Title: Elizabeth Homes, LLC, Carl Smith and Jimmy Flanagan v. Cynthia L. Cato and Danny Cato
Citation: N/A
Docket Number: 1050048
State: Alabama
Issuer: Alabama Supreme Court
Date: April 13, 2007

REL:4/13/2007 Elizabeth Homes v. Cato
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)
242-4621), 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, 2006-2007
____________________
1050048
____________________
Elizabeth Homes, L.L.C., Carl Smith, and Jimmy Flanagan
v.
Cynthia L. Cato and Danny Cato
Appeal from Elmore Circuit Court 
(CV-05-259)
SMITH, Justice.
The defendants below, Elizabeth Homes, L.L.C., Jimmy
Flanagan, and Carl Smith, appeal from the trial court's order
denying their motion to compel arbitration of the claims
asserted against them by the plaintiffs, Danny Cato and
Cynthia L. Cato.  We reverse and remand.
1050048
2
Facts and Procedural History
Elizabeth Homes sells and constructs what it describes as
"single-family residential structures."  In June 2003, the
Catos and Elizabeth Homes entered into a "purchase agreement"
for the construction of a house on property owned by the
Catos.  The document contains an arbitration provision, which
states:
"[Elizabeth Homes] and [the Catos] acknowledge that
this 
agreement 
necessarily 
involves 
interstate
commerce by virtue of the materials and components
contained 
in 
the 
dwelling 
and 
each 
of 
the
undersigned hereby agrees to arbitrate any and all
disputes arising under this agreement and to be
bound by the decision of the arbitrator which shall
be conducted pursuant to the Construction Industry
Rules of the American Arbitration Association."
(Emphasis added.)
After the Catos moved into the house, they sued Elizabeth
Homes, seeking damages for promissory fraud, breach of
warranty, breach of contract, breach of implied contract,
negligence and wantonness in constructing the house and the
setting of its elevation, and negligence and wantonness in
damaging the flooring in the house.  The complaint further
named Elizabeth Homes' "managing member," Jimmy Flanagan, and
Elizabeth Homes' office manager, Carl Smith, as defendants.
1050048
3
The defendants filed a motion to compel the Catos to
arbitrate their claims pursuant to the arbitration provision
in the purchase agreement.  The motion was supported by an
affidavit by Flanagan and a copy of the purchase agreement.
The Catos filed a response, which included no evidentiary
support, and the trial court held a hearing on the motion.
Subsequently, the trial court denied the motion by a notation
on the case-action summary.  Elizabeth Homes, Smith, and
Flanagan appeal.
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."'
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4
"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
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).
The 
defendants 
produced 
substantial 
evidence--the
purchase agreement and Flanagan's affidavit--indicating that
the parties entered into a contract containing a written
provision to settle by arbitration a controversy thereafter
arising out of the contract.  Additionally, there is no
1050048
Flanagan's affidavit in support of the motion to compel
1
arbitration detailed that the materials used to construct the
house were specially ordered for Elizabeth Homes by Elizabeth
Homes' supplier from numerous out-of-state sources.  Evidence
that a builder obtained materials and components for a house
from out-of-state suppliers is sufficient to establish that a
transaction for the construction and sale of a house
sufficiently involved interstate commerce for purposes of the
FAA.  Elizabeth Homes, L.L.C. v. Gantt, 882 So. 2d 313, 315-17
(Ala. 2003).
5
dispute in the record or on appeal as to whether the
transaction in this case involved interstate commerce.1
Therefore, the defendants' motion to compel arbitration was
properly supported by substantial evidence, and the burden
then shifted to the Catos to present evidence indicating that
the arbitration provision was invalid or that it did not apply
to the dispute here.
I.
First, as a threshold matter, the Catos argue that Smith
and Flanagan have failed to present any arguments on appeal,
because the appellants' brief contends that the judgment
should be reversed only as to "Elizabeth Homes."  Thus, the
Catos argue, Smith and Flanagan have waived any error as to
them.
