Opinion ID: 1796043
Heading Depth: 2
Heading Rank: 3

Heading: Can SCI Enforce the Arbitration Provision?

Text: Fulmer's final argument is directed solely at SCI, who is a nonsignatory to the contract and who, Fulmer claims, therefore cannot enforce the arbitration provision. Fulmer claims that the arbitration provision references only the signing parties  Fulmer and SCI-Alabama  and, therefore, it cannot encompass a nonsignatory defendant like SCI. SCI argues that the provision is not strictly limited to the signing parties, and, more importantly, that Fulmer's claims against the signatory defendant, SCI-Alabama, are so intertwined with his claims against SCI that arbitration of all of Fulmer's claims, including those against SCI, is appropriate. In Ex parte Stamey, 776 So.2d 85, 89 (Ala.2000), we discussed the doctrine of equitable estoppel with regard to nonsignatories to arbitration agreements: In order for a party to be equitably estopped from asserting that an arbitration agreement cannot be enforced by a nonparty, the arbitration provision itself must indicate that the party resisting arbitration has assented to the submission of claims against nonparties  claims that would otherwise fall within the scope of the arbitration provision  to arbitration. See Ex parte Napier, 723 So.2d [49] at 53 [(Ala.1998)]. All that is required is (1) that the scope of the arbitration agreement signed by the party resisting arbitration be broad enough to encompass those claims made by that party against nonsignatories, or that those claims be `intimately founded in and intertwined with' the claims made by the party resisting arbitration against an entity that is a party to the contract, and (2) that the description of the parties subject to the arbitration agreement not be so restrictive as to preclude arbitration by the party seeking it. See Id. In other words, the language of the arbitration agreement must be so broad that the nonparty could assert that in reliance on that language he believed he had the right to have the claims against him submitted to arbitration, and, therefore, that he saw no need to enter into a second arbitration agreement. Here, Fulmer's claims against SCI are clearly intimately founded in and intertwined with his claims against SCI-Alabama. Id. All of Fulmer's claims arise from the same set of facts. Virtually none of Fulmer's claims makes a distinction between the alleged bad acts of SCI (the parent corporation) and those of SCI-Alabama (its subsidiary); [16] rather, the claims are asserted as if SCI and SCI-Alabama acted in concert. Because Fulmer's claims are sufficiently intertwined, the only remaining question is whether the arbitration provision is so restrictive as to preclude arbitration by SCI. Id. In Stamey, we discussed two lines of cases that have evolved with regard to the issue of restrictiveness: In most of the cases that have come before this Court on an equitable-estoppel claim, we have not allowed the claims to be arbitrated, because the language of the arbitration provisions limited arbitration to the signing parties, so that there had been no assent on the part of the resisting party to arbitrate claims against nonsignatories. See First Family Fin. Servs., Inc. v. Rogers, 736 So.2d 553 (Ala.1999); Med Center Cars, Inc. v. Smith, 727 So.2d 9 (Ala. 1998); Ex parte Isbell, 708 So.2d 571 (Ala.1997); Ex parte Martin, 703 So.2d 883 (Ala.1996); Ex parte Jones, 686 So.2d 1166 (Ala.1996); Ex parte Stallings & Sons, Inc., 670 So.2d 861 (Ala. 1995); see also David F. Sawrie, Equitable Estoppel and the Outer Boundaries of Federal Arbitration Law: The Alabama Supreme Court's Retrenchment of an Expansive Federal Policy Favoring Arbitration, 51 Vand. L.Rev. 721 (1998). In other words, within these arbitration provisions references to the parties specifically limited the claims that would be arbitrable under those provisions. For example, the arbitration agreement at issue in Med Center Cars read: `BUYER HEREBY ACKNOWLEDGES AND AGREES THAT ALL DISPUTES AND CONTROVERSIES OF EVERY KIND AND NATURE BETWEEN BUYER AND SELLER ARISING OUT OF OR IN CONNECTION WITH THE PURCHASE OF THIS VEHICLE WILL BE RESOLVED BY ARBITRATION WITH THE PROCEDURE SET FORTH ON THE REVERSE SIDE OF THIS BUYER'S ORDER.'  Med Center Cars, 727 So.2d at 13. (Emphasis added.) This Court wrote: `The language of the arbitration clauses in this case [is] not broad enough to encompass claims against the nonsignatories. The written arbitration agreements in this case expressly limit the scope of the agreements to disputes, claims, and controversies arising between the Buyer and the Seller only. ... Therefore, the nonsignatories have no standing to seek enforcement of those arbitration agreements.'  