Case Title: Ace Title Loan, Inc. v. James Michael Crump and Denise Littleton, as Bankruptcy Trustee

Citation: 

Docket Number: 1050246

State: alabama

Court: Alabama Supreme Court

Date: 2009-01-16T00:00:00Z

Document:
rel: 01/16/2009 
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, 2008-2009
____________________
1050246
____________________
Ace Title Loan, Inc.
v.
James Michael Crump and Denise Littleton, as bankruptcy
trustee
Appeal from Mobile Circuit Court 
(CV-04-748)
PARKER, Justice.
Ace Title Loan, Inc. ("Ace"), appeals from a judgment of
the Mobile Circuit Court awarding the plaintiffs, James
Michael Crump and Crump's bankruptcy trustee, Denise Littleton
1050246
2
(hereinafter referred to collectively as "Crump"), $50,000 in
compensatory damages and $25,000 in  punitive damages. The
judgment was based on an arbitration award on James's assault-
and-battery claim against Ace based on the action of Ace's
repossession agents. Ace challenges the arbitrator's findings
and the award, asserting  that the arbitrator ignored Ace's
valid defense of judicial estoppel and that he violated
procedure by improperly recognizing that both the bankruptcy
trustee and James could be plaintiffs.
Background and Procedural Posture 
On November 19, 2002, two agents of Ace appeared at
James's residence to repossess from James's yard the
collateral for a loan James had negotiated with Ace.  During
the course of the repossession, the agents allegedly assaulted
James.  According to James's complaint, the attack "involved
physical beating, cuts and bruises, pain and suffering,
embarrassment, and humiliation, with the beating occurring in
full view of [James's] young daughter." It is undisputed that
James was in default on the loan and that the  repossession
was proper, but James claims that the repossession was
improperly executed. 
1050246
The bankruptcy trustee was added as a plaintiff during
1
the arbitration proceeding. See infra.
3
On March 19, 2004, James sued Ace and its agents, seeking
compensatory damages, punitive damages, and costs. Ace
answered, denying liability and stating that the action should
be stayed and that James should be ordered to submit the
dispute to binding arbitration pursuant to the "pawn
agreement," the contract under which the action arises. Ace
followed its answer on May 6, 2004, with a motion to stay and
to submit the dispute to arbitration. James opposed the
motion, and Ace filed its response on May 27, 2004, again
arguing that the dispute should be submitted to binding
arbitration. On February 4, 2005, the trial court issued its
order compelling James to arbitrate the dispute. The
arbitrator ruled in favor of Crump,  and Ace now appeals from
1
the judgment of the trial court adopting the arbitrator's
report and award.
In the Arbitration
The arbitration was held on September 29, 2005. The
arbitration, and hence this appeal, was complicated by the
fact that after the assault but before James filed the legal
action based on the assault, James filed a petition in
1050246
Although Ace's summary-judgment motion was denied, Ace
2
makes no argument in its brief on appeal regarding that
denial. Accordingly, for reasons presented infra, that issue
is not before this Court.
4
bankruptcy under Chapter 7 of the Bankruptcy Code. He failed
to list as a contingent or unsecured claim in his bankruptcy
petition the potential recovery in this action, and he did not
report the existence of his claim until Ace moved the
arbitrator for a summary judgment  based on the doctrine of
2
judicial estoppel, arguing that James's failure to mention the
claim in his bankruptcy proceeding, which had been finalized,
precluded his pursuing the claim. James  then proceeded to
reopen his bankruptcy proceeding on June 15, 2004, and
Littleton, 
the 
bankruptcy 
trustee, 
was 
added 
to 
the
arbitration proceeding as a plaintiff. Crump's brief, at 1-2.
The "Arbitration Judgment and Award," dated October 6,
2005, awarded Crump $50,000 in compensatory damages and
$25,000 in punitive damages. The trial court entered its final
judgment on October 21, 2005, adopting the arbitrator's award
and incorporating it into its order. Ace filed its notice of
appeal on November 15, 2005.
On Appeal
Ace appeals the trial court's order incorporating the
1050246
5
arbitrator's judgment, arguing that the arbitrator's award is
flawed because (1) its defense of judicial estoppel was
improperly denied; (2) the bankruptcy trustee, a party over
whom, Ace says, the arbitrator lacked personal jurisdiction,
was impermissibly added as a party to the arbitration
proceeding; (3) James was impermissibly retained as a party
once the trustee was added as a plaintiff; and (4) the
arbitrator failed to limit the award to the amount of the
claims of the unsecured creditors in James's bankruptcy
proceeding. 
Crump answers, alleging that Ace's appeal should be
dismissed as untimely filed and arguing that the arbitrator
was correct on each issue raised on appeal. For the reasons
presented below we pretermit discussion of the issues
presented and remand the cause for further proceedings in the
trial court.
Standard of Review
Our standard of review for an appeal from a trial court's
order confirming an arbitration award is as follows:
"'"Where parties, as in this case,
have agreed that disputes should go to
arbitration, the role of the courts in
reviewing the arbitration award is limited.
1050246
6
Transit 
Casualty 
Co. 
v. 
