Preview
Filed: 7/28/2023 5:24 PM
JOHN D. KINARD - District Clerk
Galveston County, Texas
Envelope No. 78008317
By: Shailja Dixit
7/31/2023 8:12 AM
NO. 22-CV-1731
WAYNE SUTHERLAND and § IN THE DISTRICT COURT
TERRI SUTHERLAND, §
Plaintiffs, §
v. §
§
TAYLOR MORRISON OF TEXAS, INC., and §
TAYLOR WOODROW COMMUNITIES- § 10TH JUDICIAL DISTRICT
LEAGUE CITY, LTD., §
Defendants/Third-Party Plaintiffs, §
v. §
§
BIG TEX AIR CONDITIONING, INC., et al., §
Third-Party Defendants. § GALVESTON COUNTY, TEXAS
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND
SUPPLEMENTAL MOTION TO COMPEL ARBITRATION
TO THE HONORABLE JUDGE OF SAID COURT:
NOW COME Defendants Taylor Morrison of Texas, Inc. and Taylor Woodrow
Communities-League City, Ltd. (collectively “TM Defendants”) and, without waiving their
arbitration rights, ask the court for its orders:
lifting abatement ordered by January 30, 2023 AGREED ORDER, to be
effective June 29, 2023;
compelling these subsequent purchaser homeowner Plaintiffs to arbitrate their
construction defect claims against TM Defendants pursuant to the paragraph 11
arbitration agreement within the Purchase Agreement for original
construction/sale of Plaintiffs’ home;1 and
compelling Third-Party Defendant Big Tex Air Conditioning, Inc. (“Big Tex
AC”) to join Plaintiffs’ arbitration proceeding to resolve TM Defendants’ third-
party claims against Big Tex AC.
1
See DEFENDANTS’ … MOTION TO COMPEL ARBITRATION … filed 10/3/2022, Ex. B-1, p. 8-10.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 1
Sutherland
I. BACKGROUND
1.1 Plaintiffs Wayne and Terri Sutherland purchased a home built by TM Defendants.2 Big
Tex AC performed HVAC work on the home pursuant to Master Agreements with each of the TM
Defendants.3 In those Master Agreements, Big Tex AC agreed:
… if Taylor Morrison is involved in any arbitration or other alternative
dispute resolution proceeding with the Homeowner, or any other party, relating in
any way to Contractor’s Work… then Contractor hereby agrees to be joined to such
arbitration or alternative dispute resolution proceeding….4
1.2 Plaintiffs filed suit against TM Defendants, alleging their “home has developed
excessive moisture, humidity and significant mold growth and mycotoxins resulting from multiple
design and construction defects.5 Plaintiffs specifically alleged that “[TM] Defendants’ agents …
fail[ed] to properly design, construct, install, and inspect the building envelope, roof, attic,
windows, HVAC system, showers, interiors and discover and remediate the defective and/or
dangerous conditions.”6
1.3 TM Defendants answered and requested—under direct-benefits estoppel—the court’s
order compelling these subsequent purchaser homeowner Plaintiffs to arbitrate their claims
pursuant to the paragraph 11 arbitration agreement within the Purchase Agreement for original
construction/sale of the home.7 That arbitration agreement also expressly provides for the inclusion
of TM Defendants’ “subcontractors, agents” in any arbitration of a dispute:
This arbitration agreement shall inure to the benefit of, and be enforceable by, Seller
and Seller’s affiliated and related entities, and each of their respective … agents,
2
PLAINTIFFS’ ORIGINAL PETITION filed 9/7/2022, p. 2 @ ¶8, hereafter “Petition.”.
3
See Exhibit A (DECLARATION OF JIM BLACK), Exhibit A-1 (MASTER AGREEMENT w/ Taylor Morrison of
Texas, Inc.), and Exhibit A-2 (MASTER AGREEMENT w/ Taylor Woodrow Communities-League City, Ltd.)
attached hereto and incorporated herein.
4
See supra note 3.
5
See supra note 2, Petition p. 3 @ ¶12.
6
See supra note 2, Petition p. 8 @ ¶27.
7
See supra note 1, p. 5.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 2
Sutherland
representatives, contractors, subcontractors, agents, vendors, suppliers, design
professionals, insurers, and any other person whom Buyer contends is responsible
for any alleged defect in or to the Property or any improvement or appurtenance
thereto. The parties contemplate the inclusion of such parties in any arbitration of
a dispute and agree that the inclusion of such parties will not affect the
enforceability of this arbitration agreement.8
TM Defendants filed their third-party claims against HVAC subcontractor Big Tex AC.9 Big Tex
AC answered “subject to arbitration.”10 Big Tex AC “does not have an objection to arbitration.”11
1.4 The court held a January 30, 2023 hearing on TM Defendants’ requests to compel
arbitration and to abate this case. The parties advised the court of pending appeals before the
Supreme Court of Texas regarding application of direct benefits estoppel to bind nonsignatory
parties to similar arbitration agreements, and requested the court’s abatement of this case to await
the Texas Supreme Court’s guidance. The court signed and entered its January 30, 2023 AGREED
ORDER abating this case pending the Texas Supreme Court’s resolution of such appeals12 and
until further order lifting abatement. That Court resolved several applicable appeals.
1.5 The Texas Supreme Court first decided Taylor Morrison of Tex., Inc. v. Skufca, 660
S.W.3d 525 (Tex. 2023) (per curiam).13 The Court held that litigants who sue based on a contract
subject themselves to its terms, including any arbitration clause within that contract. Id. at 526.
1.6 The Court next decided TotalEnergies E&P USA, Inc. v. MP Gulf of Mex., LLC, 667
S.W.3d 694 (Tex. 2023),14 and held that an arbitration agreement to arbitrate in accordance with
AAA rules “clearly and unmistakably delegated arbitrability issues to the arbitrator.” Id. at 697.
8
See supra note 1, Ex. B-1, p. 9 @ ¶11)d.
9
DEFENDANTS’ THIRD-PARTY PETITION filed 10/6/2022.
10
[Big Tex AC’s] ORIGINAL ANSWER SUBJECT TO ARBITRATION … filed 10/10/2022.
11
[Big Tex AC’s] RESPONSE TO [TM DEFENDANTS’] MOTION TO COMPEL ARBITRATION filed 1/30/2023.
12
See infra ¶¶ 1.5 and 1.8 herein.
13
Copy attached hereto as Exhibit B.
14
Copy (majority opinion only) attached hereto as Exhibit C.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 3
Sutherland
1.7 The Court next decided Lennar Homes of Tex. Land & Constr., Ltd. v. Whiteley, No.
21-0783, 2023 Tex. LEXIS 407 (Tex., May 12, 2023) (motion for rehearing filed).15 The Court
held that a subsequent purchaser homeowner was “bound by the arbitration clause in the purchase-
and-sale agreement [between the original purchaser and the homebuilder] under the doctrine of
direct-benefits estoppel.” 2023 Tex. LEXIS 407 at *1-*2.
1.8 Most recently, the Court decided Taylor Morrison of Tex., Inc. v. Kohlmeyer, No. 21-
0072, 2023 Tex. LEXIS 623 (Tex., June 30, 2023) (per curiam) (motion for rehearing filed).16 The
Court held those subsequent purchaser homeowners “were bound to arbitrate according to the
original purchase agreement under the doctrine of direct-benefits estoppel [and their] claims—all
of which relate to defects in the construction or design of the home—fall within the scope of the
arbitration provision and are subject to arbitration.” 2023 Tex. LEXIS 623 at *9-*10. That Court
remanded that case to this court “for further proceedings consistent with this opinion, such as the
grant of an appropriate stay.”
II. ARGUMENT AND AUTHORITIES
A. The court should lift abatement to allow resolution of requested arbitration
2.1 The Texas Supreme Court decided the pending appeals referenced by the AGREED
ORDER abating this case. This court should lift abatement to allow resolution of TM Defendants’
requested arbitration and other pending requests.
B. The court should compel Plaintiffs to arbitrate their claims against TM Defendants
2.2 The Texas Supreme Court’s recent guidance shows that these subsequent purchaser
homeowner Plaintiffs must arbitrate their claims as requested by TM Defendants. Skufca arose
15
Copy attached hereto as Exhibit D.
16
Copy attached hereto as Exhibit E.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 4
Sutherland
from the 56th District Court’s denial of arbitration as requested by these same TM Defendants.
Whiteley arose from another homebuilder’s request for arbitration of a subsequent purchaser
homeowner’s claims and the 56th District Court’s grant of requested arbitration and—after
arbitration concluded by an award favoring the homebuilder—the 56th District Court’s order
vacating that arbitration award because the homeowner maintained her opposition to arbitration of
her claims. The Texas Supreme Court held she was obligated to arbitrate her claims under the
doctrine of direct benefits estoppel because her claims against the homebuilder were based on its
original Purchase and Sale Agreement. 2023 Tex. LEXIS 407 at *12-*20. The Court: rejected her
suggestion that her claims for breaches of implied warranties of good workmanship and
habitability derived from common law, not from the original Purchase and Sale Agreement; and
confirmed that such implied warranties are part of that Agreement. Id. at *15-16. The Court also
recognized “the substantial overlap between the substance of a negligent construction claim and a
claim for breach of an implied warranty of good workmanship.” Id. at *17, n. 11.
2.3 Kohlmeyer arose from this court’s denial of arbitration of subsequent purchaser
homeowners’ claims as requested by these same TM Defendants. The facts of Whiteley and
Kohlmeyer are virtually identical to those presented in this case. In all these cases, subsequent
purchaser homeowners alleged “significant mold growth” in their homes resulting from
construction defects and homebuilders’ liability for breaches of implied warranties of good
workmanship and habitability and for negligent construction.17 Whiteley and Kohlmeyer set the
Texas Supreme Court’s guiding rule: such implied warranties are part of the contract for original
construction and sale, and subsequent purchasers’ claims for breaches of such implied warranties
“do not stand independently” of such contract. Whiteley at *12-*20; Kohlmeyer at *8-*9. This
17
See supra note 2, Petition p. 3, 12.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 5
Sutherland
court should follow that Court’s guiding rule and its prior direct benefits estoppel rule (“When the
alleged liability arises from the contract or must be determined by reference to it, equity prevents
the non-signatory plaintiff from avoiding an arbitration clause that was part of that contract”)
should establishes precedent that this court should follow. See Whiteley at *14-*15 (quotations and
citation omitted).
