Title: Key v. Warren Averett, LLC, et al.

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel:  May 20, 2022 
 
 
 
 
 
 
 
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, 2021-2022 
 
_________________________ 
 
1210124 
_________________________ 
 
James P. Key, Jr. 
 
v. 
 
Warren Averett, LLC, and Warren Averett Companies, LLC 
 
 
Appeal from Shelby Circuit Court 
(CV-18-900942) 
 
 
MENDHEIM, Justice. 
 
James P. Key, Jr., appeals from the Shelby Circuit Court's order 
denying his motion to compel arbitration of his claims against Warren 
1210124 
2 
 
Averett, LLC, and Warren Averett Companies, LLC (collectively referred 
to as "WA"). We reverse and remand. 
I. Facts 
 
On October 5, 2018, Key filed a complaint in the Shelby Circuit 
Court seeking a declaratory judgment against WA. Key alleged that he 
was a certified public accountant who had been employed by WA for 
25 years and had been a member of WA for 15 years; that he had executed 
a personal-services agreement ("PSA") with WA on February 26, 2018, 
that included a noncompete clause; and that WA had sent him a letter on 
September 28, 2018, terminating his employment effective October 28, 
2018. Key sought a judgment declaring "that the Non-Compete Clause 
and the financial penalty provision contained in the PSA is not applicable 
to Key and is an unlawful restraint of Key's ability to serve his clients as 
a professional." 
 
On November 2, 2018, Key filed his "First Amended Complaint." In 
that amended complaint, Key named three individual defendants in 
addition to WA:  Mary Elliot, WA's chief executive officer ("CEO"); 
April Harry, WA's chief operating officer; and William Dow, a WA 
member. Key's first amended complaint alleged that Elliot, Harry, and 
1210124 
3 
 
Dow had negotiated an allegedly exorbitant retirement package for WA's 
former CEO, James W. Cunningham. In addition to his original count for 
a declaratory judgment, Key asserted a count on his own behalf against 
WA alleging minority-shareholder oppression and a derivative-liability 
count "on behalf of WA and its members" against Elliott, Harry, and Dow 
based on their allegedly "secret, unapproved deal with ... Cunningham 
regarding his retirement compensation and [their] obligating the 
members of WA ... without properly obtaining authorization of [WA's] 
executive committee." 
 
On November 6, 2018, WA filed a "Motion to Compel Arbitration, 
and To Dismiss or Stay This Action." WA moved for arbitration on the 
basis of Section 16 of the PSA, which, in pertinent part, provided: 
"16. DISPUTE RESOLUTION. All controversies, 
claims, issues and other disputes arising out of or relating to 
this Agreement for breach thereof (collectively, the 'Disputes') 
shall be subject to the applicable provisions of this Section. 
 
".... 
 
"(b) Arbitration. Except as provided in Section 16(a) 
hereof,[1] all Disputes shall be settled by arbitration in the 
state where the Member's primary office is located at the time 
of the execution hereof in accordance with the Commercial 
 
1The parties agree that Section 16(a) of the PSA does not apply in 
this case. 
1210124 
4 
 
Arbitration Rules of the American Arbitration Association. 
Any disagreement as to whether a particular Dispute is 
subject to arbitration under this Section 16 shall be decided 
by arbitration in accordance with the provisions of this 
Section 16. Judgment upon any award rendered by the 
arbitrator in any such arbitration may be entered in any court 
having jurisdiction thereof. The arbitrator(s) shall have the 
power to grant all legal and equitable relief and remedies and 
award compensatory damages as provided for by law but shall 
not award any damages other than, or in excess of, 
compensatory damages. In the event that the amount in 
question of such arbitration is over $200,000, … WA, in its 
sole discretion, may require a panel of three independent 
arbitrators." 
 
(Emphasis added.) 
 
Also on November 6, 2018, WA filed an "Answer to First Amended 
Complaint and Counterclaims." WA asserted counterclaims against Key 
alleging breach of contract and seeking injunctive relief. The 
counterclaims alleged that Key's first amended complaint had violated 
the confidentiality provisions of the PSA. WA insisted that Key had 
"publicly disclosed confidential information concerning internal [WA] 
governance, finances, compensation arrangements with members, 
compensation negotiations, and compensation agreements concerning 
another [WA] employee," i.e., Cunningham. Along with its answer and 
counterclaims, WA filed a "Motion for Preliminary Injunction" against 
Key in which WA asked the court to stop Key from violating the 
1210124 
5 
 
confidentiality provisions of the PSA. Additionally, on November 6, 2018, 
WA filed a "Motion to Seal First Amended Complaint" based on its 
aforementioned allegation that Key's first amended complaint contained 
confidential information. 
 
