Title: Thomas v. Sloan Homes, LLC
Citation: N/A
Docket Number: 1100395
State: Alabama
Issuer: Alabama Supreme Court
Date: September 16, 2011

REL: 09/16/2011
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2011
____________________
1100395
____________________
Sammy Thomas and Pam Thomas
v.
Sloan Homes, LLC, et al.
Appeal from Blount Circuit Court
(CV-09-900170)
MURDOCK, Justice.
This case concerns the applicability of the doctrine of
merger to a deed executed and delivered in satisfaction of the
grantor's obligations under a residential sales agreement.
Sammy Thomas and Pam Thomas appeal from the Blount Circuit
1100395
2
Court's order granting a motion to compel arbitration filed by
Sloan Homes, LLC ("Sloan Homes"), David Sloan, and Teresa
Sloan in the Thomases' action alleging breach of contract and
tortious conduct in relation to the construction of a house by
Sloan Homes, the grantor under the residential sales
agreement.  The question presented by this appeal is whether,
under the doctrine of merger, the execution and delivery of
the deed in this case nullified an arbitration clause included
in the antecedent residential sales agreement. 
I.  Facts and Procedural History
On October 13, 2007, the Thomases entered into what
appears to be a standard form "General Residential Sales
Contract" with Sloan Homes ("the sales contract") for the
purchase of a residence, the construction of which by Sloan
Homes was nearing completion.  The sales contract contained an
arbitration clause that provided as follows:
"MEDIATION AND ARBITRATION/WAIVER OF TRIAL BY JURY:
All claims, disputes or other matters in question
arising out of or relating in any way to this
Contract or the breach thereof, including claims
against any broker or sales associate, or relating
to the relationship involved with, created by or
concerning this Contract, including the involvement
of any broker or sales associate ('Claim'), shall be
submitted to mediation with a mutually agreed upon
mediator within forty-five (45) days of notice of
1100395
The "General Residential Sales Contract" at issue here
1
had as its focus the sale of a residence by one party to
another; except for certain items to be completed before
closing as described in an addendum to the sales contract (see
infra), this sales contract by its terms was not concerned
with the construction of the residence.  Nonetheless, the
argument presented to this Court by the Thomases contemplates
3
the Claim. In the event no mediation resolution is
reached within sixty (60) days of the party's notice
of the Claim, all Claims shall be resolved by
binding arbitration by a single arbitrator in
Birmingham, 
Alabama 
in 
accordance 
with 
the
Commercial 
Arbitration 
Rules 
of 
the 
American
Arbitration Association then in effect. EACH PARTY
ACKNOWLEDGES THAT HE OR SHE IS KNOWINGLY WAIVING THE
RIGHT TO A TRIAL BY JURY RELATING TO ALL CLAIMS. All
disputes concerning the arbitrability of any Claim
or the enforceability or scope of this provision
shall be subject to the same binding arbitration.
The parties shall bear equally the cost of the
arbitrator and each party shall otherwise bear their
own costs; provided the arbitrator shall have the
authority to award costs as a part of this award to
the extent authorized by applicable law. The
arbitrator shall follow the law applicable to any
Claim and shall be empowered to award any damages or
other relief which would be available under the law
applicable to any such Claim. The determination of
the arbitrator shall be final, binding on the
parties and nonappealable, and may be entered in any
court of competent jurisdiction to enforce it. The
parties acknowledge and agree that the transactions
contemplated by and relating to this Contract, which
may include the use of materials and components
which are obtained from out-of-state and which
otherwise include the use of interstate mails,
roadways and commerce, involve interstate commerce,
as that term is defined in the Federal Arbitration
Act, 9 U.S.C. § 2."
(Capitalization in original; emphasis added.)   
1
1100395
that, but for the contended-for application of the merger
doctrine, the arbitration clause in this contract would be
applicable to their claims relating to the alleged defects in
the construction of their house. Whether that is correct is
not an issue that has been presented to us in this appeal and,
therefore, is not an issue that we address.
4
The sales contract also contained a section with a choice
of boxes to be "checked" to indicate whether the seller "does"
or "does not" agree to provide a "Home Warranty Policy" that
would be "effective for one year from the date of closing."
Neither box was checked.  In the space immediately above this
section, however, was the following handwritten statement: "1
years [sic] Builders Warranty."  On October 15, 2007, the
parties signed an addendum to the sales contract that set
forth certain items that were to be completed in a specified
manner as it related to construction of the house.  
On November 7, 2007, the Thomases and Sloan Homes
"closed" the sale of the house; a general warranty deed was
executed and delivered to the Thomases.  The deed contained
only those provisions as are characteristic of and common to
general warranty deeds, including, for example, a description
of the property, a recitation of the purchase price, language
of conveyance describing the nature of the estate conveyed,
and covenants and warranties pertaining to the quality of
1100395
In Morris v. Strickling, 579 So. 2d 609 (Ala. 1991), this
2
Court noted that in Cochran v. Keeton, 287 Ala. 439, 252 So.
