Title: Carroll v. Castellanos

State: alabama

Issuer: Alabama Supreme Court

Document:

REL: March 22, 2019
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, 2018-2019
____________________
1170197
____________________
William R. Carroll, M.D., et al.
v.
Paul F. Castellanos, M.D.
Appeal from Jefferson Circuit Court
(CV-17-904011)
MENDHEIM, Justice.
William R. Carroll, M.D., Loring Rue, M.D., and Gustavo
R. Heudebert, M.D. (hereinafter referred to collectively as
"the individual defendants"), appeal from the Jefferson
Circuit Court's order denying their motion to compel
1170197
arbitration of claims asserted against them by Paul F.
Castellanos, M.D.  We reverse and remand.
I.  Facts
On September 22, 2017, Dr. Castellanos filed this action
against six named defendants and other fictitiously named
defendants. The named defendants included the University of
Alabama Health Services Foundation, P.C. ("UAHSF"), the Board
of Trustees of the University of Alabama ("the Board"),1 the
University of Alabama Birmingham Health System Board of
Directors, and the individual defendants.  Dr. Castellanos
alleged that he was an "internationally recognized" physician
with 
a 
specialty 
practice 
as 
a 
"laryngologist 
and
bronchoesophagologist (airway surgeon)" who was "recruited to
come to the University of Alabama at Birmingham in 2005 to
establish a center of excellence for the treatment of voice
and aero digestive disorders at University of Alabama,
Birmingham Academic and Medical Center" ("UAB Medical
Center").  UAHSF and Dr. Castellanos executed a "Physician
Employment Contract" describing the details of his employment
1In his complaint, Dr. Castellanos misnamed the Board of
Trustees of the University of Alabama as the "Board of
Trustees for the University of Alabama School of Medicine
(UAB)."
2
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at UAB Medical Center ("the employment contract").  The
employment contract contained the following arbitration
provision: 
"(14) Any controversy or claim, arising out of, or
relating to, this Agreement, or the breach thereof,
shall be settled by arbitration in the City of
Birmingham, Alabama in accordance with the rules
then 
obtaining 
of 
the 
American 
Arbitration
Association, and judgment upon award rendered may be
entered in any court having jurisdiction thereof."
With 
respect 
to 
the 
individual 
defendants,
Dr. Castellanos alleged that Dr. Carroll was "clearly envious
or concerned that his own care for patients with similar
complexity to the patient population for Dr. Castellanos was
not 
as 
successful 
as 
that 
of 
Dr. 
Castellanos." 
Dr. Castellanos alleged that, after Dr. Carroll became interim
chairman of the ENT Department at UAB Medical Center,
Dr. Carroll engaged in a series of actions designed toward
"mak[ing] Dr. Castellanos' life at UAB [Medical Center] so
miserable that he ha[d] to leave."  Dr. Castellanos alleged
that Dr. Rue and Dr. Heudebert assisted in this plan. 
Dr. Castellanos also asserted that all the defendants,
including UAHSF "through its agents and employees," conspired
to make Dr. Castellanos want to leave his employment at UAB
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Medical 
Center. 
 
Specifically, 
against 
Dr. 
Carroll,
Dr. Castellanos asserted claims of "intentional infliction of
severe mental anguish -- outrageous conduct," "defamation,"
and "invasion of privacy -- false light."  Against all the
individual defendants, Dr. Castellanos asserted a claim of
"intentional interference with contractual and business
relations," and he alleged that all the defendants, including
UAHSF "through its agents and employees," conspired in the
commission of the tort-of-outrage, defamation, and invasion-
of-privacy claims.
On November 1, 2017, the Board filed a motion to dismiss
in which it asserted that it was entitled to immunity under
Art. 1, § 14, Ala. Const. 1901.  No other defendant joined the
Board's motion.  
On the same date, all the defendants other than the Board
filed a motion to compel arbitration as to all claims asserted
against them by Dr. Castellanos.  The motion was based on the
arbitration provision contained in the employment contract. 
The individual defendants contended that they could enforce
the arbitration provision even though they were not
signatories to 
the 
employment 
contract 
because, 
they 
reasoned,
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the individual defendants were also employees of UAHSF and Dr.
Castellanos had alleged that all the defendants had conspired
in committing the alleged torts.
Dr. Castellanos did not oppose the motion to compel
arbitration.  In his brief to this Court, Dr. Castellanos
asserts that he failed to file a response because "[t]he trial
court issued its order compelling arbitration between the
contracting parties ... before [Dr. Castellanos] had an
opportunity to oppose the motion."  Dr. Castellanos's brief,
pp. 7-8.  
On November 15, 2017, the circuit court entered an order
compelling arbitration of Dr. Castellanos's claims against
UAHSF and the Board (even though the Board had not joined the
motion to compel) but denying arbitration of his claims
against the individual defendants.2  The circuit court refused
to compel arbitration of the claims against the individual
2The 
circuit 
court's 
ordering 
arbitration 
of
Dr. Castellanos's claims against the Board was the subject of
a petition for a writ of mandamus filed by the Board with this
Court.  In Ex parte Board of Trustees of University of
Alabama, [Ms. 1170183, May 18, 2018] ___ So. 3d ___ (Ala.
2018), this Court granted the Board's petition, concluding
that the circuit court had erred in failing to dismiss the
Board as a defendant for lack of subject-matter jurisdiction
based on immunity under Art. 1, § 14, Ala. Const. 1901.
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defendants because "the aforementioned Physician Employment
Contract does not include an arbitration clause applicable to
... William R. Carroll, M.D., Loring Rue, M.D., and Gustavo R.
Heudebert, M.D."  
The following day, November 16, 2017, the individual
defendants appealed the circuit court's judgment.  On the same
date, the individual defendants filed a motion to stay the
underlying action pending the appeal, a motion the circuit
court granted on November 20, 2017.
II.  Standard of Review
"'This Court reviews de novo the
denial of a motion to compel arbitration.
Parkway Dodge, Inc. v. Yarbrough, 779 So.
2d 1205 (Ala. 2000).  A motion to compel
arbitration is analogous to a motion for a
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 
for 
arbitration 
and
proving that the contract evidences a
transaction affecting interstate commerce.
Id. 
 
