ARBITRATION DECISIONS:
SUMMARY OF ALABAMA SUPREME COURT
DECISIONS (July 2, 1998 - October 23, 1998) 

 

The following is a summary of all Alabama Supreme Court decisions dealing with arbitration from July 2, 1998 to October 23, 1998, in reverse chronological order: 

     
  1. Crown Pontiac, Inc. v. Savage, No. 2970713, 1998 WL 737938 (Ala. Civ. App. Oct. 23,  1998).

    2. This claim, which arose in district court, involved the complaint of an automobile purchaser that "her vehicle was continuously breaking down."  After both the district court and circuit court refused to compel arbitration, the Court of Appeals addressed the car dealers appeal.  The "very broad" arbitration agreement contained in the sales contract expressly included "disputes involving ‘the condition of the motor vehicle.'" Since the plaintiff's pro se complaint only alleged problems with the condition of her vehicle, the court reversed lower courts and compelled arbitration. 
     

  2. Tom Williams Motors v. Thompson, No. 1970348, 1998 WL 656109 (Ala. Sep. 25, 1998).

    3. In this case, only one of the plaintiff automobile purchasers signed the arbitration agreement contained in the buyer's order.  The trial court compelled arbitration as to the signatory but refused to compel arbitration as to the non-signatory.   The opinion of the Etowah County Circuit court was affirmed in this case without opinion and with reference to Ex Parte Dickinson, 711 So. 2d 984 (Ala. 1998).  Justice Houston concurred specially to note that his position had changed since Dickinson, which involved a similar situation; Justice Lyons concurred in the result; and Justice Maddox filed a dissent, which was joined by Chief Justice Hooper and Justice See, in which he re-stated his argument that a non-signatory should be compelled to arbitrate tort claims that "‘are founded in and intertwined with the underlying contract obligations.'" As noted by Justice Lyons, the non-signatory plaintiff based all of his claims in tort only in order to avoid arbitration. 
     
     

  3. Brilliant Homes, LTD. v. Lind, No. 1970153, 1998 WL 599496 (Ala. Sept. 11, 1998).

    4. The issue in this case was whether the broad arbitration provision set out in a mobile home manufacturer's warranty conferred on the arbitrator the power to decide the preliminary issue of arbitrability.  The plaintiff sued the manufacturer after becoming disgruntled with the condition of the mobile home and the manufacturers attempts to correct alleged defects.  Specifically, the Plaintiff claimed that the manufacturer fraudulently induced him to sign an arbitration agreement included in one of the sales documents that committed "all disputes, claims, or controversies of every kind or nature that may arise between the. . ." purchaser and the seller to arbitration.  Finding that "the clear language of the [arbitration] provision prima facie showed that the parties agreed to arbitrate the preliminary issue of arbitrability[,]" and that the plaintiff presented no evidence rebutting this prima facie showing, the court reversed the trial court's denial of the manufacturer's  motion to compel arbitration. 
     
     

  4. Med Center Cars, Inc. v. Smith, Nos. 1960214-1960216, No. 1960401, No.1960601, No. 1960602, No. 1960826, 1998 WL 560255 (Ala. Sep. 4, 1998). 

    5.  

    This case involves a class action against several defendants and arises out of the Jefferson County Circuit Court.  That court denied the defendants' motions to compel arbitration and to stay proceedings against them by the plaintiff class representatives.  The court reversed in part and affirmed in part.  There are five distinct holdings in the case: 
     

    1. The court AFFIRMED the trial court's order that arbitration could not be compelled  by a seller who did not sign the buyer's order, which contained the arbitration clause.  By  failing to sign the buyer's order, the seller failed to validate the arbitration clause.

      2.  
    2. The court REVERSED the trial court and held that an arbitration clause that requires  a buyer to arbitrate claims against the seller is enforceable even if the clause allows the  seller to litigate claims it may have against the buyer.

      3.  
    3. The court AFFIRMED the trial court and held that only the two parties named in the  arbitration agreement could be forced to arbitrate because the buyer's order containing  the arbitration agreement was a "complete and exclusive" agreement to arbitrate claims.   Therefore, the seller could not force arbitration under a trade name or the name of its  parent company.

      4.  
    4. The court AFFIRMED the trial court's order refusing to extend the arbitration  agreements to nonsignatories because the agreements were expressly limited to claims  arising between the buyer and the seller only.

      5.  
    5. The court REVERSED the lower court's order and refused to allow for class-wide  arbitration because to do so would alter the arbitration agreements themselves.

     
  5. Georgia Power Company  v. Jerry Partin, No. 1961192, 1998 WL 560252  (Ala. Sep. 4, 1998).

    6. The court REVERSED the Colbert County Circuit Court and compelled the plaintiff, a third party beneficiary to an operations agreement between Georgia Power and an affiliate, and his spouse to arbitrate.  The plaintiff, an employee of the affiliate, sued under the operations agreement claiming that the defendants negligently failed to maintain a safe work environment.  The operations agreement contained an arbitration clause.  The court held that, by suing under the operations agreement, the plaintiff chose to accept and enforce all of its terms, including the arbitration clause.  Likewise, the plaintiff's spouse's claim for loss of consortium was based on the same contract, thereby requiring arbitration. 
     
