Opinion
No. WD 60718
November 19, 2002
Appeal from the Circuit Court of Jackson County, Missouri, Honorable William Stephen Nixon, Judge.
Christopher J. Daus, St. Louis, MO, William D. Beil, Kansas City, MO, for Appellant.
Roy C. Bash, Kansas City, MO, for Respondent.
Before Robert G. Ulrich, P.J., Paul M. Spinden and Edwin H. Smith, JJ.
Lafarge Corporation appeals the trial court's order denying its motion to stay litigation and compel arbitration and granting the joint motion of Dunn Industrial Group, Inc. (DIG) and Dunn Industries, Inc. (Dunn) (collectively Respondents) to stay arbitration. Lafarge contends that the trial court erred in denying its motion to stay litigation and compel arbitration because: (1) all of the disputes and claims asserted by DIG against Lafarge are within the scope of the broad, mandatory arbitration provision of the construction contract; (2) the parties' October change order did not modify, rescind, or otherwise change the arbitration provision of the construction contract; and (3) enforcement of the arbitration provision is not barred by Missouri's equitable lien statutes. Lafarge also contends that the trial court erred in granting Respondents' joint motion to stay arbitration because: (1) Lafarge's claims against Respondents fall within the scope of the arbitration agreement of the construction contract; and (2) the written guaranty executed by Dunn inures to the benefit of Lafarge and incorporated the construction contract and arbitration agreement. The order of the trial court is affirmed in part and reversed in part, and the case is remanded with directions.
Facts
Lafarge and the City of Sugar Creek, Missouri, executed a lease agreement in October 1998 wherein Lafarge agreed to construct new facilities financed with industrial revenue bonds issued by the City. This industrial development involves the design and construction of a new 900,000 short ton per year cement manufacturing plant, an underground limestone mine, and other improvements on City-owned property.
Lafarge contracted with DIG for the design and construction of the new cement plant, known as the Sugar Creek II Cement Plant. Lafarge and DIG signed a construction contract in June 1999 wherein DIG agreed to design and build the cement plant for a lump sum amount of $76,131,518 with a project completion date of December 2000. At about the same time, Dunn, DIG's parent company, signed a contract guaranty guaranteeing DIG's performance of its obligations under the construction contract with Lafarge.
The construction contract between Lafarge and DIG contained the following arbitration clause:
Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
The construction contract also contained a provision authorizing Lafarge to make changes in the scope of DIG's work "by altering, adding to or deducting from the Work; the price of the Contract being adjusted accordingly." Over the course of the performance of the contract, issues arose between Lafarge and DIG concerning the scope of the work. When DIG believed that Lafarge had changed the scope of work, DIG submitted to Lafarge potential change orders to the contract (PCO's) requesting payment and extensions of time for extra work, labor, and materials. Lafarge approved certain PCO's submitted by DIG, and the PCO's were incorporated into change orders to the construction contract with adjustments to the contract sum and/or time. From June 1999 to October 2000, Lafarge and DIG agreed to several change orders that increased the contract sum from $76,131,518 to $84,561,916. By October 2000, eighty-seven PCO's submitted by DIG remained unresolved.
On October 4, 2000, Lafarge and DIG agreed to a change order. Preliminarily, the change order provided:
Except as modified herein, all terms and conditions of the [June 1999 construction] Contract remain in full force and effect and are a part of and incorporated into this Change Order as if fully set forth herein. In the event of any conflict or ambiguity between the terms of this Change Order and the Contract, the terms of this Change Order shall prevail.
The change order listed the eighty-seven disputed PCO's. Thirty-five of the PCO's were marked with an asterick and totaled $30,631,871 of claims by DIG. In the October change order, Lafarge agreed, among other things, to advance to DIG a sum of $6,500,000 to be treated as a credit towards the payment of any resolution of one of the thirty-five "marked" PCO's. The change order then provided:
Lafarge and DIG agree to first attempt to resolve the items marked on the PCO List by negotiation; however, either party, at any time, may resort to their respective contract remedies or remedies as provided by law.
In March 2001, DIG filed three separate mechanic's lien claims against the leasehold estate held by Lafarge and the fee simple estate held by the City. DIG asserted a mechanic's lien in the amount of $6,877,825 plus interest for extra work in connection with mass excavation at the site. Additionally, DIG asserted a mechanic's lien in the amount of $7,636,501 plus interest for extra work in connection with the preassembly of Polysius equipment. Finally, DIG asserted a mechanic's lien in the amount of $875,140 plus interest for extra work in connection with a limestone tunnel.
On March 28, 2001, DIG filed a twelve-count petition against Lafarge and the City of Sugar Creek in Jackson County Circuit Court asserting claims for breach of contract, breach of warranty, negligent misrepresentation, quantum meruit, and to foreclose its mechanic's lien claims. Lafarge and the City removed the action to the United States District Court for the Western District of Missouri in May 2001. Lafarge then filed a motion to stay litigation and compel arbitration asserting that DIG's allegations arise out of and relate to the contract entered into between Lafarge and DIG that includes a mandatory arbitration provision. DIG filed suggestions in opposition to the motion to compel arbitration.
Lafarge filed a demand for arbitration against DIG and Dunn with the American Arbitration Association on June 8, 2001. In the demand, Lafarge claimed damages from DIG of at least $7,000,000 for DIG's failure to timely complete the construction contract and for failure to properly perform and coordinate the construction work. Dunn filed a motion to intervene in the action in federal district court for the limited purpose of opposing Lafarge's demand for arbitration. DIG and Dunn, as intervenor, thereafter filed a joint motion to stay arbitration seeking a stay of the arbitration proceedings commenced by Lafarge. Before ruling on Lafarge's motion to stay litigation and compel arbitration or the joint motion of Respondents to stay arbitration, the federal court remanded the case back to the Jackson County Circuit Court.
While the action filed by DIG was pending in the federal court, an equitable mechanic's lien action concerning the mine project was filed on June 4, 2001, in Jackson County Circuit Court by Kansas City Electrical Supply Company. After the case filed by DIG was remanded back to Jackson County Circuit Court, the parties filed a joint motion to consolidate that case with the case filed by Kansas City Electrical Supply Company, which was granted by the trial court.
