Case Title: Regions Bank v. Rice

Citation: 

Docket Number: 1141154

State: alabama

Court: Alabama Supreme Court

Date: 2016-05-27T00:00:00Z

Document:
Rel: 05/27/2016
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
OCTOBER TERM, 2015-2016
____________________
1141154
____________________
Regions Bank
v.
Mary N. Rice
Appeal from Madison Circuit Court
(CV-15-900371)
BRYAN, Justice.
Regions Bank ("Regions") appeals from an order of the
Madison 
Circuit 
Court 
denying 
its 
motion 
to 
compel
arbitration.  We reverse and remand.  
1141154
In October 2011, Mary N. Rice opened both a savings
account and a checking account with Regions.  Rice opened each
account by signing a one-page signature card indicating that
she was agreeing to certain terms.  Among other things, the
signature cards provide: "By signing below, I ... (a) agree to
be bound by the terms of [Regions'] Deposit Agreement ...
[and] (b) acknowledge receipt of a copy of the applicable
Deposit Agreement."  The deposit agreement referenced by the
signature cards contains a broad arbitration provision giving
either party the option of arbitrating "any controversy,
claim, counterclaim, dispute or disagreement" between them. 
The arbitration provision also contains a provision ("the
delegation provision") requiring an arbitrator to decide any
threshold dispute regarding the arbitrability of a particular
controversy.
In March 2015, Rice sued Regions, alleging that Regions
was liable for a fall she suffered on Regions' premises. 
Regions filed a motion to compel arbitration, citing the
arbitration provision in the deposit agreement.  Rice opposed
the motion to compel arbitration, arguing that her claim is
not arbitrable.  Specifically, Rice argued that her claim is
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1141154
beyond the scope of the arbitration provision.  She also
argued that the arbitration provision is invalid, void, or
unenforceable because, she said, she did not have an
opportunity to read the arbitration provision before she
signed the signature cards, the signature cards 
"included" 
the
arbitration provision by reference rather than including it 
in
the document she signed, and the arbitration provision is
unconscionable.  In response, Regions argued that, under the
delegation provision, an arbitrator must decide the threshold
issues 
of 
arbitrability 
raised 
by 
Rice 
in 
opposing
arbitration.  Regions also addressed the merits of Rice's
argument regarding arbitrability, arguing that her claim
against it is arbitrable.  
The trial court denied the motion to compel arbitration,
without stating a reason.  Regions appealed pursuant to Rule
4(d), Ala. R. App. P., which authorizes an appeal from an
order either granting or denying a motion to compel
arbitration.  Rice did not file a brief on appeal.  We review
de novo the denial of the motion to compel arbitration. 
Bennett v. Skinner, 98 So. 3d 1140, 1142 (Ala. 2012).  
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1141154
Before the trial court, the parties disputed the validity
and scope of the arbitration provision; initially, we must
determine the "gateway" issue of "who decides" those
arbitrability issues –– the trial court or the arbitrator.
This Court has explained the general rule regarding such
gateway issues of arbitrability:
"'In ruling on a motion to stay
judicial proceedings following a request
for arbitration, the court is required to
decide 
matters 
of 
"substantive
arbitrability," that is, (1) whether a
valid agreement to arbitrate exists and, if
so, (2) whether the specific dispute falls
within the scope of that agreement.  Dean
Witter [Reynolds, Inc. v. McDonald], 758
So. 
2d 
[539,] 
542 
[(Ala. 
1999)].
"Procedural arbitrability," on the other
hand, involves questions that grow out of
the 
dispute 
and 
bear 
on 
its 
final
disposition, 
e.g., 
defenses 
such 
as 
notice,
laches, 
estoppel, 
and 
other 
similar
compliance 
defenses; 
such 
questions 
are 
for
an arbitrator to decide.  See Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79,
84, 123 S. Ct. 588, 154 L. Ed. 2d 491
(2002) 
("'"procedural" 
questions 
which 
grow
out of the dispute and bear on its final
disposition are presumptively not for the
judge, but for an arbitrator, to decide'");
John Wiley & Sons, Inc. v. Livingston, 376
U.S. 543, 84 S. Ct. 909, 11 L. Ed. 2d 898
(1964)(holding that an arbitrator should
decide whether the steps of a grievance
procedure 
were 
completed, 
where 
those 
steps
were prerequisites to arbitration).'
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1141154
"Brasfield & Gorrie, L.L.C. v. Soho Partners,
