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Doe v. Stoneridge Homes, Inc.

United States District Court, N.D. Alabama, Northeastern Division

April 16, 2019

JANE DOE and JOHN DOE, Plaintiffs,
v.
STONERIDGE HOMES, INC., et al., Defendants.

          MEMORANDUM OPINION

         Plaintiffs who identify themselves by use of the pseudonyms “Jane and John Doe” filed this action on December 21, 2018, [1] and filed an amended complaint on January 7, 2019.[2] They named the following defendants: Stoneridge Homes, Inc. (“Stoneridge”); James O. Wright, the Chief Executive Officer of Stoneridge; and American Southern Homes, LLC, the entity that owns Stoneridge.[3] Plaintiffs assert a federal claim under the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3601 et seq. (the “FHAA”), and supplemental state law claims for breach of contract and violation of the Alabama Deceptive Trade Practices Act. This opinion addresses defendants' motion to compel arbitration.[4]

         I. ALLEGATIONS OF PLAINTIFFS' AMENDED COMPLAINT

         Plaintiff Jane Doe suffers from multiple medical conditions that impair her ability to see and walk without mobility aids, including a wheelchair.[5] She and her husband John Doe first became interested in contracting with Stoneridge to build a home in Phase 6 of the “Midtowne on the Park” subdivision located in Huntsville, Alabama, during late February or early March of 2016.[6] Phase 6 was not yet under construction, but the Does nonetheless chose a floor plan and began to modify it to accommodate Jane Doe's disabilities while they waited on Phase 6 to open.[7] When Phase 6 did open in March of 2017, plaintiffs immediately notified the real estate agent representing Stoneridge that they wanted to build a home, “and discussions regarding Plaintiffs' requested changes necessary for wheelchair accessibility immediately ensued.”[8]

         Plaintiffs paid a deposit on April 9, 2017, and began working with a draftsman to finalize their building plans.[9] They signed a Purchase Agreement with Stoneridge on June 11, 2017, contracting to build a home on a lot in Phase 6 of Midtowne on the Park, with specified modifications to accommodate Jane Doe's accessibility needs.[10]The modifications specified in the contract were not all implemented in the home, and defendants Stoneridge and Wright either did not correct the errors when they were identified, or they charged plaintiffs to make additional modifications.[11]

         Stoneridge and Wright informed plaintiffs on April 19, 2018, that they would terminate the Purchase Agreement if plaintiffs did not agree to release defendants from liability for their negligent and discriminatory acts.[12] That was only eight days prior to the scheduled closing date of April 27, 2018, when the Does' mortgage rate was scheduled to lock in, and eleven days prior to the date on which the Does were scheduled to vacate their apartment.[13] An attorney for Stoneridge “gave the Does an ultimatum and a period of merely four (4) hours on April 20, 2018, in which to waive their civil rights to avoid the unilateral termination of their contract, which the Does refused to waive.”[14] Stoneridge apparently did not terminate the contract on that date, however, because an attorney for American Southern Homes, LLC, contacted plaintiffs in June of 2018 to “insist[] that any resolution of the dispute concerning completion and sale of the subject dwelling would require Plaintiffs to waive and release any and all claims of disability discrimination.”[15] Plaintiffs assert that defendants Stoneridge and Wright deceived the City of Huntsville by failing to provide the City with updated building plans, which caused the City to issue a certificate of occupancy for the home without being aware that certain accessibility features had been omitted.[16]

         Plaintiffs filed a complaint against all defendants with the United States Department of Housing and Urban Development (“HUD”) on July 5, 2018, and that complaint remains pending.[17] On September 27, 2018, after receiving notice of plaintiffs' HUD complaint, all defendants unilaterally terminated the Purchase Agreement, “alleging false pretenses, such as a failure of the Does to communicate with Defendants, and have been unsuccessfully attempting to return their contract payments since that date.”[18] John Doe informed defendants' attorney by letter dated September 28, 2018, that the unilateral termination of the Purchase Agreement violated the face of the Agreement and was also a false and misleading trade practice under Alabama law.[19] An attorney for American Southern Homes, LLC, informed the Does on November 8, 2018, that “the waiver of the ability to enforce their civil rights against Defendants was a condition precedent to allowing their subsidiary [i.e., Stoneridge] to sell the home[, ] and cut off further conciliation or settlement discussions.”[20]

         Plaintiffs claim that all defendants violated the FHAA by discriminating against Jane Doe because of her disability; “coercing, intimidating, threatening, or interfering with Plaintiffs in the exercise or enjoyment of” their FHAA rights; and retaliating against plaintiffs for filing a HUD complaint.[21] They request injunctions to prevent future discrimination, and to require defendants to correct the construction errors and convey the home to plaintiffs. They also request compensatory damages, punitive damages, and attorney fees.[22] Plaintiffs also claim that Stoneridge and Wright breached the Purchase Agreement by failing to properly complete construction of the home and convey title to them.[23] For that claim, they seek specific performance of the Purchase Agreement and compensatory, consequential, and incidental damages.[24] Finally, plaintiffs claim that defendants Stoneridge and Wright violated the Alabama Deceptive Trade Practices Act by unilaterally terminating the Purchase Agreement under false and misleading pretenses in order to interfere with plaintiffs' civil rights and avoid the expense of correcting the construction errors identified by plaintiffs.[25] For that claim, they seek damages, attorney fees, and costs.[26]