On November 19, 2018, Key filed his response to WA's motion 
requesting that the first amended complaint be sealed in which he argued 
that the motion should be denied because, he said, the information 
included in the first amended complaint was not statutorily protected 
from disclosure and the information did not need to be kept confidential 
to protect a third party. Also on November 19, 2018, Key filed an 
"Objection to Warren Averett's Motion for a Preliminary Injunction," in 
which he contended that WA's request did not meet all four elements 
necessary for the issuance of a preliminary injunction. 
 
On November 19, 2018, Key also filed a response to WA's motion to 
compel arbitration. In that response, Key asserted: 
"2. While [Key] does not object to this Court entering an 
Order sending the above-styled action to arbitration, [Key] 
does object to the use of the American Arbitration Association 
('AAA') and does not consent to the jurisdiction of the AAA. 
 
"3. [Key] respectfully requests this Court to use any and 
all equitable powers available to it to provide the Parties with 
an alternative arbitration panel selection methodology to 
1210124 
6 
 
select three independent and qualified arbitrators and grant 
them the authority and powers enumerated in Ala. Code § 6-
6-1 through § 6-6-16."2 
 
 
On December 3, 2018, Elliot, Harry, and Dow filed a motion to 
dismiss Key's first amended complaint. In that motion, they argued that 
Key lacked "standing" under Rule 23.1, Ala. R. Civ. P., to assert 
derivative claims against them because Key was not a shareholder in WA 
at the time he commenced the action.3 On the same date, Elliot, Harry, 
 
2Section 6-6-1, Ala. Code 1975, provides:  "It is the duty of all courts 
to encourage the settlement of controversies pending before them by a 
reference thereof to arbitrators chosen by the parties or their attorneys 
and, on motion of the parties, must make such order and continue the 
case for award." Section 6-6-16, Ala. Code 1975, provides:  "Nothing 
contained in [§ 6-6-1 through § 6-6-16] shall prevent any person or 
persons from settling any matters of controversy by a reference to 
arbitration at common law." 
 
3In Ex parte 4tdd.com, Inc., 306 So. 3d 8, 16 (Ala. 2020), this Court 
explained:  
 
"[I]n light of this Court's decision in Ex parte BAC Home 
Loans Servicing[, LP], [159 So. 3d 31 (Ala. 2013),] questions 
pertaining to the heightened pleading requirements of 
Rule 23.1 do not invoke the plaintiff's standing to bring the 
substantive claims and do not implicate the trial court's 
subject-matter jurisdiction; rather, Rule 23.1 imposes a 
procedural bar on a derivative action when the plaintiff fails 
to allege in the complaint that a sufficient director demand 
has been made or fails to demonstrate that making such a 
demand would be futile." 
1210124 
7 
 
and Dow filed a motion to seal Key's first amended complaint in which 
they joined the arguments set forth in WA's motion to seal that 
complaint. On December 12, 2018, WA filed a reply in favor of its motion 
to seal Key's first amended complaint. 
 
On February 6, 2019, Judge Patrick Kennedy entered an order 
recusing himself from this case. The case was reassigned to Judge Lara 
M. Alvis. On May 28, 2019, the circuit court held a hearing on all 
currently pending motions. In that hearing, WA's counsel reiterated that 
WA believed that the claims against it should be arbitrated, but WA's 
counsel also stated that WA was fine with deferring any ruling on its 
motion to compel arbitration until there was a resolution of the motion to 
dismiss Key's claims against Elliot, Harry, and Dow: 
"MR. WELLS [WA's counsel]:  Your Honor, Trey Wells for 
Warren Averett Companies, LLC and Warren Averett, LLC. 
Also defendants are a few of the executives for that company, 
Mary Elliot, April Harry and William Dow and Augusta and 
Curtis represent them. We filed a motion to compel 
arbitration, we being the company defendants. The response 
was basically we don't object to arbitration, we just don't want 
to do it with the Triple A. So from the [companies'] standpoint 
we are open to that concept but I understand the individual 
[defendants] have a motion to dismiss pending and have not 
moved to compel arbitration at this point. So from the 
[companies'] standpoint on the arbitration issue we are fine 
with the Court deferring that ruling. 
 
1210124 
8 
 
 
".... 
 
"THE COURT:  Okay. I will tell you this, and as far as -- no 
one disagrees that the case goes to arbitration, correct, after 
the motion to dismiss ruling? 
 
