Title: Stevens v. Phillips

State: alabama

Issuer: Alabama Supreme Court

Document:

852 So. 2d 123 (2002)
Susan A. STEVENS
v.
Uta PHILLIPS.
1010976.

Supreme Court of Alabama.
December 6, 2002.
*124 G. Houston Howard II of Howard, Dunn, Howard & Howard, Wetumpka, for appellant.
*125 Patrick C. (Rick) Davidson and Matthew W. White of Adams, Umbach, Davidson & White, L.L.P., Opelika, for appellee.
MADDOX, Retired Justice.
The issue in this case is whether the trial judge erred in compelling the plaintiff, the purchaser of a manufactured home, to arbitrate the claims made in her complaint in which she named a single defendant, the salesperson of the manufactured home, who was also the general sales manager of the dealership, on the ground that the salesperson did not sign the arbitration agreement in her individual capacity, as the salesperson, but instead signed it in her representative capacity as the general sales manager of the dealership.
To decide the issue presented in this case, this Court must determine, in view of the particular facts of this case: (1) whether the defendant, who, the plaintiff claims, did not sign the agreement in her individual capacity, has standing to enforce the arbitration agreement; (2) if so, whether the transaction involving the sale and financing of the manufactured home had a substantial affect on interstate commerce; and (3) whether the arbitration agreement was unenforceable because (a) it imposed on the consumer the costs of the arbitration process; (b) the agreement was not disclosed in a written warranty; and (c) the agreement violated the due-process protocol of the American Arbitration Association.
Susan A. Stevens purchased a manufactured home from Southern Investment Corporation d/b/a Southern Homes, Inc. ("Southern Homes"), 1900 Columbus Parkway, Opelika, on or about December 13, 2000. It is undisputed that Stevens was a resident of Alabama at the time of the sale and that Southern Homes was an Alabama corporation, and that the defendant, Uta Phillips, was the general sales manager of Southern Homes and was also the salesperson of the manufactured home that Stevens bought. Indies House Manufactured Homes, the manufacturer of the home, was an Alabama corporation, and the home was manufactured in Hackleburg, Alabama, although there was evidence indicating that many of the materials used in the construction of the manufactured home came from out of state.
At the time Stevens purchased the manufactured home, she executed at least two arbitration agreements. One agreement was a stand-alone arbitration agreement, which is attached to this opinion as an appendix.[1] On the date of purchase, Stevens also executed a document entitled, "Alabama Retail Installment Contract, Security Agreement, Waiver of Trial by Jury, and Agreement to Arbitration or Reference or Trial by Judge Alone" ("the contract"), which, in pertinent part, includes the following provisions:
(Capitalization and bold in original.) The following terms are defined at the beginning of the contract: "`I,' `me,' `myself,' or `my' mean[s] all persons who sign this Contract as buyer or co-buyer, jointly and severally, and `you' or `your' mean[s] the Seller and any assignee." The arbitration provision in the contract and the stand-alone arbitration agreement are hereinafter sometimes referred to together as "the arbitration agreement."
On or about February 26, 2001, Stevens sent Phillips a letter regarding the condition of the manufactured home she had purchased. In the letter, she demanded that certain repairs be made to the home and she also demanded money damages for various problems relating to the condition of her home. On or about March 15, 2001, before Stevens filed this action, Southern Homes filed a "Demand for Arbitration" with the American Arbitration Association seeking to arbitrate the claims Stevens made in her letter. On or about March 23, 2001, Stevens filed this action against Phillips individually.
Stevens's complaint contained three counts: Count I alleged that Phillips was guilty of misrepresentation, in that Phillips represented to her that the sale of the home would include "furniture and a deck and that the home would be delivered, installed, and ready for occupancy by December 19, 2000," that "[t]he defendant further promised and represented to her that any problems in the home would be promptly repaired, within twenty-four hours in the case of leaks," and that "[t]he defendant consciously and deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff"; count II alleged promissory fraud, averring that Phillips, when she made the promise that the home would include furniture and a *127 deck, had no intent to provide the furniture and a deck as a part of the bargain they had made; and count III claimed that the arbitration agreement, which Stevens admitted she signed, "permitted the purchaser and the salesperson to also agree to arbitrate disputes between themselves," but that "[t]he defendant Uta Phillips, who was the salesperson, never executed the agreement to arbitrate disputes with plaintiff," and that "[b]y filing this complaint, the plaintiff does hereby [revoke her offer] to arbitrate disputes with the defendant, Uta Phillips."
