Case Title: Selma Medical Center, Inc. v. Manayan

Citation: 733 So. 2d 382

Docket Number: 1971845, 1972233

State: alabama

Court: Alabama Supreme Court

Date: 1999-04-23T00:00:00Z

Document:
733 So. 2d 382 (1999)
SELMA MEDICAL CENTER, INC., d/b/a Columbia Four Rivers Medical Center
v.
Conrad C. MANAYAN, D.O.
Nos. 1971845, 1972233.

Supreme Court of Alabama.
April 23, 1999.
*383 R.E. Armstrong III and Allen S. Reeves of Reeves & Stewart, P.C., Selma, for appellant.
Robert H. Brogden, Ozark, for appellee.
COOK, Justice.
Selma Medical Center, Inc., doing business as Columbia Four Rivers Medical Center ("the Hospital"), appeals from the denial of its motion to compel arbitration of a dispute between the Hospital and Conrad C. Manayan, D.O.[1] We reverse and remand.
In 1996, the Hospital and Dr. Manayan entered a contract that provided, among other things, for the Hospital to pay for Dr. Manayan to move from Pennsylvania to Selma, Alabama, and to lend Dr. Manayan money to help cover his expenses in starting a medical practice in Selma. The contract also provided that Dr. Manayan's indebtedness to the Hospital would be forgiven if he moved to Selma and practiced medicine there for three years.
The contract between the Hospital and Dr. Manayan contained the following provision:
Dr. Manayan moved to Selma, but failed to stay there for three years. He refused to repay the Hospital for the moneys it had expended on his behalf under the terms of the contract. The Hospital sued Dr. Manayan, alleging breach of contract, and it asked the trial court to order that Dr. Manayan "submit to arbitration according to the provisions of the contract." The Hospital supported its motion to compel arbitration with affidavits and a memorandum of law.
Dr. Manayan filed an "answer presenting defenses," in which he asserted the defenses of equitable estoppel and fraud in the inducement of the contract. He also counterclaimed, alleging that the Hospital had engaged in various fraudulent practices with the intent to induce him to sign the contract with the Hospital. Dr. Manayan does not allege misrepresentation or fraud with regard to the arbitration clause itself.
Dr. Manayan filed a statement in opposition to the request for arbitration, claiming that the issue whether the contract was induced by fraud was to be decided by the trial court and not by arbitration because, said Dr. Manayan, the arbitration clause *384 was not broad enough to encompass claims of fraud in the inducement of the contract itself.
The trial court denied the motion to compel arbitration, holding that the "grounds, argument, and conclusions as set out in [Dr. Manayan's] statement in opposition [are] well taken." The trial court denied the Hospital's motion to "reconsider" that ruling, and these appeals followed (see n. 1).[2]
In support of his opposition to arbitration, Dr. Manayan relied on this Court's decision in Ex parte Lorance, 669 So. 2d 890 (Ala.1995). He wrote the following in his memorandum of law addressed to the trial court:
The Hospital, however, relying on Old Republic Insurance Co. v. Lanier, 644 So. 2d 1258 (Ala.1994), contends that the trial court erred in refusing to order arbitration. The Hospital maintains that, under the holding in Lanier, the arbitration agreement here is valid and is clearly broad enough to include Dr. Manayan's claims of fraud in the inducement. We agree. We wrote in Lanier:
"On appeal, the parties do not argue that these contracts do not evidence a transaction involving interstate commerce. `Therefore, the policies and provisions of the FAA govern all questions of the validity of the arbitration agreement.' Blount Int'l, Ltd. v. James River-Pennington, Inc., 618 So. 2d 1344 (Ala.1993). The FAA `requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms.' Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478[, 109 S. Ct. 1248, 103 L. Ed. 2d 488] (1989). Whether arbitration applies to a dispute between parties `is to be determined by the contract entered into by the parties.' Drake Bakeries, Inc. v. Local 50, American Bakery & Confectionery Workers Int'l, 370 U.S. 254, 256[, 82 S. Ct. 1346, 8 L. Ed. 2d 474] (1962). Therefore, `a party cannot be required to submit to arbitration any dispute he has not agreed to submit.' A.G. Edwards & Sons, Inc. v. Clark, 558 So. 2d 358, 362 (Ala.1990). In the event of ambiguity or uncertainty over applicability of an arbitration clause, the strong Federal policy embodied in the Federal Arbitration Act requires a reviewing court to resolve any ambiguities or uncertainties in favor of arbitration. In addition, `[t]he courts are not to twist the language of the contract to achieve a result which is favored by federal policy but contrary to the interest of the parties.' Goldberg v. Bear, Stearns & Co., 912 F.2d 1418, 1419-20 (11th Cir.1990)."
