Title: Ameriprise Financial Services, Inc. v. Jones

State: alabama

Issuer: Alabama Supreme Court

Document:

REL:10/30/2015
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, 2015-2016
_________________________
1140893
_________________________
Ameriprise Financial Services, Inc., and Robert Shackelford
v.
Paul D. Jones and Eleanor G. Jones
Appeal from Autauga Circuit Court
(CV-15-900004)
SHAW, Justice.
Ameriprise Financial Services, Inc. ("Ameriprise"), and
Robert 
Shackelford, 
the 
defendants 
below 
(hereinafter 
referred
to collectively as "the defendants"), appeal from the Autauga
Circuit Court's order denying, in part, their motion to compel
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arbitration of the claims asserted against them by the
plaintiffs, Paul D. Jones and Eleanor G. Jones (hereinafter
referred to collectively as "the plaintiffs"). Specifically,
the defendants 
challenge the 
circuit 
court's refusal to compel
arbitration of the plaintiffs' tort-of-outrage claim.  We
reverse and remand.
  
Facts and Procedural History
In 2009, Charles T. Jones opened two investment accounts
with Ameriprise; Shackelford is an Ameriprise employee.  In
connection with the purchase of the accounts, Charles
executed, among other documents, the "Ameriprise Brokerage
Client Agreement for Tax-Qualified ... Brokerage Accounts"
(hereinafter "the agreement").  The agreement contained an
arbitration provision that provided, in pertinent part:
"Arbitration.  By reading and accepting the terms of
this Agreement, you acknowledge that, in accordance
with the Arbitration section, you agree in advance
to arbitrate any controversies, which may arise with
the Introducing Broker or Clearing Broker.
"YOU AGREE 
THAT ALL 
CONTROVERSIES 
THAT MAY 
ARISE
BETWEEN US (INCLUDING, BUT NOT LIMITED TO THE
BROKERAGE ACCOUNT AND ANY SERVICE OR ADVICE PROVIDED
BY A BROKER OR REPRESENTATIVE), WHETHER ARISING
BEFORE, ON OR AFTER THE DATE THIS ACCOUNT IS OPENED
SHALL BE DETERMINED BY ARBITRATION....  BY SIGNING
AN ARBITRATION AGREEMENT THE PARTIES AGREE AS
FOLLOWS:
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"(A) ALL PARTIES TO THIS AGREEMENT ARE GIVING UP
THE RIGHT TO SUE EACH OTHER IN COURT, INCLUDING THE
RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE
RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS
FILED."
(Capitalization in original.)  
In 2012, Charles executed both a durable power of
attorney naming Paul as his attorney in fact and a will
leaving all of his property to the plaintiffs.  Thereafter,
Paul allegedly contacted the defendants on numerous occasions
seeking to have the plaintiffs named as the beneficiaries of
the Ameriprise accounts.  The plaintiffs allege that, after
Paul provided certain documents identified by Ameriprise as
necessary to effect the beneficiary change, the defendants
allegedly informed him that the plaintiffs had, in fact, been
designated as the named beneficiaries on both accounts. 
However, according to the plaintiffs, Ameriprise instead
"reported to the Autauga County Sheriffs Department that [the
plaintiffs had] kidnapped [Charles], and that his signature
was forged on the documents provided."  Sheriff's deputies
later spoke with Charles, who allegedly denied both his
kidnapping and the suspected forgery.
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Charles died in January 2013, and the plaintiffs made a
claim for the funds in the Ameriprise accounts.  The
defendants denied the claim, indicating that the plaintiffs
had never been named beneficiaries.
The plaintiffs subsequently sued the defendants in the
Autauga Circuit Court.  The plaintiffs' complaint alleged
numerous counts, including breach of contract, bad faith,
misrepresentation, tort of outrage, negligence, willfulness,
and wantonness.  In response, the defendants filed a motion
seeking to compel arbitration of the plaintiffs' claims. 
Specifically, the defendants contended that, despite being
nonsignatories to 
the 
agreement, the 
plaintiffs were
nonetheless bound by its terms because they were claiming a
direct benefit from the agreement.
