Title: H & S HOMES, LLC v. McDonald
Citation: 910 So. 2d 79
Docket Number: 1031445
State: Alabama
Issuer: Alabama Supreme Court
Date: December 17, 2004

910 So. 2d 79 (2004)
H &amp; S HOMES, L.L.C.
v.
Christina L. McDONALD.
1031445.

Supreme Court of Alabama.
December 17, 2004.
Rehearing Denied April 8, 2005.
*80 David L. Selby II and Jon M. Hughes of Kee &amp; Selby, LLP, Birmingham, for appellant.
Michael S. Harper, Tallassee; and Frank H. Hawthorne, Jr., of Hawthorne &amp; Myers, Montgomery, for appellee.
HOUSTON, Justice.
John McDonald and Christina L. McDonald sued H &amp; S Homes, L.L.C., and its agents, Linda Wilson Williams and Russ D'Olympio ("the defendants"),[1] alleging fraud, suppression, deceit, conversion, negligence, and wantonness relating to the McDonalds' purchase of a new mobile home from H &amp; S Homes. The defendants moved to compel arbitration of the McDonalds' claims. The purchase contract for the mobile home required that disputes arising out of the sale of the mobile home be resolved by arbitration. John was only 17 years old when he entered into the purchase contract, and he subsequently disavowed the contract based upon his status as a minor. The trial court granted the motion to compel arbitration of Christina's claims, but it denied the motion as to John's claims. The defendants appealed, and this Court affirmed the trial court's order. H &amp; S Homes, L.L.C. v. McDonald, 823 So. 2d 627 (Ala.2001).
Christina signed two arbitration agreements in connection with her and John's purchase of the mobile home from H &amp; S Homes. After this Court affirmed the trial court's order compelling arbitration of Christina's claims, Christina and the assignee/finance company selected an arbitrator in accordance with one of the agreements; however, the trial court set aside their selection and ordered the parties to select an arbitrator in accordance with the rules of the American Arbitration Association ("the AAA"). Christina appealed from that order. On appeal, this Court reversed the judgment of the trial court; it held that the two arbitration agreements must be read together and construed as one document and that Christina had properly selected an arbitrator by the method provided for in those agreements. McDonald v. H &amp; S Homes, L.L.C., 853 So. 2d 920, 924-25 (Ala.2003).
After a two-day arbitration hearing, the arbitrator awarded Christina $500,000. H &amp; S Homes appealed. We affirm.
Christina contends that this appeal is due to be dismissed because H &amp; S Homes did not challenge the arbitration award through a motion to vacate the arbitration award pursuant to 9 U.S.C. § 12 before it filed its appeal to this Court. However, such a motion is not required before an arbitration award can be appealed in Alabama. See Ala.Code 1975, § 6-6-15 ("Either party may appeal from an award under this division. Notice of the *81 appeal to the appropriate appellate court shall be filed within 10 days after receipt of notice of the award and shall be filed with the clerk ... of the circuit court where the action is pending...."). H &amp; S Homes filed its notice of appeal within 10 days after it received notice of the award. The notice of appeal filed by H &amp; S Homes became effective when the judgment on the arbitrator's award was entered; it was thus timely filed. Birmingham News Co. v. Horn, 901 So. 2d 27, 42 (Ala.2004).
Christina, in the conclusion of her brief to this Court, contends that H &amp; S Homes insisted that she sign an arbitration agreement as a condition of buying a mobile home and required her to arbitrate after she sued H &amp; S Homes and its agents. She argues that because that arbitration was conducted pursuant to the rules H &amp; S Homes chose and by an arbitrator chosen in accordance with those rules, H &amp; S Homes must live with the award entered by the arbitrator. In support of this argument, she cites Stark v. Sandberg, Phoenix &amp; von Gontard, P.C., 381 F.3d 793, 803 (8th Cir.2004):
(Citations omitted.)
H &amp; S Homes presents four issues for our review:
This Court did recognize "manifest disregard of the law" by an arbitrator as a ground for reversing an arbitrator's award in the landmark decision, authored by Justice Harwood, Birmingham News Co. v. Horn, supra. The standard for determining whether there has been a manifest disregard of the law was set out in that opinion as follows:
901 So. 2d  at 52 (quoting Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 202 (2d Cir.1998); footnote omitted).
The written award of the arbitrator in this case provides:
The stand-alone arbitration agreement dated January 28, 2000, that Christina signed is silent as to whether the arbitrator has to make a written award or to give reasons for the award made. The arbitration provision in the retail installment contract also dated January 28, 2000, and signed by Christina is ambiguous. It provides that "[t]he Commercial Rules of the American Arbitration Association (`AAA') also shall apply."
Rule 55 of the Commercial Rules of the AAA provides:
(Emphasis added.)
Attached to Christina's brief to this Court is "A Guide for Commercial Arbitrators" issued by the AAA. On page 11, the following appears:
Another sentence in the arbitration provision of the retail installment contract, which is signed by H &amp; S Homes and Christina, provides: "The award of the arbitrator(s) shall be in writing and include a statement of reasons for the award. The award shall be final."
The noun "reason" is not defined in Black's Law Dictionary (8th ed.2004). The first definition given for the noun "reason" in The American Heritage Dictionary of the English Language 1457 (4th ed.2000) is "[t]he basis or motive for an action, decision, or conviction."
