Kellco Custom Homes, Inc.; And Tracie Kelley v. Daniels H. Williams and Ellen M. Williams

Cite as 2025 Ark. App. 483
ARKANSAS COURT OF APPEALS
DIVISION IV
No. CV-24-571

KELLCO CUSTOM HOMES, INC.; AND Opinion Delivered October 22, 2025
TRACIE KELLEY
APPELLANTS APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT,
SIXTEENTH DIVISION
V. [NO. 60CV-22-746]

DANIEL H. WILLIAMS AND ELLEN M. HONORABLE MORGAN E. WELCH,
WILLIAMS JUDGE
APPELLES
REVERSED AND REMANDED

RAYMOND R. ABRAMSON, Judge

Kellco Custom Homes, Inc. (Kellco); and Tracie Kelley appeal the Pulaski County

Circuit Court order denying their motion to dismiss Ellen and Daniel Williams’s (the

Williamses’) amended complaint. On appeal, they argue that the circuit court erred by

finding that an arbitration agreement was invalidated. We agree that the circuit court erred,

and we reverse and remand.

This case returns to this court following remand. In the first appeal, we reversed the

circuit court’s denial of Kellco’s motion to dismiss for arbitration and remanded the case for

the court to consider the threshold questions as required by Bank of the Ozarks v. Walker,

2014 Ark. 223, 434 S.W.3d 357. See Kellco Custom Homes, Inc. v. Williams, 2024 Ark. App.

205. Relying on Bank of the Ozarks, we held that the circuit court must first resolve whether
there was a valid agreement to arbitrate between the parties. Id. If the circuit court found

there was a valid agreement to arbitrate, then it must determine whether the dispute falls

within the scope of the agreement. Id. We noted that only then could the circuit court

consider whether a defense invalidates the agreement. Id.

During the pendency of the first appeal, the Williamses amended their complaint

against Kellco and added Kelley, Kellco’s shareholder and officer, as a defendant. In the

amended complaint, the Williamses alleged that they had entered into a custom home

building agreement with Kellco concerning the purchase of a lot and the construction of a

house. They alleged that they made payments pursuant to that agreement totaling

$1,616,026.82, but they claimed that Kellco’s construction of the house did not progress as

provided by that agreement. They asserted that Kelley offered to terminate the custom home

building agreement and that the Williamses agreed to the termination. They stated that

Kelley represented that she would refund all payments made under the custom home

building agreement to them in exchange for terminating it. They claimed, however, that

Kelley refunded them only $310,000 and that she had moved into the house with her family.

They alleged claims for fraud, rescission at law, breach of the termination agreement, and

unjust enrichment, and they requested damages and restitution totaling $1,316,026.82. The

Williamses attached three documents to their complaint.

The first document is the custom home building agreement (the agreement) dated

February 5, 2021. The agreement provided for the purchase of a lot and construction of a

house for $843,600 with a completion date within approximately eight months. The

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agreement contained an arbitration clause stating that “[a]ny disputes related to the

performance of this subcontract shall be submitted to binding arbitration in Pulaski County,

Arkansas before an arbitrator mutually selected by the parties.” The agreement is signed by

the Williamses and Kelley, as Kellco’s president and chief executive officer.

The second document is an addendum to the custom home building agreement (the

addendum) dated January 3, 2022.1 The addendum amended the purchase price to $1.4

million and the completion date to May 1, 2022. The addendum provided that the other

terms and conditions of the agreement shall remain in full force and effect, and it is signed

by the Williamses and Kelley, as Kellco’s president and chief executive officer.

The third document is a termination of the custom home building agreement (the

termination) dated January 11, 2022. The termination provided that the agreement shall

remain in full force and effect except that due to the Williamses’ unforeseen circumstances,

the Williamses “request” that Kellco “fully and immediately” terminate the agreement. The

termination is signed by the Williamses.

On January 8, 2024, Kellco and Kelley moved to dismiss the amended complaint and

again asserted that the parties had a valid agreement to arbitrate.

On June 3, 2024, the circuit court held a hearing on the remanded issues, and on

June 10, the court entered an order again denying Kellco and Kelley’s motion to dismiss the

amended complaint. The court found that Kellco and the Williamses had entered into a

1
The pleadings indicate that the parties actually signed the addendum on January 11,
2022.

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valid arbitration agreement and that the dispute fell within the scope of the arbitration

agreement. However, the court concluded that the termination invalidated the arbitration

agreement. Kellco and Kelley again appealed, and they argue that the circuit court erred by

denying their motion to dismiss.

Although Kellco and Kelley reference a motion to dismiss for arbitration, their

request is one to compel arbitration. Accordingly, we treat their motion to dismiss as a

motion to compel arbitration. An order denying a motion to compel arbitration is an

immediately appealable order. Pest Mgmt., Inc. v. Langer, 369 Ark. 52, 250 S.W.3d 550 (2007).

We review the denial of a motion to compel arbitration de novo on the record. Id.

