Lemon Drop Properties v. Pass Marianne, LLC

CourtMississippi Supreme Court
DecidedMay 10, 2010
Docket2010-IA-00883-SCT
StatusPublished

This text of Lemon Drop Properties v. Pass Marianne, LLC (Lemon Drop Properties v. Pass Marianne, LLC) is published on Counsel Stack Legal Research, covering Mississippi Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lemon Drop Properties v. Pass Marianne, LLC, (Mich. 2010).

Opinion

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2010-IA-00883-SCT

LEMON DROP PROPERTIES, LLC

v.

PASS MARIANNE, LLC AND ALFONSO REALTY, INC. (d/b/a COLDWELL BANKER ALFONSO REALTY, INC.)

DATE OF JUDGMENT: 05/10/2010 TRIAL JUDGE: HON. ROGER T. CLARK COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: STEPHEN WALKER BURROW JAMES H. COLMER, JR. ANN M. HALPHEN ATTORNEYS FOR APPELLEES: GAIL D. NICHOLSON CHESTER D. NICHOLSON NATURE OF THE CASE: CIVIL - CONTRACT DISPOSITION: AFFIRMED IN PART; REVERSED AND REMANDED IN PART - 10/20/2011 MOTION FOR REHEARING FILED: MANDATE ISSUED:

EN BANC.

RANDOLPH, JUSTICE, FOR THE COURT:

¶1. This interlocutory appeal proceeds from an order of the Circuit Court of Harrison

County, Mississippi, First Judicial District, which granted the “Motions to Compel

Arbitration” of Pass Marianne, LLC (“Pass”) and Alfonso Realty, Inc. (“Alfonso”). On

appeal, this Court considers (1) whether Pass waived its right to arbitration, and (2) whether

a principal’s waiver of its contractual right to arbitrate operates to waive that right for its

agent. FACTS AND PROCEDURAL HISTORY

¶2. In 2005, Pass entered into a contract with Carl E. Woodward, LLC (“Woodward”) for

the construction of a new condominium development, Pass Marianne Condominiums, in Pass

Christian, Mississippi. On February 8, 2005, Pass and Lemon Drop Properties, LLC

(“Lemon Drop”) entered into a “Preconstruction Sales and Purchase Agreement”

(“Agreement”) for Unit No. 209 within the Pass Marianne Condominiums. Regarding

Alfonso, the Agreement provided that:

[e]ach party hereby agrees to indemnify and hold the other harmless from and against any liability for any claims of any broker claiming by, through or under it. SELLER has not listed this property with any real estate firm, however on certain transactions, [Alfonso] has represented the SELLER. SELLER’S agent with respect to those specific transactions is [Alfonso], which represent the SELLER and IS NOT a Buyer’s agent and Buyer acknowledges that he is a “customer” of Realtor. The real estate agency disclosure form may be attached hereto as if a real estate broker was a part of this transaction. PURCHASER ALSO ACKNOWLEDGES THAT THE PRINCIPALS OF [PASS] ARE LICENSED REAL ESTATE BROKERS AND ARE, IN ALL CASES, REPRESENTING THEMSELVES AND [PASS]. WHEN EITHER ALFONSO AND/OR KETCHINGS PRESENTED THE PROJECT TO A POTENTIAL PURCHASER AND OBTAINED THE RESERVATION AGREEMENT OR THIS CONTRACT OR ANY OTHER AGREEMENT, THE AFOREMENTIONED ALFONSO AND KETCHINGS WERE ACTING IN THEIR CAPACITY AS THE SELLER AND NOT AS A LICENSED REAL ESTATE BROKER.

(Emphasis added.) The Agreement also contained the following provision:

ARBITRATION. It is agreed that the subject matter of this Agreement substantially involves interstate commerce. Any disagreement or question between the parties which shall arise out of this Agreement, its breach or otherwise related to the development shall be submitted to arbitration under the Rules of the American Arbitration Association or as the parties may later agree in writing. The arbitration decision shall be binding on both parties. The parties renounce all right to take legal action except to enforce any arbitration award, which award shall be a condition precedent to any right of legal action that either party may have against the other.