2d 313 (1971), the Court held that "the rule of caveat emptor
would no longer be applicable to the sale of a newly
constructed house, and recogniz[ed] an implied warranty of
fitness and habitability with regard to such sales."  579
So. 2d at 610.
5
title held by the grantor and conveyed to the grantees.   The
deed made no mention of the sales contract and contained none
of the other terms that were in the sales contract, including
the arbitration clause.
At the closing, the Thomases also were provided a
separate written "Limited New Home Warranty" ("the home
warranty") from Sloan Homes as the "builder."  The home
warranty provided that Sloan Homes warranted the Thomases'
house "to be free from latent defects for a period of one (1)
year following closing or occupancy, whichever event shall
occur first."  The home warranty expressly stated that "[t]his
warranty is given in lieu of any and all other warranties
either express or implied, including any implied warranty of
merchantability, 
fitness 
for 
a 
particular 
purpose,
habitability and workmanship ...."   Like the warranty deed,
2
the home warranty did not contain an arbitration clause.  
1100395
6
On November 6, 2009, the Thomases filed an action in the
Blount Circuit Court against Sloan Homes and the owners of
Sloan Homes, David and Teresa Sloan.  The Thomases alleged the
following claims in their complaint: breach of the home
warranty; breach of the implied warranty of merchantability,
fitness 
for 
a 
particular 
purpose, 
and 
habitability;
negligent/wanton 
failure 
to 
warn; 
"negligent/wanton
development," i.e., developing a residential subdivision on
land 
not 
suitable 
for 
that 
purpose; 
negligent/wanton
construction; suppression; and breach of contract in failing
to construct the house in a workmanlike manner.  The gist of
their complaint was that Sloan Homes built the house purchased
by the Thomases in an area that previously had flooded and
that had "water problems."  The Thomases alleged that Sloan
Homes and the Sloans knew about the flooding and water
problems but failed to inform the Thomases of this information
before they entered into the sales contract and before the
closing at which the property was actually conveyed to the
Thomases.  They also alleged that despite knowing of the
flooding and water problems, Sloan Homes failed to build their
house in a manner that would compensate for potential water
1100395
7
and moisture problems.  The Thomases' alleged that, as a
result, the house had sustained severe water and moisture
damage that would cost a large amount to repair and that
diminished the value of the house and that the damage to the
house rendered it uninhabitable.  
Sloan Homes and the Sloans answered the complaint on
December 3, 2009.  On September 23, 2010, Sloan Homes and the
Sloans filed a motion to compel arbitration, attaching the
sales contract to the motion and citing the arbitration clause
contained in that contract.  On November 10, 2010, the
Thomases filed their response and opposition to Sloan Homes
and the Sloans' motion, attaching to their response the
warranty deed and the home warranty and noting the lack of an
arbitration clause in either document.  
On November 15, 2010, the circuit court entered an order
granting the motion to compel arbitration.  In its order, the
circuit court did not provide reasons for granting the motion.
The Thomases appeal from the order granting the motion to
compel arbitration.  
II.  Standard of Review
"'This Court's review of an order
granting or denying a motion to compel
1100395
8
arbitration is de novo. First American
Title Ins. Corp. v. Silvernell, 744 So. 2d
883, 886 (Ala. 1999); Crimson Indus., Inc.
v. Kirkland, 736 So. 2d 597, 600 (Ala.
1999); Patrick Home Ctr., Inc. v. Karr, 730
So. 2d 1171 (Ala.1999).'
"United Wisconsin Life Ins. Co. v. Tankersley, 880
So. 2d 385, 389 (Ala. 2003). Furthermore:
"'"A motion to compel arbitration
is analogous to a motion for
summary judgment. TranSouth Fin.
Corp. v. Bell, 739 So. 2d 1110,
1114 
(Ala. 
1999). 
The 
party
seeking to compel arbitration has
the 
burden 
of 
proving 
the
existence of a contract calling
for arbitration and proving that
that 
contract 
evidences 
a
transaction affecting interstate
commerce. Id. 'After a motion to
compel arbitration has been made
and supported, the burden is on
the 
non-movant 
to 
present
evidence 
that 
the 
supposed
arbitration 
agreement 
is 
not
valid or does not apply to the
dispute in question.'"
"'Fleetwood Enters., Inc. v. Bruno, 784 So.
2d 277, 280 (Ala. 2000) (quoting Jim Burke
Auto., Inc. v. Beavers, 674 So. 2d 1260,
1265 n. 1 (Ala. 1995) (emphasis omitted)).'
"Vann v. First Cmty. Credit Corp., 834 So. 2d 751,
753 (Ala. 2002)."
Cartwright v. Maitland, 30 So. 3d 405, 408–09 (Ala. 2009).
