Doris H. Usie v. Sunshine Homes, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

16-780

DORIS H. USIE
VERSUS

SUNSHINE HOMES, INC., ET AL.

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ON APPLICATION FOR SUPERVISORY WRITS FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF ST. MARTIN, NO. 82841-G
HONORABLE CURTIS SIGUR, DISTRICT JUDGE

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VAN H. KYZAR

JUDGE

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Court composed of John E. Conery, D. Kent Savoie, and Van H. Kyzar, Judges.

WRIT GRANTED AND MADE PEREMPTORY.

Jacques P. Soileau

Soileau & Soileau

P.O. Box 344

Breaux Bridge, LA 70517

(337) 332-4561

COUNSEL FOR PLAINTIFF/APPLICANT:
Doris H. Usie

Gina Bradley Tuttle

Guglielmo, Lopez, Tuttle, Hunter & Jarrell, L.L.P.

P.O. Drawer 1329

Opelousas, LA 70571-1329

(337) 948-8201

COUNSEL FOR DEFENDANT/RESPONDENT:
Royer Mobile Homes of Opelousas, Inc.

Lamont P. Domingue

Voorhies & Labbé

A Professional Law Corporation

P.O. Box 3527

Lafayette, LA 70502-3527

(337) 232-9700

COUNSEL FOR DEFENDANT/RESPONDENT:
Sunshine Homes, Inc.

Kyzar, Judge.

The plaintiff, Doris H. Usie, filed this application for supervisory writs
seeking to have the trial court judgment sustaining the exceptions of prematurity in
favor of the defendants, Royer Mobile Homes of Opelousas, Inc. and Sunshine
Homes, Inc. set aside. For the following reasons, we grant the writ application and
make it peremptory by reversing the trial court judgment and remanding the matter
for further proceedings.

DISCUSSION OF THE RECORD

On March 27, 2007, Usie went to Royer Mobile Homes of Opelousas, Inc.
(Royer) to find a new manufactured home (hereinafter sometimes referred to as
“home”) to take the place of her present home. After choosing a home, she paid a
non-refundable deposit of $500.00 by check so Royer would hold the home until
she could arrange financing through a third-party lender. On April 10, 2007, Usie
executed a purchase agreement with Royer, which identified both the home and the
home’s purchase price of $39,500.00, and which was signed by both Usie and Alan
Amy, Royer’s president. However, since Usie’s financing arrangements were not
yet finalized, Royer agreed that it would continue to hold the home, as well as
Usie’s $500.00 check.

On April 19, 2007, First Louisiana National Bank, on behalf of Usie, issued
a check payable to Royer in the amount of $33,500.00, for the bulk of the home’s
purchase price. The remaining balance of the purchase price, $6,000.00, was
obtained from the trade-in value of Usie’s former home. On May 5, 2007, Usie
returned to Royer to sign additional documents, one of which was entitled
“ACKNOWLEDGMENT AND AGREEMENT (HUD CODE HOMEB),” which

contained the subject arbitration agreement, as follows:

10. ARBITRATION. 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 before a single
arbitrator in accordance with Consumer arbitration rules or 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 thereof. Such
arbitration proceeding shall be held in such location as shall be
designated by MANUFACTURER. The arbitrator shall be appointed
by the American Arbitration Association, and judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Such arbitration proceeding shall be held in such
location as shall be designated by MANUFACTURER. The arbitrator
shall be appointed by the American Arbitration Association from a list
of approved arbitrators except that nothing in the agreement shall
prevent the parties from mutually agreeing on a single arbitrator of
their own choosing .[sic] The cost of arbitration shall be apportioned
equally between the parties. Purchaser agrees that prior to any
arbitration, manufacturer and its agents, investigators, representative,
attorneys etc. will be allowed to inspect the home as often as is
reasonably necessary to prepare for the arbitration. Without limiting
the generality of 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, setup, repair,
installation, manufacture, financing, insurance, its 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. EACH OF
THE PARTIES HERETO WAIVES ANY RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY CONTROVERSY BETWEEN
THE PARTIES, THEIR SUCCESSORS, ASSIGNS, HEIRS,
REPRESENTATIVES, PARENT COMPANIES, DIVISIONS,
SUBSIDIARIES, AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND CONTRACTORS.

