DeLashmutt v. Parker Group Investments, LLC

If a term is stated explicitly in a contract, its definition is not in question. If a conflicting term is not stated explicitly in the contract, the explicit term governs.

Kameron DeLashmutt was one of five investors in the development of a destination resort in Central Oregon. The “Investment Agreement” identified Park Group Investment as the “Lender” and Thornburgh Resort Company as the “Borrower.” The Agreement detailed that Parker Group and the resort would negotiate loans to the resort from other lenders, and that Mr. DeLashmutt, Jeffery Parker, and Bill Wilt were to guaranty the resort’s performance of obligations under the loans. The Agreement had a dispute resolution clause requiring any claim between Borrower and Lender to be resolved through arbitration. When the parties executed the Agreement, Trail Crossing Trust loaned $122,000 to the resort; Parker Group, Parker, and Wilt executed guarantees of repayment. Mr. Delashmutt’s mother, a trustee of Trail Crossing, received all notes and guarantees. After the resort defaulted on the notes, Mrs. DeLashmutt sued Parker Group, Parker, and Wilt to enforce the guarantees and recover the money due. The defendants made counterclaims against Mrs. DeLashmutt and named Mr. DeLashmutt as a counterclaim defendant, alleging further contract and common-law claims against Mr. DeLashmutt. Mr. DeLashmutt sought to compel arbitration as named in the agreement. The other three defendants opposed this, arguing that the clause only referred to disputes between Lender and Borrower. Under contract law, the Oregon Court of Appeals held that the arbitration clause only explicitly applies to claims between Borrower and Lender, and because the claims in this case involve a third-party claimant, the arbitration clause does not apply. Affirmed.