Thereafter, DIG filed its first amended petition against Lafarge, the City, and several other defendants. The first amended petition contained eleven separate counts against Lafarge including Breach of Contract, Missouri Private Prompt Payment Act Claim, Missouri Public Prompt Payment Act Claim, Quantum Meruit, Breach of Warranty, Negligent Misrepresentation, and Foreclose on Mechanic's Liens.
The trial court heard arguments on Lafarge's motion to stay litigation and compel arbitration and the joint motion of Respondents to stay arbitration on October 22, 2001. At the hearing, the trial court expressed its concern that arbitration of the claims between Lafarge, DIG, and Dunn may be precluded by the pending equitable mechanic's lien action and allowed the parties to brief the issue. Lafarge argued that Missouri's equitable mechanic's lien statutes, sections 429.270 through 429.340, RSMo 2000, did not preclude arbitration of the claims between it, DIG, and Dunn because arbitration is neither litigation nor the type of separate action to be stayed or prohibited by the filing of an equitable mechanic's lien suit. Respondents first argued that Missouri's equitable mechanic's lien statutes unambiguously provide that the exclusive jurisdiction for equitable mechanic's lien claims reside in the circuit court of the county where the liened property is located, and, thus, all disputes involving the mechanic's lien claims in this case are before the trial court and none would be subject to arbitration. Respondents next claimed that, regardless of the effect of the equitable mechanic's lien statutes on the action, the October change order modified the original agreement to arbitrate and expressly removed the marked PCO's from any agreement to arbitrate. The trial court entered its order on November 5, 2001, denying Lafarge's motion to stay litigation and compel arbitration and granting Respondents' joint motion to stay arbitration. This appeal by Lafarge followed.
I. Jurisdiction
Lafarge appeals the trial court's order denying its motion to stay litigation and compel arbitration and granting Respondents' joint motion to stay arbitration. While Respondents DIG and Dunn concede that this court has jurisdiction to hear the appeal from those parts of the trial court's order denying an application to compel arbitration and granting an application to stay arbitration, they contend that this court does not have jurisdiction to hear an appeal from an order denying a motion to stay litigation. First, Respondents argue that the Missouri Uniform Arbitration Act does not allow an appeal from such order. They are correct that a denial of a motion to stay proceedings pending arbitration is not appealable in Missouri under section 435.440, RSMo 2000. VCW, Inc. v. Mut. Risk Mgmt., Ltd. , 46 S.W.3d 118, 121 (Mo.App.W.D. 2001). The inquiry does not end here, however, and whether the Federal Arbitration Act (FAA) confers jurisdiction on this court to hear this appeal must be addressed.
Respondents contend that while the FAA does provide for an appeal from an order refusing to stay an action under 9 U.S.C. § 16(a)(1)(A), the federal statute cannot provide a right to an appeal where the procedural remedies in the Missouri Uniform Arbitration Act do not provide such right. This contention was expressly rejected in VCW under the general principle that the Missouri Uniform Arbitration Act cannot be used to defeat an arbitration provision covered by the FAA. Id. (citing Bunge Corp. v. Perryville Feed Produce, Inc. , 685 S.W.2d 837, 838-39 (Mo. banc 1985)). Both state and federal courts are bound by the provisions of the FAA in cases involving interstate commerce. Id. The construction contract between Lafarge and DIG involves interstate commerce; thus, the FAA applies in this case.
Respondents also argue that Lafarge may not rely on 9 U.S.C. § 16(a)(1)(A) to appeal the trial court's denial of its motion to stay litigation because the statute only applies to orders refusing a stay of an action brought in federal court. Specifically, 9 U.S.C. § 16(a)(1)(A) provides, "An appeal may be taken from an order refusing a stay of any action under section 3 of this title." Section 3 of the FAA provides:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
9 U.S.C. § 3 (1999). In making their argument, Respondents cite a United States Supreme Court case, Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ. , 489 U.S. 468, 477, 109 S.Ct. 1248, 1254-55, 103 L.Ed.2d 488 (1989), which expressly declined to decide whether section 3 of the FAA applies to state court proceedings. Missouri courts, however, have held that section 16(a)(1)(A) of the FAA allows appellants to appeal the denial of their motion to stay litigation in a Missouri court. See Getz Recycling, Inc. v. Watts , 71 S.W.3d 224, 228 n. 1 (Mo.App.W.D. 2002); VCW , 46 S.W.3d at 121-22; Mueller v. Hopkins Howard, P.C. , 5 S.W.3d 182, 186-87 (Mo.App.E.D. 1999). The status of Missouri law is clear; 9 U.S.C. § 16(a)(1)(A) grants jurisdiction to an appellate court to hear an appeal from an order refusing to stay litigation in a Missouri court in a case involving interstate commerce. Id. Accordingly, this court has jurisdiction to hear this appeal.
II. Arbitrability of Claims Raised by DIG in Its First Amended Petition Against Lafarge
In its first point on appeal, Lafarge claims that the trial court erred in denying its motion to stay litigation and compel arbitration because: (1) all of the disputes and claims asserted by DIG against Lafarge fall within the scope of the broad, mandatory arbitration provision of the construction contract; (2) the parties' October change order did not modify, rescind, or otherwise change the arbitration provision of the construction contract; and (3) enforcement of the arbitration provision is not barred by Missouri's equitable lien statutes.
A. Arbitration Provision of Construction Contract
The FAA evinces a liberal federal policy favoring arbitration agreements so that disputes might be resolved without resort to the courts. Greenwood v. Sherfield , 895 S.W.2d 169, 173 (Mo.App.S.D. 1995). Before a party may be compelled to arbitrate under the FAA, a court must determine whether a valid agreement to arbitrate exists between the parties and whether the specific dispute falls within the substantive scope of that agreement. Houlihan v. Offerman Co., Inc. , 31 F.3d 692, 694-95 (8th Cir. 1994). A court must stay litigation and compel arbitration if it determines that the parties agreed to arbitrate the dispute. Id. at 695.