2.4 Also, according to the Court’s TotalEnergies decision, Plaintiffs may not further
burden this court with “arbitrability” objections to arbitration of their claims by the American
Arbitration Association (“AAA”), the arbitration service designated by the paragraph 11
arbitration agreement.18 TotalEnergies establishes another applicable legal rule: an agreement to
arbitrate in accordance with the AAA makes its rules part of the agreement. 2023 Tex. LEXIS 315
at *19-*20. Here, AAA Construction Industry Arbitration Rule R-2 “authorize[s] the AAA to
administer the arbitration” and Rule R-9 delegates to the arbitrator “the power to rule on … any
objections with respect to the existence, scope, or validity of the arbitration agreement.”19 By that
guidance, Plaintiffs must arbitrate all their claims against TM Defendants through the AAA.
C. The court should compel arbitration of TM Defendants’ claims against Big Tex AC based
on arbitration agreements within the Purchase Agreement and Master Agreements
2.5 Just as Plaintiffs must arbitrate their claims against TM Defendants by the Purchase
Agreement’s paragraph 11 arbitration agreement, HVAC subcontractor Big Tex AC must join that
arbitration to resolve TM Defendants’ third-party claims. Big Tex AC is a third-party beneficiary
of the arbitration agreement. See In re Next Fin. Group, Inc., 271 S.W.3rd 263, 267 (Tex. 2008);
In re Rubiola, 334 S.W.3d 220, 222 (Tex. 2011) (including 3rd party in arbitration when arbitration
agreement included such party). Big Tex AC is also bound to the arbitration agreement through
18
See supra note 1, Ex. B-1, p. 9 @ ¶11)b.
19
AAA Construction Industry Arbitration Rules R-2 and R-9, attached hereto and incorporated herein as Exhibit F.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 6
Sutherland
equitable estoppel. Allegations of intertwined claims of substantially interdependent and concerted
misconduct regarding construction defects estop Big Tex AC from denying arbitration of TM
Defendants’ third-party claims. See Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305-306 (Tex.
2006) (application of equitable estoppel is warranted when arbitration clause signatory alleges
substantially interdependent and concerted misconduct by signatory and non-signatory); Cotton
Comm’l USA, Inc. v. Clear Creek ISD, 387 S.W.3d 99, 104-105 (Tex. App.—Houston [14th Dist.]
2012, no pet.). Plaintiffs’ specific claim of “unacceptably high levels of relative humidity and
condensation” clearly relates to Big Tex AC’s work. Pursuant to the paragraph 11 arbitration
agreement and Big Tex AC’s own arbitration agreements that it “agrees to be joined in such
arbitration,” Big Tex AC must join Plaintiffs’ arbitration against TM Defendants to resolve third-
party claims against Big Tex AC. Thus, in addition to ordering Plaintiffs to arbitrate their claims,
the court should also order Big Tex AC to join Plaintiffs’ arbitration and abate this lawsuit. See 9
U.S.C. § 3 (“courts of the United States… 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.”);
In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195 (Tex. 2007) (both the FAA and the Texas
Arbitration Act require courts to stay litigation of issues that are subject to arbitration).
2.6 Big Tex AC expressly contemplated arbitration when it answered TM Defendants’
third-party claims.20 Big Tex AC judicially admitted its arbitration agreements with TM
Defendants and propriety of arbitration:
Pursuant to the clear meaning of Paragraph 11, Subsection (d) of the Purchase
Agreement if the Court orders Plaintiffs’ claim to arbitration, then the claims
against Big Tex and the other fourth-party defendants should be included in
arbitration;21 and
20
See supra notes 10 and 11.
21
See supra note 11, p. 4.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 7
Sutherland
Article 12 of the … Master Agreement … also requires the claims against Big
Tex … to go to arbitration.22
2.7 Assertions of fact that are deliberate, clear, and unequivocal are regarded as judicial
admissions. Mapco, Inc. v. Carter, 817 S.W.2d 686, 687 (Tex. 1991). Big Tex AC’s judicial
admissions are conclusive against it and relieves TM Defendants of the burden of proving the
admitted facts. Mendoza v. Fidelity & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex.
1980).
2.8 Big Tex AC’s admissions notwithstanding, TM Defendants’ proof of Big Tex AC’s
arbitration agreements—within Article 12.2 of each Master Agreement with TM Defendants—
show Big Tex AC expressly agreed “to be joined in such arbitration [with a homeowner] … to
resolve all outstanding issues, claims, and defenses between [Big Tex AC] and Taylor Morrison
in such arbitration … and to be bound by the results of such arbitration.”23 TM Defendants’ third-
party claims against Big Tex AC are within the scope of Big Tex AC’s arbitration agreements, and
should be arbitrated in Plaintiffs’ arbitration proceeding.
D. Compelling “Fourth Party Defendants” to arbitration is not a condition to compel Big
Tex AC to arbitration
2.9 TM Defendants did not and do not assert claims against Big Tex AC’s “Fourth-Party
Defendants.” Big Tex AC asked the court to “order all of the parties to arbitration.”24 If Big Tex
AC claims that it cannot be compelled to arbitration without also compelling “Fourth-Party
Defendants” to arbitration, that claim is wrong. No such condition precedent appears in Big Tex
AC’s arbitration agreements with TM Defendants. No such condition precedent appears in the
Purchase Agreement’s paragraph 11 arbitration agreement.
22
See supra note 11, p. 4.
23
Ex. A-1, p. 11. Ex. A-2, p. 11.
24
See supra note 11, p. 1 (emphasis added).
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 8
Sutherland
2.10 As TM Defendants requested, the court should order Plaintiffs to initiate arbitration
with the AAA to resolve their claims against TM Defendants. As TM Defendants now request, the
court should also order Big Tex AC to join Plaintiffs’ arbitration. The court should thereafter order
abatement of this case to allow the parties to arbitrate their claims. See 9 U.S.C. § 3; In re Merrill
Lynch, 235 S.W.3d at 195.
WHEREFORE PREMISES CONSIDERED, TM Defendants pray that the court lift
abatement of this case, consider TM Defendants’ requested relief, order Plaintiffs, TM Defendants,
and Big Tex AC to arbitration with the American Arbitration Association pursuant to the parties’
arbitration agreements, and thereafter abate this case.
Respectfully submitted,
By: /s/ Carl J. Wilkerson
Carl J. Wilkerson
State Bar No. 21478400
cwilkerson@brstexas.com
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 9
Sutherland
BUSH RUDNICKI SHELTON, PC
James W. Rudnicki
State Bar No. 24006148
james@brstexas.com
Diana M. Alcala
State Bar No. 24007590
dalcala@brstexas.com
Jennifer Taylor
State Bar No. 24102559
jtaylor@brstexas.com
2508 Ashley Worth Blvd., Suite 200
Austin, Texas 78738
Telephone: 512-263-8408
Facsimile: 512-263-2562
-and-
Carl J. Wilkerson
State Bar No. 21478400
cwilkerson@brstexas.com
David M. Jones
State Bar No. 24042684
djones@brstexas.com
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: 817-274-5992
Facsimile: 817-261-1671
ATTORNEYS FOR TAYLOR
MORRISON OF TEXAS, INC. and
TAYLOR WOODROW
COMMUNITIES-LEAGUE CITY,
LTD.
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 10
Sutherland
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the foregoing document was delivered to all counsel
of record in accordance with Rule 21a of the Texas Rules of Civil Procedure, via electronic
delivery through the e-filing system on July 28, 2023.
A Craig Eiland Amy Nilsen
EILAND & BONNIN, PC JOHNSON, TRENT & TAYLOR, L.L.P.
2200 Market Street, Suite 501 919 Milam, Suite 1500
Galveston, Texas 77550 Houston, Texas 77002
ceiland@eilandlaw.com anilsen@johnsontrent.com
Shaun W. Hodge Carlos A. Balido
HODGE LAW FIRM, PLLC WALTERS BALIDO & CRAIN, L.L.P.
1301 Market Street 10440 North Central Expy., Suite 1500
Galveston, Texas 77550 Dallas, Texas 75231
shodge@hodgefirm.com Balidoedocsnotifications@wbclawfirm.com
ATTORNEYS FOR
Dax O. Faubus BIG TEX AIR CONDITIONING, INC.