644 So. 2d  at 1260 (some citations omitted).
In Lanier, the trial court denied motions to compel arbitration of agreements that contained provisions requiring arbitration of disputes "arising out of the agreements. The Lanier Court, adopting the "narrow" interpretation announced by the United States Court of Appeals for the Ninth Circuit for determining whether the FAA applied, required arbitration pursuant to the language of the arbitration provision. However, although the standard announced by the Ninth Circuit and adopted in Lanier was deemed "narrow," that standard, set out here, clearly supports a holding in this present case that the arbitration clause in the contract between Dr. Manayan and the Hospital is broad enough to require arbitration of these parties' dispute:
Lanier, 644 So. 2d  at 1262, quoting Mediterranean Enterprises, Inc. v. Ssangyong, 708 F.2d 1458, 1464 (9th Cir.1983) (emphasis added).
The arbitration clause in the contract between the Hospital and Dr. Manayan requires that the parties submit to arbitration "any dispute [that] shall arise concerning any aspect of this Agreement." This language is broader than the "arising out of language that prompted the narrow interpretation of the arbitration agreement in Lanier. Indeed, we conclude that even *386 the decision in Lorance would require arbitration in the present case, given the "concerning any aspect" language in the arbitration clause in the contract between Dr. Manayan and the Hospital:
Lorance, 669 So. 2d  at 892-93 (emphasis added).
Dr. Manayan also claims that this Court's opinion of March 20, 1998, in Investment Management & Research, Inc. v. Hamilton, supports his argument that the trial court is authorized to initially review the threshold question whether a contract containing an arbitration clause is a legally enforceable contract. According to Dr. Manayan, that opinion in Investment Management adopted the reasoning of Justice Black's dissent in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967), to the effect that if there was never a valid contract to begin with, then there is nothing to arbitrate.
In deference to the trial court, we note that at the time of its ruling, this Court had released its March 20, 1998, opinion in Investment Management, on original deliverance. However, on application for rehearing, this Court withdrew that opinion and substituted a new opinion, in which we held:
Investment Management & Research, Inc. v. Hamilton, 727 So. 2d 71, 78 (Ala.1999) (emphasis added).
The trial court erred in denying the Hospital's motion to require arbitration of the parties' dispute. Therefore, we reverse the order denying arbitration and remand the cause for an order consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and HOUSTON, SEE, LYONS, and BROWN, JJ., concur.
MADDOX, J., concurs specially.
JOHNSTONE, J., dissents.
MADDOX, Justice (concurring specially).
I write briefly to point out that I did not join the majority opinion in Old Republic Insurance Co. v. Lanier, 644 So. 2d 1258 (Ala.1994). I wrote specially in that case to express my belief that in the context of arbitration agreements the narrow interpretation of the phrase "arising out of" that the majority adopted in Lanier was inconsistent with the express federal policy in favor of arbitration. See Lanier, 644 So. 2d 1263-65 (Maddox, J., concurring in *387 the result in part and dissenting in part). I continue to hold that belief.
[1]  The denial of a motion to compel arbitration is appealable. 9 U.S.C. § 15 (Federal Arbitration Act); A.G. Edwards & Sons, Inc. v. Clark, 558 So. 2d 358 (Ala.1990). These appeals are from the trial court's order denying the Hospital's motion to arbitrate (case no. 1971845), and from the trial court's order denying the Hospital's motion to amend the order denying arbitration (case no. 1972233).
[2]  Dr. Manayan and the Hospital do not dispute that the contract involves interstate commerce.