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C. Terry Hunt Industries, Inc. v. Klausner Lumber Two, LLC

Court of Appeals of North Carolina

August 15, 2017

C. TERRY HUNT INDUSTRIES, INC., Plaintiff,
v.
KLAUSNER LUMBER TWO, LLC, Defendant.

          Heard in the Court of Appeals 19 April 2017.

         Appeal by plaintiff from orders entered 31 May 2016 and 17 June 2016 by Judge Alma L. Hinton in Halifax County No. 15CVS1112 Superior Court.

          Hamilton Stephens Steele Martin, PLLC, by Nancy S. Litwak and Erik M. Rosenwood, for plaintiff-appellant.

          Nexsen Pruet, PLLC, by David S. Pokela and Eric H. Biesecker, for defendant-appellee.

          BERGER, JUDGE.

         C. Terry Hunt Industries, Inc. ("Hunt") appeals from the order filed on May 31, 2016 granting the motion to compel arbitration made by Klausner Lumber Two, LLC ("Klausner"). Hunt also appeals from the order filed on June 17, 2016 denying both the motion to reconsider the order granting the motion to compel arbitration, and the motion to alter or amend the order. The interlocutory order compelled arbitration in Hunt's lawsuit claiming breach of a preliminary agreement for a construction project. Hunt argues that interlocutory review is proper because the order affects a substantial right. We disagree and dismiss the appeal.

         Factual & Procedural Background

         On August 19, 2014, Hunt and Klausner entered into a Preliminary Contract Agreement and Authorization to Proceed (the "Preliminary Agreement"). In the Preliminary Agreement, Hunt agreed to provide the materials and labor necessary to construct a sawmill on property owned by Klausner in Halifax County, North Carolina (the " N.C. Project"). The Preliminary Agreement preceded the anticipated execution of a contract (the " N.C. Contract") that would set the terms and conditions for the N.C. Project.

         The Preliminary Agreement incorporated the contract used by the parties for a prior sawmill construction project completed in Live Oak, Florida (the "F.L. Contract"). This agreement provided, in pertinent part:

1.2 WHEREAS [Klausner] hereby intends to engage [Hunt] to undertake and perform all Work . . . in accordance with the [ N.C. ] Contract Documents for [Klausner's] [ N.C. Project], including the obligations and related liabilities as defined in the [ N.C. ] Contract, and [Hunt] has agreed to such engagement upon and subject to the terms and conditions of the [N.C]. Contract[.]
2.1 In this Agreement, words and expressions shall have the same meanings as are respectively assigned to them in the [ N.C. ] Contract. The form and language of the [ N.C. ] Contract . . . shall be based on that used previously by the Parties for the Sawmill Project located in Live Oak, Florida. References in this Agreement to specific Articles or language to be included in the [ N.C. ] Contract shall refer to those same Articles and language included in the [F.L. Contract].

         Additionally, the parties agreed that work on the N.C. Project would commence once the Preliminary Agreement was executed, prior to the completion of any other documents pertaining to the N.C. Contract. However, pursuant to the Preliminary Agreement, once the remaining N.C. Contract documents were agreed upon by the two parties, "they shall, along with [the Preliminary Agreement], constitute the [ N.C. Contract] Documents."

         The F.L. Contract, the form and language of which the parties agreed would form the basis of the N.C. Contract, contained a three-step dispute resolution procedure in Sections 13.11-13.13. This procedure was enumerated in the F.L. Contract as follows:

13.11 Direct Discussions. If the Parties cannot reach resolution on a matter relating to or arising out of the Agreement, the Parties shall endeavor to reach resolution through good faith direct discussions between the Parties' representatives . . . . If the Parties' representatives are not able to resolve such matter . . . senior executives of the Parties shall meet . . . to endeavor to reach resolution. If the dispute remains unresolved . . ...

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