Elliott v. KB Home North Carolina, Inc.

752 S.E.2d 694, 231 N.C. App. 332, 2013 WL 6623225, 2013 N.C. App. LEXIS 1304
CourtCourt of Appeals of North Carolina
DecidedDecember 17, 2013
DocketNo. COA13-352
StatusPublished
Cited by10 cases

This text of 752 S.E.2d 694 (Elliott v. KB Home North Carolina, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elliott v. KB Home North Carolina, Inc., 752 S.E.2d 694, 231 N.C. App. 332, 2013 WL 6623225, 2013 N.C. App. LEXIS 1304 (N.C. Ct. App. 2013).

Opinion

McGEE, Judge.

KB Home Raleigh-Durham, Inc. (“Defendant”) is a general contractor in the business of building homes. Defendant has contracted with many people over the years to build homes, including Mark Elliott, Tor Gabrielson, Michelle Gabrielson, Michihiro Kashima, and Yoko Kashima (“Plaintiffs”). According to Defendant, each homeowner who purchased a home directly from Defendant “entered into two separate written contracts with [Defendant]: a New Home Purchase Agreement . . . and a New Home Limited Warranty Agreement^]” Defendant alleged that both of these agreements included enforceable arbitration clauses.

Plaintiffs filed a class action complaint, “on behalf of themselves and all other[s] ... similarly situated,” against Defendant and KB Home North Carolina, Inc. on 5 December 2008, alleging breach of contract, breach of express warranties, breach of implied warranties, negligence, negligence per se, unfair and deceptive trade practices, and negligent misrepresentation. Plaintiffs’ complaint was based upon their contentions that their homes, and those of the purported class members, were [334]*334improperly constructed in a manner allowing water and moisture to penetrate the exteriors of the houses, causing damage. Specifically, Plaintiffs alleged that the HardiPlank concrete siding on their homes had been improperly installed, and that this improper installation was the cause of the water and moisture intrusion into their homes. Defendant and KB Home North Carolina, Inc. filed a motion to dismiss on 6 February 2009. The matter was heard on 22 April 2009. By order filed 17 July 2009, the trial court dismissed KB Home North Carolina, Inc. from this action.

Defendant answered Plaintiffs’ complaint on 5 August 2009, denying the majority of the allegations in Plaintiffs’ complaint, and pleading twenty affirmative defenses. Defendant requested that the trial court deny Plaintiffs’ request for class certification, and that “all issues of fact be tried by a jury[.]” Defendant did not move to compel arbitration in response to Plaintiff’s complaint. Defendant and Plaintiffs began the discovery process, and Defendant served its first set of interrogatories on Plaintiffs on 13 October 2009. In this first set of interrogatories, Defendant defined “Plaintiffs” as the named Plaintiffs along with “any other known members of the Class as asserted in Plaintiffs’ Complaint[.]” Defendant filed a third-party complaint against Stock Building Supply, LLC (“Stock”) on 19 January 2010. Stock was the subcontractor hired by Defendant to install the HardiPlank siding. Defendant alleged that Stock “explicitly agreed to participate in binding arbitration regarding all claims arising from the construction of Plaintiffs’ homes.” However, Defendant did not demand arbitration at the time it filed its third-party complaint.

This action was designated a complex business case on 17 June 2010. Defendant, Plaintiffs, and Stock jointly filed a case management report with the North Carolina Business Court on 14 September 2010, in which Defendant and Plaintiffs agreed “that pretrial proceedings and trial will take place at the North Carolina Business Court sitting in Wake County, N.C., unless otherwise agreed to by the parties and the Court[,]” and that “no controversies exist with respect to ... venue.”

It appears that Defendant’s first mention of arbitration with respect to Plaintiffs is contained in a supplemental response to Plaintiffs’ third set of interrogatories, dated 28 March 2011. Plaintiffs asked: “Identify any contractual obligations that Plaintiffs have failed to perform which is the basis for your [affirmative defense that ‘Plaintiffs have failed to perform Plaintiffs’ own contractual obligations’].” Defendant responded in part: “Plaintiffs, including any unnamed potential class members, have failed to timely mediate and then arbitrate the claims as provided by the terms of the New Home Purchase Agreement and Limited Warranty [335]*335Agreement.” Defendant did not, however, move to compel arbitration at that time. The action proceeded, and the trial court entered an order on 27 February 2012 certifying the class as “[a]ll persons in the State of North Carolina who own a home constructed by Defendant... without a weather-restrictive barrier behind the exterior veneer of HardiPlanlc cement fiber lap siding” (excluding certain potential class members for reasons irrelevant to this appeal). Defendant appealed the order certifying the class on 28 March 2012. Defendant, on 12 April 2012, filed a motion to stay the class certification pending appeal. Defendant’s motion to stay was denied by order entered 13 April 2012. Defendant then petitioned this Court for a writ of supersedeas, asking this Court to stay the proceedings' below. Defendant’s petition was denied on 27 August 2012. Defendant also filed a petition for writ of certiorari with this Court on 11 July 2012.

In its notice of appeal, Defendant argued the order certifying the class was immediately appealable because it affected a substantial right. Specifically, and for the first time, Defendant contended that the order certifying the class was an “order denying arbitration” because it denied Defendant “its substantial right to bilateral arbitration with the absent class members.” However, Defendant still had not attempted to enforce any right to arbitration at the time it appealed the class certification order. Defendant finally filed a motion to compel arbitration on 12 April 2012. This was Defendant’s first assertion of its rights pursuant to the arbitration clauses in the two agreements.

Plaintiffs moved this Court to dismiss Defendant’s appeal on 10 July 20Í2, and argued that Defendant’s petition for writ of certiorari should be denied. In response, Defendant argued that the class certification order “did more than just grant class certification. It inherently and simultaneously denied [Defendant’s] substantial right to arbitration. For that separate and independent reason, it is immediately appealable[.]” Plaintiffs’ motion was granted and Defendant’s appeal was dismissed by order entered 28 August 2012. Defendant’s petition for writ of certiorari was denied by order entered 30 August 2012.

. The trial court denied Defendant’s motion to compel arbitration by order filed 2 November 2012. Defendant appeals.

I.

The present appeal is from an interlocutory order. However, the order denying arbitration “is immediately appealable because it involves a substantial right which might be lost if appeal is delayed.” Prime South [336]*336Homes v. Byrd, 102 N.C. App. 255, 258, 401 S.E.2d 822, 825 (1991) (citations omitted).

II.

Initially, Defendant argues that the trial court erred in failing to determine, prior to deciding the issue of waiver, whether the Federal Arbitration Act (FAA) or the North Carolina Revised Uniform Arbitration Act (NCRUAA) controlled, because the requirements to prove waiver differ under the two acts. The “waiver” provision in the FAA argued by Defendant is contained in Section 3 of that act, but is referred to as “default” rather than “waiver.” 9 USCS § 3 (a party may apply for a stay in court proceedings in order to enforce an agreement to arbitrate “providing the applicant for the stay is not in default in proceeding with such arbitration”). Defendant cites Maxum Foundations, Inc. v. Salus Corp.,

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Cite This Page — Counsel Stack

Bluebook (online)
752 S.E.2d 694, 231 N.C. App. 332, 2013 WL 6623225, 2013 N.C. App. LEXIS 1304, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elliott-v-kb-home-north-carolina-inc-ncctapp-2013.