Title: Blue Ribbon Homes Super Center, Inc. v. Bell
Citation: 821 So. 2d 186
Docket Number: 1000820
State: Alabama
Issuer: Alabama Supreme Court
Date: November 9, 2001

821 So. 2d 186 (2001)
BLUE RIBBON HOMES SUPER CENTER, INC.
v.
Kenneth B. BELL and Valerie L. Hill.
1000820.

Supreme Court of Alabama.
November 9, 2001.
*187 Cowin Knowles and E. Hamilton Wilson, Jr., of Ball, Ball, Matthews &amp; Novak, P.A., Montgomery, for appellant.
Garve Ivey, Jr., of Ivey &amp; Ragsdale, Jasper, for appellees.
STUART, Justice.
Blue Ribbon Homes Super Center, Inc. ("Blue Ribbon"), a defendant in an action pending in the Hale Circuit Court, appeals from the trial court's denial of its motion to compel arbitration. We reverse and remand with instructions to the trial court to grant Blue Ribbon's motion to compel arbitration.
On May 5, 1993, Kenneth B. Bell and Valerie L. Hill filed an 11-count complaint in the Hale Circuit Court against Blue Ribbon, a seller of mobile homes, and Crimson Industries, Inc., a mobile-home manufacturer. On June 8, 1999, Blue Ribbon removed the action to the United States district court, alleging that the Hale Circuit Court lacked subject-matter jurisdiction. The removal was made subject to all claims and defenses available to Blue Ribbon and was expressly made subject to Blue Ribbon's right to compel arbitration, pursuant to the Federal Arbitration Act, 9 U.S.C. § 2. Blue Ribbon filed a motion to compel arbitration while the action was pending in federal court. Bell and Hill filed a motion to remand the case to the Hale Circuit Court. After considering Bell and Hill's motion to remand and Blue Ribbon's response to that motion, the United States district court, on August 18, 1999, remanded this action to the Hale Circuit Court.
After the case was remanded, the only motions Blue Ribbon filed sought to dismiss the action and to compel arbitration. Bell and Hill requested the right to engage in discovery regarding the enforceability of the arbitration provision, and Blue Ribbon presumably participated in such discovery. After allowing Bell and Hill multiple continuances to conduct the discovery they had requested, the trial court denied Blue Ribbon's motion to compel arbitration. The trial court's order, entered on December 8, 2000, contained no findings of fact or conclusions of law, and the record reflects that no evidence was presented in opposition to Blue Ribbon's motion to compel arbitration.
Blue Ribbon appeals from the trial court's order denying its motion to compel arbitration. Plaintiffs respond that Blue *188 Ribbon waived its right to compel arbitration by substantially invoking the litigation process.
On May 11, 1995, Bell and Hill purchased a mobile home from Blue Ribbon. Blue Ribbon is located in Alabama. Crimson Industries manufactured the mobile home at its facility in Alabama.
In connection with their purchase of the mobile home, Bell and Hill executed a sales contract. Paragraph 16 of the sales contract provides, in pertinent part:
Also as part of their purchase transaction, Bell and Hill executed a stand-alone arbitration agreement with Blue Ribbon. This stand-alone arbitration agreement was entitled "ARBITRATION AGREEMENT BETWEEN BLUE RIBBON HOMES SUPER CENTER, INC. AND KENNETH B. BELL &amp; VALERIE L. HILL"; it provides:
The record before this Court reveals that, although Crimson Industries manufactures its mobile homes within Alabama, it purchases from out-of-state sources products such as carpet, tires, siding, and shingles. Crimson Industries incorporates those products into the mobile homes it manufactures. The record also reveals that Bank America Housing Services provided the financing for Bell and Hill's purchase of the mobile home. Bank America Services is a division of Bank America, FSB (hereinafter "Bank America"), a corporate federal savings bank organized and existing under the laws of the State of Delaware, with its principal place of business in California.
Additionally, the record contains affidavit testimony establishing that, as part of the May 11, 1995, sales transaction with Bell and Hill, Blue Ribbon sold Bell and Hill, in addition to the mobile home, air conditioning units, furniture, straps, anchors, and steps. The affidavits submitted by Blue Ribbon establish that Blue Ribbon purchased these items from out-of-state sources.
