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According to the Tennessee Court of Appeals, when a court grants a motion to compel arbitration, the underlying action should be stayed, not dismissed, because dismissal paves the way for an immediate appeal.
In Thompson v. Terminix International Company, L.P., No. M2005-02708-COA-R3-CV, 2006 WL 2380598 (Tenn. Ct. App. Aug. 16, 2006), Thompson sued Terminix to recover damages caused by termite infestation. Terminix moved to compel arbitration pursuant to the parties’ contract. The trial court granted the motion and dismissed the action.
The Court first addressed the procedural posture of the case. Specifically, the Court noted that when a trial court grants a motion to compel arbitration, the underlying action should be stayed, not dismissed. The distinction is significant because absent dismissal, an order granting a motion to compel arbitration is not immediately appealable.
The Court next turned to Thompson’s argument that the arbitration clause was unenforceable because the Tennessee Uniform Arbitration Act requires a signature for arbitration clauses related to residential property. In rejecting this argument, the Court concluded that the enforceability of the arbitration clause was governed by the Federal Arbitration Act because Terminix’s multi-state operations and interstate transit of its products established that the underlying contract involved interstate commerce.
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