Adair Homes, Inc. v. Dunn Carney Allen Higgins & Tongue, LLP
325 P.3d 49
Or. Ct. App.2014Background
- Adair Homes was sued by Haynes for breach of contract and related claims after construction of a home.
- Dunn Carney represented Adair Homes in the Haynes litigation and contested the attorney fees petition by Haynes.
- The contract required mediation/arbitration before disputes could proceed and set a 5% liquidated damages clause and prevailing party attorney fees.
- There is an arbitration paragraph (15) and a separate attorney-fee paragraph (16); the dispute is whether 15 covers all disputes or only course-of-construction disputes.
- The trial court held the arbitration clause did not apply to post-construction claims for fees, entering judgment for Dunn Carney.
- The Oregon Court of Appeals reversed, finding the contract ambiguous and that summary judgment was inappropriate due to competing extrinsic evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract is ambiguous about arbitrating post-construction disputes | Adair Homes argues arbitration covers all disputes under the contract. | Dunn Carney argues arbitration covers only course-of-construction disputes. | Ambiguity exists; extrinsic evidence needed to resolve. |
| Whether extrinsic evidence on contract meaning precludes summary judgment | Hayneses' and Adair Homes' affidavits show intent that post-construction disputes were not arbitrable. | Dunn Carney contends extrinsic evidence should not prevail if contract is ambiguous. | Summary judgment improper; issues of fact remain. |
| Whether the contract requires arbitration of all disputes or only course-of-construction disputes | Arbitration is broad and covers all disputes arising from the contract. | Arbitration is limited to course-of-construction disputes. | Ambiguity remains; cannot resolve as a matter of law. |
| Whether the court should apply a presumption of arbitrability to resolve ambiguity | Presumption supports arbitrating all disputes. | Presumption should not override the contract’s ambiguity and extrinsic evidence. | Presumption rejected; cannot resolve on summary judgment. |
Key Cases Cited
- Gemstone Builders, Inc. v. Stutz, 245 Or App 91 (Or. App. 2011) (arb. presumption when no extrinsic evidence; ambiguous contract reviewed with extrinsic evidence)
- Industra/Matrix Joint Venture v. Pope & Talbot, 341 Or 321 (Or. 2006) (arbitration requires consent; considers contract context)
- Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287 (U.S. 2010) (arbitration is strictly a matter of consent)
- Abercrombie v. Hayden Corp., 320 Or 279 (Or. 1994) (extrinsic evidence governs ambiguity resolution in contract terms)
- Dial Temporary Help Service v. DLF Int’l Seeds, 255 Or App 609 (Or. App. 2013) (extrinsic evidence creates triable issues when contract ambiguous)
- Milne v. Milne Construction Co., 207 Or App 382 (Or. App. 2006) (ambiguity threshold and summary judgment standards)
- Yogman v. Parrott, 325 Or 358 (Or. 1997) (contract ambiguity standard and interpretation framework)