The Faubus Firm
1001 Texas Avenue, 11th Floor
Houston, Texas 77002
dax-notice@faubusfirm.com
ATTORNEYS FOR PLAINTIFFS
Ian M. McLin
Randall L. Beaty Thomas Lillibridge
NEWTON JONES & MCNEELY LANGLEY & BANACK
3405 Marquart 745 E. Mulberry, Suite 900
Houston, Texas 77027 San Antonio, Texas 78212
rbeaty@newton-lawyers.com imclin@langleybanack.com
ATTORNEY FOR tlillibridge@langleybanack.com
ARNULFO RODRIGUEZ ROOFING CO., INC. ATTORNEYS FOR BFS GROUP, LLC
Timothy D. McMurtrie Brian G. Cano
ROYSTON, RAYZOR, VICKERY & WILLIAMS, L.L.P. Justin A. Diaz
802 N. Carancahua, Suite 1300 FEE, SMITH & SHARP, LLP
Corpus Christi, Texas 78401-0021 2777 Allen Parkway, Suite 800
tim.mcmurtrie@roystonlaw.com Houston, Texas 77019
ATTORNEY FOR CITY FRAMERS, LLC bcano@feesmith.com
jdiaz@feesmith.com
ATTORNEYS FOR INSTALLED BUILDING
PRODUCTS OF HOUSTON, LLC
Paul Byron Starr Mallorie S. Walker
GERMER BEAMAN & BROWN PLLC Spencer Edwards
1501 S. Mopac Expressway, Suite A400 THE HUDGINS LAW FIRM
Austin, Texas 78746 24 Greenway Plaza, Suite 2000
pstarr@germer-austin.com Houston, Texas 77046
ATTORNEY FOR mwalker@hudgins-law.com
L&W WEATHERSTRIPPING, LLC sedwards@hudgins-law.com
ATTORNEYS FOR
WISENBAKER BUILDER SERVICES, LTD
/s/ Carl J. Wilkerson
DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 11
Sutherland
Exhibit A
TAYLORMORRISON
MASTER AGRl';EMENTFORVERTICAL CONSTRUCTION SERVICES
. . - -- - (TEXAS) -- -
.ATTN: . .JANA TOVAR • ATTN: Matthew ('Matt':) C.hishtilm
TELEl"HONI;: -t713)631~773S TELEPHONE: 1281\ 598°3008
FAX: FAX: (2$1)598'"3112
j
EMAIL: dana1t;,bfanc@bigtexair:com EMAIL: mchisholrn@tayforrriotrison.com
LICENSE,#:
. FED. TAX IDj#: FED. TAX ID#: 74-2012460
..
Thi$ Mast\,lr A/iieement for Vertical Com,buction servrces ("Agreement') is made effective ,,s of this 12th day of
Oecem~r. 201i3 {"Effect[ve .Qate"), and shall govern the relationship between Contractor and TayforMQr.nSQil for any
·· new home CQfl$1rQctie>n and associated lot .Improvement project a$ del'cribed in a specific Purchase_ Oril!!r pursuant to
i.Vhlc;h Contract,:,r provid/ls service_s to toe Taylor Morrison bivislon identified above (collectively, a. "Home'); Contractor
·- · · •andTayrorMonjison agree ai, f61Tows: · -- ·
ARTICLE 1...;R~LATlt>NSHIP OF THE PARTIES ,
l
_ l'!li:; J\greernenl establishes the t$111'lS ·a_nd wni:litions on which Taylor MorrisQn mey, frQrn time to. time, anq ill Taylor
Mom\;Qn'.$ si>_!e,~fsqret1on, purchase or obtain from Contractor the labor; .supervision, ai;lmi~lt,ltion, and .other activities,
_and-the equip~ent, to!>ls ar!i;I materrals as required lly th!! terms of this A{,reementto complete _the Wo~ (as. defined
below) setforth 1i!1 one qr more PUrt::tlase Order(s) (as i'.lefinei:I b¢1ow). Once executed, the provisions of this Agreement
Slla_l! apply to. Je to the parties in
the event Contra\:k'r performs ,:iny W61'.k for Taylor Morrison pursu,:int to a Purchase Order. ·
, ARTICLE 2...;cO~'TRACT DOCUMENTS, PURCHASE ORPERS AND ELECTRONIC COMMUNICATIO!IIS PROTOCOL
2.1 ·CONTRACT OOCUMENTS: This Agreement. arid any amendment hereto (if applicable),. together with. the
exhibits, addenda and other hard or electronic documents describei:1 below, shall be collectively referred to as the
"ContractDoeuments," and are hereby incorporated Into and made part of this Agreem~
Taylor Morrison
' U-contractor V TM
Master Agreernerjt for Ver!icai---Construction Services · ..,.,,,ct,
Ver.6,3.13-TEXA~ " - -
Exhibit A-1 1
(a) i Geri,irai Gondi!ion,s (Exhibit Al; . . .. . . . ..
(bl i S<;ope ofWork {Exhlliit BYand any Scope of Wort< Addendum (a represeritalive forin of which is ;:tttac!Jed
'' ias ExhibirO);
(c) · !Site Safety Rules (ExhibitC);
{d) j Insurance Requiramenls.(Exhibit El;
(f:l) iPaymentTerins(Exhibitf};
(f) iEleetronii: ®mmunicalion Protocol (Exhibit G);
(g) iJofrlt'C!Jeck Agreement(a representative form of which is attache(j as Exhibit HJ;
(h} )Plan$. Spll(:illc;a!ions and bidS(www.buzzsaw.com); and
(il /AnY Pllrc.hai;e 0/'!lsrs or. VPOs (as defined below) issued pursuanuo tlris.Agfi'lenle\1t.
.
22 . SCOPd OF Tfll~ AGijEEMENT. This Agreement does notauthoriZe ConfractorJo comm\,!'!ce ;,111y WOit unHt
sueh time. as T~ylor l',lofl'.iSon deliVEl!S. to Conttactor a Purcilase Order (!he "Purchase. Order'). Tile PJJri:hiil;El Qrderwur.
from time ·to time, be prt>Yided by Taylor Morrison to Contractor In Taylor Morrison's sole dlscreoon .for !)ach HQme, In
addition tothe furchaseOrder, Contractor hereby acknowledges ,mdagrees to be bound by the terms .md conditions
contained in the General Conditions attached hereto es Exhibit A, th¢ Scope of Work in a Scope of Work Addendum
defined below ahd !he lnsul'c!nce Requirements attached hereto as ExhibitE.
2.3 SCOP~ OF WORK. Contractor agrees to furnish ail· supervision, labor, materials. equipment, facilities,
technology, and, services required to complete the Work based upon the scope of work attached hereto as Exhibit B and
as may also be rr,ore p,irticularty d~scril:>ed in a. specific Scope of Wo11< Addendum (collectively,. whether on!il or more, tire
•Sl:ope of. Worl() (hElreinalter, coUeclfveiy tire 'Work'') in ciimpliance with all Contract Document.s, as those dOl)Uments
are k!entifiad· tierein. The Work shaU inpluda au supervision, labor, materials, equipment,. facHillel;, technology,
JSL!!)ervisitm alli:llservices that.era:
(a) ~asonably inferable from the Scope of Wort< specified;
(b) .;custQnliuily perfQll'nei:l and provided by competent contractors .a$ part of thsl proper perfo.imance of tire
Work oHhe type $pacified;
(C) iieoslSJSaryfur1hesµcc:essflll, timely and.safe completion of the Work;
•.....• ,~ (d)
i,ecessary to cut, f,t or patch portions of the Work as required to mak¢ its several ps3rts come togettier
properly, a~d t<;> lit it to rac1.;}y~0 or be received by. !he work.. of Qther" conttactors, as shown. UJ:!On~!)r
r..asonably implied by Ifie ConfFciet Documents; and . . . . . . . . . • . . . .~... . · ...
(e) beceqllilry to. fulfill tt\e uhdertakln!l$, covenants, guarantees, if!presenta!ions ani:l warranlleJS set forthin·
jhisAgteement, the. Contract Documents and Homeowner (as definetj below) or Homeowner,'\sliOcialfon
yvarrarity tequestg approved by Taylpt Mo!Tison,
'
2.4 . ACCEPTANCE OF PURCHAS~ORPER(S). If Contractor commences performance of the Work, wlth grwitl)out ·
. .a· Pµ~hese Ord.~r; it will be deemed to have <1ccepted the t!)JJTIS .ind condili.ons qf this Ag~ment If Taylor Morl"i$on
issues a .PurQh$e Prd.ir.fpr a Horne, and Contractor undertakes Work (in the Home, CQntraclor, by. undertaking the
Work, wm be llo~nd by th¢ Purqhase Order just as .If Contractor had signed su!'h document If Contrac!Qr commences
Work on a liom,i WithOIJt a Purchase Ord,ir having.been issued by Taylor Morrisoq, it sf)all do so at its own risk and.cost
Taylor Morrison jnay $Ubsequently issue a Purchase Order. Which shall 9ovem all Wo.rk perfoTTJJicld before llrid .after the
Purchase Order(s} are issued, .uqf~ it :;pecificaliy P©Vides OthE,J:Wise. Taylor Morrison wiU, wh,in .applical:ilii, OQtify j!je
Contractor of ruiJexcepJion to the requirement of having a Pµrchase Order prior to starting thf:l'Work. This .exceptlorr Will
apply to cert.aln. i):fentified categories of work were the exai;t quantity cannot be oe.termine until the Work 1s complete, In
this exception,. ff\e. Contract9r \\'ill .Pill per!he. agreed upon quotes and a Purohase Order wm be.issued tp cover the. Work
and payment afujr the quantity has be..n determined based on the actual quan!iti,is used forthe Work.
~ontractor TM
Taylor Morrison i 2
· MasterAgr~meljt for Vertical Construction Services,,.•c.,'>
Ver, 6.3;13-TE)()\!S
Exhibit A-1 2
· 2.5 '. PLJRCi:JASEORDERS; VARIAN¢E f\lRCliASE ORDERS AND CHANGE ORDERS.
2,5.1 : Purchase Orders are c.reated byTaylor Morris6o and :are available lo Contractqr as provided -in Exhibit G.
Whereas_ the Contract Doc::t.1111e111$ coJlectively d~_rifie ·the Work ·to be· undertaken at a Home, the
Purchase Order is ilitended to provide Contractor the' no!fflfliltit!ri"retjuired to oommence a $Jl&eilio l)Ol1ion
of the Work and the ptice for the same. The P11rchiise Or,ter roay also specify materials, quanllties, color
an,t. style selections, cir other pertinent infQmlaijon,. lfapi)licable; which. information may a1tem11~vely be
pmvideQfavailable. through SupplyPro, Buµsaw or a Tc1ylo; MC!rrisorr supenntendent All Pi,oha~
Qrdl;!rs are llllJillly bindin!J contracts an~ ;lf!I il1qQrp9t,l(ed Jtjto. this A!Ji~mertt as tholl!iJh fully set forth
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herein ;is and when i$Slled by Taylor MQ~n. ~I! Worl( p-erfotrned under the Purchase Order sti~I ,be
paid in ttte,amountsli!ited on the Purchase Order.ind Will not b!)adj1JS!El(f after the Work is comp~_. ·
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2,5.2 ··variance Pur.cl]ase Orders ("VPO's") are for construction field vatiances on a single lot only and are
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issued by Taylor Mollison, if and when .applic:alife. Unless otherwise agree<:! to in writing by Taylor
Morrison, no devialiOII in the Workis to be done by Contractor prior to the issu.inceofa VPO, Once
Taylor Mortison creates a VPO, which Will be available to Contractor as provided in Exhibit G, then
construction of the Work .descnbed th.erein can be9in. Unless otherwise agreed to in writing by Taylor .