No representative of Sunshine, the manufacturer, was present when the parties
executed this document on May 5, 2007, although the signature of Sunshine’s
service manager, Hugh M. Ballard, was added at a later, unspecified time.

Usie alleged that she began experiencing health problems in October 2013,
and that she discovered leaks in her roof in 2014. Upon further investigation, she
determined that there was roof damage, rotting wood, and mold in her home. After
paying for extensive home repairs, Usie filed the instant suit against Royer, the
seller, and Sunshine.

In response to the lawsuit, Royer and Sunshine each filed exceptions of
prematurity, arguing that this suit should be dismissed or stayed and that Usie
should be required to arbitrate her claims pursuant to the arbitration clause
contained in the “Acknowledgment and Agreement” document signed by her.
Following a hearing, the trial court sustained the exceptions and stayed the matter
pending resolution of the claims in arbitration. Usie has filed the instant writ
application seeking reversal of the trial court judgment.

OPINION

In Abshire v. Belmont Homes, Inc., 04-1200, pp. 7-8 (La.App. 3 Cir. 3/2/05),
896 So.2d 277, 283 (alteration in original), writ denied, 05-862 (La. 6/3/05), 903
So.2d 458, this court set forth the proper standard for reviewing a trial court’s
judgment sustaining an exception of prematurity based on an arbitration provision,
as follows:

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

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that an administrative remedy was available, thus making the judicial
action premature.” Jd. at 1003. Thus, the burden is upon [the
defendant] 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, “[a]ppellate review of questions
of law is simply to determine whether the trial court was legally
correct or incorrect.” Jd. at 1209.

The law applicable to the enforceability of arbitration agreements was
recently discussed in Duhon v. Activelaf, LLC, 16-818, pp. 5-6 (La. 10/19/16), __
So.3d__, _ (third alteration in original), as follows:

This case involves the legal questions of whether the court of
appeal erred in its “contract of adhesion” analysis of the arbitration
clause in the Agreement, and whether the arbitration clause is
unenforceable on general contract principles of consent or adhesion.
Thus, we review the matter de novo. See Aguillard [v. Auction Mgmt.
Corp., 04-2804, (La. 6/29/05)], 908 So.2d [1,] 3; Prasad v. Bullard,
10-291 (La.App. 5 Cir. 10/12/10), 51 So.3d 35, 39; Horseshoe
Entertainment v. Lepinski, 40,753 (La.App. 2 Cir. 3/8/06), 923 So.2d
929, 934, writ denied, 06-792 (La. 6/2/06), 929 So.2d 1259.

Louisiana and federal law explicitly favor the enforcement of
arbitration clauses in written contracts. Aguillard, 908 So.2d at 7.
Louisiana Binding Arbitration Law (““LBAL”) is set forth in La. R.S.
9:4201 et seq. and expresses a strong legislative policy favoring
arbitration. 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.

As this court recognized in Aguillard, “[s]uch favorable treatment
echos the Federal Arbitration Act (“FAA”), 9 U.S.C. § I, et seg.”
908 So.2d at 7. We noted the LBAL is virtually identical to the FAA,
and determinations regarding the viability and scope of arbitration
clauses are the same under either law, thus federal jurisprudence
interpreting the FAA may be considered in construing the LBAL. /d.

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at 18. Further, to the extent that federal and state law differ, the FAA
preempts state law as to any written arbitration agreement in a
contract involving interstate commerce. Hodges v. Reasonover, 12-
0043 (La. 7/2/12), 103 So.3d 1069, 1072; FIA Card Services, N.A. v.
Weaver, 10-1372 (La. 3/15/11), 62 So.3d 709, 712; Collins v.
Prudential Ins. Co. of America, 99-1423 (La. 1/19/00), 752 So.2d 825,
827.

