Opinion ID: 1774141
Heading Depth: 1
Heading Rank: 3

Heading: Breach of the February Instrument

Text: The Sponsors are, however, individual signatories to the February Instrument. They contend that their individual claims against Beaver contained in Count II, which alleges breach of the February Instrument, are not arbitrable. This is so, they argue, because the February Instrument did not contain an arbitration clause. Essentially, they argue that the February Instrument is not a part of the Construction Contract at all, but is, in fact, an independent agreement. [5] We disagree with this argument. To be sure, the February Instrument does not, on its face, contain an arbitration clause. However, it repeatedly references the HUD Form, which, in turn, references the AIA Document, which does provide for arbitration. A familiar rule of contract law holds that [w]here a written contract refers to another instrument and makes the terms and conditions of such other instrument a part of it, the two will be construed together as the agreement of the parties. 17A Am.Jur.2d Contracts § 400 (1991). See also Ben Cheeseman Realty Co. v. Thompson, 216 Ala. 9, 12, 112 So. 151, 153 (1927). For the application of this rule in the arbitration context, see McDougle v. Silvernell, 738 So.2d 806 (Ala.1999); Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d 33, 36 (Ala.1998); and Reynolds & Reynolds Co. v. King Automobiles, Inc., 689 So.2d 1, 3 (Ala. 1996). Beaver contends: The [February Instrument] cannot stand on its own as an enforceable contract. It is subject to the terms, conditions, and requirements of the Construction Contract. The Construction Contract and the [February Instrument] arise from a single project and reference to the Construction Contract is central to an understanding of the [February Instrument]. Brief of Appellant, at 18. We agree with this contention. The purpose of the February Instrument was to require Beaver to expedite the occupancy of apartment units as they were completed, by, among other things, procuring the necessary occupancy inspections. In return, the Sponsors were required to pay an amount in excess of the amount stated in the Construction Contract, in monthly increments pro rata to the percentage of project completion. Indeed, the February Instrument is intelligible only in reference to the HUD Form and the other instruments that form the Construction Contract. Thus, it is clear the February Instrument is not a separate, independent agreement, but, instead, an integral part of the Construction Contract. Moreover, ¶ 1 of the February Instrument states: This Agreement does not modify any of the terms and conditions of said CONTRACT except to the extent it modifies the time of payment and requires SPONSORS to pay certain additional payments to CONTRACTOR. (Emphasis added.) Among those terms and conditions were, of course, the arbitration provisions in the AIA Document.