With respect to counts I and II, Stevens, although not naming Phillips's employer, Southern Homes, as a party, nevertheless included allegations relating to Southern Homes, as follows:
This paragraph appeared in both counts I and II of Stevens's complaint.
On or about April 25, 2001, Phillips filed a motion to compel arbitration. In an affidavit submitted in support of her motion, she stated that Stevens's purchase of the manufactured home "was financed through Green Point Credit Company, which is headquartered in Cincinnati, Ohio," and that "[t]he actual sales documents and credit approval came from Green Point Credit in Pensacola, Florida." Phillips also attached to her affidavit documents that she averred were "maintained in the files of Southern Homes in the normal course of business"; one of those documents was the contract signed by Stevens and Phillips, who signed in her representative capacity for Southern Homes, the pertinent provisions of which have already been quoted.
Phillips also filed an affidavit made by Tony Capasso, the controller for Indies House Manufactured Homes, who stated that, based upon the records of the company, "the home purchased by Ms. Stevens would be constructed with materials purchased and paid for through Interstate Commerce in excess of $14,000."
Although the trial judge initially denied Phillips's motion to compel arbitration on December 18, 2001, Phillips filed a motion to reconsider the denial and a second motion to compel arbitration on January 11, 2002; she attached as an exhibit the stand-alone arbitration agreement, attached to this opinion as an appendix. After considering Phillips's submission and Stevens's response, the trial court rescinded its December 18, 2001, order denying Phillips's motion to compel arbitration and entered the following order, compelling Stevens to arbitrate her claims against Phillips:
In BankAmerica Housing Services v. Lee, 833 So. 2d 609 (Ala.2002), this Court stated:
833 So. 2d  at 617.
Stevens primarily argues that the arbitration agreement attached as an appendix to this opinion is unenforceable in this case because, she argues, the agreement did not cover "agents and employees," but, in fact, contained a specific provision relating to disputes between the purchaser and the salesperson, and Phillips failed to sign this provision as the salesperson. Consequently, Stevens argues, Phillips lacks standing to compel arbitration because she did not sign the agreement in her individual capacity, on the line marked "Salesperson."
Phillips counters this argument by contending that she, as the selling agent for Southern Homes, is entitled to enforce arbitration. In support of her argument, she relies on the two cases the trial court relied on in compelling Stevens to arbitrage her disputeEx parte Gray, 686 So. 2d 250 (Ala.1996), and Monsanto Co. v. Benton Farm, 813 So. 2d 867 (Ala.2001). In Ex parte Gray, Gray, a customer of an automobile dealership, sued the dealership and the salesman. The trial court issued an order staying the action pending arbitration, and the customer petitioned this Court for a writ of mandamus vacating *129 that order.[2] This Court denied the petition, holding that Gray was compelled to arbitrate his complaints against both the dealership and the salesman, even though the agreement containing the arbitration provision was signed only by the customer and the dealership. The arbitration provision included in the "Retail Buyer's Order" Gray signed read as follows:
686 So. 2d  at 251. This Court, in denying the petition for the writ of mandamus, stated:
686 So. 2d  at 251 (emphasis added).
In Monsanto, this Court discussed the rights of a salesperson to "stand in the shoes" of the employer and enforce arbitration, even though the salesperson was a nonsignatory to the arbitration agreement. In that case, which involved facts similar to the facts of this case, this Court reviewed the law relating to the right of a nonsignatory to enforce an arbitration agreement. This Court stated:
813 So. 2d  at 873-74.
In a special concurring opinion in Monsanto, Justice Johnstone disagreed with some of the rationale in the majority opinion in Monsanto, but stated, with regard to Smith's right to compel arbitration:
813 So. 2d  at 875 (Johnstone, J., concurring in cases no. 1000900, no. 1000901, and no. 1000902, and concurring in the judgment and in the rationale in part in case no. 1000903).
Although unlike Monsanto, no order in this case compels Stevens to arbitrate her claims against Southern Homes, it is undisputed that, on or about March 15, 2001, *131 before Stevens filed this action, Southern Homes filed a "Demand for Arbitration" with the American Arbitration Association regarding the claims made by Stevens in her letter. In count I and count II, Stevens alleged in paragraphs 8 and 13, respectively:
Stevens, however, did not make Southern Homes a defendant or take any action, insofar as we can tell from the record before us, regarding the arbitration proceeding or the allegations she made in the paragraph quoted above.
