to vacate and to modify the award. The trial court held a hearing and confirmed the arbitrator’s award. At appellants’ request, the trial court entered findings of fact and conclusions of law. An appeal followed. HOLDING:Affirmed. In finding that the trial court had authority to compel arbitration, the 2nd Court of Appeals in Fort Worth stated it was not aware of any authority for the proposition that the trial court somehow lacked jurisdiction to compel a party in a pending suit to arbitration when that party executed multiple arbitration agreements. Because the trial court’s order compelling arbitration may be upheld under either of the arbitration provisions signed by appellants and the Loudermilks, the 2nd Court held that appellants’ complaints that the Loudermilks failed to establish that they had met the conditions precedent to arbitration under the warranty agreement were moot. Procedural questions, including whether procedures have been followed or excused and whether an unexcused failure to follow such procedures allows a party to avoid the duty to arbitrate, are left for the arbitrator to decide, the court stated. The court also declined to find that the Loudermilks waived their right to arbitration by initially filing suit. Even if the Loudermilks’ actions, the court stated, could be construed as having substantially invoked the judicial process, appellants cannot meet the heavy burden of showing that they were prejudiced by the Loudermilks’ actions. The suit was less than eight months old and very little discovery had occurred, the court noted. Appellants, the court stated, also contended that the arbitrator exceeded her authority by granting remedies outside the warranty’s scope, manifestly disregarding the law of limitations and miscalculating the rescission damages. But the court held that the lack of a record of the arbitration proceedings was fatal to those claims. OPINION:Walker, J.; Livingston, Walker and McCoy, J.J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.