"MR. WELLS [WA's counsel]:  Correct. And what I was 
thinking just from efficiency standpoint is we got three 
individual defendants that may or may not be going with 
everybody to arbitration. So it seems to me we figure out 
where they are, once we know that then all the parties can get 
together and figure out where to specifically arbitrate. From 
[WA's] standpoint we are open to the concept of … using the 
Triple A rules but picking some private non Triple A affiliated 
arbitrator but I don't want to make that concession or 
statement right now without knowing what the status of the 
three individual defendants are because they haven't filed a 
motion and we haven't really come to a consensus on that. 
 
"THE COURT:  Fair enough." 
 
 
On the same date, May 28, 2019, the circuit court entered an order 
granting in part the defendants' motions to seal the first amended 
complaint, ordering that the case be coded as confidential by the circuit 
clerk. That order postponed ruling on Elliot, Harry, and Dow's motion to 
dismiss pending further submissions of authority. Consistent with WA's 
expressed position, the order also indicated that the circuit court would 
defer ruling on WA's motion to compel arbitration until resolution of that 
motion to dismiss. 
1210124 
9 
 
 
On June 6, 2019, Key filed a "Second Amended Verified Complaint." 
In his second amended complaint, Key named two additional individual 
defendants, former CEO Cunningham and Thomas R. Averett. Key also 
asserted new counts of derivative and demand futility, breach of contract, 
breach 
of 
fiduciary 
duty, 
fraud/misrepresentation/suppression, 
conspiracy, and unjust enrichment. The second amended complaint 
contained many new and detailed allegations regarding the period 
leading up to WA's termination of Key's employment, which, Key alleged, 
was directly related to Key's objections to certain policies and decisions 
made by WA leadership, including WA's allocation of profits earned from 
work related to the 2010 British Petroleum ("BP") oil spill in the Gulf of 
Mexico and the retirement package negotiated for Cunningham by 
Elliott, Harry, Dow, and Averett. Specifically, Key alleged that WA and 
the individual defendants -- Elliot, Harry, Dow, Cunningham, and 
Averett -- had deprived Key and other members of WA deferred 
retirement compensation in favor of compensating WA officers, especially 
CEO Cunningham. Key further alleged that much of the compensation 
used for Cunningham's retirement package and the additional 
compensation for other officers came from BP oil-spill settlement funds. 
1210124 
10 
 
 
On June 11, 2019, WA and all the individual defendants filed a 
"Joint Motion to Strike Second Amended Complaint" in which they 
argued that the second amended complaint was filed well after Key "was 
in possession of the facts necessary to file" it. On June 14, 2019, Key filed 
his response in opposition to the joint motion to strike. Key argued that 
the defendants had failed to demonstrate that allowing the second 
amended complaint would cause actual prejudice or unduly delay the 
trial of the case. 
 
Following a hearing on June 14, 2019, the circuit court entered an 
order dismissing with prejudice individual defendants Elliot, Harry, and 
Dow from Key's action. The circuit court concluded that Key did not fulfill 
a requirement of Rule 23.1, Ala. R. Civ. P., because he was not a 
shareholder of WA at the time he filed his derivative claim. Also on 
June 14, 2019, the circuit court entered an order granting the joint 
motion to strike the second amended complaint. On July 25, 2019, Key 
filed a petition for a writ of mandamus with this Court, requesting that 
this Court direct the circuit court to set aside the orders granting the 
motion to strike and the motion to dismiss that effectively eliminated the 
individual defendants from Key's action. On August 29, 2019, this Court 
1210124 
11 
 
denied the petition without ordering answers and briefs. Ex parte Key 
(No. 1180840, Aug. 29, 2019). 
 
On December 4, 2019, Key submitted to WA's counsel a "Demand 
for Arbitration and Statement of Claim" in which he sought arbitration 
of his claims against WA pursuant to the arbitration provision in the 
PSA. That arbitration demand was not filed with the circuit court at that 
time or with an arbitration tribunal. 
 
On January 9, 2020, WA filed in the circuit court a "Notice of 
Withdrawal of [Its] Motion to Compel Arbitration." WA asserted: 
"As this case has been made confidential and the parties have 
been appropriately cleaned up by the Court, [WA] hereby 
withdraws its motion to compel arbitration, which has not 
been ruled upon by the Court. [WA] desires to avoid the 
expense involved in arbitration, and is confident this Court 
will protect against [Key's] efforts to improperly disclose 
confidential information through public filings in this matter. 
As [Key] disregarded the arbitration clause and filed this 
action in this Court, [Key] has clearly evidenced his intent to 
waive arbitration in favor [of] a judicial resolution. ... 
 