The FAA makes arbitration agreements “valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for
the revocation of any contact.” 9 U.S.C. § 2 (emphasis added). The
United States Supreme Court has explained that this provision reflects
both a “liberal federal policy favoring arbitration,” and the
“fundamental principle that arbitration is a matter of contract.” AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740,
1745, 179 L.Ed.2d 742 (2011) (citing Moses H. Cone Memorial
Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 8.Ct. 927, 74
L.Ed.2d 765 (1983) and Rent-A-Center, West, Inc. v. Jackson, 561
US. 63, 67, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010)). The
Supreme Court has instructed that in line with these principles, courts
must place arbitration agreements on an equal footing with other
contracts. Concepcion, 563 U.S. at 339, 131 S.Ct. 1740 (citing
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126
S.Ct. 1204, 163 L.Ed.2d 1038 (2006)). Despite this policy favoring
enforcement of arbitration agreements, the Supreme Court has also
recognized that, under the savings clause in § 2, general state contract
principles still apply to assess whether those agreements to arbitrate
are valid and enforceable, just as they would to any other contract
dispute arising under state law. Doctor’s Associates, Inc. v.
Casarotto, 517 U.S. 681, 686-87, 116 S.Ct. 1652, 1656, 134 L.Ed.2d
902 (1996). Accordingly, ordinary state-law principles that govern
the formation of contracts are applied when deciding whether the
parties agreed to arbitration. First Options of Chicago, Inc. v. Kaplan, 514 US. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed. 2d 985 (1995).
Importantly, the savings clause in § 2 does not permit courts to
invalidate an arbitration agreement under a state law applicable only
to arbitration provisions. Concepcion, 563 U.S. at 339, 131 S.Ct.
1740; Aguillard, 908 So. 2d at 8.

In determining whether an arbitration agreement should be enforced, we first
recognize that there exists a strong legislative policy in Louisiana favoring
arbitration. Aguillard v. Auction Management Corp., 04-2804 (La. 6/29/05), 908
So.2d 1. In support of this policy, Louisiana has enacted the Louisiana Binding
Arbitration Law (LBAL), which is found at La.R.S. 9:4201-4217. Specifically,

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.

The arbitration clause in the present case specifically references the Federal
Arbitration Act (FAA), 9 U.S.C. § 1, et seg. Section Two of the FAA provides:

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

9 U.S.C. § 2 (emphasis added).

Usie raises numerous arguments in support of a reversal of the trial court’s
ruling, amongst which is that Coleman v. Jim Walter Homes, Inc., 08-1221 (La.
3/17/09), 6 So.3d 179, which the defendants and the trial court relied on, is
distinguishable from the facts of the instant case. In that case, the supreme court
held that arbitration was required in a claim arising from the sale of a
manufactured home. Although the purchaser entered into an agreement to
purchase a home manufactured by Jim Walter Homes, Inc., the initial agreement
was verbal and both parties understood that written documents would have to be
signed at a later date to complete the sale. To that point, the supreme court stated:

Moreover, we see little support for Mr. Coleman’s assertion

that the parties reached a complete oral agreement regarding the

building of the house before the closing documents were signed. It is

obvious that the parties contemplated additional documents, such as a

mortgage and promissory note, which the law requires to be reduced

to writing in order to be effective. Where the parties intend to reduce

their negotiations to writing, they are not bound until the contract is
reduced to writing and signed by them. Breaux Brothers Construction

Co. v. Associated Contractors, Inc., 226 La. 720, 77 So.3d 17, 20
(1954).

Coleman, 6 So.3d at 183.

In contrast, Usie relies on three cases from this court: Quebedeaux v.
Sunshine Homes, Inc., 06-349 (La.App. 3 Cir. 10/11/06), 941 So.2d 162, writs
denied, 06-2698, 06-2772 (La. 1/8/07), 948 So.2d 131, 134; St. Romain v.
Cappaert Manufactured Housing, Inc., 05-140 (La.App. 3 Cir. 6/1/05), 903 So.2d
1186; and Abshire v. Belmont Homes, Inc., 04-1200 (La.App. 3 Cir. 3/2/05), 896
So.2d 277, writ denied, 05-862 (La. 6/3/05), 903 So.2d 458.

