LOWE CONSTRUCTION AND DEVELOPMENT, LLC v. JESSE O. HUDGINS
A24A1647
| Ga. Ct. App. | Nov 15, 2024Background
- Lowe Construction (owned by Michael Lowe) sold two adjacent lots (Lots 8 and 9) in Walton County—Lot 9 to the Hudginses, and Lot 8 to Carrie Martin.
- Both buyers executed New Construction Purchase and Sale Agreements, which contained a broad arbitration clause.
- After construction, the Hudginses alleged Lowe Construction wrongly built Martin’s garage and septic field on Lot 9 without authorization.
- Hudginses filed suit against Lowe Construction, Martin, and related parties, claiming ejectment, trespass, nuisance, negligence, breach of warranty of title, fraud, punitive damages, and attorney fees.
- The trial court denied Lowe Construction’s motion to stay the case and compel arbitration; Lowe Construction appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the arbitration clause cover these claims? | Claims are post-sale, not arising from contract or home construction | Claims relate to the Purchase Agreement and parties' acts or omissions | The broad arbitration language encompasses these claims |
| Is the arbitration provision limited to defects? | Arbitration only applies to construction defect claims | Arbitration applies to all claims relating to the Agreement | The clause is not limited to defects; all such claims arbitrate |
| Is causal connection required for arbitration? | No sufficient connection to contract | Only a slight causal connection is needed under Georgia law | A clear causal connection exists; arbitration required |
| Should doubts about scope of arbitrable claims favor arbitration? | No, because claims do not arise from construction defects | Yes, federal policy requires resolving doubts in favor of arbitration | Court must resolve doubts in favor of arbitration |
Key Cases Cited
- Waffle House v. Pavesi, 343 Ga. App. 102 (standard for review of motions to compel arbitration and scope of arbitration clauses)
- SunTrust Bank v. Lilliston, 302 Ga. 840 (federal policy favors resolving doubts in favor of arbitration)
- Wise v. Tidal Constr. Co., 261 Ga. App. 670 (broad contractual arbitration language includes collateral disputes)
- Wedemeyer v. Gulfstream Aerospace Corp., 324 Ga. App. 47 (slight causal connection sufficient to require arbitration under Georgia law)
- Lawyers Title Ins. Corp. v. New Freedom Mtg. Corp., 285 Ga. App. 22 (losses arising out of specified acts require only some causal connection)