Case Title: Green Tree-AL LLC v. Lisa K. White

Citation: 

Docket Number: 1071515

State: alabama

Court: Alabama Supreme Court

Date: 2010-08-13T00:00:00Z

Document:
REL:08/13/2010
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2010
____________________
1071515
____________________
Green Tree-AL LLC
v.
Lisa K. White
Appeal from Barbour Circuit Court
(CV-07-900031)
SHAW, Justice.
Green Tree-AL LLC ("Green Tree"), the plaintiff in a
replevin action pending below, appeals from the denial of its
motion to compel arbitration of the counterclaims of the
defendant/counterclaimant, Lisa K. White.  We reverse and
1071515
This page, which White initialed, stated that Southland
1
"sells, assigns, and transfers its entire right, title, and
interest in" the contract to Green Tree.
2
remand.  
Facts and Procedural History
In 1999, White purchased a manufactured home from
Southland Quality Homes, Inc. ("Southland").  In connection
with this purchase, White executed a document titled
"Manufactured Home Retail Installment Contract and Security
Agreement" ("the contract").  The contract listed Green Tree
as an "Assignee."  Page 4 of the contract was titled
"Assignment by Seller" and indicated that Southland was
assigning the contract to the "Assignee," i.e., Green Tree.1
Additionally, the contract contained an arbitration provision
that stated, in pertinent part:
"All disputes, claims or controversies arising
from 
or 
relating 
to 
this 
Agreement 
or 
the
relationships which result from this Agreement, or
the validity of this arbitration clause or the
entire Agreement, shall be resolved by binding
arbitration by one arbitrator selected by you with
my consent. This arbitration agreement is made
pursuant to a transaction involving interstate
commerce, and shall be governed by the Federal
Arbitration Act, Title 9 United States Code.
Judgment upon the award rendered may be entered in
any court having jurisdiction. The parties agree and
understand that they choose arbitration instead of
litigation 
to 
resolve 
disputes. 
The 
parties
1071515
3
understand that they have a right or opportunity to
litigate disputes in court, but that they prefer to
resolve their disputes through arbitration, except
as provided herein. THE PARTIES VOLUNTARILY AND
KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL,
EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR
PURSUANT TO A COURT ACTION BY YOU (AS PROVIDED
HEREIN). The parties agree and understand that all
disputes arising under case law, statutory law, and
all other laws including, but not limited to, all
contract, tort and property disputes, will be
subject to binding arbitration in accord with this
agreement. I agree that I shall not have the right
to participate as a representative or a member of
any class of claimants pertaining to any claim
arising from or relating to this Agreement. The
parties agree that the arbitrator shall have all
powers provided by law and the Agreement. These
powers shall include all legal and equitable
remedies including, but not limited to, money
damages, declaratory relief and injunctive relief.
Notwithstanding anything hereunto the contrary, you
retain an option to use judicial or non-judicial
relief to enforce a security agreement relating to
the collateral secured in a transaction underlying
this arbitration agreement, to enforce the monetary
obligation or to foreclose on the collateral. Such
judicial relief would take the form of a lawsuit.
The institution and maintenance of an action for
judicial relief in a court to foreclose upon any
collateral, to obtain a monetary judgment or to
enforce the security agreement, shall not constitute
a waiver of the right of any party to compel
arbitration in this Agreement, including the filing
of a counterclaim in a suit brought by you pursuant
to this provision."
(Capitalization in original.)  
Subsequently, in July 2007, Green Tree sued White,
alleging that White had failed to make payments pursuant to
1071515
A transcript of the hearing was not made part of the
2
record.  
4
the contract and seeking, among other things, possession of
the manufactured home.  Green Tree later filed a request that
the case be placed on the trial court's administrative docket,
indicating that the parties were working on resolving the
arrearage. 
The 
case 
was 
ultimately 
removed 
from 
the
administrative docket, and a default judgment was entered in
Green Tree's favor on April 7, 2008.  On April 24, 2008, White
moved to set aside the default judgment, and the trial court
granted her motion.  White then filed an answer, as well as a
counterclaim against Green Tree seeking damages based on abuse
of process, slander of title, the tort of outrage, fraud, and
negligence and wantonness.
Green Tree moved to compel arbitration of White's
counterclaims and to stay the case pending arbitration.  The
motion was supported by evidentiary exhibits.  Green Tree's
motion was set for a hearing; on the day of the hearing, White
filed a brief opposing Green Tree's motion.   Subsequently,
2
the trial court entered an order denying the motion to compel.
Green Tree appeals. 