 
"[WA] has discussed this issue with [Key's] counsel, who 
opposes continuing to litigate in this Court. In other words, 
[Key], after having received adverse rulings from this Court, 
now wishes to move this case to arbitration instead of 
proceeding in this forum in which [Key] elected to file his 
action. 
 
1210124 
12 
 
 
"WHEREFORE, PREMISES CONSIDERED, [WA] 
hereby withdraws its previously filed motion to compel 
arbitration, and stands ready to litigate this matter before 
this Court." 
 
 
On January 13, 2020, Key filed a response in opposition to WA's 
notice of withdrawal of its motion to compel arbitration. In that response, 
Key asserted that he had never opposed arbitration of his claims against 
WA and that he had not waived his right to compel arbitration by 
substantially invoking the litigation process with respect to his claims 
against WA. Key attached to his response his "Demand for Arbitration 
and Statement of Claim" that he had filed with WA on December 4, 2019.  
 
Following a long delay in this case due to the interruption of judicial 
proceedings caused by COVID-19, on August 27, 2021, the circuit court 
held a virtual hearing, using videoconferencing technology, concerning 
WA's withdrawal of its demand for arbitration. In that hearing, the 
circuit court suggested that Key file a formal motion to compel 
arbitration. On August 31, 2021, Key filed a "Motion to Compel 
Arbitration and Stay Proceedings." Along with that motion, Key again 
attached his "Demand for Arbitration and Statement of Claim." On 
September 15, 2021, WA filed a "Response to [Key's] Motion to Compel 
Arbitration and Stay Proceedings." In that response, WA argued that Key 
1210124 
13 
 
had substantially invoked the litigation process and thereby had waived 
his right to compel arbitration of his claims against WA. WA attached to 
that response an affidavit from its counsel stating that WA had incurred 
over $50,000 in legal fees for more than 200 hours of legal work on the 
proceedings to date. 
 
On November 17, 2021, the circuit court entered an order denying 
Key's motion to compel arbitration and setting the case for a bench trial. 
The order did not provide a rationale for the circuit court's decision. Key 
appealed that judgment two days later. 
II. Standard of Review 
 
The primary issue debated by the parties in this appeal is whether 
Key substantially invoked the litigation process and thereby waived his 
right to compel arbitration of this dispute. 
 
"The appropriate test for determining whether a party 
has waived its right to arbitration has two prongs:  
'[(1)] whether 
the 
party's 
actions 
as 
a 
whole 
have 
substantially invoked the litigation process and [(2)] whether 
the party opposing arbitration would be prejudiced if forced to 
submit its claims to arbitration subsequent to the other 
party's actions invoking the litigation process.' Hoover 
General [Contractors-Homewood, Inc. v. Key], 201 So. 3d 
[550,] 553 [(Ala. 2016)]. Waiver must be determined '"based 
on the particular facts of each case."' Voyager Life Ins. Co. v. 
Hughes, 841 So. 2d 1216, 1219 (Ala. 2001) (quoting 
1210124 
14 
 
Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So. 2d 
897, 899 (Ala. 1995)). Thus, 'the trial judge's determinations 
[as to waiver] should be given substantial weight upon 
review.' Id. Nevertheless, Alabama law also makes it clear 
that, because there is such a strong federal policy favoring 
arbitration, '"a waiver of the right to compel arbitration will 
not be lightly inferred, and, therefore, that one seeking to 
prove waiver has a heavy burden."' Id. (quoting Mutual 
Assurance, Inc. v. Wilson, 716 So. 2d 1160, 1164 (Ala. 1998))." 
Health Care Auth. for Baptist Health v. Dickson, 330 So. 3d 805, 809 
(Ala. 2021). But see Bridgestone Americas Tire Operations, LLC v. 
Adams, 264 So. 3d 833, 839 (Ala. 2018) ("Adams argues that, by 
participating in litigation, Bridgestone waived any right it had to 
arbitrate. That issue is subject to de novo review."). 
III. Analysis 
 
Key first contends that WA should be equitably estopped from 
opposing his motion to compel arbitration because WA had maintained 
throughout the litigation -- until it filed its notice of withdrawal of intent 
to arbitrate -- that Key's claims against it should be arbitrated. Key 
argues that he relied upon WA's representation that his claims must be 
arbitrated and that he will be harmed by allowing WA to repudiate that 
position. However, Key did not present any argument in the circuit court 
addressing the elements of equitable estoppel. "It is well settled that an 
1210124 
15 
 
appellate court may not hold a trial court in error in regard to theories or 
issues not presented to that court." Allsopp v. Bolding, 86 So. 3d 952, 962 
(Ala. 2011). Because Key's theory of equitable estoppel is a new argument 
presented for the first time on appeal, we cannot consider it. See, e.g., 
Andrews v. Merritt Oil Co., 612 So. 2d 409, 410 (Ala. 1992) ("This Court 
cannot consider arguments raised for the first time on appeal; rather, our 
review is restricted to the evidence and arguments considered by the trial 
court."). 
 
