United States District Court, W.D. Washington, Tacoma
DOUGLAS R BAKER and MARIA KAY DUPUIS-BAKER, as a married couple, Plaintiffs,
CMH HOMES, INC., a Tennessee corporation, dba CLAYTON HOMES, #742, Defendant.
ORDER ON DEFENDANT'S MOTION TO ALTER, VACATE OR
AMEND PURSUANT TO FRCP 59(E) OR ALTERNATIVE MOTION PURSUANT
TO CR 60(B), AND REPLACEMENT ORDER ON DEFENDANT'S MOTION
TO COMPEL ARBITRATION
J. BRYAN UNITED STATES DISTRICT JUDGE
MATTER comes before the Court on Defendant CMH Homes,
Inc.'s (“CMH”) Motion to Alter, Vacate or
Amend Pursuant to FRCP 59(e) or Alternative Motion Pursuant
to CR 60(b) (“Motion to Alter”) (Dkt. 24). The
Court has considered the motions, documents filed in support
of and in opposition to the motions, and the remainder of the
record herein, and it is fully advised.
reasons set forth below, the Court should grant, in part, and
deny, in part, CMH's Motion to Alter (Dkt. 24). The Court
should vacate the Order Denying CMH's Motion to Compel
(Dkt. 21) and replace it with this order. And the Court
should deny CMH's Motion to Compel (Dkt. 14).
BACKGROUND & PROCEDURAL HISTORY
case is an alleged breach of contract and construction
dispute, including a Consumer Protection Act violation claim,
arising from the alleged breach of contract. Dkt. 14, at 2.
In February 2016, Plaintiffs and CMH apparently contracted
for the purchase of land and a manufactured home; a
preliminary sales agreement was executed on August 26,
2016. Dkts. 14, at 2; 18, at 2. A final sales
agreement (“Sales Agreement”) was signed on
February 21, 2017. Dkts. 25; and 25-1. CMH contends that the
Parties executed a Binding Dispute Resolution Agreement
(“BDRA”) as part of the sale, on or about March
9, 2016, and that the Court should compel the Parties to seek
arbitration dispute resolution consistent with the BDRA.
Dkts. 14, at 2; 24; 27; and 31. Plaintiffs argue that the
BDRA is unenforceable, having been superseded and replaced by
the Sales Agreement, being unconscionable, and lacking
consideration and mutuality. Dkts. 18; 26; and 29.
1, 2019, in the Order on Defendant's Motion to Compel
Arbitration and Stay Proceedings (“Order”), the
Court denied CMH's Motion to Compel Arbitration. Dkt. 21.
The Court ruled that the February 21, 2017 Sales Agreement
superseded and revoked the BDRA. Dkt. 21. The Court concluded
that, “[n]otwithstanding liberal federal policy
favoring enforcement of arbitration agreements, there does
not appear to be a valid, enforceable arbitration agreement
here.” Dkt. 21, at 7. Because the Court found that
there was no valid, enforceable arbitration agreement, the
Court declined to discuss Plaintiffs' secondary argument
that the BDRA is unenforceable for lacking consideration and
mutuality. Dkt. 21, at 7.
15, 2019, CMH filed the instant Motion to Alter. Dkt. 24. CMH
moved to alter, vacate, or amend the Order (Dkt. 21) for two
reasons: (1) CMH alleged the Court did not recognize the
scope of the language of the BDRA, and (2) the Court
improperly relied upon the unsigned and unsworn declaration
of Maria Kay Dupuis-Baker in issuing the Order. Dkt. 24.
responded in opposition to the instant Motion to Alter. Dkt.
26. Plaintiffs' response made, in part, two arguments:
(1) CMH's Rule 59(e) or 60(b) Motion to Alter was
incorrectly filed and should have been filed as a motion for
reconsideration governed by LCR 7(h); and (2) CMH has not
shown manifest error or new facts or authority sufficient to
grant a motion for reconsideration. Dkt. 26.
replied in support of the instant Motion to Alter. Dkt. 27.
