Adair Homes, Inc. v. Dunn Carney

A court resorts to the general policy in favor of arbitration only when a contract is ambiguous and there is no extrinsic evidence of the parties' intent.

Appellant brought a malpractice claim against a law firms representation of a homebuilder in a case asserting breach of contract to construct a home. After the home was built, the homeowners filed for breach of contract, breach of warranty, and other claims. The homeowners prevailed and sought attorneys fees under a fee provision in the contract. The contact also contained an arbitration provision. The Appellants law firm disputed the amount of attorney fees but failed to dispute the homeowners entitlement to attorney fees. Appellants contend that their attorney negligently failed to assert a viable defense to the attorney fee provision. Appellant contends that the homeowners failed to comply with the arbitration provision which Appellant contends required them to arbitrate the underlying dispute before seeking attorney fees. At trial both parties moved for summary judgment. The Court found that because the contract is ambiguous as to whether it required arbitration of the disputes in which the Homeowners prevailed and because the parties offered competing extrinsic evidence bearing on that issue, summary judgment was inappropriate. Reversed and remanded.