1071515
5
Standard of Review
"'[T]he standard of review of a trial court's ruling
on a motion to compel arbitration at the instance of
either party is a de novo determination of whether
the trial judge erred on a factual or legal issue to
the substantial prejudice of the party seeking
review.' Ex parte Roberson, 749 So. 2d 441, 446
(Ala. 1999). Furthermore:
"'A motion to compel arbitration is
analogous to a 
motion for summary 
judgment.
TranSouth Fin. Corp. v. Bell, 739 So. 2d
1110, 1114 (Ala. 1999). The party seeking
to compel arbitration has the burden of
proving the 
existence of a contract calling
for arbitration and proving that that
contract evidences a transaction affecting
interstate commerce. Id. 
"After a 
motion to
compel arbitration has been made and
supported, the burden is on the non-movant
to present evidence that the supposed
arbitration agreement is not valid or does
not apply to the dispute in question."'
"Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277,
280 (Ala. 2000) (quoting Jim Burke Auto., Inc. v.
Beavers, 674 So. 2d 1260, 1265 n. 1 (Ala. 1995)
(emphasis omitted))."
Vann v. First Cmty. Credit Corp., 834 So. 2d 751, 752-53 (Ala.
2002).
Discussion
"The Federal Arbitration Act, 9 U.S.C. § 1 et
seq. ('the FAA'), provides that '[a] written
provision in ... a contract evidencing a transaction
involving commerce to settle by arbitration a
controversy thereafter arising out of such contract
or transaction ... shall be valid, irrevocable, and
1071515
6
enforceable ....' 9 U.S.C. § 2. The FAA 'mandates
the arbitration of claims encompassed by an
arbitration clause that is contained in a binding
contract that involves interstate commerce.' Ex
parte Conference America, Inc., 713 So. 2d 953, 955
(Ala. 1998)."
Elizabeth Homes, L.L.C. v. Cato, 968 So. 2d 1, 3-4 (Ala.
2007).
In support of its motion to compel arbitration, Green
Tree presented a copy of the contract, which, as noted above,
contained the arbitration provision.  Additionally, Green Tree
submitted the affidavit of Robert D. Eller, a regional manager
for Green Tree, who testified regarding the effect on
interstate commerce of the transaction evidenced by the
contract.  Green Tree thus met its "'"burden of proving the
existence of a contract calling for arbitration and proving
that 
that 
contract 
evidences a 
transaction 
affecting
interstate commerce."'"  Vann, 834 So. 2d at 753 (quoting
other cases).  The burden thus shifted to White "'"to present
evidence that the supposed arbitration agreement is not valid
or does not apply to the dispute in question."'"  Id. (quoting
other cases).   
In response to the motion to compel arbitration, White
argued that no contract calling for arbitration existed
1071515
7
between Green Tree and White, that Green Tree was not a
signatory to the contract, and that the contract limited
arbitration to the signatories.  Specifically, White correctly
noted that the "definitions" portion of the contract provided
as follows: "'I,' 'me,' 'my' means the Buyer(s). 'You,' 'your'
means the Seller and also the Assignee or their affiliates
(after the Contract is assigned by Seller). The 'parties'
means the Buyer and Seller, together...."  The arbitration
provision stated that only the "parties," which White contends
does not include Green Tree, agreed to arbitration:
"The parties agree and understand that they choose
arbitration 
instead 
of 
litigation 
to 
resolve
disputes. The parties understand that they have a
right or opportunity to litigate disputes in court,
but that they prefer to resolve their disputes
through arbitration, except as provided herein. THE
PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT
THEY HAVE TO A JURY TRIAL, EITHER PURSUANT TO
ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT
ACTION BY YOU (AS PROVIDED HEREIN)."
(Capitalization in original; emphasis added.)  Thus, White
argued that she agreed to arbitrate claims only with
Southland.    
The trial court agreed, holding:
"Green Tree has failed to meet its burden of
establishing the existence of a contract between it
and Lisa White calling for arbitration. In this
1071515
8
case, the arbitration provision is specifically
applicable only to the 'parties' who executed the
Retail Installment Contract. The purchaser is Lisa
K. White. The seller is Southland Quality Homes.
Green Tree is not a 'party' to the contract. The
Retail Installment Contract limits the applicability
of the contract to the 'parties' Lisa K. White and
Southland Quality Homes. The language of the Retail
Installment Contract is not broad enough to reach
Green Tree, who is a nonsignatory. Therefore, Green
Tree is not entitled to compel arbitration of
White's claims against it by the terms of the Retail
Installment Contract."
I.
