Opinion ID: 1935391
Heading Depth: 1
Heading Rank: 4

Heading: Cavalier's Appeals as to Clarke and Wilson

Text: Cavalier argues that the trial court erred when, relying on Ex parte Palm Harbor, it ordered Cavalier to arbitrate Clarke's and Wilson's claims under the terms of the retail installment contracts entered into by Clarke and Cedar Ridge, and by Wilson and Cedar Ridge. In Ex parte Palm Harbor, the parties contemporaneously executed three documentsa security agreement containing an arbitration clause and two freestanding arbitration agreements. The security agreement contained both a merger clause and all the terms necessary to complete the transaction. None of the documents incorporated by reference any other document. Neither freestanding arbitration document contained a merger clause, and the terms of the freestanding arbitration documents contradicted the terms of the arbitration clause in the security agreement. This Court held that the merger clause in the security agreement made it the entire agreement between the parties and worked to extinguish the freestanding arbitration documents. 798 So.2d at 660-62. Cavalier argues that these cases are distinguishable from Ex parte Palm Harbor because it, Cedar Ridge, and Clarke, on the one hand, and it, Cedar Ridge and Wilson, on the other, are all parties to the Acknowledgement and Agreement executed in each case, but it is not a party to the retail installment contracts that Clarke and Wilson each executed with Cedar Ridge. In Ex parte Palm Harbor, Palm Harbor Homes was not a party to any of the agreements; it relied on a third-party-beneficiary theory as its basis for compelling arbitration. 798 So.2d at 658-59 n. 1. Cavalier argues that because it is not a party to the retail installment contracts, and because the Acknowledgement and Agreement contains both an arbitration clause and a merger clause, the Acknowledgement and Agreement constitutes the entire agreement between it, Cedar Ridge, and Clarke, and between it, Cedar Ridge, and Wilson. This Court decided this exact question in Belmont Homes, Inc. v. Law, 841 So.2d 237 (Ala.2002). In Belmont Homes, Belmont, the mobile-home manufacturer, was not a party to the retail installment contract executed between Law and the mobile-home dealer, but Belmont was a party to a document entitled Acknowledgment and Agreement. The acknowledgment in Belmont contained an arbitration clause and a merger clause. Id. at 241. In Belmont, this Court stated that the merger clause in the retail installment contract did not extinguish the acknowledgment because Belmont was not a party to the retail installment contract and because merger clauses operate to merge only agreements between the same parties. Id. at 241. This Court held in Belmont that the acknowledgment not only represent[ed] an independent agreement between Belmont and Law, but the entire agreement between those two parties. Id. at 241. In this case, Cavalier is not a party to the retail installment contracts. The Acknowledgement and Agreement, to which Cavalier is a party, contain both an arbitration clause and a merger clause. Therefore, the Acknowledgement and Agreement constitutes the entire agreement between Cavalier, Cedar Ridge, and Clarke, on the one hand, and between Cavalier, Cedar Ridge, and Wilson, on the other. Cavalier is entitled to arbitrate all disputes between it, Cedar Ridge, and Clarke, and between it, Cedar Ridge, and Wilson under the terms of the arbitration clause in the Acknowledgement and Agreement executed with those parties. In each case, the trial court erred in disregarding the respective Acknowledgement and Agreement. Therefore, the trial court's orders regarding Cavalier are reversed and these cases are remanded for further proceedings consistent with this opinion.