Case Title: The Dunes of GP, L.L.C. v. Virginia Bradford

Citation: 

Docket Number: 1051501

State: alabama

Court: Alabama Supreme Court

Date: 2007-04-13T00:00:00Z

Document:
REL:4/13/2007 The Dunes v. Bradford
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)
242-4621), 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, 2006-2007
____________________
1051501
____________________
The Dunes of GP, L.L.C.
v.
Virginia Bradford
Appeal from Baldwin Circuit Court 
(CV-05-1454)
SMITH, Justice.
The Dunes of GP, L.L.C. ("The Dunes"), appeals from the
trial court's denial of its motion to compel arbitration of an
action against it filed by Virginia Bradford.  We affirm.
1051501
2
Facts and Procedural History
In June 2004, Bradford entered into a preconstruction
"purchase agreement" with The Dunes to buy a condominium unit
in a development in Gulf Shores known as The Dunes
Condominiums.  The purchase agreement contained the following
arbitration provision:  
"Purchaser and Seller agree that all disputes
between the parties which arise or remain unresolved
after the closing shall be resolved by binding
arbitration in accordance with Ala. Code Section
6-6-1, et seq., and the Resolution Resources
Corporation Rules for Arbitration, as in effect on
the date of the recordation of the Declaration. The
decision of the arbitrator shall be final and the
arbitrator shall have authority to award attorney's
fees and allocate the costs of arbitration as part
of any final award."
Bradford tendered $31,500 as an "initial earnest money
deposit"; the earnest money was deposited with Gulf Shores
Title Company, Inc. ("Gulf Shores Title").
For reasons unclear from the record, Bradford and The
Dunes never closed on the transaction.  Subsequently, both
Bradford and The Dunes sought to obtain the $31,500 in earnest
money deposited with Gulf Shores Title.
On December 12, 2005, Gulf Shores Title filed an action
interpleading Bradford and The Dunes and seeking a judgment
1051501
3
declaring which of them was the rightful owner of the $31,500.
The Dunes answered and filed a cross-claim against Bradford,
asserting that it was entitled to the $31,500.  Bradford filed
an answer, a cross-claim against The Dunes, and a third-party
complaint 
against 
various 
parties, 
seeking 
specific
performance of the purchase agreement and damages for breach
of contract, fraud, civil conspiracy, and unjust enrichment.
On April 13, 2006, The Dunes filed a motion to compel
Bradford to submit her claims against it to arbitration
pursuant to the arbitration provision in the purchase
agreement.  Bradford filed a response, and the trial court
held a hearing on the motion.  On June 13, 2006, the trial
court denied The Dunes' the motion.  The Dunes appeals. 
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
1051501
4
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
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).
1051501
5
In support of its motion to compel arbitration, The Dunes
submitted a copy of the purchase agreement, which contains the
arbitration 
provision, 
along 
with 
various 
documentary 
evidence
establishing that the transaction that formed the basis for
the 
purchase 
agreement 
involved 
interstate 
commerce.
Therefore, the burden then shifted to Bradford to produce
evidence indicating that the arbitration agreement was not
valid or that it did not apply to the dispute in question.
Bradford argues that the language of the arbitration
provision limits its scope to either disputes that arise after
the closing of the transaction or disputes that remain
unresolved after the closing.  Bradford testified in a
affidavit opposing the motion to compel that because the
parties never closed on the purchase of the condominium, the
arbitration provision does not apply because the triggering
event--the closing--never occurred.  Bradford argues that she
does not contest the validity of the arbitration provision;
instead, she contends that by its language it simply does not
apply to the dispute in question.   The Dunes, on the other
hand, argues that the arbitration provision covers disputes
that arise before the closing. 
1051501
6
 