Based on the record before us, which contains two arbitration agreements executed by Stevens, it appears that Stevens's claims against Phillips arise out of representations allegedly made by Phillips, while she was acting as an agent within the line and scope of her employment with Southern Homes; therefore, we hold that under the circumstances presented by this case, Phillips "stands in the shoes" of her principal.
Stevens further argues that even if Phillips can claim the benefits under the arbitration provision Phillips failed to carry her burden of showing that the transaction substantially affected interstate commerce. See American Gen. Fin., Inc. v. Morton, 812 So. 2d 282, 284-85 (Ala.2001)("The party seeking to compel arbitration has the initial burden of proving the existence of a contract calling for arbitration and proving that the contract evidences a transaction substantially affecting interstate commerce.").
As we have already pointed out, Phillips, in an effort to carry her burden of showing that Stevens's purchase of the manufactured home substantially affected interstate commerce, filed two affidavits. One of those affidavits was by Tony Capasso, the controller for Indies House Manufactured Homes, who stated that, according to the records of that company, "the home purchased by Ms. Stevens would be constructed with materials purchased and paid for through Interstate Commerce in excess of $14,000." The other affidavit was by Phillips; it stated that the manufactured home was financed through Green Point Credit Company, which is headquartered in Cincinnati, Ohio, and that the actual sales documents were prepared by and the credit approval was sought from Green Point Credit in Pensacola, Florida.
This evidence was sufficient to show that the transaction substantially affected interstate commerce. In Ex parte Thicklin, 824 So. 2d 723 (Ala.2002), this Court, quoting Southern Energy Homes, Inc. v. McCray, 788 So. 2d 882 (Ala.2000), stated, "`An Alabama resident's purchase of a new mobile homeeven one manufactured in Alabamacan be a transaction that substantially affects interstate commerce....' 788 So. 2d  at 883 (footnote omitted)." In Ex parte Thicklin, this Court discussed the evidence presented in that case to show that the sale of the manufactured home involved interstate commerce, as follows:
824 So. 2d  at 727-28. In McCray, supra, cited in Ex parte Thicklin, the evidence established that, although Southern Energy manufactured mobile homes in Alabama, the funds it used to conduct its business came from banking institutions located outside of Alabama and many of the parts incorporated into the mobile homes were acquired from suppliers outside of Alabama and were shipped in interstate commerce to Southern Energy's plant in Alabama. 788 So. 2d  at 883 n. 1.
Although there is less evidence in this case showing that the transaction substantially affected interstate commerce than there was in Ex parte Thicklin and McCray, we conclude, as this Court did in Ex parte Thicklin, that the evidence indicates that Stevens's purchase of her manufactured home was a transaction that substantially affected interstate commerce. Therefore, we find that the Federal Arbitration Act applies to this transaction.
Stevens argues (1) that the arbitration agreement in this case "covers all warranty disputes concerning the manufactured home, and it expressly provides that the `purchaser, retailer, manufacturer or lender' may invoke the provision [but] is not disclosed in any written warranty" (Stevens's brief, p. 21); and (2) that the arbitration agreement is unenforceable because it violates the consumer's due-process protocol of the American Arbitration Association.
Stevens contends that "[i]n Ex parte Thicklin, [824 So. 2d 723 (Ala.2002) ], the court held that the failure to disclose the arbitration provision in the warranty rendered the provision unenforceable as to any express-warranty and Magnuson-Moss claims." (Stevens's brief, p. 21.) She claims that the "provision requiring [Stevens] to arbitrate express-warranty and Magnuson-Moss disputes violates the Magnuson-Moss Act," and that "[u]nlike the arbitration provision in Thicklin, however, the present arbitration provision contains no severability clause." (Stevens's brief, p. 21.)
We believe that this Court's holding in Ex parte Thicklin is as broad as Stevens suggests. The plaintiff in Ex parte Thicklin sought to vacate an order of the trial court compelling arbitration of her claims against the seller and manufacturer of a mobile home for breach of warranty, violation of the Magnuson-Moss Warranty-Federal Trade Commission Act, negligence, and fraud.[3] In Ex parte Thicklin, this Court did hold that the plaintiff could not be compelled to arbitrate her express-warranty and Magnuson-Moss claims, because the arbitration clause was not contained in a written warranty, but that Thicklin could be required to arbitrate her other claims. Likewise, Stevens can be compelled to arbitrate her claims against Phillips, because those claims are not warranty claims but are "other claims."
