Case Title: Ex Parte Cain

Citation: 838 So. 2d 1020

Docket Number: 1001030

State: alabama

Court: Alabama Supreme Court

Date: 2002-06-14T00:00:00Z

Document:
838 So. 2d 1020 (2002)
Ex parte Willard H. CAIN.
(In re Willard H. Cain v. Chandeleur Homes, Inc.)
1001030.

Supreme Court of Alabama.
June 14, 2002.
*1021 Timothy L. Dillard and Allwin E. Horn IV of Dillard & Associates, L.L.C., Birmingham; *1022 and Hugh E. Holladay, Pell City, for petitioner.
R. Stan Morris, Birmingham, for respondent.
JOHNSTONE, Justice.
Willard Cain petitions this Court for a writ of mandamus directing the St. Clair Circuit Court to vacate its order compelling Cain to arbitrate his claims against Chandeleur Homes, Inc.[1] Because the evidence does not show the existence of a contract to arbitrate, we issue the writ.
On March 27, 2000, Cain purchased a new manufactured home, manufactured by Chandeleur Homes, Inc. On November 15, 2000, Cain sued Chandeleur Homes for fraudulent misrepresentation and breach of express and implied warranties "in that the said new home was not constructed in a workmanlike manner and contained numerous defects in the workmanship and materials...." (Exhibit A to Petition.)
Moving the trial court to compel Cain to arbitrate his claims, Chandeleur argued:
(Motion to Compel Arbitration, Exhibit C to Petition; emphasis added.) In support of Chandeleur's motion to compel arbitration, Chandeleur submitted an affidavit by its sales manager, David Bridges; an affidavit by its purchasing manager, Andrew Joseph Schmidt; a copy of a "Limited One Year Service Warranty"; and a copy of one page from a "homeowner's manual" containing an arbitration provision. The page from the manual (not the warranty) reads, in toto:
(Exhibit G to Petition; capitalization in original.) The "Limited One Year Service Warranty," a separate document from the page of the homeowner's manual, does not contain any arbitration provision and does not contain any reference to any arbitration provision in the homeowner's manual. The "Limited One Year Service Warranty" reads, in pertinent part:
(Exhibit F to Petition; emphasis added.) The warranty is not signed by either party, although it contains a blank signature line and a blank date line at the end of the document. (Exhibit F to Petition.)
In an affidavit, Chandeleur's Sales Manager David Bridges swore:
(Exhibit D to Petition; emphasis added.) In another affidavit, Chandeleur's Purchasing Manager Andrew Joseph Schmidt swore:
(Exhibit E to Petition.)
Opposing Chandeleur's motion to compel arbitration, Cain asserted:
(Exhibit H to Petition; emphasis added.) Cain also submitted an affidavit wherein he swore:
(Exhibit B to Petition; emphasis added.)
A party who moves to compel arbitration bears the initial burden of establishing by substantial evidence (1) the existence of an agreement to arbitrate in (2) a contract or transaction substantially affecting interstate commerce. Conseco Fin. Corp. v. Sharman, 828 So. 2d 890 (Ala. 2001), and American Gen. Fin., Inc. v. Morton, 812 So. 2d 282 (Ala.2001). If the movant successfully carries this initial burden, then the burden shifts to the opposing party to submit substantial evidence creating a genuine issue of material fact on either or both of those elements of arbitrabilitythe agreement and the substantial effect on interstate commerce. Id. If the opposing party carries this burden and creates such a genuine issue of material fact, then the fact-finder must decide it. If such a fact-finding is based entirely on evidence in writingaffidavits, written discovery, exhibits, or the likeor undisputed oral testimony, which an appellate court can judge as well as the trial court, an appellate court will review the fact-finding de novo, with no presumption of correctness. Ex parte Horn, 718 So. 2d 694 (Ala. 1998), and Lilly v. Palmer, 495 So. 2d 522 (Ala.1986). Only if such a fact-finding is based, at least in substantial part, on oral testimony the appellate court cannot observe as well as the trial court, will the fact-finding be accorded the ore tenus presumption of correctness. Justice v. Arab Lumber & Supply, Inc., 533 So. 2d 538 (Ala.1988), and Hall v. Mazzone, 486 So. 2d 408 (Ala.1986). Legal conclusions are never accorded a presumption of correctness on appellate review. Ex parte Perkins, 646 So. 2d 46, 47 (Ala.1994). If the party moving to compel arbitration fails to carry the initial burden of submitting substantial evidence supporting both of the essential elements of arbitrabilitythe agreement and the substantial effect on interstate commercethen no burden shifts to the opposing party. Ex parte Greenstreet, 806 So. 2d 1203 (Ala.2001). Rather, the motion to compel should be denied, Ex parte Greenstreet, and the ruling will be reviewed de novo. Sharman and Morton, supra.
The dispositive issue is whether Cain and Chandeleur agreed to arbitrate. Our resolution of this issue against Chandeleur pretermits any analysis of whether the contract or transaction substantially affected interstate commerce.