Key also contends that he did not substantially invoke the litigation 
process in this case because, in his response to WA's motion to compel 
arbitration -- which Key filed a little over a month after initiating the 
action -- Key agreed with WA that his claims against WA were subject to 
the arbitration provision in the PSA and he never changed that position. 
Key also argues that there has not been a substantial invocation of the 
litigation process because most of the filings in this action pertained to 
his claims against the individual defendants -- claims that were not 
subject to the PSA's arbitration provision -- and no discovery has occurred 
in the case. 
1210124 
16 
 
 
Conversely, WA contends that Key clearly invoked the litigation 
process because he initiated this action by filing a complaint in circuit 
court rather than by filing an arbitration demand with the American 
Arbitration Association as Section 16 of the PSA dictates. WA also cites 
as evidence of Key's substantial invocation of the litigation process the 
facts that Key filed two amended complaints and that he filed a petition 
for a writ of mandamus in this action. WA further argues that it would 
be substantially prejudiced by having to arbitrate the dispute at this 
juncture because it has already expended considerable time and 
resources responding to Key's filings in the circuit court. As evidence of 
this, WA cites the affidavit from its counsel stating that WA has already 
incurred over $50,000 in legal fees for more than 200 hours of legal work 
on the proceedings to date. 
 
The parties have exerted considerable mental gymnastics with 
respect to their positions on arbitration in this case. WA, which for three 
years demanded arbitration of the claims asserted against it, is now 
professing that it will be substantially prejudiced by the submission of 
this case to arbitration. Key, who initiated this action in circuit court and 
followed his original complaint with two amended complaints, is now 
1210124 
17 
 
professing that he intended all along to arbitrate his claims against WA. 
Amidst this inversion of legal positions, the parties relegate to an 
afterthought what the language of the arbitration provision of the PSA 
requires.  
 
Section 16 of the PSA states:  "[A]ll Disputes shall be settled by 
arbitration … in accordance with the Commercial Arbitration Rules of 
the American Arbitration Association. Any disagreement as to whether a 
particular Dispute is subject to arbitration under this Section 16 shall be 
decided by arbitration in accordance with the provisions of this 
Section 16." Both sides, at one point or another in this litigation, have 
summarized the meaning of the foregoing language in the arbitration 
provision. In its motion to compel arbitration, WA argued: 
 
"The arbitration provision here provides:  'Any 
disagreement over whether a particular Dispute is subject to 
arbitration under this Section 16 shall be decided by 
arbitration in accordance with the provisions of this 
Section 16.' ... Furthermore, the arbitration provision 
incorporates the Commercial Arbitration Rules of the 
American Arbitration Association (the AAA). ... The Alabama 
Supreme Court has 'consistently reiterated the holding that 
questions of arbitrability must be decided by an arbitrator 
when the parties have executed a contract containing an 
arbitration provision incorporating the AAA commercial 
arbitration rules.' Eickhoff Corp. v. Warrior Met Coal, LLC, 
[265 So. 3d 216, 222 (Ala. 2018)]. 
1210124 
18 
 
 
"As such, any question as to the scope of the clause, 
whether it applies to a particular dispute, whether it is 
enforceable against [Key], or other threshold issues of 
arbitrability are to be decided by the arbitrator, rather than 
the Court." 
 
(Emphasis added.) Similarly, in his appellate brief, Key states: 
"The unambiguous terms of this arbitration provision in the 
PSA show that any disagreement of whether a dispute should 
be arbitrated is the arbitrator's decision to make, not the Trial 
Court['s]. Id.; see also, Federal Ins. Co. v. Reedstrom, 197 
So. 3d 971, 974-75 ... (Ala. 2015) (while a trial court should 
resolve waiver issues, the arbitration [agreement] may 
effectively move this decision to the arbitrator if the 
arbitration [provision] 'clearly and unmistakably indicates' 
the issue should instead be submitted to the arbitrator); 
Brasfield & Gorrie, L.L.C. v. Soho Partners, L.L.C., 35 So. 3d 
601, 607 (Ala. 2009)." 
Key's brief, pp. 42-43 (emphasis added). 
 
