312158MAJ
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     DO NOT CITE.  SEE RAP 10.4(h).

                          Court of Appeals Division II
                               State of Washington

                            Opinion Information Sheet

Docket Number:       31215-8-II
Title of Case:       Daniel Pearson, etal, Respondents v. Adair
                     Homes, Inc, etal, Petitioner
File Date:           07/19/2005


                                SOURCE OF APPEAL
                                ----------------
Appeal from Superior Court of Thurston County
Docket No:      03-2-00875-1
Judgment or order under review
Date filed:     11/26/2003
Judge signing:  Hon. Daniel J Berschauer


                                     JUDGES
                                     ------
Authored by Elaine Houghton
Concurring: C. C. Bridgewater
            David H. Armstrong


                                COUNSEL OF RECORD
                                -----------------
Counsel for Petitioner(s)
            Alan J Wertjes
            Faris & Wertjes PS
            1800 Cooper Point Rd SW Ste 3
            Olympia, WA  98502-1179

Counsel for Respondent(s)
            Benjamin D Cushman
            Cushman Law Offices PS
            924 Capitol Way S Ste 203
            Olympia, WA  98501-1278


IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION  II

DANIEL PEARSON and TAMMY         No.  31215-8-II
PEARSON, husband and wife,

Respondents,

     v.

ADAIR HOMES, INC.,               UNPUBLISHED OPINION

Appellant,

BANK OF AMERICA Account No.
17000629,

                    Defendant.

     HOUGHTON, P.J. -- Adair Homes, Inc. appeals from a trial court ruling
denying its motion to compel arbitration under a construction contract
entered with Daniel and Tammy Pearson.  We affirm.
FACTS

     The Pearsons executed an agreement with Adair to construct a home for
them.  The Pearsons obtained a construction warranty.  The construction
contract contained a dispute resolution clause, which provided:
The Owner and Adair realize that disagreements may arise in the course of
contracting for the construction of a structure which the Parties may be
unable to settle between themselves.  If this happens, the Parties agree to
settle all disagreements in an efficient, timely and fair manner at minimal
or no cost.  To accomplish this, the parties agree to the following system
of Dispute Resolution, which shall apply to all disagreements arising at
any time and in any way relating to construction or to this Contract:
     . . . .
     . . . {T}he Parties agree to meet with an unbiased Mediator, with a
working knowledge of residential construction . . . If mediation fails to
resolve the dispute, it will immediately proceed to final and binding
arbitration with the Mediator serving as Arbitrator. . . .
     Such arbitration shall be final and binding on the Parties on all
matters involving, relating to or arising out of this Contract, or the
construction of the structure, including Adair's common law and/or
statutory lien rights.  Resort to this system of mediation/arbitration is
mandatory and time is of the essence.  The Parties shall equally share the
Mediator/Arbitrator's fees.

Clerk's Papers (CP) at 17.  The arbitration agreement also specified that
Construction Arbitration Services would resolve disputes.
     After construction was completed, the Pearsons discovered that water
penetrating through improperly sealed windows allowed mold growth that
caused their infant son to develop respiratory problems.  The Pearsons
sought $6,239.78 under warranty for repairs and attorney fees from Adair.
Adair denied the Pearsons' warranty claim, asserting that the Pearsons
failed to properly seal their home or maintain the existing seal.1
     The Pearsons sued Adair in superior court, claiming breach of
contract, breach of implied warranty of habitability, and personal injury.
Adair moved to compel arbitration.  The Pearsons disputed that the
arbitration clause covered their claims.
     After a hearing, the trial court declined to compel arbitration
stating:
No fair reading of the language subjects plaintiffs' claims of personal
injury to arbitration.  The agreement identifies that the arbitrator will
have a working knowledge of residential construction.  It is unreasonable
to suggest that this person also have a 'working knowledge' of a personal
injury claim.  This type of claim is beyond the scope of a construction
contract arbitration agreement.

CP at 69.  Adair appeals.
ANALYSIS

Arbitration Clause

      Adair first contends that the arbitration clause plainly and
unambiguously covers all claims the Pearsons brought against Adair,
including their personal injury claim.  We disagree.
     We review questions of arbitrability de novo.  Mendez v. Palm Harbor
Homes, Inc., 111 Wn. App. 446, 453, 45 P.3d 594 (2002).  The Pearsons bear
the burden of showing that the clause does not cover their claims.  Mendez,
111 Wn. App. at 453; RCW 7.04.010.
      We give the contract language its ordinary meaning.  Fancher Cattle
Co. v. Cascade Packing, Inc., 26 Wn. App. 407, 613 P.2d 178 (1980).   We
construe contracts to reflect the parties' intent, and we do not make
another or different contract under the guise of construction or
interpretation.  Corbray v. Stevenson, 98 Wn.2d 410, 415, 656 P.2d 473
(1982).
      We review the possible ambiguity of a written instrument as a
question of law.  McGary v. Westlake Investors, 99 Wn.2d 280, 285, 661 P.2d
971 (1983).  An ambiguous contract provision contains uncertain terms or
terms capable of being understood as having more than one meaning.  Mayer
v. Pierce County Med. Bureau, Inc., 80 Wn. App. 416, 421, 909 P.2d 1323
(1995).  We follow three basic principles when reviewing contract terms for
ambiguity.  First, the parties' intent controls.  Second, we ascertain that
intent from reading the contract as a whole.  Finally, we do not read an
ambiguity into an otherwise clear and unambiguous contract.  Mayer, 80 Wn.
App. at 420.
     Under general principles of contract interpretation, we construe
agreement ambiguities against the drafter.  Mendez, 111 Wn. App. at 459.
But if any doubts or questions arise with respect to the scope of the
arbitration agreement, we construe the agreement in favor of arbitration
unless satisfied that the agreement cannot be interpreted to cover a
particular dispute.  Mendez, 111 Wn. App. at 456.
In determining whether the two parties agreed to arbitrate the particular
dispute, we apply four guiding principles:  1) the duty to arbitrate arises
from the contract; 2) a question of arbitrability is a judicial question
unless the parties clearly provide otherwise; 3) a court should not reach
the underlying merits of the controversy when determining arbitrability;
and 4) as a matter of policy, courts favor arbitration of disputes.

