Opinion ID: 2494797
Heading Depth: 2
Heading Rank: 2

Heading: Whether the movants may enforce the arbitration clause

Text: In opposing arbitration, the Jenkinses contend, among other things, that an arbitration provision in a contract is generally enforceable only by the signatories of the contract. The Jenkinses' brief, p. 14 (citing Smith v. Mark Dodge, Inc., 934 So.2d 375 (Ala.2006)). [3] Conversely, the movants contend that, under the doctrine of equitable estoppel, nonsignatories to a contract can enforce an arbitration provision when the claims against the [nonsignatories] are `intimately founded in and intertwined with' the underlying contract obligations. Atelier Homes, Inc., and Wallace's brief, p. 28 (quoting Smith, 934 So.2d at 380). In Smith v. Mark Dodge, Inc ., this Court stated: 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). 934 So.2d at 380-81. We must initially determine if the arbitration provision contains sufficiently broad language that indicates that the nonsignatory was contemplated as a party. Smith, 934 So.2d at 380. Clearly, the language of the arbitration clause in this case is not party specific. See id. at 381. In fact, the language of the arbitration clause  All disputes hereunder shall be resolved by binding arbitration in accordance with rules of the American Arbitration Association  in no way limits the persons and/or entities who may seek to enforce the arbitration clause. Thus, although the evidence presented to the trial court establishes that the only parties to the contract were Atelier Custom Homes, L.L.C., and the Jenkinses, [4] the arbitration clause contains sufficiently broad language indicating that nonsignatories Atelier Homes, Inc., and Wallace were contemplated as parties. See id. at 380. Accordingly, we will review the propriety of the trial court's order compelling arbitration of the Jenkinses' claims against Atelier Homes, Inc., and Wallace. This Court will enforce an arbitration provision in a contract to which the party moving for arbitration is not a signatory in either of two instances. The first instance involves a `variation on the theory of equitable estoppel.' Fountain v. Ingram, 926 So.2d 333, 335 (Ala.2005) (quoting ECS, Inc. v. Goff Group, Inc., 880 So.2d 1140, 1145 (Ala.2003)). The second instance `arises from a third-party-beneficiary theory that affords the [nonsignatory] all the rights and benefits, as well as the burdens of that contract, including those associated with arbitration.' Fountain, 926 So.2d at 335 (quoting ECS, Inc., 880 So.2d at 1145, quoting in turn Ex parte Stamey, 776 So.2d 85, 89 (Ala.2000)).
A party claiming to be a third-party beneficiary `must establish that the contracting parties intended, upon execution of the contract, to bestow a direct, as opposed to an incidental, benefit upon the third party.' Stamey, 776 So.2d at 92 (quoting Weathers Auto Glass, Inc. v. Alfa Mut. Ins. Co., 619 So.2d 1328, 1329 (Ala. 1993)). Atelier Homes, Inc., and Wallace have not contended, either in the trial court or on appeal, that they may enforce the arbitration clause under the third-party-beneficiary exception. Thus, the third-party-beneficiary exception provides no basis for concluding that Atelier Homes, Inc., and Wallace may compel arbitration of the Jenkinses' claims against them. See Edwards v. Costner, 979 So.2d 757, 763-64 (Ala. 2007) (Edwards and Edwards Motors did not argue to the trial court or to this Court that Costner was an intended third-party beneficiary at the time the arbitration agreement was signed, nor is there evidence in the record indicating that that is the case. Thus, the third-party-beneficiary exception is not applicable.).
Arbitration may be compelled `under the doctrine of intertwining, where arbitrable and nonarbitrable claims are so closely related that the party to a controversy subject to arbitration is equitably estopped to deny the arbitrability of the related claim.' Fountain, 926 So.2d at 335 (quoting Conseco Fin. Corp. v. Sharman, 828 So.2d 890, 893-94 (Ala. 2001)). However, [t]he concept of `intertwining' necessarily presupposes that the signatory to the arbitration agreement is or will be engaged in an arbitration proceeding with the plaintiff. Southern Energy Homes, Inc. v. Kennedy, 774 So.2d 540, 545 (Ala.2000); see also Auvil v. Johnson, 806 So.2d 343, 350 (Ala.2001) (The doctrine of intertwining extends the benefits of an arbitration agreement to a nonsignatory only if the claims against him are intertwined with the claims against a signatory who is going to arbitration.); Sharman, 828 So.2d at 893-94 ([T]he doctrine of intertwining does not apply when there is no ongoing arbitration between the parties to the arbitration agreement. (citing Kennedy, 774 So.2d at 545)); Carriage Homes v. Channell, 777 So.2d 83, 86 (Ala.2000) (This present case is like Kennedy in that there is no pending or contemplated arbitration proceeding in which the doctrine of equitable estoppel could allow [the nonsignatory] to compel the [plaintiffs] to arbitrate their claims against it. (citing Ex parte Roberson, 749 So.2d 441 (Ala.1999) (Lyons, J., concurring as to the section entitled Agreement to Arbitrate))). In other words, `intertwining' requires at least two threads to weave together  one cannot intertwine a single thread. Kennedy, 774 So.2d at 545. The doctrine of intertwining does not apply in this case. Here, the signatory to the contract, Atelier Custom Homes, L.L.C., was not sued by the Jenkinses; as a result, there neither is nor will there be an arbitration proceeding involving Atelier Custom Homes, L.L.C., and the Jenkinses. In other words, because Atelier Custom Homes, L.L.C., is not a party to the underlying litigation, there will be no arbitration proceeding in which the doctrine of equitable estoppel could allow Atelier Homes, Inc., and Wallace to compel the Jenkinses to arbitrate their claims against them.