Roland J. Abshire v. Belmont Homes, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

04-1200

ROLAND J. ABSHIRE, ET AL.

VERSUS

BELMONT HOMES, INC., ET AL.

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APPEAL FROM THE
THIRTY-FIRST JUDICIAL DISTRICT COURT,
PARISH OF JEFFERSON DAVIS, NO. C-598-03,
HONORABLE G. BRADFORD WARE, DISTRICT JUDGE

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JIMMIE C. PETERS
JUDGE

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Court composed of Sylvia R. Cooks, Jimmie C. Peters, and J. David Painter, Judges.

AFFIRMED.

Steven W. Hale
Steven W. Hale & Associates, Inc.
1735 Ryan Street
Lake Charles, LA 70601-6049
(337) 433-0612
COUNSEL FOR PLAINTIFF/APPELLEE:
Roland J. Abshire, et al.

V. Ed McGuire, III
Plauché, Smith & Nieset
P. O. Drawer 1705
Lake Charles, LA 70602
(337) 436-0522
COUNSEL FOR DEFENDANT/APPELLANT:
Belmont Homes, Inc.

PETERS, J.

This appeal arises from a suit in redhibition and for property and personal

injury damages in which the plaintiffs named Belmont Homes, Inc. as one of a

number of defendants. Belmont Homes, Inc. appeals the trial court’s denial of its

dilatory exception of prematurity. For the following reasons, we affirm the trial

court’s judgment, although on different grounds.

DISCUSSION OF THE RECORD

Procedural History

This litigation involves a manufactured home constructed by Belmont Homes,

Inc. (Belmont Homes) and sold by United Homes, Inc. (United Homes) to Ronald J.

Abshire and his mother-in-law, Shirley May Simmons (who apparently appeared

primarily as a cosigner).1 On August 14, 2003, Mr. Abshire and his wife, Kari,

individually and on behalf of their minor child, Khristen, and Ms. Simmons filed this

suit against Belmont Homes and United Homes as well as the Abshire’s homeowner’s

insurer, National Security Fire & Casualty (NSFC). In their petition, the plaintiffs

asserted that United Homes and Belmont Homes were liable to them for negligent

installation, negligent construction, breach of contract, failure to warn them of certain

conditions, and violations of various state and federal laws and manufacturing safety

standards. They asserted that for these reasons, and because the manufactured home

contained various latent defects, they were entitled to recision of the sale with the

return of the purchase price, attorney fees, and property and personal injury damages.

United Homes answered the petition and filed a cross-claim against Belmont

Homes, seeking indemnity from Belmont Homes for any amounts for which it might

1
The background to this litigation as stated in this opinion is based on the content of the
pleadings, memoranda, and exhibits attached to the memoranda found in the record. Neither party
offered any evidence at the hearing on the exception of prematurity. Unless otherwise stated, the
parties to the litigation do not contest the validity of the facts stated herein.

be cast in judgment. NSFC answered the plaintiffs’ petition and asserted a cross-

claim against both Belmont Homes and United Homes, also seeking indemnity for

any amounts for which it might be cast in judgment. Belmont Homes responded to

the plaintiffs’ petition with an exception of prematurity in which it asserted that any

claims against it by the plaintiffs were required to first be submitted to arbitration.

At a hearing held on May 5, 2004, the trial court denied the exception of prematurity.

Belmont Homes timely perfected this appeal, asserting in its sole assignment of error

that the trial court erred in not requiring arbitration of all the claims asserted against

it by the plaintiffs.

Factual History

Most of the facts concerning the transaction at issue are not in dispute. United

Homes is in the business of selling manufactured homes to the public, and Belmont

Homes is in the business of building or constructing manufactured homes. Included

within United Homes’ inventory of manufactured homes are units built by Belmont

Homes.

On March 7, 2001, Mr. Abshire and Ms. Simmons appeared at United Homes’

business location in Lake Charles, Louisiana, and purchased a manufactured home

built by Belmont Homes. At the time they purchased the manufactured home, Mr.

Abshire and Ms. Simmons signed three separate documents. These documents were

not introduced into evidence at the hearing on the dilatory exception, but were

attached to the pre-hearing memoranda filed by the litigants.

Appellate courts are courts of record and may not review evidence that is not

in the appellate record or receive new evidence. La.Code Civ.P. art. 2164; Sutton’s

Steel & Supply, Inc. v. BellSouth Mobility, Inc., 00-0511, 00-0898 (La.App. 3 Cir.