"[A]fter 
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."  Jim Burke
Automotive, Inc. v. Beavers, 674 So. 2d
1260, 1265 n.1 (Ala. 1995) (opinion on
application for rehearing).'"
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Elizabeth Homes, L.L.C. v. Gantt, 882 So. 2d 313, 315 (Ala.
2003) (quoting Fleetwood Enters., Inc. v. Bruno, 784 So. 2d
277, 280 (Ala. 2000)).
III.  Analysis
We begin by noting that Dr. Castellanos's failure to file
a response to the individual defendants' motion to compel
arbitration does not require an automatic reversal of the
circuit court's judgment.  As we have previously noted in
another case in which the plaintiffs failed to file a response
to the defendants' motion to compel arbitration:
"[T]he Lollars' lack of response does not end our
inquiry.  It is true that, 'once a moving party has
satisfied its burden of production by making a prima
facie showing that an agreement to arbitrate exists
in 
a 
contract 
relating 
to 
a 
transaction
substantially affecting interstate commerce,' the
burden shifts to the nonmoving party to show
otherwise.  Ex parte Greenstreet, Inc., 806 So. 2d
at 1209 (emphasis added).  It is likewise true that
this Court has said that, '[i]f th[e nonmoving]
party presents no evidence in opposition to a
properly supported motion to compel arbitration,
then the trial court should grant the motion to
compel arbitration.'  Ex parte Greenstreet, Inc.,
806 So. 2d at 1209 (emphasis added).  Implicit in
this standard is that we must evaluate whether the
motion to compel arbitration does make a 'prima
facie showing' that the parties entered into an
agreement to arbitrate the dispute in question and
that this showing was 'properly supported' by
evidence of such an agreement.  As we have otherwise
recently expressed in another case in which the
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party 
opposing 
arbitration 
failed 
to 
present
evidence in the trial court:  '[U]nless on its face
the arbitration provision is not valid or does not
apply to the dispute in question, the trial court's
decision to deny the motions to compel arbitration
was erroneous.'  Family Sec. Credit Union v.
Etheredge, 238 So. 3d 35, 39 (Ala. 2017) (emphasis
added)."
Locklear Auto. Grp., Inc. v. Hubbard, 252 So. 3d 67, 91–92
(Ala. 2017) (some emphasis added).
In this instance, it is undisputed that Dr. Castellanos
and the individual defendants did not specifically enter into
an agreement to arbitrate the disputes between them.  The
arbitration provision in question is contained in the
employment contract that is expressly between UAHSF and
Dr. Castellanos.  The individual defendants, admittedly, were
not signatories to the employment contract.  This appears to
be where the circuit court's analysis ended, i.e., it noted
that on its face the arbitration provision did not appear to
be applicable to the claims Dr. Castellanos asserted against
the individual defendants because the individual defendants
were nonsignatories to the employment contract.  
However, as the individual defendants note, we cannot
ignore the fact that the employment contract contains an
arbitrability clause that reserves disputes about substantive
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1170197
arbitrability for the arbitrator.  This is so because the
arbitration provision states that, when arbitration is
applicable, it must occur "in accordance with the rules then
obtaining of the American Arbitration Association." 3
"We have stated that '[t]he question whether an
arbitration provision may be used to compel
arbitration of a dispute between a nonsignatory and
a 
signatory 
is 
a 
question 
of 
substantive
arbitrability 
(or, 
under 
the 
Supreme 
Court's
terminology, simply "arbitrability").'  Anderton v.
Practice–Monroeville, P.C., 164 So. 3d 1094, 1101
(Ala. 2014). 'A court decides issues of substantive
arbitrability "[u]nless the parties clearly and
unmistakably provide otherwise."'  Id. (quoting AT
& T Techs., Inc. v. Communications Workers of
America, 475 U.S. 643, 649, 106 S.Ct. 1415, 89
L.Ed.2d 648 (1986))."
Locklear Auto. Grp., 252 So. 3d at 81.  However,
"we have held 'that an arbitration provision that
incorporates rules that provide for the arbitrator
to decide issues of arbitrability clearly and
unmistakably evidences the parties' intent to
arbitrate the scope of the arbitration provision.'
CitiFinancial Corp. v. Peoples, 973 So. 2d 332, 340
(Ala. 2007).  See also Joe Hudson Collision Ctr. v.
Dymond, 40 So. 3d 704, 710 (Ala. 2009) (concluding
that an arbitrator decides issues of substantive
arbitrability 
when 
the 
arbitration 
provision
incorporated 
the 
same 
[American 
Arbitration
Association] rule as in the present case); and Wells
3The relevant American Arbitration Association rule
incorporated by the arbitration provision provides:  "The
arbitrator shall have the power to rule on his or her own
jurisdiction, including any objections with respect to the
existence, scope or validity of the arbitration agreement."
9
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Fargo Bank, N.A. v. Chapman, 90 So.3d 774, 783 (Ala.
Civ. App. 2012) (same)."
Anderton v. Practice-Monroeville, P.C., 164 So. 3d 1094, 1102
(Ala. 2014).
Dr. Castellanos objects to the invocation of the
arbitrability clause on the ground that "[t]his arbitration
clause has no legal or logical nexus to the claims against
these individual Defendants."  
Dr. Castellanos's brief, p. 23. 
This is so because, says Dr. Castellanos, the arbitration
provision 
concerns 
the 
employment 
contract 
between
Dr. Castellanos and UAHSF, but Dr. Castellanos's claims
against the individual defendants do not concern the
employment contract itself.  Specifically, Dr. Castellanos
explains, 
his 
claim 
of 
intentional 
interference 
with
contractual or business relations alleges that the individual
defendants are "strangers" to the contract.  See id. at p. 18. 
Additionally, Dr. Castellanos argues, his claims of the tort
of outrage, defamation, and invasion of privacy against the
individual defendants are "totally separate from the contract
underlying this suit. There is no logical or legal nexus
whatsoever and such claims would clearly exist even if there
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1170197
were no contractual relationship between Dr. Castellanos and
UAHSF."  Id. at p. 21.
The problem for Dr. Castellanos is that, even if he is
correct that his claims against the individual defendants
ultimately do not fall within the scope of the arbitration
provision, the circuit court is not at liberty to make that
determination. 
 