The parties are correct: by both its plain language and its 
incorporation of the American Arbitration Association's Commercial 
Arbitration Rules, Section 16 of the PSA requires that issues of 
arbitrability -- including whether Key has waived his right to compel 
arbitration by substantially invoking the litigation process -- must be 
decided by the arbitrator, not the court. 
"'"[T]he issue whether a party has waived the 
right to arbitration by its conduct during litigation 
is a question for the court and not the arbitrator." 
1210124 
19 
 
Ocwen Loan Servicing, LLC v. Washington, 939 
So. 2d 6, 14 (Ala. 2006). However, the general rule 
that the court and not the arbitrator decides 
whether a party has waived the right to 
arbitration has an exception:  issues typically 
decided by the court will be decided by the 
arbitrator instead when there is '"clear and 
unmistakable evidence"' of such an agreement in 
the arbitration provision. First Options of Chicago, 
Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 
131 L. Ed. 2d 985 (1995) (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) (alterations omitted)); see also Marie v. 
Allied Home Mortg. Corp., 402 F.3d 1, 14 (1st Cir. 
2005) (citing First Options).' 
"Anderton v. The Practice-Monroeville, P.C., 164 So. 3d 1094, 
1098 (Ala. 2014) (footnote omitted and emphasis added). In 
Anderton, this Court determined that the incorporation into 
the arbitration provision of the commercial arbitration rules 
of the American Arbitration Association ('the AAA') 
constituted clear and unmistakable evidence of the parties' 
intent to submit issues of arbitrability to the arbitrator." 
Bugs "R" Us, LLC v. McCants, 223 So. 3d 913, 918-19 (Ala. 2016).  
 
In short, whether Key's claims against WA must be arbitrated is a 
threshold issue that should not have been decided by the circuit court; 
nor is it appropriate for this Court to settle the issue in this appeal. 
Accordingly, the circuit court's order is reversed, and the cause is 
remanded for the circuit court to enter an order sending the case to 
1210124 
20 
 
arbitration for a determination of the threshold issue of arbitrability and 
staying proceedings in the circuit court during the pendency of the 
arbitration proceedings. 
 
REVERSED AND REMANDED. 
 
Parker, C.J., and Bolin, Shaw, Wise, Bryan, Sellers, and 
Stewart, JJ., concur. 
 
Mitchell, J., concurs specially, with opinion. 
 
 
1210124 
21 
 
MITCHELL, Justice (concurring specially). 
 
I join the Court's opinion because it correctly analyzes the issues on 
appeal and faithfully applies our precedents.  I write separately to 
explain why I have concerns about two of the precedents mentioned in 
the main opinion:  Ex parte BAC Home Loans Servicing, LP, 159 So. 3d 
31, 44 (Ala. 2013) ("BAC"), and Andrews v. Merritt Oil Co., 612 So. 2d 
409 (Ala. 1992).   
I. 
I begin with BAC.  The main opinion quotes a case that relies on 
BAC for the proposition that a plaintiff's failure to satisfy the heightened 
pleading requirements of Rule 23.1, Ala. R. Civ. P., warrants a dismissal 
on the merits rather than a dismissal for lack of "standing" (which is a 
component of subject-matter jurisdiction).  See ___ So. 3d at ___ n.3 
(quoting Ex parte 4tdd.com, Inc., 306 So. 3d 8, 16 (Ala. 2020), which, in 
turn, discusses BAC).  That narrow proposition is correct:  Rule 23.1 
limits the right to bring a derivative suit to plaintiffs who meet specified 
criteria, even if the plaintiffs have otherwise satisfied the constitutional 
components of standing to sue (injury in fact, causation, and 
redressability, see Ex parte HealthSouth Corp., 974 So.2d 288, 293 
1210124 
22 
 
(Ala.2007)).  But the holding in BAC swept far more broadly, decreeing 
that the "concept of standing" as a requirement of subject-matter 
jurisdiction has "no necessary role to play in respect to private-law 
actions" at all.   BAC, 159 So. 3d at 44.   
In holding that jurisdictional standing analysis never has a place 
in private-law cases, BAC reasoned that "private-law actions," unlike 
public-law actions, already "come with established elements that define 
an adversarial relationship," including an actual "injury."  Id. at 44.  
Thus, BAC states, in a private-law action "the concept of standing is 
already embodied in the various elements prescribed, including the 
common requirement of proof of a sufficient existing or threatened 
injury," such that a plaintiff's failure to satisfy those elements can always 
be described as a merits defect, thereby obviating the need for any 
jurisdictional "standing" analysis.  Id.4   
 