Arbitration is simply a matter of contract between parties. Hickory Heights Health &

Rehab, LLC v. Cook, 2018 Ark. App. 409, 557 S.W.3d 286. Whether a dispute should be

submitted to arbitration is a matter of contract construction, and we look to the language of

the contract that contains the agreement to arbitrate and apply state-law principles. Id. The

same rules of construction and interpretation apply to arbitration agreements as apply to

agreements generally; thus, we will seek to give effect to the intent of the parties as evidenced

by the arbitration agreement itself. Id. The construction and legal effect of an agreement to

arbitrate are to be determined by this court as a matter of law. Id. Any doubts and ambiguities

of coverage will be resolved in favor of arbitration. Lehman Props., Ltd. P’ship v. BB&B Constr.

Co., 81 Ark. App. 104, 98 S.W.3d 470 (2003).

On appeal, Kellco and Kelley argue that the circuit court erred by finding that the

termination invalidated the arbitration clause in the agreement. They argue that the

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termination altered only the Williamses’ intent to further perform the agreement and that

the arbitration clause remains in effect. We agree that the circuit court erred on this point.

A dispute that occurs after the termination of a contract may nevertheless be
treated as if it arose under the contract, and is therefore arbitrable, when the dispute
involves facts and occurrences that arose before the termination of the contract, the
controversy involves a right that accrued or vested under the contract, or, under
ordinary principles of contract interpretation, the disputed contractual right survives
the termination or expiration of the remainder of the contract.

21 Richard A. Lord, Williston on Contracts § 57:21 (4th ed.), Westlaw (database updated May

2025). Further, our supreme court has held that it would be inequitable to allow an appellant

to maintain inconsistent positions to avoid arbitration. Am. Ins. Co. v. Cazort, 316 Ark. 314,

322, 871 S.W.2d 575, 579–80 (1994) (stating that a party “cannot have it both ways. It

cannot rely on the contract when it works to its advantage and ignore it when it works to its

disadvantage.” (quoting Tepper Realty Co. v. Mosaic Title Co., 259 F. Supp. 688, 692 (S.D.N.Y.

1977))).

In this case, the termination pertains to the Williamses’ “request” to terminate the

agreement, and it provides that the agreement—with the arbitration clause—shall remain in

full force and effect. Moreover, the Williamses rely on the agreement as the basis for their

allegations against Kellco and Kelley in their complaint. They claim that before the

termination, they paid Kellco pursuant to the agreement, but Kellco’s construction of the

home did not progress according to the agreement’s terms. Their alleged damages are the

sums they paid under the agreement. Given these circumstances, and resolving any doubts

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in favor of arbitration, we hold that the circuit court erred by finding that the termination

invalidated the arbitration agreement.

The Williamses respond that even if the termination did not invalidate the arbitration

agreement, the dispute does not fall within the scope of the arbitration agreement because

the arbitration clause is “very specific and narrow.” They argue that their claims relate only

to the termination, and they point out that they do not allege a contract claim for breach of

the agreement.

In light of the policy favoring arbitration, we will not construe the agreement strictly

but will read it to include subjects within the spirit of the parties’ agreement. Courtyard

Gardens Health & Rehab., LLC v. Sheffield, 2016 Ark. 235, 495 S.W.3d 69; Altice USA, Inc. v.

Peterson, 2023 Ark. App. 116, 661 S.W.3d 699. We have stated that an arbitration agreement

for “any controversy” is broad and expansive. See A.G. Edwards & Sons, Inc. v. Myrick, 88 Ark

App. 125, 130, 195 S.W.3d 388, 392 (2004).

Here, the agreement provided that that “[a]ny disputes related to the performance of

this subcontract[2] shall be submitted to binding arbitration.” Even though the Williamses

do not allege a breach-of-contract claim specifically for the agreement, their claims concern

the payments made pursuant to the agreement. Accordingly, the Williamses’ argument is

without merit, and the circuit court properly found that the dispute falls within the scope of

the arbitration clause.

2The parties do not complain about the use of the term “subcontract.”

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The Williamses additionally assert that even if the arbitration agreement applies to

Kellco, Kelley cannot invoke the arbitration clause because she is not a party to the

agreement. However, the circuit court did not rule on this argument, and it is therefore not

preserved for our review. Courtyard Gardens Health & Rehab., LLC v. Quarles, 2013 Ark. 228,

at 10, 428 S.W.3d 437, 444 (declining to address whether the third-party-beneficiary doctrine

applied to bind an individual to an arbitration agreement because the circuit court did not

rule on the issue).

In conclusion, we hold that the circuit court erred by denying the motion to compel

arbitration. Accordingly, we reverse and remand.

Reversed and remanded.

VIRDEN and TUCKER, JJ., agree.

Davidson Law Firm, by: Charles Darwin “Skip” Davidson and Nickolas W. Dunn, for

appellants.

The Applegate Firm, PLLC, by: Kayla M. Applegate and Ryan J. Applegate, for appellees.

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