2 ¶3. Because of Hurricane Katrina, construction of the Pass Marianne Condominiums was

not completed until 2007. On October 3, 2007, Pass executed a warranty deed conveying

Unit No. 209 to Lemon Drop, and Woodward furnished a “Warranty of Completion of

Construction” to Lemon Drop.

¶4. On October 28, 2008, Lemon Drop filed a Complaint in the circuit court against Pass

and Woodward, which sought, inter alia, rescission of the Agreement due to alleged defects

in design and construction. The Complaint failed to attach a copy of the Agreement. See

Miss. R. Civ. P. 10(d) (“[w]hen any claim or defense is founded on an account or other

written instrument, a copy thereof should be attached to or filed with the pleading unless

sufficient justification for its omission is stated in the pleading.”).

¶5. On December 22, 2008, Pass filed its Answer, along with a cross-claim against

Woodward for fraud, defamation, and breach of contract. The pleading requested a jury trial

and did not invoke an arbitration plea against Lemon Drop. On March 6, 2009, Pass joined

in an agreed “Order Setting Trial Date.” Subsequently, Pass propounded and responded to

written discovery requests with both Lemon Drop and Woodward.

¶6. On June 5, 2009, Lemon Drop filed a “Motion to Amend Complaint,” seeking to add

Alfonso as a defendant.1 In response to Lemon Drop’s “Motion to Amend Complaint,” Pass

pleaded the following:

[w]hile it is still the preference of [Pass] to proceed in Court consistent with the Cross-Claim of [Pass] against [Woodward], in the event that either the pending Motion to Compel Arbitration filed by [Woodward] or the Motion to Bifurcate or Sever Cross-Claim filed by [Lemon Drop] is granted then, and

1 Lemon Drop attached the Agreement to this pleading.

3 only then, [Pass] would assert their contractual right to arbitration of any claims of [Lemon Drop] as to [Pass].

(Emphasis added.) Thereafter, the circuit court granted Woodward’s “Motion to Compel

Arbitration” as to Pass’s cross-claim against Woodward.

¶7. On August 27, 2009, after the circuit court granted the “Motion to Amend

Complaint,” Lemon Drop filed its “First Amended Complaint,” which named Pass,

Woodward, and Alfonso as defendants. Multiple claims were asserted against Alfonso which

related to, and arose out of, the transaction.2

¶8. On September 11, 2009, Pass filed its “Answer; Affirmative Defenses; and Motion

to Compel Arbitration” in response to the “First Amended Complaint.” On September 30,

2009, approximately one month after the “First Amended Complaint” was filed, Alfonso

filed its “Answer, Affirmative Defenses and Motion to Compel Arbitration.” Alfonso

asserted that, because it had acted as Pass’s agent, any claim against Alfonso would be

subject to the Agreement’s arbitration provision.

2 For instance, Lemon Drop maintained a claim against Alfonso for failure to furnish “the statutorily required Seller’s Disclosure Statement.” See Miss. Code Ann. §§ 89-1-501 to -525 (Rev. 1999). According to Lemon Drop, had that disclosure statement been provided:

the defects in the Project now alleged by [Pass] to exist within the Project and the Property would have been disclosed before the October 3, 2007 closing. Had [Lemon Drop] know[n] in advance of these defects or other construction “problems” as alleged by [Pass] in its August 2007 complaint against Woodward, it would not have closed on the purchase of Unit 209.

Moreover, Lemon Drop asserted that Alfonso “knew about the alleged defects and poor workmanship in the construction of the Project and Property on and before October 3, 2007[,]” but failed to “fully and completely disclose” all such defects.

4 ¶9. Following a hearing, the parties were ordered to participate in good-faith mediation.

After mediation proved unsuccessful, the circuit court entered an order which granted the

“Motions to Compel Arbitration” filed by Pass and Alfonso, concluding that as “[t]here has

been no ‘unreasonable delay’ coupled with ‘active participation’ or any factors which have

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