A direct appeal is the proper procedure by which to seek review of a trial court's denial of a motion to compel arbitration. See Southern United Fire Ins. Co. v. Howard, 775 So. 2d 156 (Ala. 2000); A.G. Edwards &amp; Sons, Inc. v. Clark, 558 So. 2d 358, 360 (Ala.1990). But see Rule 4(d), Ala. R.App. P., as amended May 10, 2001, effective October 1, 2001. By that amendment, an order either granting or denying a motion to compel arbitration will be reviewed by appeal. This Court reviews de novo a trial court's denial of a motion to compel arbitration. First American Title Ins. Corp. v. Silvernell, 744 So. 2d 883, 886 (Ala.1999); Crimson Indus., Inc. v. Kirkland, 736 So. 2d 597, 600 (Ala.1999); and Patrick Home Ctr., Inc. v. Karr, 730 So. 2d 1171 (Ala.1999).
In Ex parte Greenstreet, Inc., 806 So. 2d 1203, 1209 (Ala.2001), this Court held:
*190 Here, Blue Ribbon has the initial burden of proof, because it is the party seeking to compel arbitration. Thus, our initial inquiry is whether Blue Ribbon has carried its burden of proof in making a "prima facie showing that an agreement to arbitrate exists in a contract relating to a transaction substantially affecting interstate commerce." Ex parte Greenstreet, supra. If Blue Ribbon has met this burden, then the burden shifts to Bell and Hill as the party opposing the motion to compel arbitration. Once the burden has shifted, we consider whether Bell and Hill have established their defense to Blue Ribbon's properly supported motion, i.e., whether Blue Ribbon has waived its right to invoke the parties' arbitration agreement by substantially invoking the litigation process.
The record before this Court establishes that an "agreement to arbitrate exists in a contract relating to a transaction substantially affecting interstate commerce." Ex parte Greenstreet, supra. We recently held that "[a]n Alabama resident's purchase of a new mobile homeeven one manufactured in Alabamacan be a transaction that substantially affects interstate commerce, and the evidence indicates that the McCrays' purchase of their mobile home was such a transaction." Southern Energy Homes, Inc. v. McCray, 788 So. 2d 882, 883 (Ala.2000). In McCray, the evidence before the Court established that, although Southern Energy manufactured mobile homes within Alabama, the funds it used to conduct business came from banking institutions located out of state 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. Id. at 883 n. 1.
As was the case in McCray, Blue Ribbon presented evidence indicating that Bell and Hill's purchase of the mobile home affected interstate commerce. Affidavits provided by Thomas Deas, Blue Ribbon's president, provide, in pertinent part:[1]
Blue Ribbon also presented an affidavit of Larry Wilhite, the former manager of customer service for Bank America, the company that provided the financing for Bell and Hill's purchase of the mobile home; that affidavit states, in pertinent part:
Finally, testimony from Gary Mize, the human resources director and assistant to the president of Crimson Industries, revealed the following:
We conclude that the evidence in this case indicates that Bell and Hill's purchase of the mobile home was a transaction that substantially affected interstate commerce. Therefore, Blue Ribbon properly supported its motion to compel arbitration and the burden of persuasion shifted to Bell and Hill to oppose that properly supported motion.
The only opposition Bell and Hill offered to Blue Ribbon's properly supported motion to compel arbitration was their claim that Blue Ribbon had waived its right to compel arbitration by substantially invoking the litigation process. We note that there is a presumption against finding that a party has waived the right to compel arbitration. See Lee v. YES of Russellville, Inc., 784 So. 2d 1022, 1028 (Ala.2000); Eastern Dredging &amp; Constr., Inc. v. Parliament House, L.L.C., 698 So. 2d 102 (Ala.1997). "A party seeking to prove a waiver of a right to arbitrate carries a heavy burden, and the courts will *192 not lightly infer a waiver of the right to compel arbitration." Lee, supra, at 1028-29, citing Mutual Assurance, Inc. v. Wilson, 716 So. 2d 1160 (Ala.1998).
