Case Title: Capitol Chevrolet & Imports, Inc. v. Payne

Citation: 876 So. 2d 1106

Docket Number: 1021027

State: alabama

Court: Alabama Supreme Court

Date: 2003-09-12T00:00:00Z

Document:
876 So. 2d 1106 (2003)
CAPITOL CHEVROLET & IMPORTS, INC.
v.
Jean A. PAYNE.
1021027.

Supreme Court of Alabama.
September 12, 2003.
Robert A. Huffaker and R. Austin Huffaker, Jr., of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for appellant.
John T. Alley, Jr., Montgomery, for appellee.
*1107 HOUSTON, Justice.
Capitol Chevrolet & Imports, Inc. ("Capitol"), appeals the Montgomery Circuit Court's denial of its motion to compel arbitration. We affirm.
On September 6, 2001, the plaintiff, Jean A. Payne, purchased a used 1997 Cadillac Catera automobile from Capitol. Capitol financed the purchase of the Catera, and both Payne and Capitol signed a "Retail Installment Sale Contract" and an accompanying arbitration agreement.[1] The arbitration agreement provided, in pertinent part:
In September 2002, Payne sued Capitol and a Capitol salesperson, Jason Golden, alleging fraud and conversion. According to Payne's complaint, approximately one month after she purchased the Catera, she returned the Catera to Capitol in reliance on Golden's representation that Capitol had a willing buyer for the vehicle. Payne relinquished possession of the Catera to Capitol and stopped making payments on the car. Payne alleged that Golden, while acting in the line and scope of his employment with Capitol, misrepresented to her that Capitol had a buyer for the Catera, and that, when Payne relinquished *1108 the Catera to Capitol in reliance on that misrepresentation, Golden converted the Catera for his personal use. Payne's complaint alleged that, as a result of the misrepresentation, she lost the use of her vehicle, suffered severe mental anguish, and suffered an adverse credit rating once she stopped making payments on the Catera.
Capitol moved to compel arbitration based on the arbitration agreement Payne signed when she purchased the Catera. Payne, however, argued that her claims, which alleged fraud and conversion, were outside the scope of the arbitration agreement. The circuit court issued the following written order denying Capitol's motion to compel arbitration:
Capitol appealed.
We have recently summarized our standard of review of a denial of a motion to compel arbitration:
Orkin Exterminating Co. v. Larkin, 857 So. 2d 97, 101 (Ala.2003).
On appeal, Capitol argues that because Payne's claims concern the Catera and the financing for the Catera, her claims fall squarely within the scope of the arbitration agreement. Capitol notes that Payne's complaint alleges that, in reliance on Capitol's misrepresentations, Payne *1109 stopped making payments on the note pursuant to which she purchased the Catera, which in turn had a negative effect on her credit rating. Capitol argues that because any credit rating arose from the financing associated with Payne's purchase of the Catera, Payne's claims clearly fall within the scope of the arbitration agreement, which states that "all disputes between [Payne and Capitol] concerning the vehicle, its sale, lease or financing" are to be resolved by binding arbitration. (Emphasis added.) We disagree.
TransSouth Fin. Corp. v. Bell, 739 So. 2d 1110, 1114 (Ala.1999). "If the party moving to compel arbitration fails to make such a showing, the burden of proof does not shift to the opposing party and the motion should be denied." Ex parte Greenstreet, Inc., 806 So. 2d 1203, 1207 (Ala.2001).
In reviewing arbitration provisions, we apply general state-law contract principles. Southern Foodservice Mgmt., Inc. v. American Fid. Assurance Co., 850 So. 2d 316, 319 (Ala.2002).
Ex parte Discount Foods, Inc., 789 So. 2d 842, 844 (Ala.2001).
In Kenworth of Dothan, Inc. v. Bruner-Wells Trucking, Inc., 745 So. 2d 271, 275 (Ala.1999), we noted that, when reviewing whether a dispute is sufficiently related to a contract containing a broadly drafted arbitration agreement so as to be covered under the scope of that agreement, there must be "some legal and logical nexus between the source of the dispute and the arbitration provision at issue." Kenworth, 745 So. 2d  at 275-76. In the present case, we find no such nexus.
