Prasad v. Bullard

51 So. 3d 35, 10 La.App. 5 Cir. 291, 2010 La. App. LEXIS 1375, 2010 WL 3989696
CourtLouisiana Court of Appeal
DecidedOctober 12, 2010
DocketNo. 10-CA-291
StatusPublished
Cited by17 cases

This text of 51 So. 3d 35 (Prasad v. Bullard) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prasad v. Bullard, 51 So. 3d 35, 10 La.App. 5 Cir. 291, 2010 La. App. LEXIS 1375, 2010 WL 3989696 (La. Ct. App. 2010).

Opinion

MARC E. JOHNSON, Judge.

12Pefendant/appelIant, Sid Bullard, appeals from a judgment ordering him to submit to arbitration. For the reasons that follow, we reverse.

Plaintiff, Chandan Prasad (“Dr. Pra-sad”), entered into a contract with Bullard Capital, L.L.C., d/b/a Contract Services, to complete the construction of a house. A dispute regarding the construction con[38]*38tract arose and, pursuant to the contract, Dr. Prasad submitted an arbitration demand to the American Arbitration Association (“AAA”). The arbitration demand asserted claims against Bullard Capital, L.L.C. (“Bullard Capital”), Contract Services, L.L.C. (“Contract Services”), and defendant, Sid Bullard, as the principal for both companies and “his misrepresentations, misallocation of funds, [and] commingling of assets between the identified' organizations.” Both Bullard Capital and Contract Services filed an answer to the arbitration demand and asserted a counter claim. In the answer, Mr. Bullard challenged the jurisdiction and venue of the AAA as it related to him personally on the basis he was not a party to the contract between Dr. Prasad and Bullard Capital.

13Pr. Prasad subsequently filed a Petition for Declaratory Judgment and Order Compelling Sid Bullard to Arbitrate in the 24th Judicial District Court. Dr. Prasad indicated that a dispute over a contract had arisen between Bullard Capital and Contract Services and that the matter was proceeding through arbitration as required by the contract. He further indicated that Mr. Bullard refused to recognize the jurisdiction of the AAA over him. Dr. Prasad asserted that, although Mr. Bullard did not sign the contract, he was bound to the contract, including the arbitration provision, as the sole member in Bullard Capital and Contract Services and under the theories of piercing the corporate veil, alter ego, and third party beneficiary. As such, Dr. Prasad sought a declaratory judgment and order compelling Mr. Bullard to submit to arbitration.

Mr. Bullard responded to the petition by asserting the contract was only between Dr. Prasad and Bullard Capital and claimed that he “neither accepts nor recognize[s] the jurisdiction and venue over him by the American Arbitration Association in this matter.”

After a hearing, the trial court granted Dr. Prasad’s Petition for Declaratory Judgment and Order Compelling Arbitration. In its reasons for judgment, the trial court relied on Arthur Andersen, LLP v. Carlisle, — U.S. —, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009), as well as Louisiana jurisprudence favoring arbitration, and found that because a contract may be enforced against a non-party to the contract under certain circumstances, including piercing the corporate veil and alter ego, Mr. Bullard was required to submit to arbitration.

Mr. Bullard appeals the decision of the trial court claiming the trial court erred in finding the contract between Dr. Prasad and Bullard Capital, which contained an arbitration clause, was enforceable against him, a non-signatory. Mr. Bullard relies on Ciaccio v. Cazayoux, 519 So.2d 799 (La.App. 1st Cir.1987), and Woodrow Wilson Const. Co., Inc. v. MMR-Radon Constructors, Inc., 93-2346 (La.App. 1 Cir. 4/8/94), 635 So.2d 758, writ denied, 94-1206 (La.7/1/94), 639 So.2d 1167, to support his position that he cannot be required to submit to arbitration because he never agreed to arbitration. He contends he was not a party to the contract and, because corporations are distinct legal entities separate from the individuals who comprise them, the contract, including the arbitration clause, cannot be enforced against him.

Arbitration is a process of dispute resolution in which a neutral third party renders a decision after a hearing at which the parties have an opportunity to be heard. The purpose of arbitration is the speedy disposition of differences through informal procedures without resort to court action. Horseshoe Entertainment v. Lepinski, 40,753, p. 5 (La.App. 2 [39]*39Cir. 3/8/06), 923 So.2d 929, 933, writ denied, 06-792 (La.6/2/06), 929 So.2d 1259. A determination of whether to compel arbitration is a question of law and, thus, appellate review is simply to determine whether the trial court was legally correct or legally incorrect. Id. at 5, 923 So.2d at 934.

Arbitration is a matter of contract and a court cannot compel a party to submit to arbitration any disputes that the party has not agreed to submit. Lakeland Anesthesia, Inc. v. United Healthcare of Louisiana, Inc., 03-1662, pp. 7-8 (La.App. 4 Cir. 3/17/04), 871 So.2d 380, 386-87, writs denied, 04-969 and 04-972 (La.6/25/04), 876 So.2d 834. The authority of an arbitrator to resolve disputes is derived from the parties’ advance agreement to submit such grievances to arbitration. Horseshoe Entertainment, 40,753 at 6, 923 So.2d at 934, citing AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). Thus, unless the parties clearly and | ¿unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court and not the arbitrator. Id.

There is a strong presumption in favor of arbitration. Aguillard v. Auction Management Corp., 04-2804, pp. 24-25 (La.6/29/05), 908 So.2d 1, 18. The Louisiana Supreme Court has stated that “even when the scope of an arbitration clause is fairly debatable or reasonably in doubt, the court should decide the question of construction in favor of arbitration.” Aguillard, 04-2804 at 25, 908 So.2d at 18.

The validity, irrevocability, and enforceability of arbitration agreements are recognized in the Louisiana Binding Arbitration Law (“LAL”), La. R.S. 9:4201. The LAL is virtually identical to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-14, and, thus, federal jurisprudence provides guidance for resolving arbitration issues. Aguillard, supra. Both the LAL and FAA provide for specific enforcement of arbitration agreements. Lakeland Anesthesia, 03-1662 at 9, 871 So.2d at 387. In deciding whether to compel arbitration, the threshold inquiry is whether the parties agreed to arbitrate their disputes. This is a two-fold inquiry: (1) whether there is a valid arbitration agreement, and (2) whether the dispute in question falls within the scope of that agreement. Lakeland Anesthesia, 03-1662 at 9, 871 So.2d at 388; Saavedra v. Dealmaker Developments, LLC, 08-1239, p. 7 (La.App. 4 Cir. 3/18/09), 8 So.3d 758, 763, writ denied, 09-875 (La.6/5/09), 9 So.3d 871.

Arbitration agreements are contracts and must be enforced according to their terms. Such agreements must be interpreted by applying accepted rules of state contract law, or La. C.C. arts. 2045 to 2057. Lakeland Anesthesia, 03-1662 at 8, 871 So.2d at 387. Whether a party is obligated to arbitrate is a matter of contract and, thus, the question of who is bound by an arbitration agreement is a function of the intent of the parties, as expressed in the terms of the agreement. Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347, 355 (5th Cir.2003), cert. denied, 541 U.S. 937, 124 S.Ct. 1660, 158 L.Ed.2d 357 (2004).

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Bluebook (online)
51 So. 3d 35, 10 La.App. 5 Cir. 291, 2010 La. App. LEXIS 1375, 2010 WL 3989696, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prasad-v-bullard-lactapp-2010.