Date: 12-14-2007

Case Style: Kathy Rust v. Carriage Services of OK, Inc.

Case Number: 2007 OK CIV APP 125

Judge: Carol M. Hansen

Court: Oklahoma Court of Civil Appeals on appeal from the District Court of Oklahoma County

Plaintiff's Attorney:

Michael Gassaway, Oklahoma City, OK, for Plaintiff/Appellees,

Defendant's Attorney:

Clyde A. Muchmore, Robert G. McCampbell, Chris M. Stephens, CROWE & DUNLEVY, Oklahoma City, Oklahoma, for Defendant/Appellants.

Description:

�1 Defendant/Appellants Carriage Services of OK, Inc., Carriage Funeral Holdings, Inc., d/b/a/ Resthaven Memory Gardens, and Resthaven Memorial Park (collectively, Cemetery) appeal from an interlocutory order denying their Motion to Compel Arbitration.1 Plaintiff/Appellees Kathy Rust, Michal Rust, and Cari Smith (collectively, Rusts) purchased crypts in Cemetery's mausoleum under contracts containing no arbitration provision. Years later, Rusts purchased a bench at Cemetery under a purchase contract containing a broad arbitration clause (Bench Contract). The following year Rusts sued Cemetery for negligent treatment of human remains, negligent infliction of emotional distress, and outrage. Cemetery sought to compel arbitration of Rusts' claims under the arbitration clause in the Bench Contract, which provided it applied to any dispute between the parties. Rusts asserted their claims were unrelated to the Bench Contract.

�2 On de novo review, we hold the Bench Contract arbitration clause did not retroactively modify the earlier agreements, and therefore did not apply to disputes arising from the relationship of the parties commenced by the earlier agreement.

�3 The record shows Kathy and Michal Rust purchased two crypts at Cemetery under an agreement dated May 21, 1993.2 Rusts' decedent, Robert Rust, was interred in one of the crypts May 22, 1993. Kathy Rust later purchased four more crypts in an agreement dated August 26, 1993.3 The record contains an amended contract for the purchase of these same 4 crypts, but at a slightly higher cost, apparently due to a longer financing term, dated September 5, 1993.4 The agreements for the purchases of the crypts do not include any arbitration language.

�4 In 2005, Kathy Rust purchased a bench right at Cemetery. The Bench Contract, dated July 19, 2005, contains the following arbitration clause on its front page:

NOTICE: BY SIGNING THIS AGREEMENT, YOU ARE AGREEING TO HAVE ANY AND ALL DISPUTES BETWEEN YOU AND THE SELLER RESOLVED BY ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A COURT OR JURY TRIAL AS WELL AS YOUR RIGHT OF APPEAL.

At the bottom of the front page of the Bench Contract, below the signature lines, is a notice that the back of the contract contains additional terms. The back of the contract includes the following provision:

ARBITRATION: ANY CONTROVERSY OR CLAIM ARISING BETWEEN THE PARTIES (INCLUDING THE INTERPRETATION OF THIS ARBITRATION CLAUSE) SHALL BE SUBMITTED TO AND FINALLY RESOLVED BY MANDATORY AND BINDING ARBITRATION IN ACCORDANCE WITH THE STATUTES, RULES OR REGULATIONS GOVERNING ARBITRATIONS IN THE STATE WHERE THIS AGREEMENT HAS BEEN EXECUTED. IN THE ABSENCE OF SUCH STATUTES, RULES OR REGULATIONS, THE ARBITRATION PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE APPLICABLE RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA"); PROVIDED, HOWEVER, THAT THE FOREGOING REFERENCE TO THE AAA RULES SHALL NOT BE DEEMED TO REQUIRE ANY FILING WITH THAT ORGANIZATION, NOR ANY DIRECT INVOLVEMENT OF THAT ORGANIZATION. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE APPLICABLE STATUTES, RULES OR REGULATIONS, THE ARBITRATOR SHALL BE SELECTED BY MUTUAL AGREEMENT OF THE PARTIES OR BY A COURT OF COMPETENT JURISDICTION IN THE CITY OR COUNTY IN WHICH SELLER IS LOCATED, UPON THE APPLICATION OF ONE OR BOTH PARTIES. THIS ARBITRATION PROVISION SHALL BE BINDING ON THE SELLER, YOU AS THE PURCHASER, AND ANY OTHER PERSON WHO CLAIMS TO BE A THIRD PARTY BENEFICIARY OF THIS AGREEMENT.