There is, however, no merit to this argument.  The
statement of the case in Elizabeth Homes' brief states that
1050048
This Court applies, by analogy, the practice under Rule
2
56, Ala. R. Civ. P., dealing with summary-judgment motions, to
6
Elizabeth Homes, L.L.C., Carl Smith, and Jimmy Flanagan would
be referred to "collectively" as "Elizabeth Homes."  The name
"Elizabeth Homes" when used in the appellants' brief thus
includes Smith and Flanagan.  Additionally, the notice of
appeal lists the "appellants" as Elizabeth Homes, Smith, and
Flanagan, and the appellants' brief refers in several places
to the "appellants."  We find no waiver on the part of Smith
and Flanagan. 
II.
The Catos present numerous arguments on appeal as to why
the arbitration provision does not apply in this case.  First,
the Catos maintain that the defendants "failed to present any
evidence that the Purchase [Agreement] ever became a binding
contract" because the copy of the purchase agreement submitted
with the motion to compel arbitration was unauthenticated and
unsigned by Elizabeth Homes.  
Rule 56(e), Ala. R. Civ. P., generally requires that
"[s]worn or certified copies" of documents referred to in an
affidavit offered supporting or opposing a motion for a
summary judgment be attached to the affidavit.   However, if
2
1050048
motions to compel arbitration.  Ex parte Greenstreet, Inc.,
806 So. 2d 1203, 1207 (Ala. 2001).
7
an affidavit or the documents attached to an affidavit fail to
comply with this rule, the opposing party must object to the
admissibility of the affidavit or the document and move to
strike.  Ex parte Elba Gen. Hosp. & Nursing Home, Inc., 828
So. 2d 308, 312-13 (Ala. 2001) (noting that a party must
object to evidence submitted in support of a motion for a
summary judgment that does not comply with Rule 56(e), Ala. R.
Civ. P.); Chatham v. CSX Transp., Inc., 613 So. 2d 341, 344
(Ala. 1993) ("A party must move the trial court to strike any
nonadmissible evidence that violates Rule 56(e). Failure to do
so waives any objection on appeal and allows this Court to
consider the defective evidence.").  The copy of the purchase
agreement submitted with Flanagan's affidavit was not a
certified copy.  The Catos, however,  did not object to or
move to strike the purchase agreement when it was filed with
Flanagan's affidavit.  Therefore, they waived any objection
based on improper authentication of the purchase agreement.
See Berry Mountain Mining Co. v. American Res. Ins. Co., 541
So. 2d 4, 4-5 (Ala. 1989) (holding that a nonmovant who failed
to move to strike unauthenticated documents submitted in
1050048
8
support of a motion for a summary judgment waived objection on
appeal as the admissibility of the documents).
The Catos also allege that the purchase agreement was not
signed by Elizabeth Homes; thus, they argue, it is not
binding.  The record reveals that the signature line for
Elizabeth Homes on the purchase agreement is unsigned,
although Carl Smith's signature appears above it as a witness
to the Catos' signatures.  The purchase agreement states that
it becomes binding "upon written acceptance by [an Elizabeth
Homes] 
officer 
or 
upon 
[Elizabeth 
Homes'] 
commencing
performance," but the Catos contend that Flanagan's affidavit
fails to state that Elizabeth Homes commenced performance.
The defendants respond to this argument as follows:
"Elementary logic dictates that Elizabeth Homes
could not have constructed the home without actually
'commencing' construction. Furthermore, the Catos'
Complaint is replete with assertions that Elizabeth
Homes constructed the house. It is absurd to even
suggest to this Court that despite the fact that all
of 
the 
parties 
admit 
that 
Elizabeth 
Homes
constructed 
the 
home, 
Elizabeth 
Homes 
must
nevertheless specifically allege that it 'commenced'
construction. It is quite obvious from the record
that Elizabeth Homes 'commenced' construction. If
Elizabeth Homes had not commenced construction the
Catos would have absolutely no basis for relief
against the [defendants] as the entirety of the
Catos' Complaint is based on Elizabeth Homes'
construction of the home."
