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White v. Turnberry Homes, LLC

Court of Appeals of Tennessee

May 28, 2015

MARK A. WHITE, ET AL.
v.
TURNBERRY HOMES, LLC, ET AL.

April 14, 2015 Session

Appeal from the Chancery Court for Williamson County No. 43227 James G. Martin, III, Judge

Todd E. Panther, Nashville, Tennessee, for the appellant, Turnberry Homes, LLC.

John O. Belcher and Curtis R. Harrington, Nashville, Tennessee, for the appellees, Mark and Mirandy White.

Andy D. Bennett, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Richard H. Dinkins, J., joined.

OPINION

ANDY D. BENNETT, JUDGE

On January 2, 2013, Mark A. and Mirandy White signed an agreement to purchase a home from Turnberry Homes, LLC ("Turnberry"). Turnberry built the home in the Chardonnay subdivision in Franklin, Tennessee and conveyed title to the Whites on July 3, 2013. After moving in, the Whites allegedly found drainage problems, water in the crawlspace, moisture and condensation issues, gaps in the hardwood floors, and recurring flu and allergy symptoms in family members.

The Whites filed suit against Turnberry; Gina Sefton, Turnberry‟s real estate agent; and Larry Taylor, a Turnberry employee. They alleged causes of action against Turnberry for violation of the Tennessee Consumer Protection Act, breach of contract, breach of express warranty, breach of implied warranty, quantum meruit, negligence, negligence per se, rescission, and gross negligence. The Whites alleged fraudulent inducement against all the defendants.

Turnberry filed a motion to stay the litigation and compel binding arbitration based on the arbitration clause in the purchase agreement. The trial court granted Turnberry‟s motion in part, finding that all of the Whites‟ claims, except for the claim of fraudulent inducement, should be arbitrated. Turnberry appeals.

Standard of Review

The interpretation of a contract is a question of law. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999). We review questions of law de novo with no presumption of correctness. Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d 625, 628 (Tenn. 1999).

Analysis

The trial court relied upon two cases in reaching its decision. The first is Frizzell Construction Company, Inc. v. Gatlinburg, L.L.C., 9 S.W.3d 79 (Tenn. 1999). In Frizzell, the Tennessee Supreme Court examined whether an arbitration clause required arbitration of a claim of fraudulent inducement to enter into a contract. Frizzell, 9 S.W.3d at 85-86. Initially, the Frizzell Court determined that, because the contract involved interstate commerce, the Federal Arbitration Act ("FAA") applied. Id. at 83-84. "The purpose of the FAA is 'to ensure the enforceability, according to their terms, of private agreements to arbitrate.‟" Id. at 84 (quoting Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995)). "[P]arties cannot be forced to arbitrate claims that they did not agree to arbitrate." Id. Next, the Supreme Court examined the intention of the parties by considering the terms of the contract, the subject matter, the circumstances of the transaction, and the parties‟ construction of the agreement. Id. at 85. The court viewed the broad arbitration clause as being limited by the choice of law provision:

By stating that the contract is to be governed by Tennessee law, the parties have indicated their intention to arbitrate all disputes "arising out of, or relating to" their agreement-but only to the extent allowed by Tennessee law. . . . Therefore, because Tennessee law contemplates judicial resolution of contract formation issues, we conclude ...

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