Morrison, if Contractor engages in Work prior to the issuance of the applicable VPO, Taylor Morrison shall
not have any_liabilily for paymenffor such Work. I
2.5.3 •Change Qrd!,!rs ("Ch1111{1a Orders") are for changes to the pricing, quantities. materials and/or Work
,described in a i,ar!iculiir Change Order Addendum that will atfect every Jot !jnd/<:>r plan going forward
,subject to a specific Change QrderAdtjl;!ndurn. The .Change Order will be described in i;i Change Order
Addendum and are issged by Taylor MorriSl;in i,100 !)Qt the: Contractor.. Unless. otherMse agreed 10 by
Taylor Morrison, ho deviation in the Work des(i:fibed In. a f'archase Order is to be done by Contractor <:>r
[Contractor's subOoniractors prior to the lssµance of.ii Change Order. Once TaylorMorrison creates a.
,Change Order, WhiclJ Will bedelivered to Contraciorforlts signature, then construction oftheWork under
...... · · - ·· ·· -·· ····· · :a Purchase Order describ!)d therein .can begin subject to the Change Order.
2:6'. E:EECTIRONIC COMMUNICATION PROTOCOL. . To help facintate uniform and'Iecunt1;;;n;mittal of electronic .
communication~. and to protect and preserve data e:¢hE11J9ecJ via electrii.oic communications, the partie$ hereby agree J
that their eleclr~ic communications related to any Work will be governed by Extiibit G.
l\RTJGLE 3.,.CONTRACTOR'S OBLIGATION$ AND REPRESENTATIONS
·a.1 _' REPRE~ENTATIONS AND WARRANTIES, Contractor her!)by, and at all times during the performarice- of any
Work, representj; and warrants that: · ·
(a) Contractor is .in expert in .its field and trade;
(b) pontractor is financially solven~ able tti_pay its debts as they mature and has sufficient working capital to
perform its obligations underthE! ContractD1l¢llm!inls;
(c) . bontrac!Qr is a duly formed and existing entity and is allthoriz;ed to do business in the state where the
(-Jome is located; . . . . ··
(d} ~ontractor ls properly qualified, certified and_ licensed by all governmental and quasi-govemmental
$uthorities with jurisdiction over any Home, and shaU contin\Je to be so cer!ffled and licensed al all times
during performance of the Work (inclusive of any warranty obligations hereunder);
(e) Contractor has disclosed to Taylor Marrison, in writing, any pending claims and actions, including
arbitration and litigation, in. which· it is a party;
(f) Contractor's execution _and delivery of the Contri;ict Documents, where required, an<:! performance of the
Work, is within its duly authorized powers and has been duly authorized; ·
(g) Gontractor is, at all times~ in comi)liance with ail health and safety requirements and training, as required ·
in the local jurisdiction; and will at all times during the p13rforrnance of the Work maintain a competent
person ffi$J)Onsible for all safety and health requirements at the Site (as defined below);
Taylor Morrison 3
~tra~or ~ TM
"'-·,•'"" Mast,!r Agreemerj! for Vertical Construction Services
Ver.6.3.13·~
Exhibit A-1 3
(h) ! Unless otherwise set forth in the Contract Documents, Contractor shall give public authorities all nolfCE>S
· \ required by law and Shall obtain and pc1y for all necessary permits, licenses c1nd renewals. pertaining to
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(i} I
t the Worl(; and
Contractor shall timely provide to Taylor Morrison copies of any and all notlces, permits, licenses c1nd
I reneWals required under the Contract Documents.
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3./! SUP!=~VISIQN; Prior to commencement of the Work. Contractor llhafl s ~ its superviS/Jr for each Horne (the
•S11pervil!Ol") ciand will nCllify Taylor Morrison in writing as to the n>lffie and contact information for such Supervisor.
Contractor sha!J Jmmedic1tely nolify Taylor Morrison in writing of any temparary or perm;;ilient Chang,is to such designee.
At ,any time Cantrac!Clr ii; performing .th,;,- Work, and at .other times as necess<11Y, the Supervisor sh;:111 be present at the
Site., Conlraclbr repr•nts th.rt the Supervisor. (i) is highly qualified and has an excellemtl'eCQfd Qfe.iqlerieilce and I
perrormance oh work slmUar to thlil Work; (ii) hc1s the Hnguislic skills necessary to comm1iniCE1te With Contractofs
-employees, .sut,oontractors, suppliers and others for whom Contractor is responsillle, wll.rtever·tl!eir prjhla,y language
rrf"i.i)'be, as Well as to communicate fully with Taylor Morrison t;ihd its contractors; (iii) is fully km,wledg!l.ible regarding the
Work and the $quirements of the Contract Documents; .ind (Iv) is authorized to respond to !he needs .ind requirements
of Taylor Moni~On without obtaining further autoorization. If Contractor falls to have adequate supervision on the Site, in
addition fo- anYI other remedies avail.ible to Taylor Morrison under ,th)!; Agreernen~ T!lylor Morrison may supply its own
supervision, atpontractor's sole cost, or in the alternative, cause all Contractor's employees to ceal!e Work until adequate
supervision is provided, again at Contractor's sole cost.
3.3 CORRECTION OF DEFECTIVE WORK. At any lime during perfonnance of the Work and so long as Taylor
Morrison remai~s liable for any portion of !he Work, Contractor sh.ill remove and repair or repliioe any of its workmanship,
rnate1na·1s and equipment that are defective or substandard .ind any equipment that f.iils to develop ratings, capacities, or
ntractor, and not Taylor Morrison, is the ·controlling employel" and
· therefore has (he au!horily and responsibillty fpr !he safety of its ernployees, subcontractors, sub-'subcontractors, I
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cpn,;/uJt.ints <1nc( materialmen, as well as the safety of other con.tractors subcontract9r, sub-subcontractors, consutt?nts
<1nd trades in relation to Contractor's Work; while on tiu,·"Sile (as defined below).· All necessary personal protective
eqµiprnei:it deen;ied i;ippropriate for the work assignment will be provldll9 by Contractdrat its e~nse to .ill personnel VI/ho
will be in!>tructe~ by Contractor in the proper selection, care and use of sll(!h safety devices and s.ife goords. As the
"controlling .employer'' with regard to the safely of its own employees, contractor shall have a designated- "Responsible,
] -A!lthor~a.d Perspn for Safety" on. the Site at.all times that Contractors personnel are working on th<. Home. CQlltractdr will ·
:t identify i!11d arr$ge for additional safely training .is the need arises, will perform continuous hazard recognition for unsafe
_WQi"k. practices ~nd/or unsafe work conditions and will abate same, and will .eliminate aJI unacceptable risks h_owsoever -
!! . cereated- Contf1lctor shaU comply with .ill requirements and standard$ with re_$pec:t to occupational health and safety, .
I- accident preve11pon and safety equipment and practices, health .ind safetytraining of Contractor's employees and any
subcontractor ernployees 9n-s1te, .ind any accident prevention and safety program of Taylor Morrison, including the Site
S'11'efy Rules a!tilched hereto as Exhibit C and the General Conditions attached hereto as .Exhibit A Contractor accepts
sole're$ponsibili(y for providing .i safe place to work for its employees .ind for employees of its subcontractors, suppliers
and -others fer wj\om it is responsible, _including without umilation the adequo'$ei, of this Asr.eement, "flazaJ'dous Sub$tance" means any materials or poJlut!!nts Wh\ch poi,e a l l ~ ttJ_ Ill!!,
Home qr the Sfle, or tQ persons on or about the same, or cause the Home or the 9ile to. be in vlplaJion of any l,1w or f91;al
lilpproval. or a!l,, clefiwd as or inch1cled in the definition of "hazardous subslances," 'hazardous wastes," "hazardoµs
materials;or "tpidc" on.vqr~ of similar import ~nder any· applicable law or regulation. ·,
3.6 MOLD.! Contractor shall deliver the Home and all Work free from mold or conditions reasonably likely to lead. to
ll!e developme~t of mold. If mold arises out of Contracior's Work, Cont~tor shall beiir sole responsibility and cost, after
notification by iTaylor Morrison, to eliminate and remediate such mold (and any resulting damages) in a manner
acceptabletoi:aylorMorrison. However, Taylor Morrison may, in its sole discretion, eliminate.and reme.diate such mold
(with other $ubcontractors or otheiwise) and seek any imd all available remedies against ContracloJ", inc:lud{ng the right to
back charge orJ setoff. No materials sqpplied or installed by Contractor shall exceed acceptable moisture levels at the
Ume of installatlbn into the Home.
3.7 . PROJEt:T SITE. By commencing Work, Comractor Warrants that it has carefully examined the site of the Work
· (the "Site•), inc(uding but not limited !o all boundary and edge conditions, proposed house construction. phase locations
· and sequences,! lumber cut yards, material storage locations, wash out pits, and sequrity, safety, traffic and parkins Issues
and con!lems; t~ make certain that it is. acceptable to, Contractor and the Site is ready to acc;eptthe WQr!<, that Is has been
pfl fimited to a request by a homeowner or prospective homeowner) not specifically,.agreed to inwritingby
Taylor Monison : 5
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c·: Contractor V TM
Master Agreement tor Vertical Construction Services . --,....