Mendez, 111 Wn. App. at 455-56 (quoting Stein v. Geonerco, Inc., 105 Wn.
App. 41, 45-46, 17 P.3d 1266 (2001)).
      Here, Adair drafted the contract.  The arbitration agreement provides
in relevant part that:
      The Owner and Adair realize that disagreements may arise in the
course of contracting for the construction of a structure which the Parties
may be unable to settle between themselves. . . . {T}he parties agree to
the following system of Dispute Resolution, which shall apply to all
disagreements arising at any time and in any way relating to construction
or to this Contract . . . .

CP at 17 (emphasis added).
      The first sentence limits the dispute resolution clause to
construction disputes only, whereas the second sentence broadens the
application of this clause to every conceivable dispute arising out of this
agreement.  These inconsistencies render the arbitration agreement, read as
a whole, ambiguous.
      Moreover, we note that the Pearsons alleged personal injury claims.
Reading the arbitration clause as a whole, we conclude that the parties did
not, and could not have contemplated covering personal injury claims under
the arbitration clause where they agreed that someone with construction
experience would be selected as an arbitrator.  Because the agreement
cannot be interpreted to cover injury disputes, as alleged by the Pearsons,
we do not construe in favor of arbitration.  Therefore, we hold that the
trial court did not err in refusing to compel arbitration.
Trial on Arbitration Clause Applicability

     Adair next contends that the trial court failed to hold a trial to
determine the applicability of the arbitration clause to the Pearsons'
claim.  It asserts that the trial court erred under RCW 7.04.040.
     RCW 7.04.040 sets forth a mechanism for courts to address motions to
compel arbitration.  RCW 7.04.040(1) provides that the trial court shall
order the parties to arbitrate if it finds no substantial issue as to the
validity of the arbitration agreement.  If there is a substantial issue,
then subsection (2) directs the trial court to proceed to the trial of that
issue, and a party has a right to a jury trial if the trial court finds a
substantial issue as to the validity or existence of the arbitration
agreement.
     Adair moved to compel arbitration.  The Pearsons contested the motion.
Neither party requested a jury trial.  After a hearing, the trial court
denied Adair's motion to compel arbitration.  The trial court did not err.
Equitable Factors
     Finally, Adair contends that the trial court erroneously concluded
that equitable factors justified denying Adair's motion to compel
arbitration.
     RCW 7.04.010 provides that the arbitration agreements are enforceable
'save upon such grounds as exist in law or equity for the revocation of any
agreement.'  'Equity includes the power to prevent the enforcement of a
legal right when to do so would be inequitable under the circumstances.'
Mendez, 111 Wn. App. at 460 (citing Thisius v. Sealander, 26 Wn.2d 810,
818, 175 P.2d 619 (1946)).  'Under the proper 'conditions and
circumstances' warranting equity, 'equity will assume jurisdiction for all
purposes, and give such relief as may be required.''  Mendez, 111 Wn. App.
at 460 (quoting Income Prop. Inv. Co. v. Trefethen, 155 Wash.  493, 506,
284 P. 782 (1930)).  Equity's goal is substantial justice for the
contracting parties.  Mendez, 111 Wn. App. at 460.
     We review the application of equity for an abuse of discretion.
Mendez, 111 Wn. App. at 460.  A court abuses its discretion when it bases
its decision on untenable grounds.  Reid v. Dalton, 124 Wn. App. 113, 125,
100 P.3d 349 (2004).  'We may affirm a trial court on any theory the record
and the legal authorities supports even if the trial court did not consider
such grounds.'  Mendez, 111 Wn. App. at 460-61 (quoting LaMon v. Butler,
112 Wn.2d 193, 200-01, 770 P.2d 1027 (1989)).
     As discussed, the arbitration clause does not apply to the Pearsons'
personal injury claims.  Thus, the trial court did not abuse its discretion
in ruling that it would be inequitable to force them to resolve differing
claims in different venues and in deciding that an arbitrator with
construction experience would not be qualified to resolve a personal injury
claim.2
     Affirmed.
     A majority of the panel having determined that this opinion will not
be printed in the Washington Appellate Reports, but will be filed for
public record pursuant to RCW 2.06.040, it is so ordered.

                                             Houghton, P.J.

We concur:

Bridgewater, J.

Armstrong, J.

1 According to the agreement, Adair assumed responsibility for a majority
of the construction, but the Pearsons assumed responsibility for the
following:
During the course of construction and prior to occupancy, the Owner is
responsible to complete and fund the backfilling and final grading, the
interior and exterior painting, the installation of any stairs, patio,
steps, walkways, aprons, drains, or other items which are necessary to
conform to Government and Lender requirements.
CP at 17.  Nothing in this contract requires that the Pearsons seal the
windows.
2 Finally, according to the Pearsons' undisputed affidavit, Adair's sales
representative told them that the arbitration clause applied only to the
disputes arising during construction.  The record also contains affidavits
of two other Adair's customers, not parties to this appeal.  Gregory Peel
averred:  'Before I signed the contract, I was told by my salesperson that
the mediation/arbitration paragraph was for disagreements that might come
up during the construction process. . . . He said I still retained my
rights to sue . . . for problems arising after my home was completed.'  CP
at 40 (emphasis added).  Mary Massey, another Adair customer, averred
similarly.
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