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12/13/00), 776 So.2d 589, writ denied, 01-0152 (La. 3/16/01), 787 So.2d 316.

However, despite the fact that the litigants did not introduce these documents into

evidence, they have treated the documents as if they were introduced; therefore, we

will treat their acknowledgment as a judicial confession of the existence of the

documents as evidence. “A judicial confession constitutes full proof against the party

who made it.” La.Civ.Code art. 1853. “A judicial confession is indivisible and it may

be revoked only on the ground of error of fact.” Id. “It is also well settled that a

judicial confession is a party’s explicit admission of an adverse factual element and

that it has the effect of waiving evidence as to the subject of the admission, of

withdrawing the subject matter of the confession from issue.” Cheatham v. City of

New Orleans, 378 So.2d 369, 375 (La.1979); see also Sutton’s Steel & Supply, Inc.,

776 So.2d 589.

The first of these documents at issue is a single-page document entitled

“PURCHASE AGREEMENT/BILL OF SALE” (purchase agreement). This

document contains the signature of a representative of United Homes and the

signatures of Mr. Abshire and Ms. Simmons; describes the manufacture home by

make, model, and serial number; sets forth the particulars of the sales transaction;

disclaims warranty protection; and, despite the disclaimer of warranty protection,

provides for the resolution under Louisiana law in the Parish of Calcasieu of any

disputes arising from the sale or warranty of the manufactured home. The purchase

agreement provides no reference to Belmont Homes other than the description of the

manufactured home purchased, and no representative of Belmont Homes signed the

agreement indicating any involvement by Belmont Homes in the transaction.

3

Mr. Abshire, Ms. Simmons, and the same person who signed the purchase

agreement for United Homes2 also signed a second single-page document entitled

“DELIVERY AGREEMENT” (delivery agreement).3 This document identifies the

manufactured home and specifically sets forth the respective obligations of the

plaintiffs and United Homes concerning the delivery and set up of the manufactured

home. Additionally, the delivery agreement provides that the warranty on the

manufactured home is provided by the builder, not the dealer, yet it directs the

purchaser to contact the United Homes service manager to request warranty service.

No representative of Belmont Homes signed the delivery agreement to accept the

warranty responsibility.

Contemporaneously with the execution of the purchase agreement, Mr. Abshire

and Ms. Simmons also executed a one-page document entitled

“ACKNOWLEDGMENT AND AGREEMENT” (arbitration agreement). Although

this document contains the signature of Mr. Abshire, Ms. Simmons, and a

representative of Belmont Homes, it is incomplete in a number of respects.

Specifically, it is not dated and provides for an appearance by United Homes as the

retailer of the manufactured home. United Homes made no appearance, although the

document also provides a place for the signature of its representative at the bottom of

the page. Additionally, while Mr. Abshire and Ms. Simmons executed this document,

the party who ultimately executed the document on behalf of Belmont Homes was not

present, and the record does not establish when he affixed his signature. Additionally,

2
The United Homes agent’s signature is not sufficiently clear on either document to allow
one to ascertain the person’s name.
3
The delivery agreement is not dated, and the record does not make it clear whether it was
executed at the same time as the purchase agreement or when the manufactured home was delivered.

4

the record is silent concerning who represented Belmont Homes in presenting the

arbitration agreement to Mr. Abshire and Ms. Simmons at United Homes’ Lake

Charles location. It is clear that neither Mr. Abshire nor Ms. Simmons had any input

in the content of the preprinted material comprising the bulk of all three documents

at issue.

In the arbitration agreement, Mr. Abshire and Ms. Simmons acknowledged

generally that they purchased the manufactured home from existing inventory, that

they had been supplied with certain “Homeowner Documents” which included

Belmont Homes’ warranty, that they had been made aware of certain public health

notices associated with the transaction, and that they had visually inspected the

manufactured home and were satisfied with its appearance and condition. Concerning

the warranty, Mr. Abshire and Ms. Simmons specifically acknowledged that their

rights in that regard were those “as provided in the Homeowner Documents.”

The warranty provision of the arbitration agreement further provides that “[a]ll

warranty claims against [Belmont Homes] . . . are to be handled as provided in the

MANUFACTURER’s Warranty which PURCHASER has read and understands or

will read and be familiar with.” Because the “Homeowner Documents” were not

introduced into evidence, it is not clear whether they provided a procedure for

handling warranty claims different from United Homes’ delivery agreement.