         II. RELEVANT PROVISIONS OF THE PURCHASE AGREEMENT

         The Purchase Agreement executed by plaintiff and Stoneridge on June 11, 2017, contains the following provision:

         21. Arbitration:

It is hereby agreed that all claims, disputes and controversies between Buyer [i.e., John and Jane Doe] and Seller [i.e., Stoneridge] arising from or related to the subject home, identified herein, or to any defect in or to the subject home or the real Property on which the subject home is situated, or the sale of the subject home by Seller, including but not limited to any claim for breach of contract, negligent or intentional misrepresentation, excluding only those claims by Seller against Buyer for Buyer's breach of this Agreement, shall be submitted to binding arbitration by and pursuant to the arbitration provision contained in the Limited Warranty Agreement, as of the Effective Date[27] (Federal Arbitration Act (9 U.S.C. §§ 1-6)). A copy of the Limited Warranty Agreement has been made available to Buyer, and is incorporated herein by reference, and made a part of this Agreement.

Doc. no. 3-1 (Purchase Agreement), § 21 (alterations supplied).

         The Purchase Agreement also states:

         4. Addendums, Exhibits and Documents Available on Website:

Additional addendums may be executed by the parties hereto from time to time. The additional addendums shall amend and become a part of this Agreement, and all of the terms and provisions of such addendums shall be incorporated herein by this reference upon execution of such may include, but shall not be limited to the following:
A. Plans
B. Specification/Selection Sheets
C. Sales Agreement Addendum(s)
D. Change Order(s)
E. Contract Summary/Addendum
F. New Home Presentation Agreement
G. Limited Warranty Agreement
H. 2-10 Warranty Addendum
Buyer acknowledges that the following documents referenced in this Agreement are available on Seller's website, www.stoneridgehomesinc.com, or if Buyer desires, Seller shall make available to Buyer hard copies of the following materials, of which Buyer is assumed to have read and accepted prior to execution of this Agreement:
A. New Home Presentation Agreement
B. 2-10 Warranty Sample Booklet
C. Limited Warranty Agreement
D. Residential Construction Performance Guidelines
E. Declaration of Covenants, Conditions and Restrictions for the applicable community, together with any amendments.
For purposes of this Agreement, where appropriate, the Limited Warranty Agreement, 2-10 Warranty and the Residential Construction Performance Guidelines shall be collectively referred to as the “Builder Guidelines.” To the extent there are any contradictory provisions in the Limited Warranty Agreement, 2-10 Warranty and the Residential Standard Performance Guidelines, the contradictory language shall be resolved with preference given to the language in the Limited Warranty, then the 2-10 Warranty and finally the Residential Standard Performance Guidelines.

Doc. no. 3-1 (Purchase Agreement), § 4. One footnote omitted from the foregoing citations states that “[i]f any of the documents are not available on the website, Buyer acknowledges that same are available at the office of Seller.”[28]

         The record does not contain an executed copy of the Limited Warranty Agreement, 2-10 Warranty Addendum, or 2-10 Warranty Sample Booklet. Plaintiffs explained in their declarations that those documents would have been executed at closing, but closing has not yet occurred.[29]

         The unexecuted copy of the Limited Warranty Agreement that is attached to defendants' motion to compel arbitration does not explicitly mention arbitration.[30]

         Instead, the introductory clause of the Limited Warranty Agreement states:

WHEREAS, Seller and Buyer on this same day entered into a Purchase and Sale Agreement (the “Contract”) of which this Limited Warranty Agreement (per the terms of the 2-10 Home Buyers Warranty or the 2-10 HBS) is a part, for the sale by Seller and the purchase by Buyer of a house (the “Dwelling”) located upon that certain parcel of real property located in____ County, Alabama, the address of which is____ . . . .

Doc. no. 8-1 (Limited Warranty Agreement), at ECF 5 (emphasis supplied). Plaintiffs and defendants all acknowledge that plaintiffs had access to the Limited Warranty Agreement prior to signing the Purchase Agreement on June 11, 2017, either through the Stoneridge website or otherwise.[31]

         An unexecuted copy of the 2-10 Home Buyers Warranty Application also is attached to defendants' motion to compel arbitration. It states, in pertinent part:

Buyer(s) agree that any and all claims or disputes between him (them) and the Builder/Seller (including any person you contend is responsible for a defect in your home) arising from or relating to the Warranty, shall be submitted to binding arbitration pursuant to the Federal Arbitration Act (9 U.S.C. ยงยง 1-16). By signing below, Buyer acknowledges reading the 2-10 HBW Warranty Booklet, and CONSENTS TO THE TERMS OF THAT DOCUMENT INCLUDING THE BINDING ARBITRATION PROVISION contained therein. Buyer(s) accepts the 2-10 HBW Warranty ...

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