By the very terms of the FAA, the obligation to arbitrate rests on free assent and agreement. Village of Cairo v. Bodine Contracting Co ., 685 S.W.2d 253, 258 (Mo.App.W.D. 1985). The subsistence and validity of an arbitration clause is governed by the usual rules and canons of contract interpretation. Id. (citing United Steelworkers of Am. v. Warrior Gulf Navigation Co. , 363 U.S. 574, 582, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960)). Thus, "a party cannot be required to submit to arbitration any dispute which he has not agreed to submit." Id. (quoting Atkinson v. Sinclair Refining Co. , 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 8 L.Ed.2d 462 (1962)). Whether a dispute is covered by an arbitration provision is relegated to the courts as a question of law. Id. (citing Drake Bakeries, Inc. v. Local 50 , 370 U.S. 254, 256, 82 S.Ct. 1346, 1348, 8 L.Ed.2d 474 (1962)). An appellate court's review of the arbitrability of a dispute is de novo. Fru-Con Constr. Co. v. Southwestern Redevelopment Corp. II , 908 S.W.2d 741, 743-44 (Mo.App.E.D. 1995).
Respondents claim that the trial court's order was not based merely on contract interpretation but also on the resolution of disputed issues of fact and, therefore, review is under the clearly erroneous standard. They also argue that the trial court has discretion to stay proceedings to control its docket and conserve judicial resources, and, thus, a review of the trial court's order granting the motion to stay arbitration is for an abuse of discretion. Resolution of Lafarge's appeal, however, involves the interpretation of the October change order and whether it was ambiguous, which is a question of law, and other questions of law (e.g. the effect of the equitable mechanic's lien statute on the arbitration provision of the parties' contract). Review is de novo. Fru-Con Constr. , 908 S.W.2d at 744 n. 1.
In construing arbitration clauses, courts have categorized such clauses as "broad" or "narrow." McCarney v. Nearing, Staats, Prelogar Jones , 866 S.W.2d 881, 889 (Mo.App.W.D. 1993). A broad arbitration provision covers all disputes arising out of a contract to arbitrate, and a narrow provision limits arbitration to specific types of disputes. Id.
The June 1999 construction contract between Lafarge and DIG contained the following broad arbitration clause:
Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
All of the claims in DIG's first amended petition against Lafarge arise out of or relate to the construction contract. DIG's first amended petition contains eleven separate counts against Lafarge including Breach of Contract, Missouri Private Prompt Payment Act Claim, Missouri Public Prompt Payment Act Claim, Quantum Meruit, Breach of Warranty, Negligent Misrepresentation. These counts involve allegations of extra work or additions or changes to DIG's scope of work under the construction contract. DIG's first amended petition also contained three counts to foreclose on mechanic's liens. The underlying claims sought to be enforced by mechanic's lien also arise out of the parties' construction contract. Resolution of all counts of DIG's first amended petition against Lafarge will require an examination of Lafarge's and DIG's respective obligations and performance under the construction contract. Thus, DIG's claims against Lafarge fall within the substantive scope of the parties' arbitration agreement.
B. October Change Order
DIG concedes that the original construction contract between it and Lafarge contained an arbitration agreement. It argues, however, that the October 2000 change order unambiguously modified and, at a minimum, partially rescinded that arbitration agreement with respect to certain disputes. Lafarge, on the other hand, contends that the language of the October change order was clear and unambiguous and required the parties to arbitrate.
The cardinal principle of contract interpretation is to ascertain the intention of the parties and to give effect to that intent. Helterbrand v. Five Star Mobile Home Sales, Inc. , 48 S.W.3d 649, 658 (Mo.App.W.D. 2001). The terms of a contract are read as a whole to determine the intention of the parties and are given their plain, ordinary, and usual meaning. Id. ; City of Harrisonville v. Public Water Supply Dist. No. 9 of Cass County , 49 S.W.2d 225, 231 (Mo.App.W.D. 2001). Additionally, each term of a contract is construed to avoid rendering other terms meaningless. City of Harrisonville , 49 S.W.3d at 231. A construction that attributes a reasonable meaning to all the provisions of the agreement is preferred to one that leaves some of the provisions without function or sense. Id.
A contract is ambiguous only if its terms are susceptible to fair and honest differences. Helterbrand , 48 S.W.3d at 658 . A contract is not ambiguous merely because the parties disagree as to its construction. Id. Where the language of a contract is unambiguous, the intent of the parties is to be gathered from the contract alone, and a court will not resort to construction where the intent of the parties is expressed in clear, unambiguous language. City of Harrisonville , 49 S.W.3d at 230. Extrinsic evidence may not be introduced to vary or contradict the terms of an unambiguous agreement or to create an ambiguity. Helterbrand , 48 S.W.3d at 658 .
In October 2000, Lafarge and DIG entered into a change order in an effort to resolve disputed PCO's. The October change order incorporated all terms and conditions of the June 1999 construction contract to the extent those terms did not conflict with terms of the change order. Paragraph III.D. of the change order at issue in this case provided:
Lafarge and DIG agree to first attempt to resolve the items marked on the PCO List by negotiation; however, either party, at any time, may resort to their respective contract remedies or remedies as provided by law.
DIG claims that the provision permitting a party to pursue its "remedies as provided by law" permits a party to proceed with a civil action in a court of law, thereby modifying or partially rescinding the arbitration provision in the original construction contract. On the other hand, Lafarge argues that the provision can be interpreted consistently with the original mandatory arbitration provision.
Mutual rescission of a contract must be clear, positive, unequivocal, and decisive, and it must manifest the parties' actual intent to abandon contract rights. AAA Uniform and Linen Supply, Inc. v. Barefoot, Inc. , 17 S.W.3d 627, 629 (Mo.App.W.D. 2000). "[L]anguage excluding certain disputes from arbitration must be `clear and unambiguous' or `unmistakably clear'." Genesco, Inc. v. T. Kakiuchi Co., Ltd. , 815 F.2d 840, 847 (2d Cir. 1987) (quoting S.A. Mineracao Da Trindade-Samitri v. Utah Int'l, Inc. , 745 F.2d 190, 194 (2d Cir. 1984)). Where an arbitration clause is broad and contains no express provision excluding a particular grievance from arbitration, only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail. United Steelworkers of Am. , 363 U.S. at 584-585 . A motion to compel arbitration of a particular dispute should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Id. at 582-83. Doubts as to arbitrability should be resolved in favor of coverage. Id. at 583.