4The distinction between a dismissal for lack of subject-matter 
jurisdiction and a dismissal on the merits often has practical 
consequences.  For one thing, dismissals for lack of subject-matter 
jurisdiction are subject to different waiver and preservation rules than 
dismissals on the merits, compare Rule 12(h)(2), Ala. R. Civ. P., with Rule 
12(h)(3), Ala. R. Civ. P., and have different res judicata consequences, see 
Havis v. Marshall Cnty., 802 So. 2d 1101, 1103 n.2 (Ala. Civ. App. 2001) 
(noting that Rule 12(b)(6), Ala. R. Civ. P., dismissals ordinarily "operate 
as adjudications on the merits" under Rule 41(b), Ala. R. Civ. P.).  For 
1210124 
23 
 
BAC's reasoning on this point seems to have presumed a fixed set 
of private-law causes of action, all of which require, as an element, that 
the plaintiff suffer a particularized injury caused by the defendant's 
conduct (equivalent to the "injury in fact" and "causation" requirements 
in standing doctrine).  That presumption holds up well when it comes to 
common-law tort and contract actions -- and even most civil-law private 
actions -- but it does not always hold true.  Legislative bodies can and 
have enacted private causes of action with elements that do not 
necessarily 
import 
an 
"adversarial 
relationship," 
"injury," 
or 
"controversy" of the sort ordinarily required "to justify judicial 
intervention."  BAC, 159 So. 3d at 44.    
 Suppose, for example, that the Legislature decided to pass a law 
allowing anyone to sue companies that maintain inaccurate records, even 
if the inaccurate records are never disseminated to a third party and even 
if their existence never causes any harm to the plaintiff.  Would courts 
really be powerless to dismiss a suit brought under that law for want of 
 
another, aggrieved litigants are generally eligible for mandamus review 
on questions of subject-matter jurisdiction, but often are not eligible for 
such review on merits questions.  See Ex parte U.S. Bank Nat'l Ass'n, 
148 So. 3d 1060, 1064-65 (Ala. 2014) (describing the "well recognized 
situations" in which this Court has held mandamus review appropriate).   
1210124 
24 
 
standing?  The example may sound implausible, but Congress actually 
did enact such a law, and it was the subject of a United States Supreme 
Court opinion just last year.  See TransUnion LLC v. Ramirez, ___ U.S., 
___, ___, 141 S. Ct. 2190, 2200 (2021) (discussing the Fair Credit 
Reporting Act, 15 U.S.C. § 1681).  The Court in TransUnion held that 
several plaintiffs who sued a credit-reporting agency under the Act were 
not "concrete[ly] harm[ed]" by the defendant's maintenance of inaccurate 
records and therefore lacked standing to sue, even though Congress had 
expressly granted them a private-law right of action.  ___ U.S. at ___, 141 
S. Ct. at 2212. 
One can imagine other private laws that might spawn suits in 
which the plaintiff could satisfy the statutory merits elements but flunk 
constitutional standing analysis.  What if, for instance, the Legislature 
modified the common law of contract by allowing individuals who are 
neither parties to nor beneficiaries of a contract to sue for breach?  Or 
enacted a statute that effectively outsourced criminal prosecutions to the 
public?  Despite what BAC held, there is a clear consensus that these 
sorts of laws cannot, by themselves, confer standing to sue.  See 13A 
Charles Alan Wright, Arthur R. Miller, and Edward H. Cooper, Federal 
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Practice and Procedure § 3531 (3d ed. 2008 & Supp. 2021) ("Wright & 
Miller").5  And while there is room for debate about why such laws are 
 
