Mississippi Supreme Court Rules that Daughter is Not Compelled to Arbitration with her Contracting Parents in Construction Defect Case

The Mississippi Supreme Court ruled that a homeowner’s daughter was not party to, nor an intended beneficiary of a contract with a foundation contractor such that her claims were not subject to arbitration. The court ruled that she was not compelled to arbitrate and that her claims were ripe for adjudication in Perry County.

On June 10, 2013, Phillip Moore contracted with Olshan for repairs to the foundation
of the home he shared with his wife, Gloria Moore, and his adult daughter, Katelyn Moore. Three years later, the entire family – Mom, Dad, and Daughter – sued Olshan for economic related damages arising from the foundation. The lawsuit was segregated in that contract damages were sought by Phillip and Gloria only, while their daughter sought damages in tort for emotional distress. The parties successfully moved to compel arbitration with the exception of those claims made by Katelyn, as she was not a party to the contract or third-party beneficiary.

Finding that Katelyn Moore was neither a third-party beneficiary to the foundation-repair contract, nor was she bound by direct-benefit estoppel, the Mississippi Supreme Court found that the daughter’s claims were wholly independent of the terms of the contract to which she was not a party. Therefore she was not allowed to enforce an arbitration clause respecting Katelyn Moore’s claims, which were unrelated to the contract.

In a well written dissent, Justice Chamberlin argues that Katelyn’s damages arise from her father entering into the contract with Olsham and should, therefore, be arbitrated with the remainder of the case.

Original Article