Paragraph III.D. of the October change order is not ambiguous and can be interpreted consistently with the broad mandatory arbitration provision of the original construction contract. The "contract remedies" clause mandates Lafarge or DIG to submit to arbitration any controversy or claim arising out of or relating to the construction contract. The "remedies as provided by law" clause indicates that the parties reserve other unspecified rights or remedies that do not nullify or are not inconsistent with their obligation to arbitrate. See, e.g., Dickson County v. Bomar Constr. Co. , 935 S.W.2d 413, 415 (Tenn.Ct.App. 1996)(where contractual provision that duties and obligations imposed by contract were in addition to and did not limit otherwise available legal remedies did not nullify separate provision obligating parties to submit dispute to arbitration). Examples of such unspecified rights or remedies include the right to confirm an arbitration award under 9 U.S.C. § 9 or to enforce a mechanic's lien under Missouri's mechanic lien statutes. Such an interpretation produces harmony and meaningfulness of both clauses. If the change order were interpreted as urged by DIG, the "remedies at law" clause would be given effect, but the "contract remedies" or arbitration clause would fail. The compulsory nature of the broad arbitration provision of the construction contract would be rendered ineffective at the option of either party. Such interpretation would be contrary to the principles that a contract should be construed as a whole, that all provisions should be harmonized if possible, and that a construction that would render a provision meaningless should be avoided. It would also conflict with the principle that doubts as to arbitrability should be resolved in favor of coverage. Under the broad arbitration clause of the construction contract, Lafarge and DIG manifested their intent that all disputes arising under the contract would be submitted to arbitration. Paragraph III.D. of the October change order does not clearly, positively, unequivocally, or decisively state that the right and obligation to arbitrate was modified, limited, or rescinded. The provision, and particularly the clause "remedies as provided by law," does not expressly exclude the marked PCO's from arbitration. The paragraph does not give the parties an option to proceed under the contract or by remedies available under the law. Instead, it preserves the parties' agreement to arbitrate and other unspecified rights or remedies that are not inconsistent with that obligation.
This court will not attempt to recite all legal remedies reserved under the change order or the complex construction contract.
C. Equitable Mechanic's Lien Action
Finally, Lafarge claims that the trial court erred in denying its motion to stay litigation and compel arbitration because enforcement of the arbitration provision is not barred by Missouri's equitable lien statutes. During arguments on Lafarge's motion to stay litigation and compel arbitration and the joint motion of Respondents to stay arbitration and again in this appeal, Respondents claim that Missouri's equitable mechanic's lien statutes place exclusive jurisdiction for the claims in this case in the circuit court, and, thus, none of the claims would be subject to arbitration.
Sections 429.270 through 429.340, RSMo 2000, govern the enforcement and adjudication of the rights of multiple lienholders in an equitable action. McCarney , 866 S.W.2d at 891-892 . The purpose of an equitable mechanic's lien action is to enforce multiple mechanics' lien claims filed against the same real estate and to adjudicate the rights claimed under all conflicting liens, encumbrances, or other interests in the property. Mabin Const. Co. v. Historic Constructors, Inc. , 851 S.W.2d 98, 100 (Mo.App.W.D. 1993). An equitable mechanic's lien action may only be brought when more than one mechanic's lien is filed against the property. § 429.330, RSMo 2000. When an equitable action is commenced, it shall be exclusive of other remedies for the enforcement of mechanic's liens. § 429.290, RSMo 2000. Finally, section 429.300, RSMo 2000 provides in pertinent part:
[A]ll other suits that may have been brought on any mechanic's lien claim or demand shall be stayed and no further prosecuted, and the parties in any such other suit shall be made parties to such equitable action as in the foregoing sections provided. . . . After the institution of such equitable action no separate suit shall be brought upon any mechanic's lien or claim against said property, or any of it, but the rights of all persons shall be adjusted, adjudicated and enforced in such equitable suit.
Thus, once an equitable mechanic's lien action is brought, it is the exclusive method of litigating liens and other claims pertaining to particular property. McCarney , 866 S.W.2d at 892 (citing Meiners Co. v. Clayton Greens Nursing Ctr. , 645 S.W.2d 722, 724 (Mo.App.E.D. 1982)).
This case began in March 2001 when DIG filed three separate mechanic's lien claims against the property. Shortly thereafter, DIG filed its twelve-count petition against Lafarge and the City of Sugar Creek, which included counts to foreclose its mechanic's lien claims. Kansas City Electrical Supply Company then filed an equitable mechanic's lien action in Jackson County Circuit Court concerning the same property on June 4, 2001. Upon a joint motion by the parties, the trial court properly consolidated the case filed by DIG with the equitable mechanic's lien action under section 429.300. The equitable mechanic's lien action does not, however, preclude the enforcement of the parties' arbitration agreement to resolve the underlying disputes as argued by DIG. See Silver Dollar City, Inc. v. Kitsmiller Constr. Co. , 874 S.W.2d 526, 535 (Mo.App.S.D. 1994); McCarney , 866 S.W.2d at 892 . While an equitable mechanic's lien action is the exclusive method of litigating liens and other claims regarding property, "[a]rbitration is a proceeding separate from litigation based upon its underlying purpose of encouraging dispute resolution without resort to the courts." McCarney , 866 S.W.2d at 892 . "To characterize it as a legal action is contrary to its nature and is an unreasonable construction of equitable mechanic's lien statutes." Id. Thus, the arbitration agreement between Lafarge and DIG is enforceable regardless whether multiple mechanics liens exist creating a basis for an equitable mechanic's lien action. See Silver Dollar City , 874 S.W.2d at 535; McCarney , 866 S.W.2d at 892 .
Respondents contend that McCarney did not determine the effect of the statutory equitable mechanic's lien provisions on a contractual agreement to arbitrate because no equitable mechanic's lien action had been filed in that case at the time the motion to compel arbitration and the motion to stay arbitration were considered. While an equitable mechanic's lien action had not been filed in the case, the owner argued on appeal that the claims asserted by the architect and the contractor in their mechanic's liens and arbitration demands must be adjudicated in one equitable mechanic's lien proceeding. This court determined that issue, and the holding is, therefore, applicable in this case.
