Opinion ID: 1891321
Heading Depth: 2
Heading Rank: 2

Heading: Whether Smith's Claims against DaimlerChrysler are Arbitrable

Text: Smith next argues that his claims against DaimlerChrysler cannot be arbitrated because, he says, the parties did not contemplate that DaimlerChrysler, a nonsignatory to the arbitration agreement, would be entitled to enforce the agreement. DaimlerChrysler argues that Smith is equitably estopped from refusing to arbitrate those claims. A party typically manifests its assent to arbitrate a dispute by signing the contract containing the arbitration provision. Ex parte Stamey, 776 So.2d 85, 88-89 (Ala.2000). One of the key exceptions to this rule is the theory of equitable estoppel, under which a nonsignatory can enforce an arbitration provision when the claims against the nonsignatory are `intimately founded in and intertwined with' the underlying contract obligations. Stamey, 776 So.2d at 89 (quoting Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir.1993), quoting in turn McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir.1984)). This Court has crafted one exception to that exception: unless the arbitration provision contains sufficiently broad language that indicates that the nonsignatory was contemplated as a party, we have repeatedly held that the nonsignatory lacks standing to enforce the arbitration agreement. Med Ctr. Cars, Inc. v. Smith, 727 So.2d 9, 19 (Ala.1998); Ex parte Isbell, 708 So.2d 571, 581 (Ala.1997); Ex parte Jones, 686 So.2d 1166, 1168 (Ala.1996); and Ex parte Jones, 628 So.2d 316, 317 (Ala.1993). Where the language of the arbitration provisions limited arbitration to the signing parties, this Court has not allowed the claims against the nonsignatories to be arbitrated. Stamey, 776 So.2d at 89. If an arbitration agreement is written in broad language so that it applies to [a]ll disputes, claims or controversies arising from or relating to this Contract or the relationships which result from this Contract, Ex parte Napier, 723 So.2d 49, 51 (Ala.1998) (emphasis added), or even in slightly narrower language so that it applies to ALL DISPUTES, CLAIMS OR CONTROVERSIES ARISING FROM OR RELATING TO THIS CONTRACT OR THE PARTIES THERETO, Stamey, 776 So.2d at 91 (capitalization in original; emphasis added), this Court will proceed to determine whether arbitration may be compelled under the doctrine of equitable estoppel. Conversely, if the language of the arbitration provision is party specific and the description of the parties does not include the nonsignatory, this Court's inquiry is at an end, and we will not permit arbitration of claims against the nonsignatory. See Jim Burke Auto., Inc. v. McGrue, 826 So.2d 122, 131 (Ala.2002) (affirming the trial court's order denying a nonsignatory's motion to compel arbitration where the arbitration agreement was between you [a signatory plaintiff] and us [a signatory defendant] or our employees, agents, successors or assigns)(bracketed language added); Ex parte Lovejoy, 790 So.2d 933, 938 (Ala.2000) (issuing a writ of mandamus directing a trial court to enter an order denying a nonsignatory's motion to compel arbitration where the arbitration provision was limited to all disputes or controversies between you [Lovejoy] and us [Allen Motor Company and its assignees] ) (bracketed language and emphasis in original); First Family Fin. Servs. v. Rogers, 736 So.2d 553, 560 (Ala.1999) (reversing a trial court's order granting a nonsignatory's motion to compel arbitration where you [the plaintiffs] and we [First Family] agreed to arbitrate and the arbitration provision elsewhere stated that it applied to all claims and disputes between you [the plaintiffs] and us [First Family],  and furthermore stated that it applied to any claim or dispute ... between you [the plaintiff] and any of our [First Family's] employees or agents, any of our affiliate corporations, and any of their employees or agents ) (bracketed language and emphasis in original); and Med Center Cars, 727 So.2d at 19 (affirming a trial court's order denying nonsignatories' motions to compel arbitration where the arbitration provisions were limited to disputes and controversies BETWEEN BUYER AND SELLER) (capitalization in original). The arbitration agreement signed by Smith and Mark Dodge provides, in pertinent part:  [Smith] and [Mark Dodge] agree that all claims, demands, disputes or controversies of every kind or nature between them arising from, concerning or relating to any of the negotiations involved in the sale, lease, or financing of the vehicle, the terms and provisions of the sale, lease or financing arrangements, the arrangements for financing, the purchase of insurance, extended warranties, service contracts or other products purchased as an incident to the sale, lease or financing of the vehicle ... shall be settled by binding arbitration.... ....  