Id. at 19. Because the agreement in Med Center Cars limited the claims that might be submitted to arbitration to those between the `buyer' and the `seller,' the buyer, who was resisting arbitration, could not be found to have assented to have his claims against a nonparty lender submitted to arbitration. Med Center Cars applied the rule that if the arbitration provision is specifically limited to claims that arise between the parties to the contract, then any nonparties will not be able to enforce the arbitration agreement. However, this Court has also held that the language of other arbitration agreements was sufficiently broad to include claims against nonparties, and in regard to such agreements it has allowed nonparties to enforce the arbitration provisions against parties to the contract. See Ex parte Napier, 723 So.2d 49 (Ala.1998); Ex parte Gates, 675 So.2d 371 [(Ala.1996)]; see also Sawrie, Equitable Estoppel and the Outer Boundaries of Federal Arbitration Law: The Alabama Supreme Court's Retrenchment of an Expansive Federal Policy Favoring Arbitration, 51 Vand. L.Rev. 721. For example, the arbitration provision in Napier read: `21. ARBITRATION: All disputes, claims or controversies arising from or relating to this Contract or the relationships which result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration by one arbitrator selected by Assignee with consent of Buyer(s). This arbitration Contract is made pursuant to a transaction in interstate commerce, and shall be governed by the Federal Arbitration Act at 9 U.S.C. Section 1. Judgment upon the award rendered may be entered in any court having jurisdiction. The parties agree and understand that they choose arbitration instead of litigation to resolve disputes. The parties understand that they have a right or opportunity to litigate disputes through a court, but that they prefer to resolve their disputes through arbitration except as provided herein. THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY ASSIGNEE (AS PROVIDED HEREIN). The parties agree and understand that all disputes arising under case law, statutory law and all other laws including, but not limited to, all contract, tort and property disputes will be subject to binding arbitration in accord with this contract. The parties agree and understand that the arbitrator shall have all powers provided by the law and the Contract. These powers shall include all legal and equitable remedies including, but not limited to, money damages, declaratory relief and injunctive relief. Notwithstanding anything hereunto [sic] the contrary, Assignee retains an option to use judicial or non-judicial relief to enforce a security agreement relating to the Manufactured Home secured in a transaction underlying this arbitration agreement, to enforce the monetary obligation secured by the Manufactured Home or to foreclose on the Manufactured Home. Such judicial relief would take the form of a lawsuit. The institution and maintenance of an action for judicial relief in a court to foreclose upon any collateral, to obtain a monetary judgment or to enforce the security agreement shall not constitute a waiver of the right of any party to compel arbitration regarding any other dispute or remedy subject to arbitration in this Contract, including the filing of a counterclaim in a suit brought by Assignee pursuant to this provision.'  Napier, 723 So.2d at 51. (Emphasis added.) That arbitration provision in Napier contained no references to the parties that would impose a limitation on what claims would be arbitrated. We held that the provision was broad enough to include claims that were related to the contract because the language was sufficient to indicate that the party resisting arbitration had assented to submit its claims against nonparties  claims that otherwise would fall within the scope of the provision  to arbitration. Id. at 54. Is the arbitration provision included in the Green Tree contract broad enough to indicate that the Stameys assented to have their claims against Hallmont  claims that would otherwise fall within the arbitration agreement  submitted to arbitration? In other words, is the arbitration provision involved in this action more similar to the arbitration provisions in the First Family line of cases or those in the Napier line of cases? Stamey, 776 So.2d at 89-91 (capitalization original); see also Equifirst Corp. v. Ware, 808 So.2d 1, 5 (Ala.2001); Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir.1993) (allowing nonsignatory parent company to enforce arbitration provision based on intertwined claims where provision required arbitration of  any controversy or claim arising out of or relating to this Agreement or the breach thereof ....). The question at the end of the language quoted above from Stamey  [I]s the arbitration provision ... more similar to the arbitration provisions in the First Family line of cases or those in the Napier line of cases?  is the question we must resolve in this case. Is the arbitration provision in Fulmer's contract with SCI-Alabama more similar to the arbitration provisions in the First Family line of cases or those in the Napier line of cases? Stamey, 776 So.2d at 91. The arbitration provision at issue here states: ANY CONTROVERSY OR CLAIM ARISING BETWEEN THE PARTIES (INCLUDING THE INTERPRETATION OF THIS ARBITRATION CLAUSE) SHALL BE SUBMITTED TO AND FINALLY RESOLVED BY MANDATORY AND BINDING ARBITRATION.... THIS ARBITRATION PROVISION SHALL BE BINDING ON THE SELLER, YOU AS THE PURCHASER, AND ANY OTHER PERSON WHO CLAIMS TO BE A THIRD PARTY BENEFICIARY OF THIS AGREEMENT.  (Capitalization original; emphasis added.) [17] We hold that the arbitration provision in this case is more similar to the line of cases following First Family Financial Services, Inc. v. Rogers, 736 So.2d 553 (Ala.1999), because the provision covers only claims that arise between the parties, the only exception being that the provision also covers those who claim status as a third-party beneficiary. SCI is not a party to the contract; neither does it claim to be a third-party beneficiary. Therefore, Fulmer is not equitably estopped from asserting that SCI cannot enforce the arbitration provision. The trial court did not err in denying the motion to compel arbitration as to Fulmer's claims against SCI.