Furthermore, under the Supremacy Clause, the equitable mechanic's lien statutes cannot be applied to defeat the parties' abitration agreement, which is covered by the FAA. Silver Dollar City , 874 S.W.2d at 535 (citing Bunge , 685 S.W.2d at 839). Under the Supremacy Clause of the United States Constitution, the federal government is empowered to preempt state laws to the extent it believes that such action is necessary to achieve its purpose. Silvey v. Mallinckrodt, Inc. , 976 S.W.2d 497, 498-99 (Mo.App.E.D. 1998). Section 2 of the FAA provides:
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2. In enacting this section, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims that the contracting parties agreed to arbitrate. Southland Corp. v. Keating , 465 U.S. 1, 10, 104 S.Ct. 852, 858, 79 L.Ed.2d 1 (1984). A state law that attempts to preclude enforcement of an arbitration agreement in a contract involving interstate commerce would conflict with the FAA and, thus, violate the Supremacy Clause. Id. (a California franchise investment statute that sought to require judicial consideration of claims arising under the statute could not bar an arbitration remedy under a contract within the coverage of the FAA); Boogher v. Stifel, Nicolaus Co. , 825 S.W.2d 27, 29 (Mo.App.E.D. 1992). Missouri's equitable mechanic's lien statutes will, therefore, not be applied to bar enforcement of Lafarge and DIG's agreement to arbitrate the underlying disputes.
For all of the reasons discussed, the trial court erred in denying Lafarge's motion to stay litigation and compel arbitration between Lafarge and DIG. That part of the trial court's order is, therefore, reversed, and the case is remanded to the trial court to enter an order staying litigation of DIG's claims against Lafarge and compelling arbitration of those claims.
III. Arbitrability of Claims Raised by Lafarge in Its Demand for Arbitration Against DIG and Dunn
In its second point on appeal, Lafarge contends that the trial court erred in granting Respondents' joint motion to stay arbitration because: (1) its claims against both DIG and Dunn fall within the scope of the arbitration agreement of the construction contract; and (2) the written guaranty executed by Dunn inures to the benefit of Lafarge and incorporated the construction contract and arbitration agreement.
Soon after DIG filed its original petition against Lafarge, Lafarge filed a demand for arbitration against DIG and Dunn with the American Arbitration Association. In the demand, Lafarge claimed damages from DIG of at least $7,000,000 for DIG's failure to timely complete the construction contract and for failure to properly perform and coordinate the construction work. Lafarge sought similar damages from Dunn as guarantor of the construction contract. Thereafter, DIG and Dunn filed a joint motion to stay arbitration, which was eventually granted by the trial court.
A. Claims Against DIG
In this point on appeal, Lafarge first contends that its claims against DIG in its demand for arbitration fall within the scope of the parties' arbitration agreement and, therefore, must be arbitrated. As discussed in section IIA above, the June 1999 construction contract between Lafarge and DIG contained a broad arbitration provision that mandated arbitration of "[a]ny controversy or claim arising out of or relating to [the] contract." Clearly, Lafarge's claim for damages against DIG for DIG's "failure to timely complete" the construction contract and for its "failure to properly perform and coordinate the construction work" arise out of or relate to the construction contract. Lafarge's claims against DIG fall within the substantive scope of the parties' arbitration agreement.
Once again, DIG asserts that the October change order "freed [it] from its obligation to arbitrate." As discussed above in section IIB, the October change order does not modify or rescind the arbitration provision in the construction contract but preserves the parties' agreement to arbitrate as well as other unspecified rights or remedies that are not inconsistent with that obligation.
Finally, DIG asserts that since Lafarge's claims against it are compulsory counterclaims to its claims against Lafarge which were properly raised in the equitable mechanic's lien action in the circuit court proceedings, the trial court's order staying the arbitration proceedings was correct. Missouri has a compulsory counterclaim rule that compels a party to state any claim it has against its adversary that arises out of the transaction or occurrence that is the subject matter of the suit. Rule 55.32(a); Evergreen Nat'l Corp. v. Killian Constr. Co. , 876 S.W.2d 633, 635 (Mo.App.W.D. 1994). The purpose of the rule is to discourage separate litigation covering the same subject matter and to require adjudication of such claims in the same action. Evergreen , 876 S.W.2d at 635. "The compulsory counterclaim is a means of bringing together all logically related claims into a single litigation, through the penalty of precluding the later assertion of omitted claims." Id.
The preclusion effect of the compulsory counterclaim rule, however, is subject to contractual adjustment by the parties. Publicis Communication v. True N. Communications Inc. , 132 F.3d 363, 366 (7th Cir. 1997). For instance, if the parties to a contract promise to litigate a dispute only in a particular forum, one party to the contract cannot seek to bar the litigation in that forum because the claim was not presented in some other forum. Id. An arbitration clause is simply a particular type of forum selection clause. Id. Thus, a dispute covered by a contract's arbitration clause need not be asserted as a compulsory counterclaim in litigation to avoid waiver. Id. (citing Local Union No. 11 v. G.P. Thompson Elec., Inc. , 363 F.2d 181, 185 (9th Cir. 1966)(holding that "[i]f one of the disputing parties could, by filing a complaint alleging a grievance outside the scope of the agreement for arbitration, force his opponent to by-pass arbitration and assert counterclaims as to controversies otherwise arbitrable, the desired intent and purpose of arbitration agreements could be effectively frustrated.") ). In this case, Lafarge and DIG agreed that any dispute arising out of the construction contract shall be settled by arbitration. DIG cannot now seek to bar arbitration of Lafarge's claims against it because those claims were not presented as compulsory counterclaims in its suit against Lafarge in circuit court, which as discussed in section II above, was itself subject to arbitration. See also Sokkia Credit Corp. v. Bush , 147 F. Supp.2d 1101, 1105-06 (D.Kan. 2001)(holding that compulsory counterclaim rule did not apply to bar lessor from asserting claims under lease agreement against lessee in federal court in Kansas, even though claims could have been raised as counterclaims in lessee's prior action in Alabama state court, because lease agreements forum selection clause, in which lessee consented to exclusive jurisidiction and venue in Kansas courts, made Alabama action improper.)
Thus, for all of these reasons stated above, the trial court erred in staying arbitration of Lafarge's claims against DIG. That part of the order is, therefore, reversed, and the case is remanded to the trial court to enter an order compelling arbitration of Lafarge's claims against DIG.