1050048
9
 
(Appellants' reply brief at 5.)
The Catos cite Premiere Chevrolet, Inc. v. Headrick, 748
So. 2d 891 (Ala. 1999), for the proposition that a party
cannot enforce an agreement to arbitrate found in a contract
it has not signed.  However, the document at issue in Premiere
Chevrolet was part of a multi-document automobile transaction,
and the arbitration provision was part of a "buyer's order"
that specifically stated that it was not valid or "binding"
unless signed and accepted by the automobile dealer.
Here, Flanagan's affidavit states that Elizabeth Homes
"entered into a Purchase Agreement" with the Catos and
discusses "[t]he terms of the Purchase Agreement between
Elizabeth Homes, LLC[,] and Cynthia L. Cato and Danny Cato
...."  The defendants further asserted in their motion to
compel arbitration that Elizabeth Homes entered into the
purchase agreement with the Catos and constructed the house.
The Catos never denied these assertions or presented any
affidavits or evidence demonstrating that they did not enter
into the purchase agreement or that the house was never
constructed. 
 
Indeed, 
the 
Catos' 
complaint 
states
affirmatively that Elizabeth Homes constructed the house.
1050048
10
Although the defendants' motion to compel and supporting
evidence are bare, thus complicating our review, given
Flanagan's affidavit we hold that the defendants presented
substantial evidence that Elizabeth Homes entered into the
purchase agreement with the Catos.
The Catos also argue that the defendants have failed to
prove that the purchase agreement applies to the Catos' house:
"Further, [the defendants] failed to meet
[their] evidentiary burden of proving that the
unsigned contract applies to the home that is the
subject of the Catos' complaint.  Flanagan's
affidavit failed to state that [Elizabeth Homes]
constructed 
a 
home 
for 
the 
Catos, 
that 
it
constructed only one home, or that the home on which
this suit is based is the home described in the
Purchase Agreement."
(Catos' brief at 14.)
As noted above in Vann, supra, the defendants, in moving
to compel arbitration, had the burden of producing substantial
evidence of "the existence of a contract calling for
arbitration and proving that that contract evidences a
transaction affecting interstate commerce."  Once this was
done, the burden then shifted to the Catos to present evidence
indicating that the arbitration provision is invalid or that
it does not apply to the dispute in question.  
1050048
11
In this case, the Catos' allege that Elizabeth Homes
constructed a house for them, and they seek damages stemming
from the construction of the house.  Flanagan testified in his
affidavit that Elizabeth Homes and the Catos entered into a
contract--the purchase agreement--for the construction of a
house; that contract contains an arbitration provision.  The
defendants thus met their burden of production. 
Because the defendants met their burden of production,
the burden then shifted to the Catos to show that the
arbitration provision in the purchase agreement was invalid or
that it does not apply to this dispute.  Vann, supra.  The
Catos did not challenge the validity of the arbitration
provision.  Additionally, the Catos never argued to the trial
court that the purchase agreement did not involve the
construction of the house at issue, and they presented no
evidence on this point.  On appeal, the Catos still do not
deny that the purchase agreement was a contract to build the
house they argue was built negligently and wantonly.  Because
the Catos presented no evidence showing that Elizabeth Homes
constructed the house pursuant to some other agreement or
contract, whether written or oral, the Catos failed to meet
1050048
12
their burden in showing that the arbitration provision in the
purchase agreement does not apply.  We thus see no merit in
the Catos' argument.  See Chastain v. Robinson-Humphrey Co.,
957 F.2d 851, 855 (11th Cir. 1992) ("A party cannot place the
making of the arbitration agreement in issue simply by opining
that no agreement exists. Rather, that party must substantiate
the denial of the contract with enough evidence to make the
denial colorable."); Manning v. Energy Conversion Devices,
Inc., 833 F.2d 1096, 1103 (2d Cir. 1987) ("A party resisting
arbitration on the ground that no agreement to arbitrate
exists must submit sufficient evidentiary facts in support of
this claim ...."). 