The arbitration agreement further provides that it constitutes the entire

agreement between the parties and that it is to “be governed by the laws of the State

of Mississippi.” It also includes a savings clause which reads as follows:

If any provision of this Agreement is found to be unenforceable
(Including, without limitation any provision of Section 10 hereof), such
provision shall be considered severed from the remaining provisions of
this Agreement (including, without limitation, the remaining provisions

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of Section 10 hereof), and such remaining provisions shall be and remain
in full force and effect.

The arbitration provision at issue is the “Section 10” referred to in the savings clause

and reads in full as follows:

All parties acknowledge and agree that this Agreement and the
performance of the transactions contemplated hereby evidence
transactions which involve a substantial nexus with interstate commerce.
Accordingly, any dispute; controversy or claim of any kind or nature
which has arisen or may arise between the parties, their successors,
assigns, heirs, representatives, parent companies, divisions, subsidiaries,
affiliates, officers, directors, employees, agents, and contractors
(including any dispute, controversy or claim relating to the validity of
this arbitration clause), whether arising out of past, present or future
dealings between the parties, their successors, assigns, heirs,
representatives, parent companies, divisions, subsidiaries, affiliates,
officers, directors, employees, agents and contractors shall be governed
by the Federal Arbitration Act and shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction hereof. Such
arbitration proceedings shall be held at the principal place of business of
the Manufacturer or at such location as shall be designated by
Manufacturer, and shall be heard by an arbitrator who is either a (i)
retired judge or (ii) practicing attorney who has conducted more than
three (3) arbitrations during the preceding five (5) years. Without
limiting the generality of the foregoing, it is the intention of the parties
to resolve by binding arbitration, as provided herein, all past, present, and
future disputes, whether in tort, contract or otherwise, concerning or
related to (i) the manufactured home, its sale, warranty, set up, repair,
installation, manufacture, financing, insurance, its condition, (ii) the
validity of this Agreement, and (iii) any other dealings, business or
otherwise, between the parties, their successors, assigns, heirs,
representatives, parent companies, divisions, subsidiaries, affiliates,
officers, directors, employees, agents, and contractors. The parties
understand and agree that the arbitrator shall have all powers provided
by law, and may award any legal or equitable relief, including, without
limitation, money damages; declaratory relief and injunctive relief;
provided, however that the arbitrator will have no power to award
punitive damages or other damages not measured by the prevailing
party’s actual damages. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO JURY TRIAL WITH RESPECT TO
ANY CONTROVERSY BETWEEN THE PARTIES, THEIR
SUCCESSORS, ASSIGNS, HEIRS, REPRESENTATIVES,
PARENT COMPANIES, DIVISIONS, SUBSIDIARIES,

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AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
AND CONTRACTORS.

After hearing the arguments of counsel, the trial court found that the arbitration

agreement was ambiguous when considered in light of the content of the purchase and

delivery agreements and therefore declined to stay the proceedings or order arbitration.

Specifically, the trial court concluded that the conflict in the documents with regard

to the law applicable to disputes rendered the arbitration agreement unenforceable.

After this ruling, Belmont Homes timely perfected this appeal.

OPINION

The dilatory exception of prematurity is provided for in La.Code Civ.P. art.

926(A)(1), and its function is to raise the issue that a judicial cause of action does not

yet exist because of some unmet prerequisite condition. Blount v. Smith Barney

Shearson, Inc., 96-0207 (La.App. 4 Cir. 2/12/97), 695 So.2d 1001, writs denied, 97-

0952, 97-0970 (La. 5/30/97), 694 So.2d 246, 247. “It usually is utilized in cases

where the law or a contract has provided a procedure for one aggrieved of a decision

to seek relief before resorting to judicial action,” and “[t]he exceptor has the initial

burden of showing that an administrative remedy was available, thus making the

judicial action premature.” Id. at 1003. Thus, the burden is upon Belmont Homes to

establish that a valid and enforceable arbitration agreement exists. See id. In

determining whether a party is bound by an arbitration agreement, we apply ordinary

contract principles, and a party cannot be required to submit to arbitration a dispute

that he has not agreed to submit. Tresch v. Kilgore, 03-0035 (La.App. 1 Cir. 11/7/03),

868 So.2d 91. Whether a court should compel arbitration is a question of law.

Dufrene v. HBOS Mfg., 03-2201 (La.App. 4 Cir. 4/7/04), 872 So.2d 1206. Therefore,

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“[a]ppellate review of questions of law is simply to determine whether the trial court

was legally correct or incorrect.” Id. at 1209.