The parties do not dispute that the 2005 Bench Contract was for the purchase of a bench in front of Rusts' crypts.

�5 In their Petition, Rusts alleged Cemetery was negligent in interring bodies in its mausoleum.5 As noted above, Rusts asserted claims for negligent treatment of human remains, negligent infliction of emotional distress, and outrage. Rusts made no claim related to the bench or the Bench Contract in their Petition.

�6 Cemetery responded to the Petition with a Motion to Compel Arbitration based on the Bench Contract. Cemetery asserted that Rusts' "Petition asserts a variety of claims in tort, all of which arise out of the contractual setting of the written contracts between" Cemetery and Kathy Rust. Rusts objected to the Motion to Compel Arbitration, arguing that none of their claims related to the purchase of the bench, and that therefore the arbitration clause in that contract was not applicable to their claims.

�7 The trial court denied Cemetery's Motion to Compel Arbitration, and Cemetery appeals. An order denying a motion to compel arbitration is an interlocutory order appealable by right. Freeman v. Prudential Sec., Inc., 1993 OK CIV APP 65, � 6, 856 P.2d 592, 594. We review the grant or denial of a motion to compel arbitration de novo. Towe, Hester & Erwin, Inc. v. Kansas City Fire & Marine Ins. Co., 1997 OK CIV APP 58, � 4, 947 P.2d 594, 596.

�8 In seeking to compel arbitration, a party "must present a statement of the law and facts showing an enforceable agreement to arbitrate the issues presented by the petition." Rogers v. Dell Computer Corp., 2005 OK 51, �16, 138 P.3d 826. Ambiguities are resolved in favor of finding the dispute is arbitrable; "arbitration should be allowed unless the court can say with 'positive assurance' the dispute is not covered by the arbitration clause." City of Muskogee v. Martin, 1990 OK 70, 796 P.2d 337, 340. However, the courts will not impose arbitration where the parties have not agreed to it because "(a)rbitration is a matter of consent, not coercion." Oklahoma Oncology & Hematology P.C. v. US Oncology, Inc., 2007 OK 12, �22, 160 P.3d 936.

�9 In determining whether the parties have consented to arbitration, the courts will decide whether there is a valid enforceable arbitration agreement, whether the parties are bound by the arbitration agreement, and whether the parties agreed to submit a particular dispute to arbitration. Id. The contract must be construed to carry out the intent of the parties at the time the contract was made. Oxley v. General Atlantic Resources, Inc., 1997 OK 46, 936 P.2d 943, 945.

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http://www.oscn.net/applications/oscn/deliverdocument.asp?cite=2007+OK+CIV+APP+125

Outcome: �10 Rusts' tort claims, to the extent they arise from a contractual relationship between the parties, relate only to the 1993 crypt purchase contracts. In those contracts, the parties expressed no intent to submit disputes to arbitration. The Bench Contract does clearly express such an intent. However, the nature of Rusts' claims do not depend on the existence of the Bench Contract, and do not arise from that contractual relationship. Only if we determined the parties intended the arbitration clause in the Bench Contract to retroactively modify the 1993 contracts could we compel arbitration. The Bench Contract does not state such an intent. Therefore, we hold the Bench Contract arbitration clause did not retroactively modify the earlier agreements, and does not apply to disputes arising from the relationship of the parties commenced by the earlier agreement. The trial court's order is AFFIRMED.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None