III.
The Catos further allege that the claims asserted in this
case are outside the scope of the arbitration provision.
Specifically, the provision states that the parties agree "to
arbitrate any and all disputes arising under this agreement
...."  The Catos contend that this language is narrow and
indicates that the agreement to arbitrate covers a limited
range of disputes that arise under the terms of the purchase
agreement itself.  The claims for damages in their complaint,
1050048
13
they maintain, do not arise under the terms of the purchase
agreement.
In interpreting an arbitration provision, "any doubts
concerning the scope of arbitrable issues should be resolved
in favor of arbitration, whether the problem at hand is the
construction of the contract language itself or an allegation
of waiver, delay, or a like defense to arbitrability."  Moses
H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24-25 (1983) (emphasis added; footnote omitted).  "Thus, a
motion to compel arbitration should not be denied 'unless it
may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the
asserted dispute.' United Steelworkers of America v. Warrior
& Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S. Ct. 1347,
4 L. Ed. 2d 1409 (1960)."  Ex parte Colquitt, 808 So. 2d 1018,
1024 (Ala. 2001) (emphasis added).
As this Court explained in Koullas v. Ramsey, 683 So. 2d
415, 416 (Ala. 1996), the phrase "arising under" in an
arbitration 
agreement 
contemplates 
a 
narrow 
scope 
of
operation.  In Koullas, the plaintiff, Ramsey, entered into a
contract in 1987 to sell and transfer to Koullas 60% of her
1050048
14
stock in her business, Apparel Creations of America, Inc.  The
contract included an arbitration clause providing that
disputes between the parties "'arising under this Agreement,'"
638 So. 2d at 417, would be settled by arbitration.  Several
years after the transaction, Ramsey sued Koullas, alleging
that as a corporate director of Apparel Creations, Koullas
converted profits of the corporation for his personal gain,
oppressed Ramsey's right to receive dividends, usurped Apparel
Creations' corporate opportunities by using profits to
establish and develop a separate corporation in which he was
the sole shareholder, and breached his fiduciary duty as a
corporate director.  Koullas, 683 So. 2d at 416.
Koullas moved to compel arbitration of Ramsey's claims
pursuant to the arbitration clause contained in the 1987
contract.  Ramsey argued that her claims did not "arise under"
the terms of that contract and were therefore not subject to
the arbitration provision.  The trial court denied the motion
to compel arbitration, and Koullas appealed.
This Court noted:
"Where, as here, an arbitration clause refers to
disputes 
or 
controversies 
'arising 
under' 
an
agreement, the clause will apply only to those
claims arising under the terms of the agreement, and
1050048
15
it will not extend to matters or claims independent
of, or merely collateral to, the agreement.  We
agree 
that, 
in 
order 
for 
a 
dispute 
to 
be
characterized as arising out of or relating to the
subject matter of the contract, and thus subject to
arbitration, it must at the very least raise some
issue that cannot be resolved without a reference to
or construction of the contract itself."
Koullas, 683 So. 2d at 417-18 (citation omitted).  We went on
to hold that Ramsey's claims against Koullas as a corporate
director did not require reference to or a construction of the
1987 contract:
"Nothing in the contract addresses the manner and
method by which Apparel Creations was to be managed
after the sale of the stock. It does not name
Koullas as a corporate director, and it does not
even mention how the shareholders would be involved
within the corporation. It does not address the
amount of salaries, commissions, or dividends that
would 
be 
paid 
to 
corporate 
officials 
or
stockholders. It is silent as to any duties or
responsibilities that the parties would owe to the
corporation after the sale and transfer of the
stock. Simply put, every term of the contract
relates exclusively to some aspect of the one-time
sale of corporate stock, which was completed in
1987, before Koullas even became a corporate
director of Apparel Creations.