On appeal, Green Tree challenges the trial court's
holding that Green Tree could not enforce the arbitration
provision.  White reiterates the argument she presented below
and that was adopted by the trial court.
That one may be compelled to arbitrate a claim is not
necessarily premised on the fact that both participants in the
arbitration proceedings are signatories to a contract calling
for arbitration.  Specifically, this Court has held that in
numerous situations one may compel arbitration under a
contract to which it is not a party, or that one who is not a
signatory to a contract calling for arbitration must
nevertheless arbitrate his or her claims.  See, e.g., Ex parte
Stamey, 776 So. 2d 85, 89 (Ala. 2000) ("[B]oth Federal courts
1071515
9
and Alabama courts have enforced exceptions to this rule, so
as to allow a nonsignatory, and even one who is not a party,
as to a particular contract, to enforce an arbitration
provision within that same contract.").  However, "unless the
arbitration provision contains sufficiently broad language
that indicates that the nonsignatory was contemplated as a
party, we have repeatedly held that the nonsignatory lacks
'standing' to enforce the arbitration agreement."  Smith v.
Mark Dodge, Inc., 934 So. 2d 375, 380-81 (Ala. 2006).
First, Green Tree contends that, as an assignee of the
contract, it was entitled to all the rights and privileges
held by Southland under the contract.  Generally, an assignee
steps into the shoes of an assignor who was the signatory of
an arbitration provision, thus allowing the assignee to
enforce that arbitration provision.  Nissan Motor Acceptance
Corp. v. Ross, 703 So. 2d 324, 326 (Ala. 1997).  In Green Tree
Financial Corp. v. Channell, 825 So. 2d 90 (Ala. 2002), a
financial-services company, "Green Tree Financial," financed
the purchase of a mobile home.  Green Tree Financial was an
assignee of a sales contract and installment agreement between
the purchasers of the mobile home and Johnson Mobile Homes,
1071515
10
the seller of the mobile home.  The purchasers later sued
Green Tree Financial and Johnson Mobile Homes, both of which
moved to compel arbitration.  We stated:
"As an assignee, Green Tree [Financial] simply
steps into the shoes of the assignor, Johnson Mobile
Homes, a signatory to the installment agreement,
which contained the arbitration clause. See Nissan
Motor Acceptance Corp. v. Ross, 703 So. 2d 324, 326
(Ala. 1997) (citing Upchurch v. West, 234 Ala. 604,
609, 176 So. 186, 190 (1937), overruled on other
grounds, Dominex, Inc. v. Key, 456 So. 2d 1047 (Ala.
1984)). 'A valid assignment gives the assignee the
same rights, benefits, and remedies that the
assignor possesses.' 703 So. 2d at 326. Therefore,
as a result of the assignment of the installment
agreement to Green Tree [Financial], it holds the
same rights, benefits, and remedies that Johnson
Mobile Homes held under the installment agreement."
825 So. 2d at 95.  See also Ocwen Loan Servicing, LLC v.
Washington, 939 So. 2d 6, 9 (Ala. 2006) ("As a general rule,
an assignee stands in the shoes of the assignor and may
enforce an arbitration agreement entered into between the
assignor and another party.").   
White argues that parts of the arbitration provision
appear to designate that White and Southland agreed, as the
"parties" to the contract, to arbitrate disputes against each
other; White thus argues that Green Tree, even as an assignee,
was not contemplated as a party capable of enforcing
1071515
11
arbitration. However, we note that other parts of the
arbitration provision do contemplate the involvement of other
entities, including Green Tree, in arbitration.  Specifically,
in parts of the provision, Green Tree, which is included in
the definition of "you," is referenced as participating in the
arbitration process:
"All disputes, claims or controversies arising
from 
or 
relating 
to 
this 
Agreement 
or 
the
relationships which result from this Agreement ...
shall be resolved by binding arbitration by one
arbitrator selected by you with my consent. ... THE
PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT
THEY HAVE TO A JURY TRIAL, EITHER PURSUANT TO
ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT
ACTION BY YOU .... Notwithstanding anything hereunto
the contrary, you retain an option to use judicial
or non-judicial relief to enforce a security
agreement relating to the collateral secured in a
transaction underlying this arbitration agreement,
to enforce the monetary obligation or to foreclose
on the collateral. ...  The institution and
maintenance of an action for judicial relief in a
court to foreclose upon any collateral, to obtain a
monetary judgment or to enforce the security
agreement, shall not constitute a waiver of the
right of any party to compel arbitration in this
Agreement, including the filing of a counterclaim in
a suit brought by you pursuant to this provision."