As previously stated, the trial court concluded that the arbitration agreement was

ambiguous because the choice-of-law provision conflicted with that found in the

purchase agreement. However, at the May 5, 2004 hearing on the exception, Belmont

Homes’ counsel asserted to the trial court that, despite the clear language of the

arbitration agreement with regard to the application of Mississippi law and the Federal

Arbitration Act, 9 U.S.C.A. § 1, et seq., “the Statutes are fairly clear. It’s R.S. 9:4201

and a couple of statutes thereafter. . . . There were some issues as to what law would

apply. As far as the application, we are both arguing Louisiana law. I don’t think

that’s an issue.” Thus, counsel for Belmont Homes judicially confessed that Louisiana

law, and specifically the Louisiana Binding Arbitration Law, La.R.S. 9:4201, et seq.,

applied to the arbitration agreement.4 See La.Civ.Code art. 1853.

This judicial confession effectively eviscerates the trial court’s reasons for

judgment. Thus, we find that the trial court erred in rejecting the application of the

arbitration clause for the reasons asserted in its reasons for judgment. However, we

find that the trial court reached the right result in determining that the arbitration

agreement was not enforceable.

In determining whether any arbitration agreement should be enforced, we must

first recognize that there exists a strong legislative policy in Louisiana favoring

arbitration. Woodson Constr. Co. v. R.L. Abshire Constr. Co., 459 So.2d 566 (La.App.

4
In its appellate brief, Belmont Homes does not specifically repeat the trial stipulation that
Louisiana law and the Louisiana Arbitration Law applies to this matter. However, its entire
argument cites only Louisiana law. We note, however, that application of the Louisiana Binding
Arbitration Law as opposed to the Federal Arbitration Act is of little consequence because, as
pointed out by the supreme court in International River Center v. Johns-Manville Sales Corp., 02-
3060, p. 6 (La. 12/3/03), 861 So.2d 139, 143, the Federal Arbitration Act is “a collection of statutes
which is very similar to the Louisiana Binding Arbitration Law.”

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3 Cir. 1984). In fact, “[a]ny doubt as to whether a controversy is arbitrable should be

resolved in favor of arbitration.” Id. at 569. In support of this strong policy,

Louisiana has enacted the Louisiana Arbitration Law. With regard to the validity of

arbitration agreements, La.R.S. 9:4201 provides:

A provision in any written contract to settle by arbitration a
controversy thereafter arising out of the contract, or out of the refusal to
perform the whole or any part thereof, or an agreement in writing
between two or more persons to submit to arbitration any controversy
existing between them at the time of the agreement to submit, shall be
valid, irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.

Additionally, La.R.S. 9:4202 provides:

If any suit or proceedings be brought upon any issue referable to
arbitration under an agreement in writing for arbitration, the court in
which suit is pending, upon being satisfied that the issue involved in the
suit or proceedings is referable to arbitration under such an agreement,
shall on application of one of the parties stay the trial of the action until
an arbitration has been had in accordance with the terms of the
agreement, providing the applicant for the stay is not in default in
proceeding with the arbitration.

Thus, pursuant to La.R.S. 9:4202, “a court shall stay the trial of an action in order for

arbitration to proceed if any party applies for such a stay and shows (1) that there is

a written agreement and (2) the issue is referable to arbitration under the arbitration

agreement, as long as the applicant is not in default in proceeding with the

arbitration.” Int’l River Ctr. v. Johns-Manville Sales Corp., 02-3060, p. 3 (La.

12/3/03), 861 So.2d 139, 141.

“However, this does not mean that all arbitration provisions are valid under state

law.” Rodriguez v. Ed’s Mobile Homes of Bossier City, La., 04-1082, p. _ (La.App.