"If Ramsey was alleging any wrongdoing in the
making of the sales contract or in its performance,
or was alleging violation of its provisions, then
Ramsey's claims might reasonably be said to 'arise
under' the contract and therefore be subject to the
limited arbitration clause contained therein. As it
is, Ramsey's allegations against Koullas arise
1050048
16
solely from his actions as a corporate director, not
as a buyer of stock under the sales contract."
Koullas, 683 So. 2d at 418.
As in Koullas, we must examine the individual claims in
the complaint to determine whether the dispute "arises under"
the purchase agreement.  The defendants argue on appeal that
the Catos are attempting to "circumvent the contract and its
arbitration provision by couching their complaint in terms of
tort and implied contract" and are "careful to avoid any
mention of the [Purchase] Agreement in their complaint."
(Appellants' brief at 10, 6.)  The Catos claim that they have
simply elected to "forgo" claims under the contract to "avoid
arbitration."  (Catos' brief at 17.)
In determining the nature of a cause of action, this
Court looks to allegations in the body of the complaint, not
the caption or label the party applies.  Rutley v. Country
Skillet Poultry Co., 549 So. 2d 82, 84 (Ala. 1989) ("[A]
caption to a pleading is only the label by which to identify
it and is not the determining factor of what the pleading
actually is or what it states. A court must look to the
allegations in the body of the complaint in order to determine
the nature of a plaintiff's cause of action.").  The substance
1050048
17
of the plaintiff's allegations control, not the effort given
by the plaintiff to style the claims throughout litigation.
Bailey v. Faulkner, 940 So. 2d 247, 253 (Ala. 2006) ("Faulkner
places great reliance on the fact that he has been careful to
style his claims throughout this litigation as negligence and
wantonness claims, rather than as an alienation-of-affections
claim.  However, '[t]his Court has always looked to substance
over form.' Southern Sash Sales & Supply Co. v. Wiley, 631 So.
2d 968, 971 (Ala. 1994)." (footnote omitted)).
Count I of the Catos' complaint, styled "promissory
fraud," alleges that in June 2003 the Catos discussed with
Elizabeth Homes the "possibility" of constructing a house on
their property.  It alleges that Elizabeth Homes orally
represented that it would build the house "to the same
standards as" a model home, that these representations were
false, and that Elizabeth Homes never intended to construct
the house to the same standards as the model home.  Although
not stated directly, it appears that the complaint alleges
that the house, as built, did not conform to the standards of
the model home.  As a result, the Catos allege that they
suffered "annoyance, inconvenience, mental anguish," and they
1050048
It appears that "Standard Seville" is the name of one of
3
the styles of house that Elizabeth Homes offers. 
18
allege that the value of the house is less than it should be.
Additionally, the Catos allege in Count II of the complaint
that these representations created an "oral warranty" that
Elizabeth Homes breached.
The purchase agreement states that Elizabeth Homes would
build a "Standard Seville
 model in substantial conformity
[3]
with plans and specifications" and recites that the Catos, as
purchasers, understand that Elizabeth Homes would perform the
scope of work shown in certain plans and specifications.  The
purchase agreement further contains a merger or integration
clause, which states that the purchase agreement constitutes
"the entire contract" and that there are no other oral or
written  promises or agreements except those set forth in
certain documents named in the purchase agreement.  Elizabeth
Homes argues that the purchase agreement specifies how the
house is to be built, and any claim that the house did not
conform to a party's expectation must therefore arise under
that agreement.
The Catos first argue that Elizabeth Homes has not proven
that their claim arises under the purchase agreement.