In Quebedeaux, this court held invalid an arbitration agreement the seller
unilaterally added to a purchase agreement because the buyers would have lost
their $15,000.00 down payment and $7,000.00 they spent on site preparation had
they refused to sign the agreement. In St, Romain, we held that the purchaser of a
manufactured home was not required to arbitrate her redhibition claims, when the
evidence showed that the purchaser were unaware of and never signed an
arbitration agreement as part of her purchase of the manufactured home. In
Abshire, we further held that an arbitration agreement was invalid when it was not
shown to be part of the consideration for the purchase of the home and that the
manufacturer, who was not a party to the purchase agreement, could not
unilaterally “assign additional consideration for the perfection of the sale.”
Abshire, 896 So.2d at 285.

Royer and Sunshine contend that the ruling in Coleman places into question
the continued viability of the holdings in Quebedeaux, St. Romain, and Abshire. In
Fin & Feather Chalets, LLC v. Southern Energy Homes, Inc., 13-6082, 2014 WL
4354459 (E.D. La. Sept. 2, 2014), which was quoted by the trial court, the federal

court declined to address the viability of Quebedeaux, St. Romain, and Abshire

because Coleman was on point with the facts at issue in that matter. However, the
court in Fin & Feather recognized that state law is applicable to the initial
determination of whether an arbitration agreement is valid.

In Posadas v. The Pool Depot, Inc., 02-1819, pp. 3-4 (La.App. 1 Cir.
6/27/03), 858 So.2d 611, 613-14, writ denied, 03-2125 (La.11/7/03), 857 So.2d
502 (citations omitted) (emphasis added), the court stated as follows:

Although a state law cannot be used to invalidate an arbitration
agreement [governed by the FAA] when the law applies only to
arbitration agreements, a state law may be applied to invalidate an
arbitration agreement if that law governs issues concerning the
validity, revocability, and enforceability of contracts generally. Thus,
generally applicable contract defenses, such as fraud, duress, or
unconscionability, may be applied to invalidate arbitration agreements
without contravening the FAA.

The written purchase agreement in this instance was executed by Usie and
Royer on April 10, 2007. Usie alleges that the sale was complete as of that date;
while the Royer and Sunshine contend that the sale was not completed until May 5,
2007, when the document containing the arbitration clause was executed. Pursuant
to La.Civ.Code art. 2456, “[o}wnership is transferred between the parties as soon
as there is agreement on the thing and the price is fixed, even though the thing sold
is not yet delivered nor the price paid.” In this instance, the purchase agreement
set forth the specific manufactured home that Usie was purchasing and the price to
be paid for the home being purchased. While she had not yet obtained financing
for the home, La.Civ.Code art. 2456 specifically states that payment of the
purchase price is not necessary for ownership to transfer.

Additionally, there is no provision in the purchase agreement making the
procurement of financing a condition precedent to the sale. Although the purchase

agreement states, “Title to the within described unit passes as of the date of signing of

the retail installment or security agreement by the purchasers even though physical

delivery may not be made until a later date”, financing was not being provided by
either the seller or the manufacturer, and those financing documents between the
buyer and the third-party lender, if any, were not necessary to the transaction at
hand. Further, while the parties anticipated that Usie would trade her used
manufactured home as partial payment for the new home, the actual trade in was
not required prior to the transfer of ownership of the new home.

Although the trial court concluded that Coleman was controlling, we find
that it is distinguishable from the facts at issue here. In Coleman, the parties, who
initially entered into a verbal agreement, understood that written documents were
necessary to perfect the sale, including the financing documents, which were
facilitated by the seller. In the instant case, the parties agree that a written
purchase agreement was executed on April 10, 2007, which was clear as to the
object of the sale and the price. There were no conditions precedent set forth in the
agreement pertaining to this transaction. Indeed, the language in the document
itself refers to the purchase as a completed transaction. Moreover, there was

neither verbal discussion nor written provisions concerning the necessity to
arbitrate at the time the purchase agreement was executed. The first mention of
the arbitration agreement was contained in the Acknowledgment and Agreement
executed by the parties on May 5, 2007. However, none of the documents.

executed on May 5, 2007, were necessary for a completed sale because the

ownership of the home was transferred on April 10, 2007, at which time either

Although the Purchase Agreement indicated, in two different locations, that the
agreement was subject to the terms and conditions stated on both sides of the agreement, only the
front side of the document was introduced into evidence at the hearing on the exception of
prematurity.

