Court Opinion

ID: 1080726
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:43:04.94204+00
Date Added: 2024-06-11T13:13:41.576892
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
           MIDDLE SECTION AT NASHVILLE

                                                    FILED
SOUTHEAST DRILLING &                )
BLASTING SERVICES, INC.,                     )        July 16, 1997
                                    )
      Plaintiff/Appellee,           )              Cecil W. Crowson
                                                  Appellate Court Clerk
                                    )
VS.                                 )   Rutherford Chancery
                                    )   No. 97CV-60
BRS CONSTRUCTION COMPANY,           )
                                    )   Appeal No.
      Defendant/Appellant           )   01A01-9706-CH-00272
                                    )
and                                 )
                                    )
STONES RIVER PLACE LTD.,            )
ED BOYD EXCAVATING, INC.,           )
                                    )
      Defendants/Appellees.         )

  APPEAL FROM THE CHANCERY COURT FOR RUTHERFORD COUNTY
                AT MURFREESBORO, TENNESSEE

               THE HONORABLE DON R. ASH, CHANCELLOR

For Southeast Drilling & Blasting       For Stones River Place, Ltd and
Services, Inc.:                         BRS Construction:

Frank Grace, Jr.                        William W. Gibson
Dana C. McLendon, III                   James C. Bradshaw, III
Waller Lansden Dortch & Davis           Wyatt Tarrant & Combs
Nashville, Tennessee                    Nashville, Tennessee

                                        Charles M. Levy
                                        Coral Gables, Florida

                                        For Ed Boyd Excavating, Inc.:

                                        Wm. Kennerly Burger
                                        Murfreesboro, Tennessee

                                        Jack E. Seaman
                                        Nashville, Tennessee

                  VACATED AND REMANDED

                                        WILLIAM C. KOCH, JR., JUDGE
                          MEMORANDUM OPINION

       This extraordinary appeal involves a dispute over whether discovery should
be stayed pending resolution of a motion to compel arbitration. Since the
application and answers fully set forth the parties’ positions and the material facts,
we dispense with further briefing and oral argument and proceed to the merits of
the appeal in order to save the parties additional time and expense.1 We find that
this is a proper case for an extraordinary appeal because the trial court should
resolve the motion to compel arbitration prior to allowing any proceedings related
to the merits. Therefore, in accordance with Tenn. Ct. App. R. 10(b),.2 we vacate
the order directing that depositions be held within thirty days and reserving
judgment on the motion to compel arbitration for forty-five days and remand the
case to the trial court for further proceedings in accordance with this opinion.

                                                  I.

       Stones River Place, Ltd. hired BRS Construction Company as the general
contractor for the construction of a multi-unit residential development on land
owned by Stones River Place. BRS Construction entered into three contracts with
Ed Boyd Excavating, Inc. for site work, paving, and utilities. Each of these
contracts provided that “[a]ny controversy or claim between the Contractor and
the Subcontractor arising out of or related to this Subcontract or the breach
thereof, shall be settled by arbitration . . .” Ed Boyd Excavating subsequently
entered into a subcontract with Southeast Drilling and Blasting Services, Inc. to
perform a portion of its subcontract.

       On August 23, 1996, Southeast Drilling served a notice of non-payment on
BRS Construction and Stones River Place in compliance with the materialman’s

       1
        Pursuant to Tenn. R. App. P. 2, we suspend the application of Tenn. R. App. P. 24-26
and 29. We also find oral argument to be unnecessary pursuant to Tenn. R. App. P. 35(c).
       2
           Tenn. Ct. App. P. 10(b) provides:
                         The Court, with the concurrence of all judges participating
                 in the case, may affirm, reverse or modify the actions of the trial
                 court by memorandum opinion when a formal opinion would
                 have no precedential value. When a case is decided by
                 memorandum opinion, it shall be designated “MEMORANDUM
                 OPINION,” shall not be published, and shall not be cited or relied
                 on for any reason in a subsequent unrelated case.

                                                 -2-
lien laws and, on October 18, 1996, Southeast Drilling filed liens on the property.
On January 16, 1997, Southeast Drilling filed suit to enforce its liens in the
Chancery Court for Rutherford County. Ed Boyd Excavating filed a cross-claim
against BRS Construction and Stones River Place alleging, among other claims,
breach of contract.

        On May 16, 1997, Ed Boyd Excavating filed a motion to compel the
appearance of the two principals of BRS Construction, Bill Starnes and Bob R.
Starnes, for depositions. On May 23, 1997, BRS Construction moved to compel
arbitration pursuant to Tenn. Code Ann. §§ 29-5-302, -303 (Supp. 1996). On June
16, 1997, the trial court reserved judgment on the motion to compel arbitration for
forty-five days but directed that Bob R. Starnes, Sr., Bob R. Starnes, Jr. and Bill
Starnes be made available for depositions within thirty days. On June 27, 1997,
Ed Boyd Excavating moved to stay the pending arbitration which BRS
Construction had previously filed with the American Arbitration Association. The
trial court announced from the bench its decision to stay the arbitration
proceedings but no order reflecting that ruling has yet been entered.3

        On June 24, 1997, BRS Construction filed this application for an
extraordinary appeal, asserting that the trial court erred in compelling discovery
while its motion to compel arbitration was pending.                         BRS Construction
subsequently filed a motion for a stay pending appeal. On June 26, 1997, this
court ordered the parties to file an answer to the application within ten days.
Southeast Drilling has responded that the trial court should have stayed the
proceedings until a decision is reached on the motion to compel arbitration. Ed
Boyd Excavating has responded in opposition to the application and contends that
discovery is necessary in order to determine whether the motion to compel
arbitration should be granted.