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19
Instead, they argue: "The complaint specifically alleges an
oral representation. [Elizabeth Homes] offered no evidence to
establish the claim is based on a written contract."  (Catos'
brief at 22.)  The Catos, however, misunderstand the
respective burdens.  As discussed above, it is the Catos'
burden to demonstrate that the arbitration agreement in the
purchase agreement does not apply to this dispute.  However,
the Catos presented no evidence in opposition to the motion to
compel arbitration indicating that Elizabeth Homes had entered
into an agreement, whether oral or written, outside the
purchase agreement.  Additionally, there is no evidence
indicating that Elizabeth Homes or its agents made any oral
representations 
to 
the 
Catos 
that 
differ 
from 
the
specifications stated in the purchase agreement.  Therefore,
the Catos failed to meet their burden of showing that the
arbitration provision in the purchase agreement does not apply
to their claim that the house did not conform to their
expectations.  
The purchase agreement, as noted above, states that the
house will conform to certain specifications and plans.  Any
claim by the Catos that the house deviated from the
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20
specifications or design they agreed to with Elizabeth Homes
thus "arises under" the purchase agreement.
The Catos, citing National Auction Group, Inc. v.
Hammett, 854 So. 2d 65 (Ala. 2003), argue that they are the
"masters" of the complaint, that the complaint alleges "an
oral representation," and that this Court cannot assume that
the Catos must be suing under the purchase agreement.
Hammett, however, is inapposite.  In that case, a defendant
attempted to compel arbitration of the plaintiff's claims
pursuant to an arbitration provision found in a contract
between two defendants.  This Court refused the attempt to
compel arbitration, noting that the complaint expressly
alleged that the defendants had breached a different contract,
and it did not allege a breach of the contract containing the
arbitration provision.  Hammett, 854 So. 2d at 70.
In Hammett, the plaintiff was not a party to the contract
that 
contained 
an 
arbitration provision; instead, the
plaintiff was suing based on the alleged breach of a different
contract.  In the instant case, the Catos presented no
evidence indicating that they were parties to a contract or
agreement with Elizabeth Homes other than the purchase
1050048
21
agreement.  Indeed, the Catos do not even deny that they
entered into the purchase agreement.  Thus, Hammett is
inapplicable. 
In Counts III, IV, V, and VI of the complaint, the Catos
allege that Elizabeth Homes was negligent and wanton in
constructing the house and setting the elevation of the house.
Specifically, the complaint alleges that Elizabeth Homes
"undertook to construct a home" and "locate or set the
elevation" but negligently and wantonly "performed th[ese]
undertaking[s]."  The Catos allege that Elizabeth Homes' duty
to exercise care in building the house and setting the
elevation arises by operation of law and is independent of any
contractual duty Elizabeth Homes might have had.  The "arise
under" language of the arbitration provision, the Catos
conclude, does not extend to disputes that are independent of
or collateral to the purchase agreement.  
Even assuming that the Catos are correct in arguing that
Elizabeth Homes' duty to not act negligently or wantonly in
constructing and setting the elevation of the house is a duty
imposed by law and not by the purchase agreement, we are hard-
pressed to nevertheless accept that the claims do not "arise
1050048
22
under" the purchase agreement.  As noted above, Elizabeth
Homes undertook to construct a house for the Catos pursuant to
the purchase agreement.  The Catos claim that Elizabeth Homes
breached certain standards of care in building that house.
While the standard of care to which Elizabeth Homes was
required to adhere may have arisen by operation of law or
outside the purchase agreement, Elizabeth Homes' duty to
actually build the house and set the elevation clearly arises
under 
the 
purchase 
agreement, 
which 
provides 
the
specifications and standards for constructing the house.  In
any event, it is "'well established that a party may not avoid
broad language in an arbitration clause by attempting to cast
its complaint in tort rather than contract.'"  Beaver Constr.
Co. v. Lakehouse, L.L.C., 742 So. 2d 159, 165 (Ala. 1999)
(quoting McBro Planning & Dev. Co. v. Triangle Elec. Constr.