Court granted, in part, and denied, in part, and otherwise
renoted to September 4, 2019, CMH's instant Motion to
Alter. Dkt. 28. The Court amended the Order (Dkt. 21) to cite
to the Notice of Errata's signed, sworn declaration
(Dkts. 25, at 25-1) and concluded that the Order's
reliance on the unsigned, unsworn declaration (Dkts. 19; and
19-1) was harmless. Dkt. 28. The Court granted Plaintiffs
leave to file an additional response and granted CMH leave to
file a reply. Dkt. 28.
filed a Supplemental Response Supporting Opposition to
Defendant's Motion to Compel (“Supplemental
Response”). Dkt. 29. Plaintiffs maintains that
“the BDRA is unenforceable (1) for lack of
consideration and mutuality of obligation, and (2) because it
was not made a part of the Sales Agreement which clearly
contained an integration clause establishing the final
manifestation of the contract between the parties.”
Dkt. 29, at 1. Plaintiffs add that the BDRA should be
stricken as unconscionable. Dkt. 29, at 7.
filed a Reply in Support of Motion to Stay Proceedings and
Compel Arbitration/Motion to Amend (“Reply”).
Dkt. 31. CMH maintains that the “BDRA is enforceable
and binding, and these proceedings should be stayed while the
parties pursue resolution of their dispute via binding
private arbitration as contracted.” Dkt. 31, at 1. CMH
argues that Plaintiffs never raised unconscionability as a
defense to arbitration in response to CMH's Motion to
Compel, and it was therefore waived. Dkt. 31, at 8. CMH
further argues that Plaintiffs' unconscionability
argument is without merit. Dkt. 31, at 8.
filed a Notice of Intent to File Surreply (Dkt. 32), and
filed a Surreply (Dkt. 33) requesting that the Court strike
or disregard two statements in made by CMH in its Reply.
Plaintiffs argue that CMH (1) made an unsupported
representation in its reply, and (2) introduced a declaration
lacking personal knowledge. Dkt. 33. CMH filed a Motion to
Strike Surreply and Motion for Leave to Supplement Reply on
Defendant's Motion to Compel Arbitration/Motion to Amend
(Dkt. 34) not in compliance with LCR 7(g)(4), which the Court
need not consider.
Court has the power to reconsider, revise, alter, or amend
the Order for cause. See Fed. R. Civ. P. 60;
City of Los Angeles, Harbor Div. v. Santa Monica
Baykeeper, 254 F.3d 882, 886-87 (9th Cir. 2001) (quoting
Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th
Cir. 1981)) (citing, e.g., Toole v. Baxter Healthcare
Corp., 235 F.3d 1307, 1315 (11th Cir. 2000) (stating
that when a district court issues “an interlocutory
order, the district court has plenary power over it and this
power to reconsider, revise, alter or amend the interlocutory
order is not subject to the limitations of Rule 59”));
see also LCR 7(h); see generally Dkt. 28.
In light of the additional briefing from the Parties
regarding enforcement of the BDRA and the need for further
consideration, the Court should vacate the Order Denying
CMH's Motion to Compel (Dkt. 21) and replace it with this
WASHINGTON STATE SUBSTANTIVE LAW APPLIES
the rule of Erie R.R. Co. v. Tompkins, 304 U.S. 64
(1938), federal courts sitting in diversity jurisdiction
apply state substantive law and federal procedural law.
Gasperini v. Center for Humanities, Inc., 518 U.S.
415, 427 (1996).
ARBITRATION LEGAL STANDARDS
Federal Arbitration Act (“FAA”), 9 U.S.C.,
established a “liberal federal policy favoring
arbitration.” AT&T Mobility LLC v.