"`[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" AT & T Techns., Inc. v. Communication Workers of America, 475 U.S. 643, 648, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960)); and see Ex parte Lovejoy, 790 So. 2d 933 (Ala. 2000). "`When deciding whether parties agree to arbitrate a certain matter (including arbitrability) courts generally ... should apply ordinary state-law principles that govern the formation of contracts.'" Oakwood Mobile Homes, Inc. v. Barger, 773 So. 2d 454, 459 (Ala.2000) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995)). "`The requisite elements of [a contract] include: an offer and an acceptance, consideration, and mutual assent to terms essential to the formation of a contract.'" Ex parte Grant, 711 *1027 So. 2d 464, 465 (Ala.1997) (quoting Strength v. Alabama Dep't of Finance, Div. of Risk Mgmt., 622 So. 2d 1283, 1289 (Ala.1993)). "Assent must be manifested by something. Ordinarily, it is manifested by a signature. [However], [a]ssent may be manifested by ratification." Southern Energy Homes, Inc. v. Hennis, 776 So. 2d 105, 108 (Ala. 2000) (citing Southern Energy Homes, Inc. v. Harcus, 754 So. 2d 622, 625 (Ala.1999)), wherein this Court remanded the case to the trial court for a finding of whether the purchasers of a manufactured home ratified and thereby accepted an arbitration provision by accepting repairs pursuant to a warranty containing the arbitration provision. Distinguishing Southern Energy Homes, Inc. v. Harcus in Southern Energy Homes, Inc. v. Hennis, this Court held:
Hennis, 776 So. 2d  at 108-109 (some emphasis original; some emphasis added).
Chandeleur maintains that, although Cain did not sign an arbitration agreement, his assent to arbitrate is evidenced by his acceptance of the benefits of the warranty through repairs and service guaranteed by the warranty. Specifically, Chandeleur states, "Chandeleur does not dispute that the warranty contract and arbitration limitation were not signed by Petitioner; however, Chandeleur vehemently denies that Petitioner did not ratify them by requesting warranty service on his home and by alleging breach of Chandeleur's warranty agreement in the instant lawsuit." (Respondent's brief, p. 6.) Relying on Southern Energy Homes, Inc. v. Ard, 772 So. 2d 1131 (Ala.2000), Chandeleur argues, "Petitioner cannot on one hand seek the benefits of an agreement while at the same time repudiate other provisions of it." (Respondent's brief, p. 7.)
Chandeleur's reliance on Ard to require Cain to arbitrate his claims is misplaced. Ard is distinguishable from the case before us in that, there, the warranty itself contained an arbitration agreement between Southern Energy and the Ards, and the Ards did not submit any evidence to refute the existence and their acceptance of the arbitration agreement. The Ards had requested and received service under the warranty before they attempted to repudiate the arbitration agreement contained in the warranty. In the instant case, the warranty does not contain any arbitration provision. Rather, the warranty expressly states that it "gives you specific legal rights and you may also have other rights ... [and it] does not exclude any implied warranties." (Exhibit F to Petition.)
In the case before us, the only arbitration provision is in a page from a homeowner's manual, which Chandeleur has not proven to be a contract existing between Cain and Chandeleur. Indeed, Chandeleur Sales Manager David Bridges's affidavit, as quoted above, swears that the "written factory warranty [containing no arbitration provision] ... is our only contract with the owner." (Exhibit D to Petition; emphasis added.) Although Chandeleur maintains that the homeowner's manual containing the arbitration provision "places certain conditions on the warranty contract with the *1028 owner," see Bridges's affidavit, the only page of the homeowner's manual containing the arbitration provision itself does not even mention the "Limited One Year Service Warranty" and cites only duties of a manufacturer of a manufactured home and the rights of a purchaser as provided by a federal safety statute, as distinguished from a warranty. (Exhibit G to Petition.) Furthermore, Chandeleur's "unilateral enclosure of an arbitration provision in a homeowner's manual is... insufficient as a matter of law to show that [Cain] assented to all the contents therein." Hennis, 776 So. 2d  at 108-09. Moreover, unlike the Ards, Cain has submitted his affidavit as evidence that he never received either a homeowner's manual or the "Limited One Year Service Warranty" which Chandeleur claims it left in a kitchen drawer in the manufactured home sold to Cain.
Because the evidentiary materials submitted by Chandeleur in support of its motion to compel Cain to arbitrate his claims do not establish the existence of contract containing an arbitration agreement between Cain and Chandeleur, Cain is entitled to mandamus relief. Accordingly, we issue a writ of mandamus directing the St. Clair Circuit Court to vacate its order compelling the petitioner Cain to arbitrate his claims against Chandeleur Homes.
WRIT GRANTED.
MOORE, C.J., and HOUSTON, LYONS, BROWN, HARWOOD, and WOODALL, JJ., concur.
[1]  Rule 4(d), Ala. R.App. P., as amended effective October 1, 2001, provides that an order either granting or denying a motion to compel arbitration is reviewable by appeal. On March 8, 2001, before the effective date of this amendment, Cain filed his petition for a writ of mandamus, which was then the appropriate mode of review, Ex parte Napier, 723 So. 2d 49, 51 (Ala.1998).