In First Family Financial Services, Inc. v. Jackson, 786 So. 2d 1121 (Ala.2000), this Court addressed the question whether the defendant in that case had waived its right to compel arbitration. This Court stated:
786 So. 2d  at 1128. The First Family Court continued:
Id. (citations and emphasis omitted).
In this case, as in First Family, the record unequivocally shows that Blue Ribbon did not "bespeak[] an intention to abandon the right [of arbitration] in favor of the judicial process." Id. at 1128. In its initial filing, the notice of removal to federal court, Blue Ribbon expressly referenced its right to compel arbitration and, in fact, Blue Ribbon immediately followed the filing of its notice of removal with the filing of a motion to compel arbitration. Cf. Ex parte Hood, 712 So. 2d 341 (Ala. 1998) ("`"By [removing the case to federal district court] without at the same time asking the district court for an order to arbitrate, [the defendant] manifested an intention to resolve the dispute through the processes of the federal court."'") (quoting Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So. 2d 897, 900 (Ala.1995) (emphasis added)). Additionally, the record reflects that the only other documents Blue Ribbon filed in this action pertained to dismissal of the case, to arbitration, or to the filing of an appeal of the trial court's order.
We conclude that Bell and Hill have not met their burden of proving that Blue Ribbon substantially invoked the litigation process. Therefore, we conclude that Blue Ribbon has not waived its right to compel arbitration. Because Bell and Hill have not proven that Blue Ribbon substantially *193 invoked the litigation process, we need not address the element of prejudice.
Blue Ribbon has properly supported its motion to compel arbitration. Bell and Hill have failed to meet their burden of proof in establishing that Blue Ribbon waived its right to compel arbitration by substantially invoking the litigation process. For these reasons, we conclude that the trial court erred in denying Blue Ribbon's motion to compel arbitration. We reverse the trial court's order of December 8, 2000, and remand this case to the trial court for the entry of an order granting Blue Ribbon's motion to compel arbitration.
REVERSED AND REMANDED WITH INSTRUCTIONS.
HOUSTON, SEE, LYONS, BROWN, HARWOOD, and WOODALL, JJ., concur.
MOORE, C.J., and JOHNSTONE, J., dissent.
JOHNSTONE, Justice (dissenting).
I respectfully dissent. The defendants have not carried their initial burden of proving that the sale of this mobile home to these plaintiffs substantially affected interstate commerce.
The recitations in the agreements that the mobile home "ha[d] been in interstate commerce" did not prove that it had not "come to rest" in Alabama before the sale to the plaintiffs. See Ex parte Kampis, [Ms. 1000099, September 21, 2001] (Ala. 2001).[*] Likewise, for aught that appears in the affidavits, the components incorporated into the mobile home had "come to rest" in Alabama before they were incorporated. Id. That the principal place of business of Bank America Housing Services is in California does not establish that the financing for this purchase came from California. Likewise, the organization and incorporation of Bank America Housing Services under the laws of Delaware does not establish that the financing came from Delaware. Indeed, the defendants studiously avoid saying the financing came from out of state. The contract and transaction that must have substantially affected interstate commerce to support the application of the Federal Arbitration Act is the one between the plaintiffs and the defendants. Other contracts or transactions between the defendants and out-of-state persons or entities are irrelevant.
The record establishes without dispute that this mobile home was manufactured within Alabama and was sold by an Alabama seller to the Alabama resident plaintiffs. This transaction was local, not interstate. Therefore, the Federal Arbitration Act does not govern this case and does not preempt Alabama's statutory prohibition against the specific enforcement of predispute arbitration agreements, § 8-1-41(3), Ala.Code 1975. Therefore, the trial court did not err in denying the motion to compel arbitration.
[1]  Mr. Deas submitted multiple affidavits in support of Blue Ribbon's motion to compel arbitration. The excerpt quoted above is condensed from two of those affidavits.
[*]  Note from the reporter of decisions: On February 8, 2002, the Alabama Supreme Court, on application for rehearing, withdrew its September 21, 2001, opinion and substituted another opinion.