? In addition to the Acknowledgment and Agreement, Usie executed a Placement and
Service Agreement, an Important Health Notice, a document concerning skirting kits, a
Consumer Information document from Sunshine, and the Bill of Sale.

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party could have demanded specific performance of the contract. Had Usie sought
to rescind the sale after that date, Royer could legally have denied her request.

Further, while Royer and Sunshine pontificate that Coleman overturned the
holdings of this court in Quebedeaux, St. Romain, and Abshire, we find that each
of these cases is factually distinguishable from Coleman. To hold to the contrary
would be to give every seller the absolute power to demand, even after the fact,
that purchasers sign arbitration agreements or risk losing their money or property.
Thus, we conclude that the trial court erred in sustaining the peremptory exceptions
of prematurity requiring arbitration in this case based upon the holdings in
Coleman and Fin & Feathers.

We turn now to determine the validity of the arbitration clause in the
agreement dated May 5, 2007, and its effect, if any, when considered separately
from the previously executed sale. It is clear that the arbitration agreement, if valid
under the contract laws of this state, could, by its own terms, bind the parties to
arbitration for any claims related to the prior sale. It is not disputed that the
agreement containing the arbitration language was executed by Usie and Royer,
through its president, Amy, and that Sunshine was neither a party to the sale nor
represented in person when this document was executed.

We find that the facts presented herein are indistinguishable from those in
Rodriguez v. Ed’s Mobile Homes of Bossier City, Louisiana, 04-1082 (La.App. 3
Cir. 12/8/04), 889 So.2d 461, writ denied, 05-83 (La. 3/18/05), 896 So.2d 1010.
There, an arbitration agreement was invalidated for lack of consent by the
purchasers, who executed a purchase agreement for a mobile home prior to the
mention of or signing of the arbitration agreement. However, despite the fact that
they were already legally and financially liable for the mobile home, the Rodriguez

plaintiffs genuinely believed, even if they were never explicitly told so, that the

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execution of the arbitration agreement was a prerequisite to their gaining
possession of the home. We held that this “understanding was error under the
law.” Id. at 464. We, likewise, hold that Usie’s understanding in this case was
also error under the law. Accordingly, we find that Usie’s consent to the
arbitration agreement is invalidated based on this legal error.

Further, as we noted in Rodriguez, the manufacturer “knew or should have
known that the arbitration agreement could not be part of the consideration of the
original contract, especially as no mention of arbitration was made until after
signing the original contract. A party cannot, unilaterally, assign additional
consideration for the perfection of a sale.” Jd. Even if the purchase agreement and
arbitration agreement had been contemporaneously, evidence is still required that
the arbitration agreement was part of the consideration of the original purchase
agreement for it to be valid. Abshire, 896 So.2d 277. In this instance, no such
evidence is present. Thus, Sunshine, who was not a party to the purchase
agreement, is precluded from unilaterally assigning additional consideration for the
perfection of the sale in the form of the arbitration agreement. Had Royer required
Usie to agree to the arbitration agreement as to both it and Sunshine as additional
consideration for the purchase, it was obligated to include that as a condition of the
sale and make it a part of the purchase agreement. It failed to do so. Accordingly,
the arbitration agreement fails on its own merits as to both Royer and Sunshine for
failure of consideration.

DISPOSITION

For the reasons assigned herein, we grant and make peremptory the
application for supervisory writs filed by Doris H. Usie, and in doing so, reverse
the judgment of the trial court sustaining the exceptions of prematurity in favor of

Royer Mobile Homes of Opelousas, Inc. and Sunshine Homes, Inc. We assess all

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costs of this writ application to Royer Mobile Homes of Opelousas, Inc. and
Sunshine Homes, Inc.

WRIT GRANTED AND MADE PEREMPTORY.

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