The plaintiffs filed a response conceding that they were
"equitably estopped from avoiding" arbitration as to 
all 
their
claims except for the tort-of-outrage count.  That count
stated:  "The defendants, in misrepresenting facts to the
plaintiffs and accusing the plaintiffs of kidnapping and
forgery, knew or should have known that such extreme or
outrageous conduct would inflict extreme emotional distress
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upon the plaintiffs." Unlike their other claims, which the
plaintiffs acknowledged "depend upon the existence of [the
agreement]," 
as 
to 
their tort-of-outrage claim, 
they
maintained that
"there is no dependence on the existence of any
contract and the prima facie elements of this cause
of action can be proven with only the slightest
references to the ... [agreement].  The existence of
the subject accounts only provides 'background'
information as to the circumstance surrounding [the
defendants' actions in] contacting the Autauga
County Sheriffs Department and reporting that
Charles Jones had been kidnapped.  To prevail, [the
plaintiffs] need not prove the existence of the
subject accounts.  Additionally, the duty not to
engage in outrageous conduct does not arise out of
the subject account; instead, the duty arose out of
general tort and was owed to [the plaintiffs]
regardless of any contractual relationship between
Charles ... and Ameriprise."
Relying on the foregoing, the plaintiffs argued that none
of the four recognized exceptions pursuant to which this Court
has allowed a nonsignatory to an arbitration agreement to be
compelled to arbitration, namely agency, alter ego, third-
party beneficiary, and intertwining/equitable estoppel,
applied.  See, generally, Custom Performance, Inc. v. Dawson,
57 So. 3d 90, 97-99 (Ala. 2010).  The circuit court agreed,
concluding that all claims except the tort-of-outrage claim
must be arbitrated and that the tort-of-outrage "claim shall
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proceed to trial in the ordinary course." The defendants
appeal solely as to the circuit court's ruling on the
arbitrability of the tort-of-outrage claim.  
Standard of Review
"'[T]he standard of review of a trial court's
ruling on a motion to compel arbitration at the
instance of either party is a de novo determination
of whether the trial judge erred on a factual or
legal issue to the substantial prejudice of the
party seeking review.  Ex parte Roberson, 749 So. 2d
441, 446 (Ala. 1999).  Furthermore:
"'A motion to compel arbitration is
analogous to a motion for 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 that
contract evidences a transaction affecting
interstate commerce.  Id.  "After 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."'
"Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277,
280 (Ala. 2000) (quoting Jim Burke Auto., Inc. v.
Beavers, 674 So. 2d 1260, 1265 n.1 (Ala. 1995)
(emphasis omitted))."
Vann v. First Cmty. Credit Corp., 834 So. 2d 751, 752-53 (Ala.
2002).
Discussion
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"The Federal Arbitration Act, 9 U.S.C. § 1 et
seq. ('the FAA'), provides that '[a] written
provision in ... a contract evidencing a transaction
involving commerce to settle by arbitration a
controversy thereafter arising out of such contract
or transaction ... shall be valid, irrevocable, and
enforceable ....' 9 U.S.C. § 2. The FAA 'mandates
the arbitration of claims encompassed by an
arbitration clause that is contained in a binding
contract that involves interstate commerce.' Ex
parte Conference America, Inc., 713 So. 2d 953, 955
(Ala. 1998)."
Elizabeth Homes, L.L.C. v. Cato, 968 So. 2d 1, 3-4 (Ala.
2007). 
In support of their motion to compel arbitration, the
defendants produced a contract calling for arbitration,
namely, the agreement.   Therefore, the burden then shifted to
1
the plaintiffs to present evidence indicating that the
arbitration provision did not apply to their claims against
the defendants.  Vann, supra. 
As set out above, the plaintiffs conceded below that,
despite the fact that they were nonsignatories to the
agreement, they were nonetheless bound to arbitrate some of
their claims because they were seeking to claim benefits
dependent upon the agreement, which contained the arbitration
There is no dispute that the transaction involved
1
interstate commerce.
