HISTORY MAKING COURT DESICION
Husband Bound by Arbitration Agreement, But Wife, Child Are Not
A mobile home owner must arbitrate both contract and mold tort claims arising from alleged defects and mold exposure,
but his wife and child were not parties to the purchase agreement and can pursue personal injury claims in court, a Louisiana
appellate court ruled Feb. 16. Snyder v. Belmont Homes Inc., No. 2004 CA 0445 (La. App., 1st Cir.).

The IEQ Review
Husband Bound by Arbitration Agreement, But Wife, Child Are Not
by HarrisMartin Publishing 
BATON ROUGE, La. - A mobile home owner must arbitrate both contract
and mold tort claims arising from alleged defects and mold exposure,
but his wife and child were not parties to the purchase agreement
and can pursue personal injury claims in court, a Louisiana
appellate court ruled Feb. 16. Snyder v. Belmont Homes Inc., No.
2004 CA 0445 (La. App., 1st Cir.).

Doug Johnson and Courtney Snyder initially sued Belmont Homes Inc.
and Bayou State Mobile Homes Inc. in 2002, alleging defects in a
mobile home purchased that same year by Johnson, prior to the
couple's marriage. They sought damages for redhibition, breach of
warranty, negligent misrepresentation and unfair trade practices.

A year later, Johnson and Snyder amended the complaint to allege
injuries to themselves and to their newborn child arising from
exposure to mold.

Belmont Homes filed an exception, contending that the purchase
contract mandated mediation and binding arbitration of all matters
arising from the purchase of the mobile home.

The 19th Judicial District Court, Parish of East Baton Rouge, denied
the exception and Belmont appealed.

The 1st Circuit Court of Appeal distinguished Johnson's claims from
those of his wife and child, noting that Johnson was the only party
to the purchase agreement.

The court reversed on Johnson's contract and related redhibition
claims, ruling that Johnson was bound by the contract's arbitration
provision on those claims.

Johnson's tort claims were more problematic and there are no
Louisiana cases directly on point, the court continued.

The Louisiana Arbitration Law directs the courts to follow the
Federal Arbitration Act, and the federal law requires a two-step
determination: whether the parties agreed to arbitration, and
whether that agreement was 'broad' or 'narrow.'

A narrow clause would limit arbitration to matters relating to the
performance of the contract, but the language in this instance is
broad, the court explained, requiring arbitration of 'a dispute,
controversy or claim of any kind or nature arising between he
parties.'

The court noted that while there are no Louisiana cases on point,
California appellate courts have applied arbitration agreements to
tort claims 'when the tort liability 'had its roots' in the sales
agreement containing the arbitration clause' (Izzi v. Mesquite
Country Club, 186 Cal. App. 3d 1309, 231 Cal; Rptr. 315 [1986]).

'The wording of this particular agreement clearly states that any
and all claims of any nature, contract or tort, will be settled by
arbitration,' the court said. ''But for' the defects in the product
resulting in the mold, Johnson would have no tort claim against
defendants for toxic mold. Therefore, this clause is sufficiently
broad and sufficiently clear to include this toxic mold tort claim.'

The court added that courts have found that a party seeking to
enforce the provisions of a contract must accept all provisions.

Snyder also asserted contract claims, but was not a party to the
purchase agreement and was not married to Johnson at the time of
purchase, the court said. The court found no evidence that Snyder
has a right of action or interest in the suit, but gave her 30 days
to amend the petition.

But Snyder can continue to pursue her products liability claims, as
can her child, the court decided.

'There is nothing in the record showing that Snyder had knowledge of
the arbitration agreement,' the court said. 'Nor is there any
evidence that she was obligated under the contract, or the
obligation was incurred on her behalf, or that she benefited in
anyway from that agreement.'

'We are therefore in agreement with the trial court's conclusion
that Snyder cannot be bound to arbitrate based on a contract which
she did not sign when there is no evidence she knew about the
agreement, was obligated by it, that it was incurred on her behalf,
or that she benefited from it,' the court decided. 'It should be
obvious without citation, that a party cannot create title in
herself by judicial confession, where there is no legal basis for
her title.'

Richard C. Dalton of Dalton Law Firm in Lafayette, La., represents
Johnson and Snyder.

John P. Wolff III and Kyle A. Ferachi of Keogh, Cox & Wilson in
Baton Rouge are counsel for Belmont Homes. Larry D. Book of Baton
Rouge is counsel for Bayou State Mobile Homes.
http://www.imakenews.com/pureaircontrols/e_article000373433.cfm?x=b4B115h,bvtv58G