Even if the conflicting provisions in the retail installment contract could be reconciled to require the arbitrator to include a *83 statement of the reasons for the award, there is no evidence indicating that the arbitrator knew that his written award, which he wrote "[b]ased upon the testimony and documents presented at the hearing as well as the written arguments and briefs," did not constitute a "statement of reason, the basis or motive for [his] action, decision, or conviction." H &amp; S Homes wants this Court to define "a statement of reasons for the award" as an award including findings of fact and conclusions of law, which is what H &amp; S Homes asked the arbitrator to do after the award was made. This we will not do.
There is no proof that there has been a manifest disregard of the law, as that term was defined in Birmingham News Co. v. Horn, supra, in regard to this issue.
In asserting this argument, H &amp; S Homes paints with too broad a brush. Linda Wilson Williams and Russ D'Olympio were initially defendants in this action. They were dismissed as parties; H &amp; S Homes knew that they had been dismissed. The record reveals that the lawyer for H &amp; S Homes asked Christina's lawyer: "And you have dismissed Russ and you have dismissed Linda." To which Christina's lawyer responded: "Yes."
Also, the following appears in the affidavit of the arbitrator:
U.S.A. Petroleum Corp. v. Hines, 770 So. 2d 589 (Ala.1999), is dispositive of this issue. Under the holding of that case the arbitrator here not only did not manifestly disregard the law, but he also applied the correct law appropriately.
The arbitration award provided, in pertinent part:
In Birmingham News, 901 So. 2d  at 50, this Court, joining the majority of State appellate courts that recognize "manifest disregard of the law" as a ground available for reviewing an arbitration award, wrote:
In her complaint, Christina alleges not only fraud but also suppression, deceit, conversion, negligence, and wantonness. No issue is made that the arbitrator knew of the governing legal principle as it relates to suppression, deceit, conversion, negligence, or wantonness, yet refused to apply it or ignored it altogether. From reviewing the record, which an appellate court should not have to do when a party is seeking to vacate an arbitration award on the basis of manifest disregard of the law, this Court is satisfied that evidence was presented in arbitration as to each of those causes of action so that awarding damages for those causes of action was not a manifest disregard of the law.
There is clear and convincing evidence that an agent of H &amp; S Homes converted the down payment made by the McDonalds and the furniture in the mobile home, which came as standard equipment with the mobile home, and that H &amp; S Homes concealed from Christina the fact that although $3,000 had been added to the price of the mobile home as a furniture allowance, Christina received only $2,000 as furniture allowance. When these and other "problems" were presented to the vice president of H &amp; S Homes in an attempt to rectify the problems, the vice president asked if Christina knew about these problems. When told that she did not, he stated "what the customer doesn't know won't hurt them."
H &amp; S Homes takes two of many instances of misrepresentations constituting fraud and contends that Christina could not have reasonably relied upon those misrepresentations because, it argues, she could have ascertained the truth by reading the documents that she signed in their entirety. H &amp; S Homes proves that the arbitrator knew the reasonable-reliance aspect of the law of fraud by citing his comment: "[T]he law says, at least the latest law I am aware of, that you are deemed to know and understand what you signed. The fact that it is done quick or with marks a lot doesn't bother me." However, the mere fact that the arbitrator found for Christina based on the evidence of wrongdoing by H &amp; S Homes that was before him does not mean that he ignored the reasonable-reliance aspect of the law of fraud in making his award "[b]ased upon the testimony and documents presented at the hearing as well as written arguments and briefs...."
This issue is without merit.
The arbitrator's award provided: "The Respondent H &amp; S Homes L.L.C. shall pay to the Claimant [Christina] $500,000.00." It does not specify whether those damages are compensatory or punitive or both.
In her complaint, Christina sought damages for lost moneys, loss of use of money, and mental anguish, anxiety, and emotional distress; she sought both compensatory and punitive damages. H &amp; S Homes does not challenge the amounts awarded Christina for lost moneys, loss of use of money, mental anguish, anxiety, and emotional distress, apart from arguing that it has no liability at all based on fraud.
This Court cannot determine how much of the arbitrator's award of $500,000 was for compensatory damages, including damages for mental anguish. Therefore, this Court cannot hold that the arbitrator showed a manifest disregard of the law in *85 awarding punitive damages. Birmingham News Co. v. Horn, 901 So. 2d  at 67-68.
When parties elect arbitration, they elect a procedure designed primarily to avoid the complex, time-consuming, and costly alternative of litigation. Arbitration is not a perfect system of justicediscovery is abbreviated, the rules of evidence are relaxed, and the arbitrator, as fact-finder, operates with almost none of the controls and safeguards present in traditional litigation. Stark v. Sandberg, Phoenix &amp; von Gontard, supra. H &amp; S Homes has not shown that in determining the amount of the award in this case the arbitrator manifestly disregarded the law. The award is affirmed.
AFFIRMED.
NABERS, C.J., and LYONS, JOHNSTONE, and WOODALL, JJ., concur.
[1]  Linda Wilson Williams and Russ D'Olympio were dismissed as defendants at some point in the underlying proceedings in this case.
[2]  After the award was made, H &amp; S Homes asked the arbitrator to "amend the award and thereby clarify said award by setting forth and including findings of fact and conclusions of law." The arbitrator summarily denied this motion.