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provision; by that acknowledgment, the plaintiffs both
necessarily 
established 
themselves 
as 
third-party
beneficiaries 
of 
the 
agreement 
and 
rendered 
themselves 
subject
to the accompanying burdens created thereby.  See Dawson, 57
So. 3d at 97-98 (holding that "[r]egardless of whether a
nonsignatory is in fact a third-party beneficiary, the
nonsignatory is treated as a third-party beneficiary —- and is
equitably estopped from avoiding arbitration —- when he or she
asserts legal claims to enforce rights or obtain benefits that
depend on the existence of the contract that contains the
arbitration agreement").  See also Cook's Pest Control, Inc.
v. Boykin, 807 So. 2d 524, 526 (Ala. 2001) (restating the
general rule "'that a third-party beneficiary cannot accept
the benefit of a contract, while avoiding the burdens or
limitations of that contract'" (quoting Georgia Power Co. v.
Partin, 727 So. 2d 2, 5 (Ala. 1998))).  However, "[t]o the
extent that the nonsignatory's claims do not rely on the
existence 
of the 
contract 
containing the 
arbitration
provision, the nonsignatory is not estopped from avoiding
arbitration."  Dawson, 57 So. 3d at 98. 
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The plaintiffs present numerous claims on appeal as to
why they, as nonsignatories, may not be compelled to arbitrate
their tort-of-outrage claim.  See, e.g. Boykin, 807 So. 2d at
526 (explaining that, generally, "a nonsignatory to an
arbitration agreement cannot be forced to arbitrate [his]
claims").  Specifically, they maintain that the third-party-
beneficiary exception does not apply because, they contend,
"[w]hen the subject [agreement was] signed ... neither
Ameriprise nor Charles ... intended to confer any direct
benefit on [either of the plaintiffs]"; that "[t]he
'intertwining claims' exception is inapplicable because, as
signatories, Ameriprise and Shackelford cannot use this
exception to compel non-signatories to arbitrate"; and that 
"the 'equitable estoppel' exception does not apply
because this exception is predicated on the
equitable principle that a non-signatory cannot
simultaneously prosecute a claim that relies on or
depends upon the existence of a contract containing
an arbitration provision and ignore the contract’s
arbitration provision."
(Appellees' brief, at pp. 8-9.)  The plaintiffs contend that
their tort-of-outrage claim is not dependent upon the
agreement containing the arbitration provision.  More
specifically, they contend that the agreement has only a
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"tangential" connection to the facts giving rise to their
tort-of-outrage 
claim, 
namely 
the 
purported 
false 
reporting 
of
a forgery and a kidnapping.  We cannot agree.
As set out above, the agreement, by its express terms,
applies to "all controversies that may arise." The defendants
note that this Court has held that "'[t]he phrase "any
controversy or claim arising out of or relating to" in
arbitration agreements covers a broad range of disputes.'"  
(Appellants' brief, at p. 20, quoting Vann, 834 So. 2d at
754.) The language of the agreement refers to "any
controversies" that arise between the parties and is not
limited to those related to or arising from the agreement. 
The plaintiffs continue to assert, however, that they claim no
benefits under the agreement that relate to the prosecution of
their tort-of-outrage claim. 
In order to determine whether "a third party's claims can
be so dependent upon a contract that a mere disavowal of
third-party-beneficiary status cannot defeat a properly
supported motion to compel arbitration," we conduct a fact-
specific analysis.  Boykin, 807 So. 2d at 526-27.  In Olshan
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Foundation Repair Co. of Mobile v. Schultz, 64 So. 3d 598
(Ala. 2010), we stated:
"We must consider the facts presented to us in
this case to determine whether the tort claims
asserted by Mrs. Schultz depend upon the existence
of the 2006 and 2007 contracts containing the
arbitration 
provision. 
See, 
e.g., 
[Custom
Performance, Inc. v.] Dawson, 57 So. 3d [90] at 98
[(Ala. 2010)] (quoting this Court's statements in
Cook's [Pest Control, Inc. v. Boykin, 807 So. 2d 524
(Ala. 
2001),] 
and 
stating: 
'Accordingly, 
to
determine whether [the plaintiff] is equitably
estopped from avoiding the contractual burden of
arbitration, we must first consider whether, under
the circumstances of this case, any of the legal
claims asserted by [the plaintiff] are dependent on
the existence of the contract that contains the
arbitration agreement.').  Mrs. Schultz alleges that
Olshan negligently and wantonly performed work on
the foundation of her house in August 2006, March
2007, and January 2008, thus damaging her house. It
is undisputed that Olshan's work on which Mrs.