Additionally, the scope of the arbitration agreement is
clearly broad enough to apply to disputes between Green Tree
and White.  Specifically, the arbitration provision specifies
that all disputes arising from or relating to the contract "or
1071515
12
the relationships which result from" the contract shall be
resolved by arbitration.  
Finally, this Court has previously noted:
"'[There is a] strong presumption in favor of
arbitration' created by the Federal Arbitration Act.
See, generally, Blue Cross Blue Shield of Alabama v.
Rigas, 923 So. 2d 1077, 1083 (Ala. 2005).  'In
interpreting an arbitration provision, "any doubts
concerning the scope of arbitrable issues should be
resolved in favor of arbitration, whether the
problem at hand is the construction of the contract
language itself or an allegation of waiver, delay,
or a like defense to arbitrability."'  The Dunes of
GP, L.L.C. v. Bradford, 966 So. 2d 924, 927 (Ala.
2007) (quoting Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24-25 (1983)) (emphasis
omitted).  Indeed, '"a motion to compel arbitration
should not be denied 'unless it may be said with
positive assurance that the arbitration clause is
not susceptible of an interpretation that covers the
asserted dispute.'"'  Id. (quoting Ex parte
Colquitt, 808 So. 2d 1018, 1024 (Ala. 2001), quoting
in turn United Steelworkers of America v. Warrior &
Gulf Navigation Co., 363 U.S. 574, 582-83 (1960))
(emphasis omitted).  'While, "as with any other
contract, the parties' intentions control, ... those
intentions are generously construed as to issues of
arbitrability."'  Carroll v. W.L. Petrey Wholesale
Co., 941 So. 2d 234, 237 (Ala. 2006) (quoting
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 626 (1985))."
Kenworth of Mobile, Inc. v. Dolphin Line, Inc., 988 So. 2d
534, 544-45 (Ala. 2008).
Although the language of the arbitration provision
defining "parties" has Southland and White agreeing to
1071515
13
arbitrate their claims, the provision also contemplates Green
Tree's participation in the arbitration process.  Further,
Green Tree, as the assignee designated in the contract, is
entitled to all the rights and privileges held by Southland
under the contract.  Finally, the scope of the arbitration
provision is broad and specifically provides for the
arbitration 
of 
disputes 
arising 
from 
or 
related 
to
relationships resulting from the contract.  Given these facts
and the broad federal policy in favor of arbitration, we
conclude that the trial court erred in holding that Green Tree
had no standing to enforce the arbitration provision.
II.
The second issue is whether, even if Green Tree could
enforce the arbitration provision, White's counterclaims were
subject to arbitration.  The trial court held that they were
not:  
"The Retail Installment Contract provides that 'all
disputes, claims, or controversies arising from or
relating to' the Retail Installment Contract between
Lisa K. White and Southland Quality Homes shall be
subject to binding arbitration. White's counterclaim
against Green Tree asserts claims for fraud on the
court, abuse of process, slander of title, outrage,
negligence and wantonness claims. The claims relate
to Green Tree's conduct following an Order from this
Court. This Court is a party to that Order and the
1071515
14
Court is an entity offended if the Order is not
obeyed. This Court does not agree to arbitrate the
claims. Claims for contempt or violation of a court
order or abuse of or disrespect for judicial
authority are not appropriate for arbitration. In re
Grant, 281 B.R. 721 (S.D. Ala. 2000)."
White contends that her counterclaims "relate to Green Tree's
conduct before the trial court" and that, under Grant v. Cole
(In re Grant), 281 B.R. 721 (S.D. Ala. 2000), claims "for
contempt or violation of a court order or abuse of or
disrespect for judicial authority are not appropriate for
arbitration."  White's brief, at 17-18.
The order to which the trial court and White refer is not
included in the record before us.  In an affidavit attached to
her motion to set aside the default judgment, White claimed
that, sometime after August 9, 2007, she appeared at a hearing
and demonstrated to the trial court that she was current on
her payments and that the trial court acknowledged or
expressed both to her and to Green Tree's counsel that White's
obligation was current.  Green Tree, on the other hand,
disputes these assertions, arguing that the record indicates
that no such hearing took place in this case and further that
no order declaring that White was current on her obligation
exists.  Instead, Green Tree suggests that White is confusing
1071515
15
the instant case with a previous action that was dismissed;
Green Tree asserts that the instant action was filed after
White had again defaulted on her payments. 
The record reveals no motion for contempt or other
request for relief premised on Green Tree's alleged violation
of the trial court's instructions and no order directing Green
Tree's conduct with respect to its collection of White's
purported debt.  