While the present action does, in some sense, "aris[e] from... any of the negotiations involved in the sale ... of the vehicle"  Payne obtained possession of the allegedly converted Catera as a result of the initial sale  a fair reading of the arbitration agreement signed by Payne and Capitol leads to the conclusion that the agreement covers only disputes that more closely relate to the initial purchase and financing of the Catera, and the negotiations and sale of other services incident to the initial sale of the Catera. The arbitration agreement states that it covers disputes
We do not believe that the plain language of the arbitration agreement would lead one to assume or understand that the agreement covered the claims alleged in Payne's complaint  a later fraudulent misrepresentation, unrelated to the original sale of the vehicle, resulting in the conversion of the vehicle. The present dispute involves alleged subsequent tortious conduct on the part of Capitol and its agent that is not close enough in relation to the initial sale of the Catera to be covered by the language of the arbitration agreement. Accordingly, we find that Capitol did not meet its burden in proving the existence of a contract calling for arbitration of the dispute now before us.
Because we find that Capitol did not meet its burden in proving the existence of a contract calling for arbitration of the present dispute, the Montgomery Circuit Court's order denying Capitol's motion to compel arbitration is affirmed.
AFFIRMED.
LYONS, BROWN, HARWOOD, WOODALL, and STUART, JJ., concur.
JOHNSTONE, J., concurs in part and concurs in the judgment.
SEE, J., dissents.
JOHNSTONE, Justice (concurring in part and concurring in the judgment).
I concur except that I express no opinion on the dictum in footnote 1 to the effect that the typed name of Capitol Chevrolet constitutes a proper "signature" on the arbitration agreement.
SEE, Justice (dissenting).
I respectfully dissent from the majority's affirmance of the trial court's denial of Capitol's motion to compel arbitration. The arbitration agreement provided in part: "Without limiting the generality of the foregoing, it is the intention of the buyer/lessee and the dealer to resolve by binding arbitration all disputes between them concerning the vehicle, its sale, lease or financing." It is certainly possible to construe this language to limit the scope of the arbitration agreement to the initial sale of the vehicle; however, it is also reasonable to construe the language in the arbitration agreement  "all disputes between them concerning the vehicle, its sale, lease or financing"  to apply to any sale of the vehicle.
The question of arbitrability is "`an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.'" Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002)(quoting AT & T Techns., Inc. v. Communications Workers, 475 U.S. 643, 649, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986)). The arbitration agreement Payne signed provides that "any question regarding whether a particular controversy is subject to arbitration shall be decided by the Arbitrator." This Court has held that where the contract specifies that the arbitrator is to resolve questions of arbitrability, a trial court's denial of a motion to compel arbitration based upon whether a claim is subject to *1111 arbitration is improper. Capitol Chevrolet & Imports, Inc. v. Grantham, 784 So. 2d 285 (Ala.2000). In Grantham, the arbitration agreement contained the same language regarding the threshold question of arbitrability, and this Court held that the language "clearly provided" that the question of arbitrability would be determined by an arbitrator. Because the question of arbitrability should be decided by an arbitrator as provided in the arbitration agreement, I respectfully dissent.
[1]  The "Retail Installment Sale Contract" provided that "[t]his contract contains the entire agreement between you and us relating to this contract.... Any change to the contract must be in writing and we must sign it." On appeal, Payne argues that because the arbitration agreement signed by her was a separate document that was not signed by Capitol or referenced in the "Retail Installment Sale Contract," the arbitration agreement is not enforceable. However, because Payne raises this argument for the first time on appeal, we need not address it. See Owens v. National Bank of Commerce, 608 So. 2d 390, 391 (Ala.1992). We do note, however, that the typed name "Capitol Chevrolet & Imports, Inc.," which appears on the signature line for the "Seller/Lessor/Dealer," constitutes a proper "signature." Anderson Bros. Chrysler Plymouth Dodge, Inc. v. Hadley, 720 So. 2d 895 (Ala.1998).