Ver. 6.3.13-TEx,i\S
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Exhibit A-1 5
Taylor or
Morrisc\n s1s rE!qulred by law; Alf copies. of the Pl,;ins and Specifications shall be retumeq to Taylor Morrison
upon request i .
.. ,; : -· ' '
111 the event oI a Specification tnat ?llows Coritra
Preview
Filed: 7/28/2023 5:24 PM JOHN D. KINARD - District Clerk Galveston County, Texas Envelope No. 78008317 By: Shailja Dixit 7/31/2023 8:12 AM NO. 22-CV-1731 WAYNE SUTHERLAND and § IN THE DISTRICT COURT TERRI SUTHERLAND, § Plaintiffs, § v. § § TAYLOR MORRISON OF TEXAS, INC., and § TAYLOR WOODROW COMMUNITIES- § 10TH JUDICIAL DISTRICT LEAGUE CITY, LTD., § Defendants/Third-Party Plaintiffs, § v. § § BIG TEX AIR CONDITIONING, INC., et al., § Third-Party Defendants. § GALVESTON COUNTY, TEXAS DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION TO THE HONORABLE JUDGE OF SAID COURT: NOW COME Defendants Taylor Morrison of Texas, Inc. and Taylor Woodrow Communities-League City, Ltd. (collectively “TM Defendants”) and, without waiving their arbitration rights, ask the court for its orders: lifting abatement ordered by January 30, 2023 AGREED ORDER, to be effective June 29, 2023; compelling these subsequent purchaser homeowner Plaintiffs to arbitrate their construction defect claims against TM Defendants pursuant to the paragraph 11 arbitration agreement within the Purchase Agreement for original construction/sale of Plaintiffs’ home;1 and compelling Third-Party Defendant Big Tex Air Conditioning, Inc. (“Big Tex AC”) to join Plaintiffs’ arbitration proceeding to resolve TM Defendants’ third- party claims against Big Tex AC. 1 See DEFENDANTS’ … MOTION TO COMPEL ARBITRATION … filed 10/3/2022, Ex. B-1, p. 8-10. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 1 Sutherland I. BACKGROUND 1.1 Plaintiffs Wayne and Terri Sutherland purchased a home built by TM Defendants.2 Big Tex AC performed HVAC work on the home pursuant to Master Agreements with each of the TM Defendants.3 In those Master Agreements, Big Tex AC agreed: … if Taylor Morrison is involved in any arbitration or other alternative dispute resolution proceeding with the Homeowner, or any other party, relating in any way to Contractor’s Work… then Contractor hereby agrees to be joined to such arbitration or alternative dispute resolution proceeding….4 1.2 Plaintiffs filed suit against TM Defendants, alleging their “home has developed excessive moisture, humidity and significant mold growth and mycotoxins resulting from multiple design and construction defects.5 Plaintiffs specifically alleged that “[TM] Defendants’ agents … fail[ed] to properly design, construct, install, and inspect the building envelope, roof, attic, windows, HVAC system, showers, interiors and discover and remediate the defective and/or dangerous conditions.”6 1.3 TM Defendants answered and requested—under direct-benefits estoppel—the court’s order compelling these subsequent purchaser homeowner Plaintiffs to arbitrate their claims pursuant to the paragraph 11 arbitration agreement within the Purchase Agreement for original construction/sale of the home.7 That arbitration agreement also expressly provides for the inclusion of TM Defendants’ “subcontractors, agents” in any arbitration of a dispute: This arbitration agreement shall inure to the benefit of, and be enforceable by, Seller and Seller’s affiliated and related entities, and each of their respective … agents, 2 PLAINTIFFS’ ORIGINAL PETITION filed 9/7/2022, p. 2 @ ¶8, hereafter “Petition.”. 3 See Exhibit A (DECLARATION OF JIM BLACK), Exhibit A-1 (MASTER AGREEMENT w/ Taylor Morrison of Texas, Inc.), and Exhibit A-2 (MASTER AGREEMENT w/ Taylor Woodrow Communities-League City, Ltd.) attached hereto and incorporated herein. 4 See supra note 3. 5 See supra note 2, Petition p. 3 @ ¶12. 6 See supra note 2, Petition p. 8 @ ¶27. 7 See supra note 1, p. 5. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 2 Sutherland representatives, contractors, subcontractors, agents, vendors, suppliers, design professionals, insurers, and any other person whom Buyer contends is responsible for any alleged defect in or to the Property or any improvement or appurtenance thereto. The parties contemplate the inclusion of such parties in any arbitration of a dispute and agree that the inclusion of such parties will not affect the enforceability of this arbitration agreement.8 TM Defendants filed their third-party claims against HVAC subcontractor Big Tex AC.9 Big Tex AC answered “subject to arbitration.”10 Big Tex AC “does not have an objection to arbitration.”11 1.4 The court held a January 30, 2023 hearing on TM Defendants’ requests to compel arbitration and to abate this case. The parties advised the court of pending appeals before the Supreme Court of Texas regarding application of direct benefits estoppel to bind nonsignatory parties to similar arbitration agreements, and requested the court’s abatement of this case to await the Texas Supreme Court’s guidance. The court signed and entered its January 30, 2023 AGREED ORDER abating this case pending the Texas Supreme Court’s resolution of such appeals12 and until further order lifting abatement. That Court resolved several applicable appeals. 1.5 The Texas Supreme Court first decided Taylor Morrison of Tex., Inc. v. Skufca, 660 S.W.3d 525 (Tex. 2023) (per curiam).13 The Court held that litigants who sue based on a contract subject themselves to its terms, including any arbitration clause within that contract. Id. at 526. 1.6 The Court next decided TotalEnergies E&P USA, Inc. v. MP Gulf of Mex., LLC, 667 S.W.3d 694 (Tex. 2023),14 and held that an arbitration agreement to arbitrate in accordance with AAA rules “clearly and unmistakably delegated arbitrability issues to the arbitrator.” Id. at 697. 8 See supra note 1, Ex. B-1, p. 9 @ ¶11)d. 9 DEFENDANTS’ THIRD-PARTY PETITION filed 10/6/2022. 10 [Big Tex AC’s] ORIGINAL ANSWER SUBJECT TO ARBITRATION … filed 10/10/2022. 11 [Big Tex AC’s] RESPONSE TO [TM DEFENDANTS’] MOTION TO COMPEL ARBITRATION filed 1/30/2023. 12 See infra ¶¶ 1.5 and 1.8 herein. 13 Copy attached hereto as Exhibit B. 14 Copy (majority opinion only) attached hereto as Exhibit C. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 3 Sutherland 1.7 The Court next decided Lennar Homes of Tex. Land & Constr., Ltd. v. Whiteley, No. 21-0783, 2023 Tex. LEXIS 407 (Tex., May 12, 2023) (motion for rehearing filed).15 The Court held that a subsequent purchaser homeowner was “bound by the arbitration clause in the purchase- and-sale agreement [between the original purchaser and the homebuilder] under the doctrine of direct-benefits estoppel.” 2023 Tex. LEXIS 407 at *1-*2. 1.8 Most recently, the Court decided Taylor Morrison of Tex., Inc. v. Kohlmeyer, No. 21- 0072, 2023 Tex. LEXIS 623 (Tex., June 30, 2023) (per curiam) (motion for rehearing filed).16 The Court held those subsequent purchaser homeowners “were bound to arbitrate according to the original purchase agreement under the doctrine of direct-benefits estoppel [and their] claims—all of which relate to defects in the construction or design of the home—fall within the scope of the arbitration provision and are subject to arbitration.” 2023 Tex. LEXIS 623 at *9-*10. That Court remanded that case to this court “for further proceedings consistent with this opinion, such as the grant of an appropriate stay.” II. ARGUMENT AND AUTHORITIES A. The court should lift abatement to allow resolution of requested arbitration 2.1 The Texas Supreme Court decided the pending appeals referenced by the AGREED ORDER abating this case. This court should lift abatement to allow resolution of TM Defendants’ requested arbitration and other pending requests. B. The court should compel Plaintiffs to arbitrate their claims against TM Defendants 2.2 The Texas Supreme Court’s recent guidance shows that these subsequent purchaser homeowner Plaintiffs must arbitrate their claims as requested by TM Defendants. Skufca arose 15 Copy attached hereto as Exhibit D. 16 Copy attached hereto as Exhibit E. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 4 Sutherland from the 56th District Court’s denial of arbitration as requested by these same TM Defendants. Whiteley arose from another homebuilder’s request for arbitration of a subsequent purchaser homeowner’s claims and the 56th District Court’s grant of requested arbitration and—after arbitration concluded by an award favoring the homebuilder—the 56th District Court’s order vacating that arbitration award because the homeowner maintained her opposition to arbitration of her claims. The Texas Supreme Court held she was obligated to arbitrate her claims under the doctrine of direct benefits estoppel because her claims against the homebuilder were based on its original Purchase and Sale Agreement. 2023 Tex. LEXIS 407 at *12-*20. The Court: rejected her suggestion that her claims for breaches of implied warranties of good workmanship and habitability derived from common law, not from the original Purchase and Sale Agreement; and confirmed that such implied warranties are part of that Agreement. Id. at *15-16. The Court also recognized “the substantial overlap between the substance of a negligent construction claim and a claim for breach of an implied warranty of good workmanship.” Id. at *17, n. 11. 