"'"Agreements to arbitrate are essentially
creatures of contract," and ordinary contract rules
govern 
the 
interpretation 
of 
arbitration
provisions.' Orkin Exterminating Co. v. Larkin, 857
So. 2d 97, 103 (Ala. 2003) (quoting Blount Int'l,
Ltd. v. James River-Pennington, Inc., 618 So. 2d
1344, 1346 (Ala. 1993)). 'When interpreting a
contract, a court should give the terms of the
contract their clear and plain meaning and should
presume that the parties intended to do what the
terms of the agreement clearly state.' Brewbaker
Motors, Inc. v. Belser, 776 So. 2d 110, 112 (Ala.
2000). Additionally, this Court will interpret the
terms of a contract to give 'effect to all terms
used.' Sullivan, Long & Hagerty v. Southern Elec.
Generating Co., 667 So. 2d 722, 725 (Ala. 1995). See
also Board of Water & Sewer Comm'rs of Mobile v.
Bill Harbert Constr. Co., 870 So. 2d 699, 710 (Ala.
2003) ('The law is settled that this Court is bound
to construe contracts so as to give meaning to all
provisions whenever possible.').
"The 
duty 
to 
arbitrate 
is 
a 
contractual
obligation, and 'a party cannot be required to
arbitrate any dispute that he or she has not agreed
to submit to arbitration.' [Georgia Power Co. v.
Partin, 727 So. 2d 2, 5 (Ala. 1998)]."
Medical Servs., LLC v. GMW & Co., [Ms. 1041753, December 15,
2006] __ So. 2d ___, ___ (Ala. 2006).  
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."  Moses
1051501
7
H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24-25 (1983) (emphasis added).  "Thus, 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.' United Steelworkers of America v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582-83, 80 S. Ct. 1347, 4 L. Ed.
2d 1409 (1960)."  Ex parte Colquitt, 808 So. 2d 1018, 1024
(Ala. 2001) (emphasis added).
The Dunes' argument is as follows:
"While the mandatory binding arbitration clause
in the present contract is not artfully drafted, the
doubt regarding its scope must be construed in favor
of arbitration. A practical interpretation of the
arbitration provision is that the provision was
meant to govern disputes arising both before and
after the closing. Specific performance is an
obvious claim likely to arise out of a contract for
the sale of real estate. It is unlikely that a
seller would agree to arbitration but exclude
specific performance from arbitration."
The Dunes' brief at 6.
Other than this paragraph, The Dunes does not explain how
the language of the arbitration provision requires this
"practical interpretation."  In any event, in construing a
contract, 
this 
Court 
looks 
not 
for 
"a 
practical
1051501
8
interpretation," but to the intention of the parties.  "The
intention of the parties controls in construing a written
contract and the intention of the parties is to be derived
from the contract itself, where the language is plain and
unambiguous."  Loerch v. National Bank of Commerce of
Birmingham, 624 So. 2d 552, 553 (Ala. 1993).
By 
its 
terms, 
the 
arbitration 
provision 
here 
is
applicable to "all disputes between the parties which arise or
remain unresolved after the closing."  In order to accept The
Dunes' argument that the arbitration provision covers the
dispute in this case, we must interpret this phrase to mean
that both (1) disputes that "arise" at any time and (2)
disputes that "remain unresolved after closing" must be
submitted to arbitration.  Bradford, however, argues that the
plain language of the provision indicates that it applies to
(1) disputes that "arise" after closing and (2) disputes that
"remain unresolved" after closing.  In other words, Bradford
would have the phrase "after closing" modify both the words
"arise" and "remain unresolved."
Normally, doubt regarding the scope of an arbitration
provision would require this Court to construe the provision
1051501
9
in favor of arbitration.  See Moses H. Cone Mem'l Hosp.,
supra; Colquitt, supra.  However, in construing a contract, we
must give effect and meaning to all its terms and provisions,
whenever possible.  Medical Servs., ___ So. 2d at ___;
Sullivan, Long & Hagerty v. Southern Elec. Generating Co., 667
So. 2d 722, 725 (Ala. 1995); and Board of Water & Sewer
Comm'rs of Mobile v. Bill Harbert Constr. Co., 870 So. 2d 699,
710 (Ala. 2003).  To read the arbitration provision to apply
to those disputes that "arise" and also to separate disputes
that "remain unresolved after closing" would render the second
description unnecessary.  Specifically, if parties must
arbitrate all disputes that "arise," then the parties must
necessarily arbitrate disputes that "remain unresolved after
closing" because such disputes have already arisen and are
subject to arbitration.  Thus, the phrase describing disputes
that "remain unresolved" would be superfluous.  
We must instead read the phrase to give all of its terms
meaningful operation.  Therefore, the phrase "after closing"
must apply to or "modify" both disputes that arise after
closing and disputes that remain unresolved after closing.
1051501
10
This interpretation gives meaning to the all the terms in the
arbitration provision.
The Dunes argues that paragraph 2.b. of the purchase
agreement, which provides, in part, that the "holder" of the
earnest money "shall disburse Earnest Money only as follows
... upon order of a court or arbitrator having jurisdiction
over any dispute involving the Earnest Money...," indicates
that the purchase agreement "contemplates" that an arbitrator
would be involved in a dispute involving the earnest money.
The Dunes raises this argument for the first time in its reply
brief; therefore, it is not properly before us.  See Byrd v.
Lamar, 846 So. 2d 334, 341 (Ala. 2002) (noting the "settled
rule that this Court does not address issues raised for the
first time in a reply brief").
Because the closing has not taken place, the arbitration
provision is not applicable to the dispute between the
parties.  Therefore, the trial court did not err in denying
The Dunes' motion to compel arbitration. 
AFFIRMED.
Cobb, C.J., and See, Woodall, and Parker, JJ., concur.