Opinion ID: 1711563
Heading Depth: 1
Heading Rank: 5

Heading: Evidencing Transaction Involving Commerce.

Text: Dispositive of the issue of whether the BSS contract evidences a transaction involving commerce is Allied-Bruce Terminix Companies, Inc. v. Dobson, ___ U.S. ___, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). In Allied-Bruce Terminix Companies, Inc., Steven Gwin purchased a lifetime termite protection plan for his home in Birmingham, Alabama, from the local Terminix office. Four years later, Gwin sold his home to the Dobsons. Terminix reinspected the house prior to closing and reported the house to be termite free. Subsequent to closing, the Dobsons discovered the house was infested with termites. The Dobsons found Allied-Bruce's efforts to treat and repair the house inadequate and filed suit against the Gwins, Allied-Bruce, and Terminix in state court. Allied-Bruce and Terminix asked the court for a stay to allow arbitration to proceed as required by the lifetime termite protection plan purchased by Gwin. Ultimately, the Alabama Supreme Court upheld the lower court's denial of the stay based upon a state statute making written predispute arbitration agreements invalid and unenforceable. As a threshold matter, the U.S. Supreme Court recognized that the basic purpose of the AA was to overcome the refusal of courts to enforce agreements to arbitrate. The Court then concluded that the words `involving commerce' require a broad interpretation to give effect to the act's basic purpose, to put arbitration provisions on the same footing as a contract's other terms. ___ U.S. at ___, 115 S.Ct. at 840. Thus, the word `involving,' like `affecting,' signals an intent to exercise Congress's commerce power to the full. ___ U.S. at ___, 115 S.Ct. at 841. The U.S. Supreme Court then found that the words `evidencing a transaction' must be interpreted as meaning that the transaction in fact must involve interstate commerce even if the transaction as contemplated by the parties did not involve an interstate commerce connection. ___ U.S. at ___, 115 S.Ct. at 841. The Court reasoned that this interpretation was necessary to avoid costs and delays brought on by litigation concerning the intent of the parties and to give effect to Congress' intent to make arbitration agreements universally enforceable. The Court determined that the arbitration clause there at issue concerned a transaction that in fact involved interstate commerce for two reasons. First, Terminix and Allied-Bruce were clearly multistate businesses, and second, the materials used to treat the house for termites and to repair the damage came from outside Alabama. Application of Allied-Bruce Terminix Companies, Inc., to the case now before us compels the conclusion that the BSS Home Buyers Warranty contract evidences a transaction that in fact involves commerce within the meaning of the AA. The BSS warranty was an agreement between the Kelleys and BSS, and BSS is an out-of-state business. The Home Buyers Warranty booklet given to the Kelleys clearly identified that district claims offices for Home Buyers Warranty were located in New Jersey, Georgia, Texas, and California. In addition, the homeowner information pamphlet given to the Kelleys indicated that Home Buyers Warranty itself has an Aurora, Colorado, address. Moreover, John C. Czerwinski, president of Benchmark, stated in his affidavit that a significant portion of the materials used to construct the Kelley home were manufactured outside Nebraska. Thus, the BSS warranty agreement clearly constituted a transaction which in fact involved interstate commerce and is thus subject to the AA. The agreement evidences a transaction between a local homeowner and an out-of-state company, and the transaction required the use of goods which traveled in the stream of interstate commerce.