Trenwick
Reinsurance 
Co., 
659 
F. 
Supp. 
1346
(S.D.N.Y. 1987), affirmed, 841 F.2d 1117
(2d Cir. 1988); Saxis Steamship Co. v.
Multifacs International Traders, Inc., 375
F.2d 577 (2d [Cir.] 1967). On motions to
confirm or to vacate an award, it is not
the function of courts to agree or disagree
with the reasoning of the arbitrators.
Application of States Marine Corp. of
Delaware, 127 F. Supp. 943 (S.D.N.Y. 1954).
Courts are only to ascertain whether there
exists one of the specific grounds for
vacation of an award. Saxis Steamship Co.
A court cannot set aside the arbitration
award just because it disagrees with it; a
policy allowing it to do so would undermine
the federal policy of encouraging the
settlement of disputes by arbitration.
United 
Steelworkers 
of 
America 
v.
Enterprise Wheel & Car Corp., 363 U.S. 593,
80 S. Ct. 1358, 4 L. Ed.2d 1424 (1960);
Virgin 
Islands 
Nursing 
Association's
Bargaining Unit v. Schneider, 668 F. 2d 221
(3d Cir. 1981). An award should be vacated
only where the party attacking the award
clearly establishes one of the grounds
specified [in 9 U.S.C. § 10]. Catz American
Co. v. Pearl Grange Fruit Exchange, Inc.,
292 F. Supp. 549 (S.D.N.Y. 1968)."'
"R.P. Industries, Inc. v. S & M Equipment Co., 896
So. 2d [460,] 464 [(2004)](quoting Maxus, Inc. v.
Sciacca, 598 So. 2d 1376, 1380-81 (Ala. 1992)). The
standard by which an appellate court reviews a trial
court's order confirming an arbitration award under
the Federal Arbitration Act is that questions of law
are reviewed de novo and findings of fact are
reviewed only for clear error. See Riccard v.
Prudential Ins. Co., 307 F.3d 1277, 1289 (11th Cir.
2002)."
1050246
Rules 71B and 71C, Ala. R. Civ. P., were adopted, Rule
3
4(e), Ala. R. App. P., was adopted, and Rule 4(a)(1), Ala.
R. App. P., was amended, all effective February 1, 2009, in
response to Horton Homes, to clarify the procedure for
taking an appeal from an arbitrator's award.
7
Hereford v. D.R. Horton, Inc., [Ms. 1070398, Jan. 9, 2009] ___
So. 2d ___, ___ (Ala. 2009).
Necessity of Challenge in the Circuit Court
A challenge to an arbitration award is a prerequisite to
an appeal. As we said in Horton Homes, Inc. v. Shaner, [Ms.
1061659, June 20, 2008] ___ So. 2d ___ (Ala. 2008):3
"The judgment entered by the circuit clerk on
the arbitrator's award pursuant to § 6-6-15[, Ala.
Code 1975,] is a conditional one; it does not become
a final appealable judgment until the circuit court
has had an opportunity to consider a motion to
vacate filed by a party seeking review of the
arbitration award. A party seeking review of an
arbitration award is required to file a motion to
vacate 
during 
this period--while the judgment
entered by the circuit clerk remains conditional--in
order to preserve its ability to later prosecute
that appeal to an appellate court once the judgment
becomes final. This is so not only because § 6-6-15
contemplates a party's first seeking relief from an
award in the circuit court, but also because '[a]ny
grounds not argued to the trial court, but urged for
the first time on appeal, cannot be considered.'
Lloyd Noland Hosp. v. Durham, 906 So. 2d 157, 165
(Ala. 2005)."
___ So. 2d at ___.
Here, the record bears no evidence that such a motion was
1050246
8
filed. A similar situation existed when Horton Homes was
decided. Horton Homes, relying on this Court's decision in H&S
Homes, L.L.C. v. McDonald, 910 So. 2d 79 (Ala. 2004), holding
that a Rule 59(e), Ala. R. Civ. P., motion to vacate the award
was not required before an arbitration award could be
appealed, did not challenge the arbitration award in the
circuit court, but timely filed its notice of appeal. In
considering this failure in Horton Homes, this Court reviewed
and then overruled McDonald, noting that a judgment on an
arbitrator's award does not become a final appealable judgment
"until the circuit court has had an opportunity to consider a
motion to vacate." ___ So. 2d at ___. We then held:
"Because the failure ... to file a motion to
vacate the award with the circuit court was
presumably in reliance on McDonald, it would hardly
be just to deny relief in their appeals on that
basis. For that reason, we now reverse the final
judgment resulting from the passage of 10 days from
the circuit clerk's entry of a conditional judgment,
leaving in place the conditional judgment, and
remand the cause for [the appellants] to file
motions to vacate the award with the circuit court
within 30 days of the date of this opinion. If,
within the following 90 days, the circuit court
denies those motions or otherwise allows the
conditional judgment entered by the circuit clerk to
become final by default, [the appellants] may engage
in further appellate proceedings that permit us to
review the circuit court's action with new briefs
and a record that includes grounds asserted in any
1050246
9
subsequently filed motions to vacate."
___ So. 2d at ___. Here, because Horton Homes was decided
after Ace had  filed its notice of appeal, the same reliance
on McDonald may have influenced Ace's decision to appeal
without filing a motion in the circuit court to vacate the
judgment. Consequently, it would be unjust to deny Ace's
appeal on that basis, and we, therefore, reverse the circuit
court's judgment and remand the case to afford Ace the
opportunity to present its motion to vacate the judgment in
the circuit court. 
REVERSED AND REMANDED.
Cobb, C.J., and See, Woodall, and Smith, JJ., concur.