Concepcion, 131 S.Ct. 1740, 1745 (2011). Creating
“a body of federal substantive law of arbitrability,
” the FAA applies to “any arbitration agreement
within the coverage of the Act.” Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983). The FAA applies to any “written provision in
… a contract evidencing a transaction involving
commerce.” 9 U.S.C. § 2. Pursuant to the FAA,
arbitration agreements are “valid, irrevocable and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.
doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration, whether the problem at hand
is the construction of the contract language itself or an
allegation of waiver, delay, or a like defense to
arbitrability.” Moses H. Cone Mem'l Hosp.,
460 U.S. at 24-25 (1983). “Courts must indulge every
presumption ‘in favor of arbitration, whether the
problem at hand is the construction of the contract language
itself or an allegation of waiver, delay, or a like defense
to arbitrability.'” Zuver v. Airtouch
Commc'ns, Inc., 153 Wn.2d 293, 301 (2004) (quoting
Moses H. Cone Mem'l Hosp., 460 U.S. at 25).
“The party opposing arbitration bears the burden of
showing that the agreement is not enforceable.”
Id. at 302.
the FAA mandates that ‘district courts shall
direct the parties to proceed to arbitration on issues as to
which an arbitration agreement has been signed[, ]' the
FAA limits courts' involvement to ‘determining (1)
whether a valid agreement to arbitrate exists and, if it
does, (2) whether the agreement encompasses the dispute at
issue.'” Cox v. Ocean View Hotel Corp.,
533 F.3d 1114, 1119 (9th Cir. 2008) (emphasis in the
original) (quoting Chiron Corp. v. Ortho Diagnostic Sys.,
Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). “If
the response is affirmative on both counts, then the Act
requires the court to enforce the arbitration agreement in
accordance with its terms.” Chiron Corp., 207
F.3d at 1130. If the court determines the matter is subject
to arbitration, it may either stay the matter pending
arbitration or dismiss it. EEOC v. Waffle House,
Inc., 534 U.S. 279, 289 (2002).
assessing whether an arbitration agreement or clause is
enforceable, the Court should apply ordinary state-law
principles that govern the formation of contracts. Lowden
v. T-Mobile USA, Inc., 512 F.3d 1213, 1217-18 (9th Cir.
2008). Accordingly, the Court will apply Washington law.
follows the objective manifestation theory of contracts.
Hearst Commc'ns, Inc. v. Seattle Times Co., 154
Wn.2d 493, 503 (2005). “Under this approach, we attempt
to determine the parties' intent by focusing on the
objective manifestations of the agreement, rather than on the
unexpressed subjective intent of the parties.”
Id. “We generally give words in a contract
their ordinary, usual, and popular meaning unless the
entirety of the agreement clearly demonstrates a contrary
intent.” Id. Contracts are viewed as a whole;
particular language is interpreted in the context of other
contract provisions. See Weyerhaeuser Co. v. Commercial
Union Ins. Co., 142 Wn.2d 654, 669-70 (2000).
the writing is a complete integration, any terms and
agreements that are not contained in it are
disregarded.” Lopez v. Reynoso, 129 Wn.App.
165, 171 (2005) (internal citations omitted). “While
boilerplate integration clauses can provide strong evidence
of integration, they are not operative if they are premised
on incorrect statements of fact.” S.D. Deacon Corp.
of Washington v. Gaston Bros Excavating, Inc. 150
Wn.App. 87, 93 (2003) (internal citations omitted). “A
court may consider evidence of negotiations and circumstances
surrounding the formation of the contract, and if the
agreement is not completely integrated, additional terms may
be proved to the extent they are consistent with the written
ABRITRATION AGREEMENT ANALYSIS
make three primary arguments against the existence of a valid
agreement to arbitrate, discussed below. First, the Court
discusses whether the Sales Agreement superseded and revoked
the BDRA. Second, whether the BDRA lacks consideration and
mutuality of obligation. Finally, whether the BDRA is
Whether the Sales Agreement superseded and revoked the
BDRA, dated on or around March 9, 2016, provides, in part:
“The Parties agree to mandatory, binding arbitration
(‘Arbitration') of all Claims that are not resolved
in Mediation …. Any Party to this Agreement may
commence arbitration at any time ...