B. Claims Against Dunn
Next, Lafarge contends that its claims against Dunn in its demand for arbitration require arbitration. Dunn, however, disagrees. First, it claims that Lafarge is not the obligee under the plain terms of the guaranty and, therefore, cannot invoke the guaranty's provisions. Secondly, Dunn claims that it has no agreement to arbitrate any dispute with Lafarge because the guaranty does not incorporate the arbitration provision in the construction contract between Lafarge and DIG.
1. Lafarge as the Obligee Under the Guaranty
The contract guaranty signed by Dunn guarantees DIG's prompt and satisfactory performance of the construction contract between Lafarge and DIG. It further provides that if DIG defaults in performance of its obligations under the construction contract, Dunn shall have the option to complete the work of the contract or to pay to obligee all damages, costs, and expenses that the obligee is entitled to recover from DIG by reason of the default. The guaranty names as the obligee Lafarge Canada, Inc., a wholly controlled subsidiary of Lafarge. Dunn contends that the terms of the guaranty apply only to Lafarge Canada and do not apply to Lafarge. Lafarge argues that Dunn's guaranty inures to its benefit.
A guaranty, a species of contract, is a collateral agreement for another's undertaking and is an independent contract that imposes responsibilities different from those imposed in the agreement to which it is collateral. Jamieson-Chippewa Inv. Co. v. McClintock , 996 S.W.2d 84, 87 (Mo.App.E.D. 1999). The rules of construction applicable to other contracts apply to a guaranty. Id. at 88. However, the liability of a guarantor is to be strictly construed according to the terms of the guaranty agreement and may not be extended by implication beyond the strict letter of the obligation. Id. ; Ulreich v. Kreutz , 876 S.W.2d 726, 728 (Mo.App.E.D. 1994). Such strict construction, however, does not entitle a guarantor to demand an unfair and strained interpretation of the words used in order that it may be released from the obligation that it has assumed. Zoglin v. Layland , 328 S.W.2d 718, 721 (Mo.App. 1959).
A guaranty agreement may be construed together with any contemporaneously executed agreements dealing with the same subject matter as an aid in ascertaining the intention of the parties. McClintock , 996 S.W.2d at 87 . Those agreements, however, do not constitute a single contract, and the liability of the guarantor remains primarily dependent on the guaranty agreement itself. Id. Any ambiguity in a guaranty agreement should arise in the first instance from the agreement itself, and neither a court nor the parties will be permitted to create an ambiguity where none exists. Id. at 89.
Guaranties are divided into two types, general and special. Gateway Frontier Properties, Inc. v. Selner, Glaser, Komen, Berger Galganski, P.C. , 974 S.W.2d 566, 569 (Mo.App.E.D. 1998). A general guaranty is addressed to persons generally and is assignable under the principles of contract law. Id. at 569-570. On the other hand, a special guaranty is addressed to a particular person. Id. at 570. As a general rule, a guaranty addressed to a particular person many only be acted upon and enforced by such party. Id. ; Mitchell Bro. v. Railton , 45 Mo. App. 273, 277 (1891). Where, however, a guaranty is intended by both parties to be for the benefit of someone other than the addressee or named obligee, a guaranty is not special despite being addressed to a specific person. Railton , 45 Mo. App. at 277-80; 38 Am. Jur.2d Guaranty § 110 (1999). Thus, a principal may take advantage of a guaranty naming its agent as obligee where the guaranty was intended by both parties to be for the benefit of the principal. Id. Such principle is consistent with the general rule in agency law that the other party to a contract made by an agent for a disclosed or partially disclosed principal, acting within its authority, is liable to the principal, unless the principal is excluded as a party by the form or terms of the contract. Restatement (Second) of Agency § 292 (1958).
In this case, the evidence demonstrates that Lafarge, not Lafarge Canada, was intended by the parties to be the obligee of the contract guaranty. Lafarge Canada is a wholly controlled subsidiary of Lafarge and is extensively involved in and responsible for the management of the construction project on behalf of Lafarge. The guaranty itself demonstrates that Lafarge was the entity the guaranty was intended to benefit. The guaranty explains that the obligee "has executed a Contract" with DIG for construction work at the Sugar Creek New Cement Plant Project. The contract for the design and construction of the cement plant, which was attached to and was specifically referenced throughout the guaranty, was executed between DIG and Lafarge, not Lafarge Canada. The notation "Lafarge Corporation c/o Lafarge Canada-CTS" is typed at the top of every page of the construction contract. Throughout the guaranty, reference is made to Dunn's guarantee of DIG's obligations to the obligee under the construction contract. The construction contract between Lafarge and DIG and the guaranty agreement were executed contemporaneously and concern the same subject matter. Construing the agreements together, Dunn's obligations under the guaranty were intended to run to the party with whom DIG contracted for the construction of the cement plant Lafarge, not Lafarge Canada. Nothing in the guaranty excludes Lafarge as a party. Cf. Rush Presbyterian St. Luke's Med. Ctr. v. Safeco Ins. Co. , 825 F.2d 1204, 1205-06 (7th Cir. 1987)(where surety bond named general contractor as obligee and provided that "[n]o right of action shall accrue on this bond to or for the use of any person or corporation other than the Obligee named herein," owner, though disclosed principal of general contractor, was not entitled to sue on bond).
Alternatively, clear and convincing evidence exists to support the conclusion that the guaranty mistakenly names Lafarge Canada as the obligee. Equity will reform a contract that, due to the mutual mistake of the parties, does not accurately set forth the terms of the agreement actually made or that does not incorporate the true prior intentions of the parties. Sperrer v. Sperrer , 573 S.W.2d 693, 695 (Mo.App. 1978). The burden is on the party seeking the equitable relief of reformation to show by clear and convincing evidence that the instrument did not express the agreement of the parties by reason of their mutual mistake. Duenke v. Brummett , 801 S.W.2d 759, 765 (Mo.App.S.D. 1991). The party seeking relief is not required to show that the parties agreed on any particular language to be used in the instrument, only that they agreed to accomplish a particular goal and that the instrument as executed is insufficient to effectuate their intentions. Id. ; Sperrer , 573 S.W.2d at 695 . Where the evidence supports reformation, the remedy is not barred by the fact that the instrument is unambiguous. Duenke , 801 S.W.2d at 765 . "In a proceeding to reform an instrument on the ground of mutual mistake, parol evidence is admissible to establish the fact of mistake and in what it consisted and to show how the writing should be reformed to conform to the intention of the parties." Id. at 766. Parol evidence is not received for the purpose of altering the contract of the parties but to show what their contract really was. Id.