"It has long been our rule that an appellate
court may not rely on facts outside the record. ...
Moreover, a court may not ordinarily take judicial
notice of the records of another court.  See Belyeu
v. Boman, 252 Ala. 371, 373, 41 So. 2d 290, 291
(1949) (holding that the Supreme Court of Alabama
may not take judicial notice of the records of the
trial court unless those records appear in the
clerk's record or in the records of the Supreme
Court); Worthington v. Amerson, 741 So. 2d 437, 438
n.2 (Ala. Civ. App. 1999) ('Generally, a court may
not take judicial notice of the records of another
court.')."
Ex parte Jett, 5 So. 3d 640, 645-46 (Ala. 2007) (See, J.,
concurring specially).  Therefore, there is no basis for this
Court to consider White's claims as an attempt to enforce a
previous order of the trial court; instead, for all that
appears, White's counterclaims are all premised on actions
taken by Green Tree in servicing the loan and seek damages for
1071515
The trial court did not base its decision on this
3
premise; however, White raised it in her opposition to Green
Tree's motion to compel arbitration.
16
those actions.  Therefore, the trial court erred in holding
that the counterclaims were "for contempt or violation of a
court order or abuse of or disrespect for judicial authority"
and thus not appropriate for arbitration.
III.
Finally, White contends on appeal that the arbitration
provision in this case is unconscionable.3
"It is well settled that '[t]he burden of
proving 
unconscionability 
of 
an 
arbitration
agreement rests with the party challenging the
agreement.' Green Tree Fin. Corp. of Alabama v.
Vintson, 753 So. 2d 497, 504 (Ala. 1999); Briarcliff
Nursing Home, Inc. v. Turcotte, 894 So. 2d 661, 665
(Ala. 2004); see also Young v. Jim Walter Homes,
Inc., 110 F. Supp. 2d 1344, 1347 (M.D. Ala. 2000).
The party challenging the agreement must demonstrate
that '(1) [the challenged] terms ... are grossly
favorable to a party that has (2) overwhelming
bargaining power.' American Gen. Fin., Inc. v.
Branch, 793 So. 2d 738, 748 (Ala. 2000) (summarizing
the four factors set forth in Layne v. Garner, 612
So. 2d 404, 408 (Ala. 1992))."
Sloan Southern Homes, LLC v. McQueen, 955 So. 2d 401, 403
(Ala. 2006).  
White 
contends 
that 
the 
arbitration 
provision 
is
unconscionable because, she says, the terms are overly broad
1071515
17
and it "exempt[s] the defendants from the duty to arbitrate
and expressly reserv[es] the right to try to a jury their
claims."  White's brief, at 23.  However, this Court has
previously rejected similar arguments regarding similarly
worded arbitration provisions.  See, e.g., Green Tree Fin.
Corp. of Alabama v. Vintson, 753 So. 2d 497 (Ala. 1999); Green
Tree Fin. Corp. v. Wampler, 749 So. 2d 409 (Ala. 1999); and
Conseco Fin. Corp.-Alabama v. Boone, 838 So. 2d 370, 373 (Ala.
2002).   
White also argues, citing Harold Allen's Mobile Home
Factory Outlet, Inc. v. Butler, 825 So. 2d 779, 783 (Ala.
2002), that the arbitration provision is unconscionable
because, she says, Green Tree essentially has the power to
pick the arbitrator.  However, the arbitration provision held
to be unconscionable in Harold Allen's Mobile Home allowed the
seller "to select the arbitrator with no input from" the
purchaser.  825 So. 2d at 783 (emphasis added). The
arbitration provision in the instant case essentially requires
the parties to mutually agree on the arbitrator; thus, Harold
Allen's Mobile Home is clearly distinguishable.
Finally, White contends that Green Tree possessed
1071515
18
overweening bargaining power.  However, it was White's burden
to produce evidence substantiating this assertion, and no such
evidence is found in the record.  See Blue Cross Blue Shield
of Alabama v. Rigas, 923 So. 2d 1077, 1090 (Ala. 2005), and
Leeman v. Cook's Pest Control, Inc., 902 So. 2d 641, 648 (Ala.
2004).  Therefore, we conclude that White has failed to
establish that the arbitration provision in this case is
unconscionable.  
Conclusion
The trial court's order denying the motion to compel
arbitration of White's counterclaims is reversed, and the case
is remanded for further proceedings consistent with this
opinion.  
REVERSED AND REMANDED.
Cobb, C.J., and Woodall, Smith, and Parker, JJ., concur.