Regarding Stevens's alternative argument that the arbitration agreement was unenforceable because it violated "the consumer due process protocol of the American Arbitration Association" (Stevens's brief, p. 23), this Court, in Ex parte Thicklin, discussed a similar claim:
824 So. 2d  at 735.
In Ex parte Thicklin, Justice See, in a special concurrence, wrote the following on the issue of unconscionability:
"540 So. 2d  at 716.
"In Ex parte Napier, 723 So. 2d 49 (Ala.1998), this Court noted:
824 So. 2d  at 737-38 (footnotes omitted).
Based on the record before us and the above-cited authorities, we conclude that the trial court did not err in compelling Stevens to arbitrate her claims against Phillips. It is undisputed that Southern Homes, on March 15, 2001, instituted arbitration proceedings with the American Arbitration Association; the brief filed on behalf of Phillips on this appeal states:
(Phillips's brief, p. 35.) Stevens, in her reply brief, does not dispute or address this statement made in Phillips's brief, or call our attention to evidence in support of her claim that the arbitration agreement in this case is unconscionable because it violates her due-process rights as a consumer. As previously stated, her main argument is that Phillips, in her individual capacity, was a nonsignatory and therefore could not compel arbitration, and that, even if we determined that Phillips had standing, the sale of the manufactured home did not substantially affect interstate commerce.
Based on the foregoing, we hold that the trial court did not err in compelling Stevens to arbitrate her claims against Phillips.
This opinion was prepared by Retired Justice Hugh Maddox, sitting as a Justice of this Court pursuant to § 12-18-10(e), Ala.Code 1975.
AFFIRMED.
HOUSTON, SEE, BROWN, WOODALL, and STUART, JJ., concur.
LYONS, JOHNSTONE, and HARWOOD, JJ., concur in the result.
MOORE, C.J., dissents.
JOHNSTONE, Justice (concurring in the result).
The record discloses that the plaintiff is, in fact, pursuing against the signatory dealer before the arbitrator essentially the same claims the plaintiff is pursuing against the nonsignatory agent Phillips before the circuit court. (The plaintiff is pursuing other claims as well against the signatory dealer before the arbitrator.) The record discloses that, while the plaintiff is contesting the issue of the arbitrability of all of these claims against the signatory dealer, the plaintiff has submitted this issue of arbitrability to the arbitrator herself. The classic operation of the doctrine of equitable estoppel intertwining on these facts, together with the other facts recited in the main opinion, entitles the nonsignatory agent Phillips to the benefit of the same arbitration agreement invoked by the signatory principal dealer. Auvil v. Johnson, 806 So. 2d 343, 348 and 350 (Ala. 2001). See also my special writing in Monsanto Co. v. Benton Farm, 813 So. 2d 867, 875 (Ala.2001), cited in the main opinion. Monsanto is an archetypal equitable estoppel intertwining case in that, there, the signatory principal DAS had already conclusively established its right to enforce the arbitration agreement when this Court held that the nonsignatory agent too could enforce that agreement. Id.
[1]  It is readily apparent from examining the arbitration agreement attached to this opinion as an appendix, that Stevens, as the purchaser, signed in two places, and that immediately above her second signature the following sentence appears: "ANY DISPUTE BETWEEN SALESPERSON AND PURCHASER WILL BE SETTLED THROUGH ARBITRATION." It is also apparent that Phillips signed the agreement on behalf of "SOUTHERN HOMES OUTLET CENTER, A DIVISION OF SOUTHERN INVESTMENT CORP., 1900 COLUMBUS PKWY, OPELIKA, AL 36804," the retailer.
[2]  When Ex parte Gray was decided, a writ of mandamus was the appropriate remedy for the aggrieved party to pursue. Rule 4(d), Ala. R.App. P., adopted effective October 1, 2001, makes an order granting or denying a motion to compel arbitration reviewable by appeal.
[3]  The petition for the writ of mandamus in Ex parte Thicklin was filed before October 1, 2001, the effective date of Rule 4(d), Ala. R.App. P., which provides that review of an order granting or denying a motion to compel arbitration is by appeal. Before the adoption of Rule 4(d), review of an order granting a motion to compel arbitration was by petition for a writ of mandamus. Thus Ex parte Thicklin was decided under an abuse-of-discretion standard of review applicable to a petition for a writ of mandamus.