As discussed above, the guaranty itself and the construction contract entered into contemporaneously with the guaranty demonstrate that the parties intended that the guaranty benefit Lafarge, the party with whom DIG contracted for construction of the cement plant. The guaranty, however, does not accurately incorporate the true prior intentions of the parties; instead it names Lafarge Canada as the obligee. To interprete the guaranty as Dunn contends, that Lafarge Canada is the obligee, would render meaningless the entire contract guaranty that guarantees DIG's performance of the construction contract with Lafarge. A court must avoid an interpretation of a guaranty that renders it absurd. Standard Meat Co. v. Taco Kid of Springfield, Inc. , 554 S.W.2d 592, 596 (Mo.App. 1977). The October change order further demonstrates that the parties intended Lafarge to be the obligee of the contract guaranty, not Lafarge Canada. The change order, which incorporated the construction contract, specifically stated that Dunn accepts the terms of the change order modifying the construction contract and acknowledges that the guaranty shall cover DIG's obligations to Lafarge under the change order. The change order was signed by representatives of Lafarge, DIG, and Dunn. Whether under the principle of agency law or of reformation of a contract for mutual mistake, the result is the same — Lafarge is the obligee of the guaranty. An interpretation that the parties intended Lafarge to benefit from the guaranty is not an extention of Dunn's liability as guarantor but only gives force and effect to the guaranty as it was intended by the parties. Lafarge may enforce its rights under the guaranty.
2. Whether Arbitration Provision was Incorporated into Dunn's Guaranty
Dunn next contends that it has no agreement to arbitrate any dispute with Lafarge because it, as guarantor, is not a signatory to a contract containing an arbitration agreement, and the guaranty does not incorporate the arbitration provision of the construction contract between Lafarge and DIG. Lafarge argues that the arbitration agreement was incorporated into Dunn's guaranty; therefore, Dunn is compelled to arbitrate.
Arbitration is a matter of contract, and a party cannot be required to arbitrate a dispute that it has not agreed to arbitrate. AgGrow Oils, L.L.C. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA , 242 F.3d 777, 780 (8th Cir. 2001) (quoting ATT Technologies, Inc. v. Communications Workers of Am. , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)). As such, a guarantor who is not a signatory to a contract containing an arbitration clause is generally not bound by the arbitration clause. Grunstad v. Ritt , 106 F.3d 201, 204 (7th Cir. 1997) (quoting Asplundh Tree Expert Co. v. Bates , 71 F.3d 592, 595 (6th Cir. 1995)). However, in a majority of state courts including Missouri, due to the strong federal policy in favor of arbitration, arbitration agreements are enforced against guarantors or sureties where the arbitration agreement is incorporated by reference into the guaranty or performance bond. Sheffield Assembly of God Church, Inc. v. Am. Ins. Co. , 870 S.W.2d 926, 931 (Mo.App.W.D. 1994); Gabriel M. Wilner, 1 Domke On Commercial Arbitration § 10:04 (1999).
In Missouri, "matters incorporated into a contract by reference are as much a part of the contract as if they had been set out in the contract in haec verba." Metro Demolition Excavating Co. v. H.B.D. Contracting, Inc. , 37 S.W.3d 843, 846 (Mo.App.E.D. 2001) (quoting Trantham v. Old Republic Ins. Co. , 797 S.W.2d 771, 774 (Mo.App.E.D. 1990)). Under this principle, parties in construction subcontract situations have been held to be subject to arbitration provisions contained in construction contracts that were incorporated by reference into the subcontracts. Id. at 847; Jim Carlson Constr., Inc. v. Bailey , 769 S.W.2d 480, 482 (Mo.App.W.D. 1989). For example, in Jim Carlson Construction, Inc. v. Bailey , where an owner/contractor agreement for the construction of a residential dwelling specifically incorporated by reference the American Institute of Architects standard form of General Conditions that contained an arbitration provision, this court held that the parties to the owner/contractor agreement were subject to the arbitration provision. 769 S.W.2d at 482. Similarly in Metro Demolition Excavating Co. v. H.B.D. Contracting, Inc. , where two subcontracts involving a construction project contained language that specifically incorporated by reference certain documents including the general conditions of the prime construction contract and the general conditions of the prime contract contained arbitration provisions, the Eastern District held that the subcontracts incorporated by reference those arbitration provisions, and the parties to the subcontracts were required to arbitrate their disputes under the subcontracts. 37 S.W.3d at 847.
In Sheffield Assembly of God Church, Inc. v. American Insurance Company , the issues were whether the surety was subject to an arbitration clause included in the construction contract between the owner and the general contractor and was bound by a damage award assessed by arbitrators against the general contractor. This court held that where the performance bond specifically referenced and incorporated the construction contract under the terms of the bond and where the surety judicially admitted that it was bound by the arbitration proceeding by raising the arbitration proceeding as a defense consistently throughout the circuit court proceedings, the surety was subject to the arbitration clause and was bound by the arbitrators' damage award against the general contractor. Sheffield , 870 S.W.2d at 931-32 .
The instant case is distinguishable from Jim Carlson Construction , Metro Demolition , and Sheffield . In those cases, documents containing arbitration provisions were specifically incorporated by reference into other contracts. In this case, Dunn's guaranty refers to the construction contract between Lafarge and DIG, and the contract is attached to the guaranty. The guaranty also provides that Dunn "guarantees prompt and satisfactory performance of the attached Contract in accordance with all its terms and conditions." The guaranty does not, however, incorporate by reference the construction contract. Mere reference to the construction contract in the guaranty is insufficient to establish that Dunn bound itself to the arbitration provison of the construction contract. See Grunstad , 106 F.3d at 205 (guaranty that stated that guarantor agreed to "guarantee all of the provisions of" underlying agreement and "especially the performance of" one of the parties to the underlying agreement did not unambiguously express guarantor's intent to be personally bound by underlying agreement's arbitration clause). Likewise, the guaranty provision of the October change order, which provides that the guaranty shall apply to and cover DIG's obligations under the change order, does not incorporate by reference the construction contract or the change order itself. Additionally, unlike in Sheffield , Dunn has not judicially admitted that it is bound by the arbitration provision. Throughout the circuit court proceeding and in response to Lafarge's demand for arbitration, Dunn has consistently resisted arbitration. Dunn is not required to arbitrate the claims raised by Lafarge against it under the guaranty.