Substantive 
arbitrability 
concerns
"(1) whether a valid agreement to arbitrate exists and, if so,
(2) whether the specific dispute falls within the scope of
that agreement."  Brasfield & Gorrie, L.L.C. v. Soho Partners,
L.L.C., 35 So. 3d 601, 604 (Ala. 2009) (citing Dean Witter
Reynolds, Inc. v. McDonald, 758 So. 2d 539, 542 (Ala. 1999)). 
In other words, substantive arbitrability addresses both
whether the nonsignatories -- the individual defendants -- 
can
enforce the agreement to arbitrate and whether the claims at
issue are encompassed by the arbitration provision.
"Under the [Federal Arbitration] Act, arbitration is a
matter of contract, and courts must enforce arbitration
contracts according to their terms."  Henry Schein, Inc. v.
Archer & White Sales, Inc., 586 U.S. ___, ___, 139 S.Ct. 524,
529 (2019).  This is true as to "not only the merits of a
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particular 
dispute 
but 
also 
'"gateway" 
questions 
of
"arbitrability," such as whether the parties have agreed to
arbitrate or whether their agreement covers a particular
controversy.'"  Id. (quoting Rent-A-Center, West, Inc. v.
Jackson, 561 U.S. 63, 68–69 (2010)).  Thus, 
"[w]hen 
the 
parties' 
contract 
delegates 
the
arbitrability question to an arbitrator, a court may
not override the contract.  In those circumstances,
a 
court 
possesses 
no 
power 
to 
decide 
the
arbitrability issue.  That is true even if the court
thinks that the argument that the arbitration
agreement applies to a particular dispute is wholly
groundless."
Henry Schein, 586 U.S. at ___, 139 S.Ct. at 529.
In sum, although questions remain about whether the
claims at issue fall within the scope of the arbitration
provision and whether the arbitration provision may be used to
compel arbitration between a signatory -- Dr. Castellanos --
and the nonsignatory individual defendants, and although such
threshold questions are usually decided by the court, here
those questions have been delegated to the arbitrator by
virtue of the arbitrability clause.  See, e.g., Anderton, 164
So. 3d at 1102.  The circuit court erred in failing to allow
the arbitrator, rather than the court, to determine those
threshold issues.
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IV.  Conclusion
The questions whether the individual defendants, as
nonsignatories to the employment contract, can enforce the
arbitration provision in that contract and whether the
arbitration provision encompasses Dr. Castellanos's claims
against the individual defendants are questions for the
arbitrator, not the court, pursuant to the arbitration
provision in the employment contract.  The circuit court erred
in denying the individual defendants' motion to compel
arbitration.  We therefore reverse the order and remand the
case for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
Parker, C.J., and Bolin, Shaw, and Bryan, JJ., concur.
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