2.3 Kohlmeyer arose from this court’s denial of arbitration of subsequent purchaser homeowners’ claims as requested by these same TM Defendants. The facts of Whiteley and Kohlmeyer are virtually identical to those presented in this case. In all these cases, subsequent purchaser homeowners alleged “significant mold growth” in their homes resulting from construction defects and homebuilders’ liability for breaches of implied warranties of good workmanship and habitability and for negligent construction.17 Whiteley and Kohlmeyer set the Texas Supreme Court’s guiding rule: such implied warranties are part of the contract for original construction and sale, and subsequent purchasers’ claims for breaches of such implied warranties “do not stand independently” of such contract. Whiteley at *12-*20; Kohlmeyer at *8-*9. This 17 See supra note 2, Petition p. 3, 12. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 5 Sutherland court should follow that Court’s guiding rule and its prior direct benefits estoppel rule (“When the alleged liability arises from the contract or must be determined by reference to it, equity prevents the non-signatory plaintiff from avoiding an arbitration clause that was part of that contract”) should establishes precedent that this court should follow. See Whiteley at *14-*15 (quotations and citation omitted). 2.4 Also, according to the Court’s TotalEnergies decision, Plaintiffs may not further burden this court with “arbitrability” objections to arbitration of their claims by the American Arbitration Association (“AAA”), the arbitration service designated by the paragraph 11 arbitration agreement.18 TotalEnergies establishes another applicable legal rule: an agreement to arbitrate in accordance with the AAA makes its rules part of the agreement. 2023 Tex. LEXIS 315 at *19-*20. Here, AAA Construction Industry Arbitration Rule R-2 “authorize[s] the AAA to administer the arbitration” and Rule R-9 delegates to the arbitrator “the power to rule on … any objections with respect to the existence, scope, or validity of the arbitration agreement.”19 By that guidance, Plaintiffs must arbitrate all their claims against TM Defendants through the AAA. C. The court should compel arbitration of TM Defendants’ claims against Big Tex AC based on arbitration agreements within the Purchase Agreement and Master Agreements 2.5 Just as Plaintiffs must arbitrate their claims against TM Defendants by the Purchase Agreement’s paragraph 11 arbitration agreement, HVAC subcontractor Big Tex AC must join that arbitration to resolve TM Defendants’ third-party claims. Big Tex AC is a third-party beneficiary of the arbitration agreement. See In re Next Fin. Group, Inc., 271 S.W.3rd 263, 267 (Tex. 2008); In re Rubiola, 334 S.W.3d 220, 222 (Tex. 2011) (including 3rd party in arbitration when arbitration agreement included such party). Big Tex AC is also bound to the arbitration agreement through 18 See supra note 1, Ex. B-1, p. 9 @ ¶11)b. 19 AAA Construction Industry Arbitration Rules R-2 and R-9, attached hereto and incorporated herein as Exhibit F. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 6 Sutherland equitable estoppel. Allegations of intertwined claims of substantially interdependent and concerted misconduct regarding construction defects estop Big Tex AC from denying arbitration of TM Defendants’ third-party claims. See Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305-306 (Tex. 2006) (application of equitable estoppel is warranted when arbitration clause signatory alleges substantially interdependent and concerted misconduct by signatory and non-signatory); Cotton Comm’l USA, Inc. v. Clear Creek ISD, 387 S.W.3d 99, 104-105 (Tex. App.—Houston [14th Dist.] 2012, no pet.). Plaintiffs’ specific claim of “unacceptably high levels of relative humidity and condensation” clearly relates to Big Tex AC’s work. Pursuant to the paragraph 11 arbitration agreement and Big Tex AC’s own arbitration agreements that it “agrees to be joined in such arbitration,” Big Tex AC must join Plaintiffs’ arbitration against TM Defendants to resolve third- party claims against Big Tex AC. Thus, in addition to ordering Plaintiffs to arbitrate their claims, the court should also order Big Tex AC to join Plaintiffs’ arbitration and abate this lawsuit. See 9 U.S.C. § 3 (“courts of the United States… 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.”); In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195 (Tex. 2007) (both the FAA and the Texas Arbitration Act require courts to stay litigation of issues that are subject to arbitration). 2.6 Big Tex AC expressly contemplated arbitration when it answered TM Defendants’ third-party claims.20 Big Tex AC judicially admitted its arbitration agreements with TM Defendants and propriety of arbitration: Pursuant to the clear meaning of Paragraph 11, Subsection (d) of the Purchase Agreement if the Court orders Plaintiffs’ claim to arbitration, then the claims against Big Tex and the other fourth-party defendants should be included in arbitration;21 and 20 See supra notes 10 and 11. 21 See supra note 11, p. 4. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 7 Sutherland Article 12 of the … Master Agreement … also requires the claims against Big Tex … to go to arbitration.22 2.7 Assertions of fact that are deliberate, clear, and unequivocal are regarded as judicial admissions. Mapco, Inc. v. Carter, 817 S.W.2d 686, 687 (Tex. 1991). Big Tex AC’s judicial admissions are conclusive against it and relieves TM Defendants of the burden of proving the admitted facts. Mendoza v. Fidelity & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980). 2.8 Big Tex AC’s admissions notwithstanding, TM Defendants’ proof of Big Tex AC’s arbitration agreements—within Article 12.2 of each Master Agreement with TM Defendants— show Big Tex AC expressly agreed “to be joined in such arbitration [with a homeowner] … to resolve all outstanding issues, claims, and defenses between [Big Tex AC] and Taylor Morrison in such arbitration … and to be bound by the results of such arbitration.”23 TM Defendants’ third- party claims against Big Tex AC are within the scope of Big Tex AC’s arbitration agreements, and should be arbitrated in Plaintiffs’ arbitration proceeding. D. Compelling “Fourth Party Defendants” to arbitration is not a condition to compel Big Tex AC to arbitration 2.9 TM Defendants did not and do not assert claims against Big Tex AC’s “Fourth-Party Defendants.” Big Tex AC asked the court to “order all of the parties to arbitration.”24 If Big Tex AC claims that it cannot be compelled to arbitration without also compelling “Fourth-Party Defendants” to arbitration, that claim is wrong. No such condition precedent appears in Big Tex AC’s arbitration agreements with TM Defendants. No such condition precedent appears in the Purchase Agreement’s paragraph 11 arbitration agreement. 22 See supra note 11, p. 4. 23 Ex. A-1, p. 11. Ex. A-2, p. 11. 24 See supra note 11, p. 1 (emphasis added). DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 8 Sutherland 2.10 As TM Defendants requested, the court should order Plaintiffs to initiate arbitration with the AAA to resolve their claims against TM Defendants. As TM Defendants now request, the court should also order Big Tex AC to join Plaintiffs’ arbitration. The court should thereafter order abatement of this case to allow the parties to arbitrate their claims. See 9 U.S.C. § 3; In re Merrill Lynch, 235 S.W.3d at 195. WHEREFORE PREMISES CONSIDERED, TM Defendants pray that the court lift abatement of this case, consider TM Defendants’ requested relief, order Plaintiffs, TM Defendants, and Big Tex AC to arbitration with the American Arbitration Association pursuant to the parties’ arbitration agreements, and thereafter abate this case. Respectfully submitted, By: /s/ Carl J. Wilkerson Carl J. Wilkerson State Bar No. 21478400 cwilkerson@brstexas.com DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 9 Sutherland BUSH RUDNICKI SHELTON, PC James W. Rudnicki State Bar No. 24006148 james@brstexas.com Diana M. Alcala State Bar No. 24007590 dalcala@brstexas.com Jennifer Taylor State Bar No. 24102559 jtaylor@brstexas.com 2508 Ashley Worth Blvd., Suite 200 Austin, Texas 78738 Telephone: 512-263-8408 Facsimile: 512-263-2562 -and- Carl J. Wilkerson State Bar No. 21478400 cwilkerson@brstexas.com David M. Jones State Bar No. 24042684 djones@brstexas.com 200 N. Mesquite St., Suite 200 Arlington, Texas 76011 Telephone: 817-274-5992 Facsimile: 817-261-1671 ATTORNEYS FOR TAYLOR MORRISON OF TEXAS, INC. and TAYLOR WOODROW COMMUNITIES-LEAGUE CITY, LTD. DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 10 Sutherland CERTIFICATE OF SERVICE I certify that a true and correct copy of the foregoing document was delivered to all counsel of record in accordance with Rule 21a of the Texas Rules of Civil Procedure, via electronic delivery through the e-filing system on July 28, 2023. A Craig Eiland Amy Nilsen EILAND & BONNIN, PC JOHNSON, TRENT & TAYLOR, L.L.P. 2200 Market Street, Suite 501 919 Milam, Suite 1500 Galveston, Texas 77550 Houston, Texas 77002 ceiland@eilandlaw.com anilsen@johnsontrent.com Shaun W. Hodge Carlos A. Balido HODGE LAW FIRM, PLLC WALTERS BALIDO & CRAIN, L.L.P. 1301 Market Street 10440 North Central Expy., Suite 1500 Galveston, Texas 77550 Dallas, Texas 75231 