3 Cir. 12/8/04), ___ So.2d ___, ___. Rather, application of arbitration law

presupposes the existence of a written agreement not subject to any grounds “at law

or in equity” for its revocation per La.R.S. 9:4201. See id. Importantly, “[o]ne of the

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conditions of a valid contract is the consent of both parties. Consent may be vitiated

by error. Error can ‘invalidate a contract if it is related to the princip[al] cause, or

motive, for making the agreement’ [Scott v. Bank of Coushatta, 512 So.2d 356, 361

(La.1987)] and is ‘known or should have been known to the other party.’ [Hidalgo v.

Julian, 98-83, p. 7 (La.App. 3 Cir. 5/20/98), 715 So.2d 498, 501.] Cause is the ‘reason

why a party obligates himself.’ [La.Civ.Code art. 1967.]” Id. at ___ (footnote

omitted).

In Rodriguez, the plaintiffs purchased a mobile home. Following the purchase,

the plaintiffs filed suit against the manufacturer and dealer for redhibition and attorney

fees. The manufacturer filed a dilatory exception of prematurity, alleging the

existence of an arbitration agreement. The trial court denied the exception, finding

that the arbitration agreement was adhesionary. This appellate court affirmed the trial

court’s judgment, but on different grounds.

Specifically, we noted that when the plaintiffs signed the original agreement and

made a down payment, there was no discussion of the requirement of arbitration.

Instead, the arbitration agreement was presented to the plaintiffs for the first time at

the closing. The plaintiffs signed the arbitration agreement because they thought they

had to do so in order to purchase the mobile home. We concluded: “[T]heir

understanding was error under the law. The parties had already agreed upon the terms

of contract of sale before closing, and binding arbitration was not one of them.

According to the original purchase agreement’s terms, title of the mobile home passed

to the [plaintiffs] once they paid for the mobile home, either through cash or financing.

Contrary to what they were told, they did not need to sign the arbitration agreement

to take delivery of their home.” Id. at ___. Importantly, we also observed that the

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manufacturer “knew or should have known that the arbitration agreement could not

be part of the consideration of the original contract. A party cannot, unilaterally,

assign additional consideration for the perfection of a sale.” Id. at ___. Thus, we

rescinded the arbitration agreement as being invalid for lack of consent.

Likewise, in the instant case, under the purchase agreement the plaintiffs paid

$3,640.00 as a down payment and financed $32,696.50. Title of the mobile home

passed to them once they made the down payment and financed the mobile home. The

plaintiffs did not need to sign the arbitration agreement to take delivery of their mobile

home either per the purchase agreement or per the delivery agreement, both of which

documents were executed by United Homes and the plaintiffs, not Belmont Homes.

Further, although the plaintiffs signed the arbitration agreement at the same time they

signed the purchase agreement, there is no evidence that the arbitration agreement was

part of the consideration of the original purchase agreement. In any event, as in

Rodriguez, Belmont Homes, the third-party manufacturer who was not a party to the

purchase agreement, could not unilaterally assign additional consideration for the

perfection of the sale. Additionally, the provision of a warranty by Belmont Homes

has not been shown to constitute cause or consideration for the arbitration agreement

because La.R.S. 51:911.25 provides mandatory warranty rights in connection with

manufactured homes, and Belmont Homes has failed to show that its warranty

provided the plaintiffs with even greater rights than provided in La.R.S. 51:911.25.

Importantly, under La.R.S. 51:911.25(C), a “buyer may not waive his rights under this

Part and any such waiver is hereby prohibited as contrary to public policy and shall

be unenforceable and void.”

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For the reasons stated, we find that the trial court reached the right result in

rejecting enforcement of the arbitration agreement; thus, we affirm the trial court’s

judgment. In doing so, we find it unnecessary to address any other potential grounds

in law or equity for rescission of the contract, such as lack of mutuality and whether

this extensive arbitration agreement was so lacking in equal bargaining power as to

constitute a contract of adhesion. Additionally, we do not address the scope of the

arbitration agreement and leave to another day the issue of whether an arbitration

clause can be extended to cover future tort claims despite the restrictive language of

La.R.S. 9:4201.5

DISPOSITION

For the foregoing reasons, we affirm the judgment of the trial court rejecting the

exception of prematurity filed by Belmont Homes, Inc. We assess all costs of this

appeal to Belmont Homes, Inc.

AFFIRMED.

5
Louisiana Revised Statutes 9:4201 speaks only of controversies “arising out of the contract
. . . or an agreement in writing . . . to submit to arbitration any controversy existing between them
at the time of the agreement to submit . . . .”

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