L.L.C.,  35 So. 3d 601, 604-05 (Ala. 2009).  To
clarify, we note that the United States Supreme
Court has referred to questions of 'substantive
arbitrability' 
as 
simply 
'questions 
of
arbitrability' 
and 
questions 
of 
'procedural
arbitrability' as 'procedural questions.'  Howsam,
537 U.S. at 83."
Anderton v. Practice-Monroeville, P.C., 164 So. 3d 1094, 1101
(Ala. 2014). 
Thus, disputes regarding the validity and scope of an
arbitration provision (like the dispute here) are issues of
substantive arbitrability, and generally such issues are
decided by a court.  However, there is an important exception
to that general rule.  Gateway questions of substantive
arbitrability may be delegated to the arbitrator if the
delegation is clear and unmistakable.  First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (citing AT&T
Techs., Inc. v. Communications Workers of America, 475 U.S.
643, 649 (1986)); see, e.g., Anderton, 164 So. 3d at 1100-02
(applying such a delegation provision); and Federal Ins. Co.
v. Reedstrom, [Ms. 1141153, December 18, 2015] ___ So. 3d ___,
___ (Ala. 2015) (same).  The United States Supreme Court has
long recognized that parties may agree to such a delegation
provision, which is severable from the underlying 
agreement to
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1141154
arbitrate.  Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
68-69, 78-79 (2010).  "[P]arties can agree to arbitrate
'gateway' questions of 'arbitrability,' such as whether the
parties have agreed to arbitrate or whether their agreement
covers a particular controversy."  Rent-A-Center, 561 U.S. at
68-69. 
Succinctly 
stated, 
questions 
of 
substantive
arbitrability are decided by a court unless the parties
clearly and unmistakably provide otherwise.
If the parties have clearly and unmistakably delegated
questions of substantive arbitrability to the arbitrator, the
court's role is narrow.  If a party challenges the validity of
the delegation provision itself, the court "must consider the
challenge before ordering compliance with" the delegation
provision.  Rent-A-Center, 561 U.S. at 71.  However, "unless
[a party] challenged the delegation provision specifically,
[the court] must treat it as valid ... and must enforce it ...
leaving any challenge to the validity of the [arbitration]
Agreement as a whole for the arbitrator."  561 U.S. at 72. 
Because a delegation provision is severable from the other
contract provisions, it will be enforced unless it is
specifically challenged.  561 U.S. at 71-72 (enforcing a
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1141154
delegation provision when there was no specific challenge to
that provision but a challenge to the entire arbitration
provision on the ground of unconscionability).
In this case, the delegation provision clearly and
unmistakably delegates questions of substantive arbitrability
to the arbitrator.  The delegation provision states: "Any
dispute regarding whether a particular controversy is subject
to arbitration, including any claim of unconscionability and
any dispute over the enforceability, scope, reach or validity
of this agreement to arbitrate disputes or of this entire
Agreement, shall be decided by the arbitrator(s)."  Regions
invoked the delegation provision after Rice argued that her
claim is not arbitrable.  Although Rice challenged the
validity of the arbitration provision as a whole, she has not
specifically challenged the delegation provision.  Because
Rice 
has 
not 
"challenged 
the 
delegation 
provision
specifically, [the court] must treat it as valid ... and must
enforce it ... leaving any challenge to the validity of the
[arbitration provision] as a whole for the arbitrator."  Rent-
A-Center, 561 U.S. at 72.  Pursuant to the delegation
provision, the arbitrator must resolve the disputed issue 
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1141154
whether Rice's claim is arbitrable under the arbitration
provision.  
Accordingly, the trial court erred in denying the motion
to compel arbitration.  We therefore reverse the order and
remand the case for further proceedings consistent with this
opinion.  
REVERSED AND REMANDED.
Stuart, Bolin, Parker, Shaw, Main, and Wise, JJ., concur.
Murdock, J., dissents.
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1141154
MURDOCK, Justice (dissenting).
I respectfully dissent.  See Federal Ins. Co. v.
Reedstrom, [Ms. 1141153, Dec. 18, 2015] ___ So. 3d ___, ___
(Ala. 
2015) 
(Murdock, 
J., 
dissenting); 
Anderton 
v.
Practice-Monroeville, P.C., 164 So. 3d 1094, 1103 (Ala. 2014)
(Murdock, J., dissenting).
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