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The North Carolina Court of Appeals held that a dispute arising from an allegedly negligent termite inspection was not subject to arbitration because the arbitration clause applied only to the termite treatment contract.
In Hailey v. Terminix Co. of North Carolina, Inc., 2007 WL 1892559 No. COA06-675 (N.C. Ct. App. July 3, 2007), Hailey hired Terminix to perform a termite inspection on property he intended to purchase. On November 29, 2003, Terminix inspected the property and informed Hailey that there were no signs of termite damage. Hailey purchased the property on December 9, 2003. On December 10, 2003, Terminix performed a termite pest control treatment pursuant to a termite treatment plan purchased by Hailey on December 9.
Subsequently, Hailey discovered termite damage that had existed prior to the initial inspection. Hailey sued Terminix for negligence and breach of contract. Terminix moved to compel arbitration pursuant to an arbitration clause in the treatment contract. The trial court denied the motion.
On appeal, the Court held that the parties did not enter into an agreement to arbitrate disputes arising from the November 29 inspection. Terminix argued that the arbitration agreement applied to the initial inspection because it was performed in conjunction with the termite treatment. The Court rejected this argument because there was no evidence showing the parties agreed the initial inspection was part of the treatment contract. Instead, the time lapse of eleven days between the initial inspection and the treatment suggested the two agreements were separate.
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