1100395
9
III.  Analysis
The Thomases do not dispute that the sales contract
contains an arbitration clause or that the sales contract
evidences a transaction affecting interstate commerce.  The
sole issue presented by this appeal is whether the doctrine of
merger operates to nullify the arbitration clause in the sales
contract.  Specifically, the Thomases rely on the fact that
the deed delivered to them at the closing on the sale of the
house contained no arbitration provision, and they cite
Russell v. Mullis, 479 So. 2d 727 (Ala. 1985), for the
following proposition: 
"Under the doctrine of 'merger,' ordinarily, in the
absence of fraud or mistake, when a contract to sell
and convey real estate has been consummated by the
execution 
and 
delivery 
of 
a 
deed, 
... 
the
preliminary contract becomes functus officio, and
the deed becomes a sole memorial of the agreement,
and upon it the rights of the parties rest ...."
479 So. 2d at 730.  We reject the Thomases' merger argument.
As the Court of Civil Appeals observed in the relatively
recent case of Brogden v. Durkee, 16 So. 3d 113, 115 (Ala.
Civ. App. 2009): 
"'[I]t is well settled that "there are cases in
which certain preliminary stipulations, such as are
independent and collateral and not such preliminary
agreement as would be merged in the conveyance,
1100395
10
survive the deed and confer independent causes of
action."' Starr v. Wilson, 11 So. 3d 846, 855 (Ala.
Civ. App. 2008) (quoting Ridley v. Moyer, 230 Ala.
517, 520, 161 So. 526, 528 (1935)); see also
Rickenbaugh v. Asbury, 28 Ala. App. 375, 380, 185
So. 181, 184 (1938) (holding that a seller's
obligation, under a real-estate sales contract, to
provide water for domestic purposes did not merge
into the deed)."
The limitation of the merger doctrine has been further
explained as follows: 
"The real merger-exception rule in the sale of
realty is that 'where the antecedent contract
contains provisions imposing obligations upon the
vendor other than those relating to title or
possession, and ... collateral thereto ... such
collateral provisions will be held to survive the
deed.' Where the antecedent contract contains an
agreement to build, repair or construct as well as
an agreement to convey, it is too plain to debate
that the actual transfer of the deed (which passes
only legal title) is 'only a part performance of the
provisions of the antecedent ... contract,' and that
the agreements to build or construct 'come under the
collateral agreement theory' and hence are clearly
exempted from the operation of merger in the first
place. The practice of calling such a dual-purpose
antecedent contract a mere 'sales contract,' so as
to effect its entire merger into the deed, ignores
the true nature of the agreement and ignores modern
business reality with the result of substantial
injustice to uncounted home buyers in this state.
"The rational basis for the merger rule is that
where parties enter into a final contract all prior
negotiations, understandings and agreements 'on the
same subject' are merged into the final contract,
and are accordingly extinguished. ... [W]here the
antecedent contract or contracts clearly provide for
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11
agreements or stipulations to build or construct as
well as an agreement to convey, it is plain that the
actual transfer of the deed, which is performance
only of the agreement to convey, does not extinguish
any duties and obligations arising out of the
agreement to build."
Holmes v. Worthey, 159 Ga. App. 262, 266-67, 282 S.E.2d 919,
923 (1981) (citations and emphasis omitted).  See also
Davencourt at Pilgrims Landing Homeowners Ass'n v. Davencourt
at Pilgrims Landing, LC, 221 P.3d 234, 254 (Utah 2009)
(stating that "'[t]he doctrine of merger ... is applicable
when the acts to be performed by the seller in a contract
relate only to the delivery of title to the buyer'" and that
"collateral acts to the conveyance of title by the seller
'survive the deed and are not extinguished by it'" (quoting
Stubbs v. Hemmert, 567 P.2d 168, 169 (Utah 1977)).
To the extent that disputes regarding the manner and
quality of the construction of the home purchased by the
Thomases was governed by the arbitration clause in the sales
contract at issue, the rights and obligations of the parties
under this clause were not altered by the delivery of an
ordinary 
warranty 
deed 
and 
the 
conveyance 
of 
title
accomplished thereby.  The merger doctrine does not in this
case extinguish the arbitration clause any more than it
1100395
The Thomases also assert that the separate written
3
warranty provided to them by Sloan Homes at the closing, which
as noted also did not contain an arbitration clause, operated
to nullify the arbitration clause in the sales contract;
however, the Thomases provide no discussion or authority in
support of this assertion.  This Court has no obligation to
perform the parties' research or to craft arguments for the
parties.  See Dykes v. Lane Trucking, Inc., 652 So. 2d 248,
251 (Ala. 1994).
12
extinguishes other "collateral agreements" found in the sales
contract.3
IV.  Conclusion
Based on the foregoing, we affirm the circuit court's
order granting Sloan Homes and the Sloans' motion to compel
arbitration of the Thomases' claims. 
AFFIRMED.
Malone, C.J., and Woodall, Bolin, and Main, JJ., concur.