ARBITRATION: Olshan Foundation Repair and Waterproofing v. Otto (COA 1/16/2009)

Olshan Foundation Repair and Waterproofing v. Otto

01/16/2009 2009 WL 102963

Opinion by Judge Stumbo; Senior Judge Guidugli concurred; Judge Thompson concurred in result only.

The Court reversed an order of the circuit court denying appellant’s motion to compel arbitration and stay an action brought by appellees. Appellees brought the action for breach of contract, breach of implied and express warranties, and negligence, related to fully-transferable lifetime warranties for repairs made to the foundation of a house they purchased.

The Court preliminarily held that the appeal was not interlocutory, in that a party prosecuting an interlocutory appeal from an order denying a motion to compel arbitration under the
Kentucky Uniform Arbitration Act, could proceed either under CR 65.07 or the general appellate procedure set out in CR 73. Because the motion to compel arbitration was expressly brought pursuant to the KUAA and the Federal Arbitration Act, the interlocutory appeal was properly brought via CR 73.

The Court then held that the trial court erred in denying the motion to compel arbitration. While appellees were not bound to the agreements under contract law principles, because they decided to seek warranty repairs as third-party direct beneficiaries, they were estopped from disavowing the arbitration language in the warranties.

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