shodge@hodgefirm.com Balidoedocsnotifications@wbclawfirm.com ATTORNEYS FOR Dax O. Faubus BIG TEX AIR CONDITIONING, INC. The Faubus Firm 1001 Texas Avenue, 11th Floor Houston, Texas 77002 dax-notice@faubusfirm.com ATTORNEYS FOR PLAINTIFFS Ian M. McLin Randall L. Beaty Thomas Lillibridge NEWTON JONES & MCNEELY LANGLEY & BANACK 3405 Marquart 745 E. Mulberry, Suite 900 Houston, Texas 77027 San Antonio, Texas 78212 rbeaty@newton-lawyers.com imclin@langleybanack.com ATTORNEY FOR tlillibridge@langleybanack.com ARNULFO RODRIGUEZ ROOFING CO., INC. ATTORNEYS FOR BFS GROUP, LLC Timothy D. McMurtrie Brian G. Cano ROYSTON, RAYZOR, VICKERY & WILLIAMS, L.L.P. Justin A. Diaz 802 N. Carancahua, Suite 1300 FEE, SMITH & SHARP, LLP Corpus Christi, Texas 78401-0021 2777 Allen Parkway, Suite 800 tim.mcmurtrie@roystonlaw.com Houston, Texas 77019 ATTORNEY FOR CITY FRAMERS, LLC bcano@feesmith.com jdiaz@feesmith.com ATTORNEYS FOR INSTALLED BUILDING PRODUCTS OF HOUSTON, LLC Paul Byron Starr Mallorie S. Walker GERMER BEAMAN & BROWN PLLC Spencer Edwards 1501 S. Mopac Expressway, Suite A400 THE HUDGINS LAW FIRM Austin, Texas 78746 24 Greenway Plaza, Suite 2000 pstarr@germer-austin.com Houston, Texas 77046 ATTORNEY FOR mwalker@hudgins-law.com L&W WEATHERSTRIPPING, LLC sedwards@hudgins-law.com ATTORNEYS FOR WISENBAKER BUILDER SERVICES, LTD /s/ Carl J. Wilkerson DEFENDANTS’ MOTION TO LIFT ABATEMENT AND SUPPLEMENTAL MOTION TO COMPEL ARBITRATION PAGE 11 Sutherland Exhibit A TAYLORMORRISON MASTER AGRl';EMENTFORVERTICAL CONSTRUCTION SERVICES . . - -- - (TEXAS) -- - .ATTN: . .JANA TOVAR • ATTN: Matthew ('Matt':) C.hishtilm TELEl"HONI;: -t713)631~773S TELEPHONE: 1281\ 598°3008 FAX: FAX: (2$1)598'"3112 j EMAIL: dana1t;,bfanc@bigtexair:com EMAIL: mchisholrn@tayforrriotrison.com LICENSE,#: . FED. TAX IDj#: FED. TAX ID#: 74-2012460 .. Thi$ Mast\,lr A/iieement for Vertical Com,buction servrces ("Agreement') is made effective ,,s of this 12th day of Oecem~r. 201i3 {"Effect[ve .Qate"), and shall govern the relationship between Contractor and TayforMQr.nSQil for any ·· new home CQfl$1rQctie>n and associated lot .Improvement project a$ del'cribed in a specific Purchase_ Oril!!r pursuant to i.Vhlc;h Contract,:,r provid/ls service_s to toe Taylor Morrison bivislon identified above (collectively, a. "Home'); Contractor ·- · · •andTayrorMonjison agree ai, f61Tows: · -- · ARTICLE 1...;R~LATlt>NSHIP OF THE PARTIES , l _ l'!li:; J\greernenl establishes the t$111'lS ·a_nd wni:litions on which Taylor MorrisQn mey, frQrn time to. time, anq ill Taylor Mom\;Qn'.$ si>_!e,~fsqret1on, purchase or obtain from Contractor the labor; .supervision, ai;lmi~lt,ltion, and .other activities, _and-the equip~ent, to!>ls ar!i;I materrals as required lly th!! terms of this A{,reementto complete _the Wo~ (as. defined below) setforth 1i!1 one qr more PUrt::tlase Order(s) (as i'.lefinei:I b¢1ow). Once executed, the provisions of this Agreement Slla_l! apply to. Je to the parties in the event Contra\:k'r performs ,:iny W61'.k for Taylor Morrison pursu,:int to a Purchase Order. · , ARTICLE 2...;cO~'TRACT DOCUMENTS, PURCHASE ORPERS AND ELECTRONIC COMMUNICATIO!IIS PROTOCOL 2.1 ·CONTRACT OOCUMENTS: This Agreement. arid any amendment hereto (if applicable),. together with. the exhibits, addenda and other hard or electronic documents describei:1 below, shall be collectively referred to as the "ContractDoeuments," and are hereby incorporated Into and made part of this Agreem~ Taylor Morrison ' U-contractor V TM Master Agreernerjt for Ver!icai---Construction Services · ..,.,,,ct, Ver.6,3.13-TEXA~ " - - Exhibit A-1 1 (a) i Geri,irai Gondi!ion,s (Exhibit Al; . . .. . . . .. (bl i S<;ope ofWork {Exhlliit BYand any Scope of Wort< Addendum (a represeritalive forin of which is ;:tttac!Jed '' ias ExhibirO); (c) · !Site Safety Rules (ExhibitC); {d) j Insurance Requiramenls.(Exhibit El; (f:l) iPaymentTerins(Exhibitf}; (f) iEleetronii: ®mmunicalion Protocol (Exhibit G); (g) iJofrlt'C!Jeck Agreement(a representative form of which is attache(j as Exhibit HJ; (h} )Plan$. Spll(:illc;a!ions and bidS(www.buzzsaw.com); and (il /AnY Pllrc.hai;e 0/'!lsrs or. VPOs (as defined below) issued pursuanuo tlris.Agfi'lenle\1t. . 22 . SCOPd OF Tfll~ AGijEEMENT. This Agreement does notauthoriZe ConfractorJo comm\,!'!ce ;,111y WOit unHt sueh time. as T~ylor l',lofl'.iSon deliVEl!S. to Conttactor a Purcilase Order (!he "Purchase. Order'). Tile PJJri:hiil;El Qrderwur. from time ·to time, be prt>Yided by Taylor Morrison to Contractor In Taylor Morrison's sole dlscreoon .for !)ach HQme, In addition tothe furchaseOrder, Contractor hereby acknowledges ,mdagrees to be bound by the terms .md conditions contained in the General Conditions attached hereto es Exhibit A, th¢ Scope of Work in a Scope of Work Addendum defined below ahd !he lnsul'c!nce Requirements attached hereto as ExhibitE. 2.3 SCOP~ OF WORK. Contractor agrees to furnish ail· supervision, labor, materials. equipment, facilities, technology, and, services required to complete the Work based upon the scope of work attached hereto as Exhibit B and as may also be rr,ore p,irticularty d~scril:>ed in a. specific Scope of Wo11< Addendum (collectively,. whether on!il or more, tire •Sl:ope of. Worl() (hElreinalter, coUeclfveiy tire 'Work'') in ciimpliance with all Contract Document.s, as those dOl)Uments are k!entifiad· tierein. The Work shaU inpluda au supervision, labor, materials, equipment,. facHillel;, technology, JSL!!)ervisitm alli:llservices that.era: (a) ~asonably inferable from the Scope of Wort< specified; (b) .;custQnliuily perfQll'nei:l and provided by competent contractors .a$ part of thsl proper perfo.imance of tire Work oHhe type $pacified; (C) iieoslSJSaryfur1hesµcc:essflll, timely and.safe completion of the Work; •.....• ,~ (d) i,ecessary to cut, f,t or patch portions of the Work as required to mak¢ its several ps3rts come togettier properly, a~d t<;> lit it to rac1.;}y~0 or be received by. !he work.. of Qther" conttactors, as shown. UJ:!On~!)r r..asonably implied by Ifie ConfFciet Documents; and . . . . . . . . . • . . . .~... . · ... (e) beceqllilry to. fulfill tt\e uhdertakln!l$, covenants, guarantees, if!presenta!ions ani:l warranlleJS set forthin· jhisAgteement, the. Contract Documents and Homeowner (as definetj below) or Homeowner,'\sliOcialfon yvarrarity tequestg approved by Taylpt Mo!Tison, ' 2.4 . ACCEPTANCE OF PURCHAS~ORPER(S). If Contractor commences performance of the Work, wlth grwitl)out · . .a· Pµ~hese Ord.~r; it will be deemed to have <1ccepted the t!)JJTIS .ind condili.ons qf this Ag~ment If Taylor Morl"i$on issues a .PurQh$e Prd.ir.fpr a Horne, and Contractor undertakes Work (in the Home, CQntraclor, by. undertaking the Work, wm be llo~nd by th¢ Purqhase Order just as .If Contractor had signed su!'h document If Contrac!Qr commences Work on a liom,i WithOIJt a Purchase Ord,ir having.been issued by Taylor Morrisoq, it sf)all do so at its own risk and.cost Taylor Morrison jnay $Ubsequently issue a Purchase Order. Which shall 9ovem all Wo.rk perfoTTJJicld before llrid .after the Purchase Order(s} are issued, .uqf~ it :;pecificaliy P©Vides OthE,J:Wise. Taylor Morrison wiU, wh,in .applical:ilii, OQtify j!je Contractor of ruiJexcepJion to the requirement of having a Pµrchase Order prior to starting thf:l'Work. This .exceptlorr Will apply to cert.aln. i):fentified categories of work were the exai;t quantity cannot be oe.termine until the Work 1s complete, In this exception,. ff\e. Contract9r \\'ill .Pill per!he. agreed upon quotes and a Purohase Order wm be.issued tp cover the. Work and payment afujr the quantity has be..n determined based on the actual quan!iti,is used forthe Work. ~ontractor TM Taylor Morrison i 2 · MasterAgr~meljt for Vertical Construction Services,,.•c.,'> Ver, 6.3;13-TE)()\!S Exhibit A-1 2 · 2.5 '. PLJRCi:JASEORDERS; VARIAN¢E f\lRCliASE ORDERS AND CHANGE ORDERS. 2,5.1 : Purchase Orders are c.reated byTaylor Morris6o and :are available lo Contractqr as provided -in Exhibit G. Whereas_ the Contract Doc::t.1111e111$ coJlectively d~_rifie ·the Work ·to be· undertaken at a Home, the Purchase Order is ilitended to provide Contractor the' no!fflfliltit!ri"retjuired to oommence a $Jl&eilio l)Ol1ion of the Work and the ptice for the same. The P11rchiise Or,ter roay also specify materials, quanllties, color an,t. style selections, cir other pertinent infQmlaijon,. lfapi)licable; which. information may a1tem11~vely be pmvideQfavailable. through SupplyPro, Buµsaw or a Tc1ylo; MC!rrisorr supenntendent All Pi,oha~ Qrdl;!rs are llllJillly bindin!J contracts an~ ;lf!I il1qQrp9t,l(ed Jtjto. this A!Ji~mertt as tholl!iJh fully set forth Il herein ;is and when i$Slled by Taylor MQ~n. ~I! Worl( p-erfotrned under the Purchase Order sti~I ,be paid in ttte,amountsli!ited on the Purchase Order.ind Will not b!)adj1JS!El(f after the Work is comp~_. · ' . •..". 