Schultz bases her claims was done pursuant to the
2006 and 2007 contracts.  To support her claims,
Mrs. Schultz must prove that Olshan owed her a duty. 
Mrs. Schultz has not alleged, and we do not see how
she may prove, the existence of such a duty without
reference to the 2006 and 2007 contracts.  As in
[Capitol Chevrolet & Imports, Inc. v.] Grantham, 
[784 So. 2d 285 (Ala. 2000),] therefore, Mrs.
Schultz's claims depend upon the existence of the
contracts containing the arbitration provision. Mrs.
Schultz cannot simultaneously 'base her claims on
the contract[s] executed between her husband and
[Olshan] and at the same time seek to avoid the
arbitration agreement.' Grantham, 784 So. 2d at
289."
64 So. 3d at 609-10 (footnote omitted).
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The 
plaintiffs' 
tort-of-outrage 
claim 
arises 
from 
conduct
by the defendants that occurred in connection with the
plaintiffs' attempts to effect a beneficiary change under the
agreement.  Without the agreement, the plaintiffs would never
have contacted Ameriprise, and Ameriprise would never have
contacted law enforcement with concerns regarding whether the
documents submitted to effectuate the change had been forged
and Charles had been kidnapped.  In fact, it was only in
Paul's role as attorney in fact and agent for Charles, who was
clearly bound by the duty to arbitrate all controversies, that
the requested beneficiary change –- and the allegedly 
outrageous response of Ameriprise –- occurred.  Moreover, the
allegedly "outrageous" nature of Ameriprise's response to the
requested benefit change must be viewed in the context of its
own responsibilities in determining the validity of a
requested beneficiary change on the affected accounts;
therefore, the plaintiffs' claims arise out of the manner in
which they contend the beneficiary change –- an act the
defendants argue was specifically governed by the 
agreement --
should have been effectuated.   See Edward D. Jones & Co. v.
2
We express no opinion as to the viability of the
2
plaintiffs' tort-of-outrage claim.
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Ventura, 907 So. 2d 1035, 1042 (Ala. 2005).  See also Edwards
Motors, Inc. v. Hudgins, 957 So. 2d 444, 448 (Ala. 2006)
(compelling arbitration of purchaser plaintiffs' malicious-
prosecution claim where automobile dealership had instituted
criminal proceeding against plaintiffs, which was later
dismissed, on ground that arbitration provision contained in
purchase 
agreement 
covered 
plaintiffs' 
claim, 
which
"'"result[ed] from or ar[ose] out of or relat[ed] to or
concern[ed] the transaction entered into"'" (quoting Dan
Wachtel Ford, Lincoln, Mercury, Inc. v. Modas, 891 So. 2d 287,
293 (Ala. 2004))).  
In sum, the nonsignatory plaintiffs have clearly conceded
that they are third-party beneficiaries of the agreement.  The
scope of the arbitration provision in the agreement is 
indisputably broad enough to encompass the plaintiffs' tort-
of-outrage claim.  Moreover, as the defendants note, "[t]he
events surrounding the change of beneficiary [on the
Ameriprise accounts] form the basis for all of the
[plaintiffs’] claims."  (Appellants' brief, at pp. 6-7.) 
Under 
the 
foregoing 
reasoning, 
the 
plaintiffs' 
tort-of-outrage
claim is, like their other claims, subject to the arbitration
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provision in the agreement.  The circuit court, therefore,
improperly denied the defendants' motion seeking to compel
arbitration of all of the plaintiffs' claims.
Conclusion
We reverse the circuit court’s order insofar as it denied 
the defendants' motion to compel arbitration of the
plaintiffs' tort-of-outrage claim and remand the case for
proceedings consistent with this opinion.
REVERSED AND REMANDED.
Stuart, Bolin, Parker, Main, and Wise, JJ., concur. 
Moore, C.J., and Murdock and Bryan, JJ., dissent.
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