Opinion ID: 1613112
Heading Depth: 1
Heading Rank: 3

Heading: Application of Sisters of the Visitation to the Evidence Presented in this Case

Text: (1) Citizenship of the parties and any affiliation they might have with out-of-state entities. The evidence establishes that AFS operates its business in Tuscaloosa and that MSC operates its business in Birmingham. AFS and MSC, however, assert that they are limited liability companies organized under the laws of the State of Illinois and that they are, therefore, not Alabama entities. However, neither AFS nor MSC traveled to Alabama to engage in business with Colburn and Harris; both were already doing business in Alabama when they entered into the payday-loan transactions at issue in these cases. Thus, the fact that AFS and MSC are organized as business entities in a different state is not determinative of whether these particular transactions substantially affected interstate commerce. AFS and MSC also assert that because the owners of the limited liability companies reside outside Alabama, Colburn's and Harris's transactions with AFS and MSC, therefore, involved interstate commerce. We do not find this evidence relevant to the determination whether Colburn's transactions, entered into with AFS in Tuscaloosa, and Harris's transactions, entered into with MSC in Birmingham, substantially affected interstate commerce. The only manner in which Colburn's and Harris's transactions could impact the owners of AFS and MSC, who are located outside this state, is by impacting the net earnings of those companies and thereby impacting the profits or losses of their out-of-state owners. We conclude that the payday-loan transactions at issue in these cases were separate and complete transactions, unrelated to the subsequent determination of AFS's and MSC's net earnings and the subsequent determination of the profits or losses to be attributed to the owners of those companies. The evidence before this Court establishes that Colburn and Harris, who are Alabama residents, entered local businesses; they filled out applications for a payday loan; and once those applications were accepted, they wrote checks on local banks. AFS and MSC processed those applications by entering information into computers and accessing the Internet via those computers. AFS and MSC advanced Colburn and Harris a small amount of money, presumably obtained through local sources, and agreed to hold the checks Colburn and Harris had written for the money for a week or two, at which time Colburn and Harris were to return to the local AFS and MSC locations and repay the advance, again, presumably with local funds. We conclude that these transactions, based upon the evidence before us, were primarily intrastate in nature. Accordingly, this factor does not support the motions to compel arbitration filed by AFS and MSC. (2) Where the tools and equipment used at the project site originated. AFS and MSC failed to establish that any of the tools, equipment, or materials used to complete the payday loans obtained by Colburn and Harris were obtained in interstate commerce. Neither AFS nor MSC offered any evidence to establish that the computers, the employees, or even the funds used in the payday loans traveled in interstate commerce or that any of those items were obtained specially for these transactions. The only evidence AFS or MSC offered that even remotely related to this factor was that the information used in processing the loans traveled over the Internet to an out-of-state site. As Colburn and Harris correctly assert, this involved no more than a long-distance telephone call placed by AFS and MSC via the Internet. Assuming, without deciding, that the movement of information in the manner presented here could substantially affect interstate commerce, we conclude that, in this case, the single Internet access involved in each of the payday-loan transactions does not rise to the level of a substantial effect on interstate commerce, as required under Sisters of the Visitation. (3) Intrastate versus interstate allocation of costs and services involved in the project. AFS and MSC offered no evidence regarding the intrastate versus interstate allocation of costs and services involved in the payday-loan transactions. Thus, this factor does not support the motions to compel arbitration filed by AFS and MSC. (4) Subsequent movement across state lines. The payday-loan transactions at issue in these cases involve the advancing of money. Citing American General Finance, Inc. v. Branch, 793 So.2d 738 (Ala. 2000), AFS and MSC assert that this Court has recognized that money is intrinsically mobile and, therefore, that they have met their burden of proof under Sisters of the Visitation. However, this argument fails for two reasons. First, the evidence offered in this case is distinguishable from that offered in American General Finance. The evidence in American General Finance established that the funds loaned in that case came from an out-of-state affiliate of American General Finance and originated from an out-of-state bank account. Additionally, upon the plaintiff's repayment of the loan, the money was again routed to an out-of-state bank account. The record in this case contains no evidence of the type of interstate involvement found in American General Finance. Thus, the evidence in American General Finance established a much greater degree of interstate involvement in its loan transaction than that established in this case. Moreover, in American General Finance we noted that the object of the transactionthe loan proceedswas intrinsically mobile. In other words, the proceeds enabled [the borrowers] subsequently to purchase goods and services that traveled in interstate commerce. American General Finance, 793 So.2d at 747. Although we agree that loan proceeds moneysare mobile, this language does not stand for the proposition that a loan transaction inherently triggers the FAA; to construe this language in such a manner would be at odds with this Court's holding in Sisters of the Visitation, supra, and many subsequent cases. Further, the simple fact that loan proceeds are mobile does not require the conclusion that all loan transactions are inherently interstate in nature. In this case, neither AFS nor MSC offered any evidence indicating that the funds for the payday loans originated in interstate commerce. Additionally, neither AFS nor MSC offered any evidence indicating that the proceeds of the loans were used in interstate commerce. Moreover, the amounts of the loans were smalleach loan involved increments of less than $300. Based on the record before us, there simply is no basis upon which to conclude that any of Colburn's or Harris's payday-loan transactions substantially affected interstate commerce. Accordingly, this factor does not support the motions to compel arbitration filed by AFS and MSC. (5) The degree of separability from other contracts. The record is devoid of any evidence that Colburn's or Harris's payday loans are interrelated with any other contracts. Accordingly, this factor does not support the motions to compel arbitration filed by AFS and MSC. Based on the record before us, we conclude that the payday-loan transactions did not substantially affect interstate commerce. Accordingly, we affirm the orders entered by the Tuscaloosa Circuit Court and the Madison Circuit Court, although for different reasons than those given by the trial courts. Because our conclusion that the transactions at issue did not substantially affect interstate commerce requires us to affirm the orders entered by the trial courts, we pretermit consideration of the other issues raised on appeal. We express no opinion as to the merits of those remaining issues. AFFIRMED. MOORE, C.J., and HOUSTON, BROWN, JOHNSTONE, HARWOOD, and WOODALL, JJ., concur. SEE, J., dissents. LYONS, J., recuses himself.