5When BAC held that standing analysis cannot play a legitimate 
role in private-law cases, it characterized that result as consistent with 
United States Supreme Court precedent and the Wright & Miller 
treatise.  See 159 So. 3d at 40-46 (citing Lujan v. Defenders of Wildlife, 
504 U.S. 555 (1992); and 13A Charles Alan Wright, Arthur R. Miller, and 
Edward H. Cooper, Federal Practice & Procedure §§ 3531, 3531.6 (3d ed. 
2008)).  But, as the most current version of § 3531 illustrates, neither the 
United States Supreme Court nor Wright & Miller endorse BAC's 
categorical rule that standing can never play a legitimate role in private-
law actions.  On the contrary, the United States Supreme Court has held, 
and the Wright & Miller treatise has acknowledged, that even private-
law plaintiffs must satisfy the components of standing to invoke a court's 
subject-matter jurisdiction.  See, e.g., TransUnion, ___ U.S. at ___, 141 S. 
Ct. at 2205 (explaining that the Court has long "rejected the proposition 
that 'a plaintiff automatically satisfies the injury-in-fact requirement 
whenever a statute grants a person a statutory right and purports to 
authorize that person to sue to vindicate that right' " (citation omitted)); 
___ U.S. at ___, 141 S. Ct. at 2209-14 (holding that the plaintiffs lacked 
standing to sue a credit-reporting agency even though the agency had 
violated the plaintiffs' statutorily conferred private rights); Lujan, 504 
U.S. at 576-77 (emphasizing that Congress cannot confer standing simply 
by passing a law that "permits all citizens" or "a subclass of citizens who 
suffer no distinctive concrete harm" to sue); 13A Wright & Miller § 3531 
(observing that standing is "ordinarily" not an issue in claims alleging 
"private wrongdoing" but declining to state a categorical rule); id. § 
3531.6 (similar); 13B Wright & Miller § 3531.13 (explaining that the 
United States Supreme Court "continues to impose [standing] limits on 
congressional authority to create new legal rights supported by private 
remedies," but expressing doubt about the wisdom and historical 
pedigree of that rule).  I am not aware of any other jurisdiction, state or 
federal, that has adopted BAC's categorical prohibition on applying 
standing principles to private-law causes of action.   
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insufficient, see, e.g., Sierra v. City of Hallandale Beach, Fla., 996 F.3d 
1110, 1115-40 (11th Cir. 2021) (Newsom, J., concurring) (arguing that 
principles of executive power, rather than judicial power, prohibit 
legislatures from enabling "private plaintiffs to sue for wrongs done to 
society in general or to seek remedies that accrue to the public at large"), 
I think the consensus view may be correct, at least in broad outline.  The 
separation-of-powers framework embodied in both our Federal and State 
Constitutions likely prevents the legislative branches from empowering 
private plaintiffs to sue defendants for conduct that did not affect the 
plaintiffs personally.  Such laws risk impugning both the judicial power 
(by requiring courts to adjudicate generalized grievances) and the 
executive power (by transferring the executive's enforcement authority 
to private parties).   
In sum, BAC apparently did not anticipate the existence of private 
laws that authorize recovery in the absence of a particularized injury, 
and it may have announced an overbroad rule as a result.  If called to do 
so in a future case, I would be willing to reevaluate that decision.     
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II. 
I next turn to Andrews.  The main opinion quotes Andrews for the 
proposition that this Court " 'cannot consider arguments raised for the 
first time on appeal; rather, our review is restricted to the evidence and 
arguments considered by the trial court.' "  ___ So. 3d at ___ (quoting 
Andrews, 612 So. 2d at 410) (emphasis added).  Courts frequently cite 
this language, and I have relied on it myself, see Wiggins v. City of 
Evergreen, 295 So. 3d 43, 49 (Ala. 2019), but I've come to believe that it 
misstates the preservation principles generally applied by this Court and 
other courts of review.  As some of our other, more carefully worded 
precedents have explained, the "rule of issue preservation" typically 
prevents appellants from raising new "issues, questions, or theories" on 
review, but does not prohibit them from invoking "new arguments or 
authorities" in support of existing issues, questions, or theories.  See Ex 
parte City of Gulf Shores, [Ms. 1200366, Sept. 30, 2021] ___ So. 3d ___ 
(Ala. 2021) (Mitchell, J., dissenting) (collecting cases).   The line between 
issues, questions, and theories, on the one hand, and arguments, on the 
other, is not always easy to draw, but a good rule of thumb is that an 
argument involves a "specific," often singular, point of contention, 
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whereas an issue, question, or theory typically is broad enough to 
encompass multiple supporting arguments.  Ex parte Jenkins, 26 So. 3d 
464, 473 n.7 (Ala. 2009).   
Andrews's statement that parties cannot raise new "arguments" on 
appeal is dictum -- both in Andrews itself and as quoted in this case -- 
because in both instances the appellant failed to preserve a broad issue 
or theory, rather than simply an individual argument in support of an 
issue or theory.  See Andrews, 612 So. 2d at 410 (noting that the appellant 
had failed to raise a discrete statutory "issue" -- namely, whether her 
termination violated the Employee Polygraph Protection Act of 1988); ___ 
So. 3d at ___, (describing the defense of equitable estoppel as a "theory" 
that Key failed to preserve).  Nevertheless, because of its potential to lead 
litigants and lower courts astray, I believe we should reconsider 
Andrews's preservation language in a suitable case.   
* * * 
While I concur in the main opinion, which is sound regardless of 
whether BAC and Andrews were correct, I believe we should reevaluate 
both decisions in the future.