Co., 741 F.2d 342, 344 (11th Cir. 1984)).  See also ECS, Inc.
v. Goff Group, Inc., 880 So. 2d 1140 (Ala. 2003) (holding that
a finance company's claims against an underwriter must be
arbitrated pursuant to a provision requiring arbitration of
claims "arising out" of a contract, even though the finance
company stated its claims in tort rather than in contract and
1050048
23
the finance company was not a signatory to the contract).  It
appears that the Catos' claims are essentially claims of a
breach of the purchase agreement styled as tort claims.  We
thus hold that the Catos failed to demonstrate that these
claims do not arise under the terms of the purchase agreement.
Counts VII and VIII of the complaint allege that after
the house was constructed, an agent of Elizabeth Homes came to
check certain "electrical issues."  The Catos claim that,
while performing the work, the agent negligently and wantonly
damaged part of the vinyl flooring in the house when the agent
moved their tanning bed.  The Catos argue that these claims
are not arbitrable because, they say, the defendants did not
prove that the claims were related to the purchase agreement,
there was no evidence to establish that Elizabeth Homes' agent
was performing a service under a warranty, and even if the
work is considered work under a warranty or the purchase
agreement, they could still allege a tort claim separately
from the contract. 
The defendants argue that the damage to the floor
occurred either during the course of the construction or
during the course of repairs made pursuant to a warranty
1050048
The provision cited by the defendants actually states
4
that any liability on Elizabeth Homes' part for a breach of
the contract will be limited to the actual cost of repairing
or correcting the breach.
24
provision found in the purchase agreement.   Thus, they
4
maintain, the claims asserted in Counts VII and VIII arise
under the purchase agreement.
Again, it was the Catos' burden to show that the
arbitration provision does not apply to these claims.  There
is no evidence indicating that Elizabeth Homes' agent, in
checking "electrical issues," was performing work outside the
purchase agreement or pursuant to some other contract or
agreement.  For all that appears from the record, this work
was performed pursuant to, and under the terms of, the
purchase agreement.  We thus conclude that the Catos have not
proven that these claims fall outside the scope of the
arbitration provision. 
In Count IX, the Catos claim that the defendants breached
an implied contract to construct the house in a "good and
workmanlike manner."  The Catos maintain that this claim is
based on an implied, not an express, contract, and that the
defendants presented no evidence to show that the Catos' claim
was based on the purchase agreement.  In Counts X and XI the
1050048
25
Catos appear to allege that the defendants breached a contract
and committed promissory fraud in failing to complete repairs
pursuant to a "punch list."  Specifically, they claim that as
they were preparing to move into the house, they presented
Elizabeth Homes with a list of problems, defects, or
incomplete work in the house.  They state: "[I]n order to
induce the plaintiffs to pay the defendants the balance due
for the home, the defendants promised and contracted to
complete the items on the punch list."  
As to all three counts, the Catos have again failed to
present any evidence showing that the arbitration provision in
the purchase agreement does not apply.  There is no evidence
indicating that the parties entered into an implied contract
outside the purchase agreement or that a separate contract was
created based on the "punch list."  Furthermore, these claims
all appear to revolve around alleged deficiencies in the
construction of the house.  Because the duty to construct the
house, and the specifications describing that duty, were all
imposed by the purchase agreement, we cannot conclude with
"positive assurance" that the Catos' claims do not fall under
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the terms of the purchase agreement or within the scope of its
arbitration provision.
Conclusion
We hold that the defendants have met their burden in
supporting their motion to compel arbitration, and the Catos
failed to demonstrate that the arbitration provision in the
purchase agreement does not apply in this case.  Therefore,
the trial court erred in denying the motion to compel.  The
trial court's order is reversed, and the case is remanded for
proceedings consistent with this opinion.  
REVERSED AND REMANDED.
Cobb, C.J., and See, Woodall, and Parker, JJ., concur.