                                                II.

        3
        BRS Construction has filed a supplemental application for an extraordinary appeal
requesting that this court reverse the trial court’s decision to stay the arbitration. We decline to
address this issue because no order has yet been entered. Once entered, the order resolving the
motion to stay arbitration may be appealable as of right pursuant to Tenn. Code Ann. § 29-5-319
(Supp. 1996) and Tenn. R. App. P. 3(a).

                                                -3-
      Arbitrating disputes is favored by the state, federal, and common law.
Dewitt v. Al-Haddad, App. No. 89-394-II, 1990 WL 50727, at *7 (Tenn. Ct. App.
April 25, 1990) (No Tenn. R. App. P. 11 application filed). By enacting the
Uniform Arbitration Act, the General Assembly has embraced a legislative policy
favoring enforcement of agreements to arbitrate. Buraczynski v. Eyring, 919
S.W.2d 314, 317 (Tenn. 1996).

      Tenn. Code Ann. § 29-5-303 enables courts to make summary
determinations concerning whether a party is entitled to arbitration. Samson v.
Hartsville Hospital, App. No. 01A01-9609-CH-00430, 1997 WL 107167, at *2
(Tenn. Ct. App. March 12, 1997) (No Tenn. R. App. P. 11 application filed).
Tenn. Code Ann. § 29-5-303(a) provides that, when one party shows the existence
of an arbitration agreement and the other party denies the existence of an
agreement, “the court shall proceed summarily to the determination of the issue
so raised . . .” Tenn. Code Ann. § 29-5-303(b) also provides that, when a party
has moved to stay an arbitration proceeding and a dispute exists with regard to the
arbitration agreement, the issue “shall be forthwith and summarily tried.” Tenn.
Code Ann. § 29-5-303(d) further provides that: “Any action or proceeding
involving an issue subject to arbitration shall be stayed if an order for arbitration
or an application therefor has been made under this section . . .”

      These provisions evidence a clear statutory intent that courts determine
whether a party is entitled to arbitration prior to conducting any proceedings
related to the merits. Thus, the normal course of proceedings is first to resolve the
issue of whether the parties should be required to arbitrate. All other proceedings
on the merits, including discovery, should be stayed pending this determination.

      Like any other contract right, the right to arbitration can be waived. The
answer of Ed Boyd Excavating indicates that the record currently before the trial
court does not contain sufficient facts to determine whether a waiver has occurred.
Thus, some discovery may be necessary to enable the trial court to determine
whether the motion to compel arbitration should be granted. Such discovery
should be limited to matters relevant to the motion to compel arbitration and any
disputes concerning whether particular discovery is related to this issue shall be
resolved by the trial court.

                                        -4-
                                               III.

       For the reasons stated herein, we vacate the trial court’s June 16, 1997 order
and remand the case with directions to enter an order staying all proceedings on
the merits pending a resolution of the motion to compel arbitration. The order
may provide for discovery only with regard to the issue of whether the arbitration
clause should be enforced.            Once the trial court has ruled on the motion to
compel arbitration, the parties may appeal pursuant to Tenn. R. App. P. 3(a) and
Tenn. Code Ann. § 29-5-319 or, if necessary, Tenn. R. App. P. 9 or 10.4 We also
tax the costs of this appeal to Ed Boyd Excavating, Inc. for which execution, if
necessary, may issue.

                                                       ____________________________
                                                       WILLIAM C. KOCH, JR., JUDGE

CONCUR:

________________________________
HENRY F. TODD, P.J., M.S.

________________________________
BEN H. CANTRELL, JUDGE

       4
        Tenn. Code Ann. § 29-5-319 permits an appeal as of right from an order denying an
application to compel arbitration or an order granting an application to stay arbitration. An order
compelling arbitration is not appealable as of right, Peters v. Commonwealth Associates, App.
No. 03A01-9508-CV-00295, 1996 WL 93768, at *2 (Tenn. Ct. App. March 5, 1996) (No Tenn.
R. App. P. 11 application filed); Anderson County v. Architectural Techniques Corp., App. No.
03A01-9205-CH-00184, 1993 WL 5921, at *1 (Tenn. Ct. App. January 14, 1993) (No Tenn. R.
App. P. 11 application filed), but may be reviewed pursuant to Tenn. R. App. P. 9 or 10.

                                               -5-