Title: TranSouth Financial Corp. v. Bell

State: alabama

Issuer: Alabama Supreme Court

Document:

739 So. 2d 1110 (1999)
TRANSOUTH FINANCIAL CORPORATION et al.
v.
Ronald A. BELL.
1971442.

Supreme Court of Alabama.
June 25, 1999.
*1111 J. Fairley McDonald III of Maynard, Cooper & Gale, P.C., Montgomery; and Richard H. Gill of Copeland, Franco, Screws & Gill, P.A., Montgomery, for appellants.
Darron C. Hendley, Montgomery; and Paul R. Cooper of Cooper & Cooper, Montgomery, for appellee.
HOUSTON, Justice.[1]
TranSouth Financial Corporation ("TranSouth"), Associates Financial Life Insurance Company, Associates Insurance Company, and Associates Financial Services are defendants in an action pending in the Lowndes Circuit Court. They appeal from the trial court's order denying their motion to compel arbitration of the claims filed against them by the plaintiff Ronald A. Bell. We reverse and remand.
Bell's claims are based on allegations of fraud in connection with loans that he obtained from TranSouth on January 28, 1993; June 25, 1994; November 30, 1994; and November 8, 1995. Bell alleges that a TranSouth loan officer, acting on the defendants' behalf, misrepresented to him that he was required to purchase credit-life insurance to cover each of those loans. Bell also alleges that the loan officer misrepresented to him that he had to obtain new loans instead of having funds advanced to him from prior loans; this practice, according to Bell, resulted in his incurring unnecessary fees and charges and having to pay higher interest rates.
During the execution of documents in connection with a loan on September 17, 1996, Bell signed a separate "Arbitration Agreement," which provided:
(Emphasis added.)
The defendants moved to compel arbitration of Bell's claims, based on the September 17, 1996, document. Bell alleged, in response to the defendants' motion to compel, that he had been fraudulently induced to sign the September 17, 1996, document. Specifically, Bell alleged that before he signed the document he asked the loan officer what it was and that he was told it was an arbitration agreement that covered only disputes arising out of the September 17, 1996, loan. In the alternative, Bell alleged that the loan officer suppressed from him the fact that the September 17, 1996, document expressly referred to all of his previous loan agreements with TranSouth and the fact that TranSouth had reserved the right to seek enforcement of the September 17, 1996, *1114 document in a federal court. The record does not contain any evidence supporting Bell's allegations. The trial court ruled that a fact question was presented as to the validity of the September 17, 1996, document and ordered a jury trial on the issue of arbitrability.
After carefully examining the record and the briefs, we hold that the trial court erred in denying the defendants' motion to compel arbitration of Bell's claims. A motion to compel arbitration is analogous to a motion for a summary judgment. Allied-Bruce Terminix Cos. v. Dobson, 684 So. 2d 102 (Ala.1995); Allstar Homes, Inc. v. Waters, 711 So. 2d 924 (Ala.1997). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction affecting interstate commerce. Jim Burke Automotive, Inc. v. Beavers, 674 So. 2d 1260 (Ala.1995). The September 17, 1996, document presented by the defendants prima facie showed that Bell had agreed to arbitrate disputes arising out of previous loan transactions and that that arbitration agreement was executed as part of a financial transaction that involved interstate commerce. Thus, after the defendants prima facie demonstrated that they were entitled under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA"), to arbitrate Bell's claims, the burden shifted to Bell to back up his fraud allegations with an evidentiary showing of some kind; otherwise, the defendants' motion to compel arbitration was due to be granted. See Ryan's Family Steak Houses, Inc. v. Regelin, 735 So. 2d 454 (Ala. 1999) (after a motion to compel arbitration has been made and supported, the burden is on the nonmovant to present evidence indicating that the supposed arbitration agreement is not valid or does not apply to the dispute in question); Allied-Bruce Terminix Cos. v. Dobson, supra (the nonmovant must present at least some evidence to substantiate his factual allegations; mere demand for a jury trial on the issue of arbitrability is not enough); see also Ex parte Napier, 723 So. 2d 49 (Ala. 1998) (the burden of proving unconscionability is on the party opposing arbitration).
As noted, the record contains no evidence supporting Bell's fraud allegations, although it does indicate that Bell may have intended to attach an affidavit to his response to the defendants' motion to compel. Bell has attached as an appendix to his brief in this Court an affidavit wherein he states that the loan officer told him "that the arbitration agreement was for the 9/17/96 loan only" and that the loan officer "did not tell [him] that the arbitration agreement would cover previous loans which [he] had taken with TranSouth." Bell contends that he was under no duty to read the September 17, 1996, document; he argues, instead, that a jury could find his reliance on the alleged statements of the loan officer to be justifiable under the circumstances.[2] Bell asserts in his brief that he submitted the affidavit to the trial court for consideration and that he provided the defendants with a copy of it. The defendants dispute this; in fact, the record indicates that the defendants specifically argued to the trial court that Bell had presented no evidence in support of his fraud allegations. Bell did not file a Rule 10(f), Ala.R.App.P., motion to supplement the record with the affidavit. Under these circumstances, this Court will not go outside the record and consider the document attached to Bell's brief. See Rowe v. Isbell, 599 So. 2d 35 (Ala.1992); Smith v. Smith, 596 So. 2d 1 (Ala.1992).
Because the record contains no evidence rebutting the defendants' prima facie showing of arbitrability, and because we find no other basis in the record for affirming the trial court's order, we must *1115 reverse the trial court's order denying the defendants' motion to compel arbitration.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, COOK, SEE, LYONS, BROWN, and JOHNSTONE, JJ., concur.
JOHNSTONE, Justice (concurring).
I concur with the majority. Further, while the plaintiff-appellee argues that the McCarran-Ferguson Act saves Alabama statutory law barring the two insurance company defendants from specifically enforcing the arbitration agreement, the record of the proceedings before the trial court is not sufficiently developed regarding the role or participation of these two particular defendants to allow us to address this argument.
[1]  This case was originally assigned to another Justice. It was reassigned to Justice Houston on February 12, 1999.
[2]  Bell filed his action before March 15, 1997; therefore, the "justifiable reliance" standard would apply. See Foremost Ins. Co. v. Parham, 693 So. 2d 409 (Ala.1997).