This Agreement is binding upon, and inures to the benefit of [Smith] and [Mark Dodge] and the officers, employees, agents and affiliated entities of each of them. ...  [SMITH] AND [MARK DODGE] UNDERSTAND THAT THEY ARE AGREEING TO RESOLVE THE DISPUTES BETWEEN THEM DESCRIBED ABOVE BY BINDING ARBITRATION, RATHER THAN BY LITIGATION IN ANY COURT. (Boldface type and capitalization in original; all other emphasis added.) Much of the text of the arbitration agreement seems to apply only to Smith and Mark Dodge, reciting as it does twice that Smith and Mark Dodge shall settle by arbitration the claims, demands, disputes, and controversies between them. The agreement further explains, however, that it is binding upon not only Smith and Mark Dodge, but also other described parties. DaimlerChrysler notes that one category of additional parties is affiliated entities of either party. DaimlerChrysler argues that it is one of Mark Dodge's affiliated entities. That term is undefined in the arbitration agreement. (In Rogers, supra, the term our affiliate corporations was defined in the arbitration agreement as our parent corporations, subsidiary corporations, and sister corporations. 736 So.2d at 556. It was undisputed that the nonsignatory insurance companies seeking to compel arbitration did not qualify as affiliate corporations under that definition.) The adjective affiliated is defined as closely associated with another typically in a dependent or subordinate position. Merriam-Webster's Collegiate Dictionary 21 (11th ed.2003). The verb affiliate is defined as to attach as a member or branch: bring or receive into close connection. Webster's Third New International Dictionary 35 (Merriam-Webster, Inc.1981). A fair reading of these dictionary definitions indicates that to be affiliated with one another, Mark Dodge and DaimlerChrysler must be somehow closely connected. The record reflects that the two are intimately associated. Their association was such that in issuing the service contract, Daimler-Chrysler could presume to commit that the contract was between [Smith] and the selling Dealer. Mark Dodge was an automobile dealership selling Dodge vehicles, one of DaimlerChrysler's line of vehicles, and was an Authorized DaimlerChrysler Service Contract Dealer. Smith purchased the vehicle from Mark Dodge and, according to Smith's contentions on appeal, Mark Dodge and DaimlerChrysler jointly warranted the vehicle. Because Smith has not supplied this Court with a reply brief or otherwise challenged below or here DaimlerChrysler's contention that it is due recognition as an entity affiliated with Mark Dodge, we take DaimlerChrysler's assertion to be uncontradicted; consequently, we cannot conclude that the trial court erred in implicitly finding that DaimlerChrysler had standing to seek to enforce the arbitration agreement against Smith. We therefore proceed to determine whether DaimlerChrysler may enforce the arbitration agreement against Smith. DaimlerChrysler seeks to compel arbitration as to Smith's allegation of breach of contract and breach of warranty. Smith alleges that by refusing to offer coverage under the service contract for the second round of necessary repairs, DaimlerChrysler breached its service contract and the warranty. DaimlerChrysler may enforce the arbitration agreement against Smith only if Smith's claims against DaimlerChrysler are intimately founded in and intertwined with the claims made against Mark Dodge. Stamey, 776 So.2d at 89. All of Smith's claims against DaimlerChrysler arise out of and relate to Mark Dodge's November 2003 repairs, the subsequent malfunctioning of Smith's vehicle, and Mark Dodge and DaimlerChrysler's apparent refusal to perform the repairs in May 2004 under either the warranty or the service contract. DaimlerChrysler specifically argues that the claims are intertwined, and Smith did not attempt in his only brief to this Court to counter DaimlerChrysler's intertwining argument. Having thus failed even to attempt to rebut the movant's showings, Smith has failed to meet his burden. See Patriot Mfg., Inc. v. Jackson, 929 So.2d 997, 1006 (Ala.2005). Therefore, we cannot conclude that the trial court erred in granting DaimlerChrysler's motion to compel arbitration. We affirm the trial court's order compelling arbitration.