Whether Dunn is ultimately bound by the results of the arbitration between Lafarge and DIG is not addressed in this opinion.
3. Estoppel
Finally, Lafarge claims that Dunn should be estopped from avoiding its obligation to arbitrate because its claims against Dunn under the guaranty are inextricably intertwined with its claims against DIG under the construction contract and because Dunn has previously sought the benefit of other provisions of the construction contract.
Lafarge cites two cases, J.J. Ryan Sons, Inc. v. Rhone Poulenc Textile, S.A. , 863 F.2d 315 (4th Cir. 1988), and McBro Planning Dev. Co. v. Triangle Elec. Constr. Co., Inc. , 741 F.2d 342 (11th Cir. 1984), in support of its first argument. These cases, which held that arbitration between an signatory and a nonsignatory was required based on an estoppel theory, are, however, distinguishable from the instant case. In those cases, the Fourth and Eleventh Circuits estopped signatories to contracts containing an arbitration agreement from avoiding arbitration with nonsignatories when the issues the nonsignatories were seeking to resolve in arbitration were intertwined with the agreement signed by the signatory. J.J. Ryan Sons , 863 F.2d at 320-321; McBro , 741 F.2d at 343-344 . See also Thomson-CSF, S.A. v. Am. Arbitration Ass'n , 64 F.3d 773, 779 (2d Cir. 1995)(discussing the two cases). Conversely, in this case, Lafarge, as signatory to the construction contract that contains the arbitration clause, seeks to compel Dunn, a nonsignatory, to arbitrate its claims against Dunn under the guaranty. As discussed throughout this opinion, arbitration is a matter of contract, and a party cannot be required to arbitrate a dispute that it has not agreed to arbitrate. AgGrow Oils , 242 F.3d at 780 (quoting ATT Technologies , 475 U.S. at 648). Dunn is not a signatory to a contract containing an arbitration clause. At no point did Dunn indicate a willingness to arbitrate any disputes with Lafarge. See Thomson-CSF, S.A. , 64 F.3d at 779 (court was unwilling to apply estoppel cases where signatory was seeking to compel arbitration from a nonsignatory). Furthermore, the cases cited by Lafarge involved claims that were integrally related to the contract containing the arbitration provision. J.J. Ryan Sons , 863 F.2d at 320-321; McBro , 741 F.2d at 343-344 . See also Thomson-CSF, S.A. , 64 F.3d at 779. While the contract guaranty signed by Dunn guarantees DIG's prompt and satisfactory performance of the construction contract between Lafarge and DIG, it is a collateral agreement for another's undertaking and is an independent contract that imposes different responsibilities from those imposed in the construction contract between Lafarge and DIG. Jamieson-Chippewa Inv. Co. , 996 S.W.2d at 87 . Dunn's liability as a guarantor is not integrally related to the construction contract between Lafarge and DIG.
Finally, Lafarge very briefly argues that Dunn should be estopped from avoiding its obligation to arbitrate because Dunn has previously sought the benefit of other provisions of the construction contract. Lafarge cites Dubail v. Medical West Building Corp. , 372 S.W.2d 128, 132 (Mo. 1963), for the general rule that by accepting benefits, a party may be estopped from questioning the existence, validity, and effect of a contract. "A party will not be allowed to assume the inconsistent position of affirming a contract in part by accepting or claiming its benefits, and disaffirming it in part by repudiating or avoiding its obligations, or burdens." Id. (citation omitted).
Lafarge's reliance on Dubail and its general estoppel rule is misplaced. In Dubail , a plaintiff attorney sued a corporation and its shareholders to recover a balance of over $20,000 for attorney fees and for advancements made to the corporation by the attorney while the corporation was being incorporated and thereafter until the defendant shareholders purchased controlling interest in the corporation. The plaintiff attorney sued under a contract wherein he and other stockholders agreed to sell all of their stock to the defendant shareholders. The attorney and other shareholders also agreed to indemnify the corporation from any claims that might be asserted by another corporation under a previous contract with the defendant corporation. Under the contract at issue in the case, the defendant shareholders agreed to pay the plaintiff attorney $25,000 for legal services performed for and advancements made to the defendant corporation. The defendant corporation was not a party to the contract and argued that it was not liable to the plaintiff attorney for the balance due for that reason. The Missouri Supreme Court found that the defendant corporation, by its actions in accepting the benefits under certain terms of the contract, adopted the contract as its own and should not be permitted to avoid the obligations imposed by other terms of the contract. Id.
In Dubail , the defendant corporation undoubtedly received and accepted benefits of the contract. It not only accepted the legal services and advancements of the attorney, but it also pleaded in a separate lawsuit the provision in the contract whereby the attorney agreed to hold it harmless against any claims made by the other corporation. Id. In this case, however, it cannot be said that Dunn has accepted the benefits of the construction contract between Lafarge and DIG. Lafarge argues that Dunn accepted the benefits of the construction contract when, after it notified Dunn of DIG's default under the construction contract, Dunn sought to avoid its responsibilities to Lafarge by citing a provision of the October change order, which is part of the construction contract. The provision in the change order cited by Dunn purportedly limits Lafarge's damages against DIG if DIG fails to complete a specific aspect of the construction contract on or before a particular date. The provision is a possible defense of DIG's against a claim by Lafarge. Dunn's citation of the provision in response to Lafarge's notification of DIG's default was, therefore, not inconsistent with its argument that the arbitration provision of the construction contract does not apply to its guaranty because it was never incorporated by reference into the guaranty. Thus, Dubail and its estoppel principal does not apply in this case. See Fenberg v. Goggin , 800 S.W.2d 132, 134 (Mo.App.E.D. 1990)(where estoppel principle held not to apply in case).
In that Dunn did not agree to arbitrate its liability as guarantor, the trial court did not err in staying Lafarge's arbitration against Dunn. That part of the trial court's order is, thus, affirmed.
The order of the trial court is affirmed in part and reversed in part, and the case is remanded with directions consistent with this opinion.
Robert G. Ulrich, P.J. Spinden, J. and Smith, J. concur.