     

  6. Ex Parte McNaughton, No. 1961708, 1998 WL 544926

    7. (Ala. Aug. 28, 1998) 

    The court denied the plaintiff's petition for writ of mandamus and AFFIRMED the Jefferson County Circuit Court's order ordering arbitration of the plaintiff's claims under the arbitration clause in the employee's handbook.  As a condition to employment, the plaintiff signed an acknowledgment form that incorporated the defendant's arbitration policy.  The acknowledgment form only bound the parties to one provision of the employee handbook - the arbitration policy.  The form indicated that the rest of the handbook were merely guidelines and that the only binding provision was the arbitration clause.  The provision of at-will employment by the defendant was sufficient consideration in exchange for the plaintiff's agreement to arbitrate.  Further, the court rejected the plaintiff's argument that arbitration clauses are both  unconscionable and a mutuality of remedy. 
     
     

  7.  Anderson Brothers Chrysler Plymouth Dodge, Inc. v. Hadley, No. 1961143, 1998 WL 430373 (Ala. July 31, 1998)

    8. The trial court refused to enforce an arbitration agreement, (1) because the signature line contained the name "Anderson Brothers CPD" (and not an authorized agent of the company), and (2) the name appeared above the caption "Seller/Lessor," but the document referred to a transaction between a "buyer/lessee" and the "dealer."  The court REVERSED and HELD that the signature "Anderson Brothers CPD" was enforceable, therefore the agreement did not lack mutuality, and found that the document was not ambiguous, so that the difference between "dealer" and "seller/lessor" did not warrant finding the agreement unenforceable. 
     
     

  8. Anniston Lincoln Mercury Dodge v. Conner, No. 1970074, 1998 WL 432251 (Ala. July 31, 1998)

    9. The plaintiff sued the defendant car dealership to have a contract (which included a car sale, a life insurance policy purchase, and an arbitration agreement) canceled, claiming fraud and lack of capacity.  The trial court refused to compel arbitration to resolve the plaintiff's claim that the arbitration clause was fraudulently induced, and that she lacked capacity to enter into the agreement, because she lacked an full understanding of the English language (she was S. Korean).  The court REVERSED and HELD that when an argument bears upon an entire agreement, the resolution of the argument must be left to an arbitrator.  In this case, whether or not the plaintiff understood the English Language went toward the whole contract, therefore the trial court erred in not compelling arbitration. 
     
     

  9. Ex parte Green Tree Financial Corp., 1962148, 1998 WL 432217 

    10. (Ala. July 31, 1998) 

    The court, in dicta, noted that individuals who sign valid arbitration agreements cannot be included in a class action.  The contractual obligations of parties to an arbitration agreement cannot be overcome by Rule 23 of the Alabama Rules of Civil Procedure.  Id., slip op. at 4 n.3. 
     
     

  10. Ex parte Bentford, 1961675, 1998 WL 398070 (Ala. July 17, 1998)

    11. Petition for a Writ of Mandamus directing the trial judge to withdraw his order granting defendant's motion to compel arbitration.  After two years of discovery, defendant attempted to invoke an arbitration clause.  The clause was not contained in a signed agreement, but in a pamphlet referred to in a signed document.  The court GRANTED THE WRIT and HELD that after substantially invoking the litigation process for two years, the opposing party's interest would be prejudiced by granting arbitration.  Additionally, the court noted that   it would be fundamentally unjust for this Court to articulate a standard whereby the citizens of this state, when entering contracts, would be required to leap from document to document searching for provisions that, in amongst the fine print and voluminous documentation, might operate to deprive them of their fundamental rights without their acknowledged consent. 
     
     

  11. Ex parte Warren, 1970645,  1998 WL 382010 (Ala. July 10, 1998)

    12. Petition for a Writ of Mandamus directing the trial judge to vacate his order granting defendant's motion to compel arbitration.  Petitioners claimed that because the arbitration organization named in the contract was defunct, the arbitration agreement could no longer be enforced.  Additionally, petitioner's wife claimed that she was not subject to the agreement, because she was not a signatory to the contract.  The court DENIED THE WRIT and HELD that because petitioner's wife was not a signatory to the contract, she had no standing to challenge the defendant's failure to perform under that contract (the underlying claim).  In addition, the court interpreted § 5 of the Federal Arbitration Act ("FAA") to mean that where an arbitrator named in an agreement cannot or will not arbitrate the dispute, the court will appoint a different arbitrator rather than void the entire agreement.  The court established one exception to this rule where a particular agency or arbitrator is picked, and it is clearly the intent of the parties to make the selection an essential term of the contract, without which the contract would be void. 
     
     

  12. Ex parte Dan Tucker Auto Sales, Inc., 1951866, 1998 WL 351784

    13. (July 2, 1998) 

    Petition for a Writ of Mandamus directing the trial judge to withdraw his order requiring the petitioner/defendant-below to pay an arbitration filing fee and to require the plaintiff-below to file that fee.  The dispute arose when the trial judge interpreted the term "initiating party", found in Rule 6 of the Commercial Arbitration Rules of the American Arbitration Association, to mean the party who seeks to compel arbitration.  The court GRANTED THE WRIT and HELD that the "initiating party" is the plaintiff, not the party who seeks to compel arbitration.

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