2,5.2 ··variance Pur.cl]ase Orders ("VPO's") are for construction field vatiances on a single lot only and are I I I issued by Taylor Mollison, if and when .applic:alife. Unless otherwise agree<:! to in writing by Taylor Morrison, no devialiOII in the Workis to be done by Contractor prior to the issu.inceofa VPO, Once Taylor Mortison creates a VPO, which Will be available to Contractor as provided in Exhibit G, then construction of the Work .descnbed th.erein can be9in. Unless otherwise agreed to in writing by Taylor . Morrison, if Contractor engages in Work prior to the issuance of the applicable VPO, Taylor Morrison shall not have any_liabilily for paymenffor such Work. I 2.5.3 •Change Qrd!,!rs ("Ch1111{1a Orders") are for changes to the pricing, quantities. materials and/or Work ,described in a i,ar!iculiir Change Order Addendum that will atfect every Jot !jnd/<:>r plan going forward ,subject to a specific Change QrderAdtjl;!ndurn. The .Change Order will be described in i;i Change Order Addendum and are issged by Taylor MorriSl;in i,100 !)Qt the: Contractor.. Unless. otherMse agreed 10 by Taylor Morrison, ho deviation in the Work des(i:fibed In. a f'archase Order is to be done by Contractor <:>r [Contractor's subOoniractors prior to the lssµance of.ii Change Order. Once TaylorMorrison creates a. ,Change Order, WhiclJ Will bedelivered to Contraciorforlts signature, then construction oftheWork under ...... · · - ·· ·· -·· ····· · :a Purchase Order describ!)d therein .can begin subject to the Change Order. 2:6'. E:EECTIRONIC COMMUNICATION PROTOCOL. . To help facintate uniform and'Iecunt1;;;n;mittal of electronic . communication~. and to protect and preserve data e:¢hE11J9ecJ via electrii.oic communications, the partie$ hereby agree J that their eleclr~ic communications related to any Work will be governed by Extiibit G. l\RTJGLE 3.,.CONTRACTOR'S OBLIGATION$ AND REPRESENTATIONS ·a.1 _' REPRE~ENTATIONS AND WARRANTIES, Contractor her!)by, and at all times during the performarice- of any Work, representj; and warrants that: · · (a) Contractor is .in expert in .its field and trade; (b) pontractor is financially solven~ able tti_pay its debts as they mature and has sufficient working capital to perform its obligations underthE! ContractD1l¢llm!inls; (c) . bontrac!Qr is a duly formed and existing entity and is allthoriz;ed to do business in the state where the (-Jome is located; . . . . ·· (d} ~ontractor ls properly qualified, certified and_ licensed by all governmental and quasi-govemmental $uthorities with jurisdiction over any Home, and shaU contin\Je to be so cer!ffled and licensed al all times during performance of the Work (inclusive of any warranty obligations hereunder); (e) Contractor has disclosed to Taylor Marrison, in writing, any pending claims and actions, including arbitration and litigation, in. which· it is a party; (f) Contractor's execution _and delivery of the Contri;ict Documents, where required, an<:! performance of the Work, is within its duly authorized powers and has been duly authorized; · (g) Gontractor is, at all times~ in comi)liance with ail health and safety requirements and training, as required · in the local jurisdiction; and will at all times during the p13rforrnance of the Work maintain a competent person ffi$J)Onsible for all safety and health requirements at the Site (as defined below); Taylor Morrison 3 ~tra~or ~ TM "'-·,•'"" Mast,!r Agreemerj! for Vertical Construction Services Ver.6.3.13·~ Exhibit A-1 3 (h) ! Unless otherwise set forth in the Contract Documents, Contractor shall give public authorities all nolfCE>S · \ required by law and Shall obtain and pc1y for all necessary permits, licenses c1nd renewals. pertaining to -1 l •. (i} I t the Worl(; and Contractor shall timely provide to Taylor Morrison copies of any and all notlces, permits, licenses c1nd I reneWals required under the Contract Documents. I i I 3./! SUP!=~VISIQN; Prior to commencement of the Work. Contractor llhafl s ~ its superviS/Jr for each Horne (the •S11pervil!Ol") ciand will nCllify Taylor Morrison in writing as to the n>lffie and contact information for such Supervisor. Contractor sha!J Jmmedic1tely nolify Taylor Morrison in writing of any temparary or perm;;ilient Chang,is to such designee. At ,any time Cantrac!Clr ii; performing .th,;,- Work, and at .other times as necess<11Y, the Supervisor sh;:111 be present at the Site., Conlraclbr repr•nts th.rt the Supervisor. (i) is highly qualified and has an excellemtl'eCQfd Qfe.iqlerieilce and I perrormance oh work slmUar to thlil Work; (ii) hc1s the Hnguislic skills necessary to comm1iniCE1te With Contractofs -employees, .sut,oontractors, suppliers and others for whom Contractor is responsillle, wll.rtever·tl!eir prjhla,y language rrf"i.i)'be, as Well as to communicate fully with Taylor Morrison t;ihd its contractors; (iii) is fully km,wledg!l.ible regarding the Work and the $quirements of the Contract Documents; .ind (Iv) is authorized to respond to !he needs .ind requirements of Taylor Moni~On without obtaining further autoorization. If Contractor falls to have adequate supervision on the Site, in addition fo- anYI other remedies avail.ible to Taylor Morrison under ,th)!; Agreernen~ T!lylor Morrison may supply its own supervision, atpontractor's sole cost, or in the alternative, cause all Contractor's employees to ceal!e Work until adequate supervision is provided, again at Contractor's sole cost. 3.3 CORRECTION OF DEFECTIVE WORK. At any lime during perfonnance of the Work and so long as Taylor Morrison remai~s liable for any portion of !he Work, Contractor sh.ill remove and repair or repliioe any of its workmanship, rnate1na·1s and equipment that are defective or substandard .ind any equipment that f.iils to develop ratings, capacities, or ntractor, and not Taylor Morrison, is the ·controlling employel" and · therefore has (he au!horily and responsibillty fpr !he safety of its ernployees, subcontractors, sub-'subcontractors, I l cpn,;/uJt.ints <1nc( materialmen, as well as the safety of other con.tractors subcontract9r, sub-subcontractors, consutt?nts <1nd trades in relation to Contractor's Work; while on tiu,·"Sile (as defined below).· All necessary personal protective eqµiprnei:it deen;ied i;ippropriate for the work assignment will be provldll9 by Contractdrat its e~nse to .ill personnel VI/ho will be in!>tructe~ by Contractor in the proper selection, care and use of sll(!h safety devices and s.ife goords. As the "controlling .employer'' with regard to the safely of its own employees, contractor shall have a designated- "Responsible, ] -A!lthor~a.d Perspn for Safety" on. the Site at.all times that Contractors personnel are working on th<. Home. CQlltractdr will · :t identify i!11d arr$ge for additional safely training .is the need arises, will perform continuous hazard recognition for unsafe _WQi"k. practices ~nd/or unsafe work conditions and will abate same, and will .eliminate aJI unacceptable risks h_owsoever - !! . cereated- Contf1lctor shaU comply with .ill requirements and standard$ with re_$pec:t to occupational health and safety, . I- accident preve11pon and safety equipment and practices, health .ind safetytraining of Contractor's employees and any subcontractor ernployees 9n-s1te, .ind any accident prevention and safety program of Taylor Morrison, including the Site S'11'efy Rules a!tilched hereto as Exhibit C and the General Conditions attached hereto as .Exhibit A Contractor accepts sole're$ponsibili(y for providing .i safe place to work for its employees .ind for employees of its subcontractors, suppliers and -others fer wj\om it is responsible, _including without umilation the adequo'$ei, of this Asr.eement, "flazaJ'dous Sub$tance" means any materials or poJlut!!nts Wh\ch poi,e a l l ~ ttJ_ Ill!!, Home qr the Sfle, or tQ persons on or about the same, or cause the Home or the 9ile to. be in vlplaJion of any l,1w or f91;al lilpproval. or a!l,, clefiwd as or inch1cled in the definition of "hazardous subslances," 'hazardous wastes," "hazardoµs materials;or "tpidc" on.vqr~ of similar import ~nder any· applicable law or regulation. ·, 3.6 MOLD.! Contractor shall deliver the Home and all Work free from mold or conditions reasonably likely to lead. to ll!e developme~t of mold. If mold arises out of Contracior's Work, Cont~tor shall beiir sole responsibility and cost, after notification by iTaylor Morrison, to eliminate and remediate such mold (and any resulting damages) in a manner acceptabletoi:aylorMorrison. However, Taylor Morrison may, in its sole discretion, eliminate.and reme.diate such mold (with other $ubcontractors or otheiwise) and seek any imd all available remedies against ContracloJ", inc:lud{ng the right to back charge orJ setoff. No materials sqpplied or installed by Contractor shall exceed acceptable moisture levels at the Ume of installatlbn into the Home. 3.7 . PROJEt:T SITE. By commencing Work, Comractor Warrants that it has carefully examined the site of the Work · (the "Site•), inc(uding but not limited !o all boundary and edge conditions, proposed house construction. phase locations · and sequences,! lumber cut yards, material storage locations, wash out pits, and sequrity, safety, traffic and parkins Issues and con!lems; t~ make certain that it is. acceptable to, Contractor and the Site is ready to acc;eptthe WQr!<, that Is has been pfl fimited to a request by a homeowner or prospective homeowner) not specifically,.agreed to inwritingby Taylor Monison : 5 ~ - c·: Contractor V TM Master Agreement tor Vertical Construction Services . --,.... Ver. 6.3.13-TEx,i\S . .. J·, ' Exhibit A-1 5 Taylor or Morrisc\n s1s rE!qulred by law; Alf copies. of the Pl,;ins and Specifications shall be retumeq to Taylor Morrison upon request i . .. ,; : -· ' ' 111 the event oI a Specification tnat ?llows Coritra