Opinion ID: 1780764
Heading Depth: 2
Heading Rank: 2

Heading: The WLS defendants v. The Lewises

Text: The WLS defendants contend that the trial court erred in vacating its order compelling arbitration with respect to the Lewises' claims against them because, they say, the necessary requirements of 1) an agreement to arbitrate and 2) a substantial effect on interstate commerce have been satisfied. The Lewises contend that the trial court acted appropriately, and they raise many of the same arguments they advanced against Conseco; namely, 1) that the WLS defendants failed to demonstrate the requisite effect on interstate commerce, 2) that specific enforcement of the arbitration provision is not appropriate because of certain breaches of the installment agreement, and 3) that the arbitration provision cannot be enforced because it was not disclosed in a written warranty. Because we find the Lewises' specific-enforcement argument unpersuasive for the reasons given above, we address only the first and third arguments raised by the Lewises in support of the trial court's ruling.
In support of their motion to compel arbitration, the WLS defendants relied upon the affidavit of Larry Smith; however, the trial court struck Smith's affidavit as untimely; it therefore did not consider it. The Lewises argue that while the WLS defendants now rely upon Conseco's involvement in the transaction to establish the requisite connection to interstate commerce (as supported by Eller's affidavit), the WLS defendants never sufficiently pursued this argument before the trial court. However, a review of the WLS defendants' response to the Lewises' motion to alter, amend, or vacate the trial court's original order granting the WLS defendants' motion to compel arbitration reveals the following assertions: 3. As the Motions to Compel Arbitration granted by this Honorable Court have substantiated, the sales transaction involving the purchase of the manufactured home in question had a substantial effect on interstate commerce, such that the arbitration provision in the Retail Installment Contract was properly enforced by this Court. 4. Defendants cite the Court to the Alabama Supreme Court's decision in Green Tree Financial Corp., n/k/a Conseco Financial Corp. v. Lewis, [813 So.2d 820] (Ala.2001), a copy of which is attached for the Court's convenience. In that case, involving the same Delaware corporation that is the codefendant in the case at bar, the arbitration provision in the installment contract was found to be enforceable even though the sale took place in Alabama between Alabama buyers and an Alabama dealer, by virtue of the lender, Conseco, being a Delaware corporation with its principal place of business in Minnesota, payments remitted by checks drawn on out-of-state banking institutions, and payments mailed by the purchasers to out-of-state addresses, as well as specific authorization in the contract to assign the installment contract to the lender, Conseco. Such factors were deemed sufficient to constitute the requisite `substantial effect on interstate commerce' required for enforcement of the arbitration provision in the installment contract under the Federal Arbitration Act. 5. The Alabama Supreme Court recognized in Lewis, supra, that the arbitration provision not only embraced the installment contract itself, but also `all relationships which result(ed) from (the) Contract.' [813 So.2d at 824.] As a result, the facts supporting the conclusion that the sales transaction in that case were found to have a substantial effect upon interstate commerce, as they do in the case at bar, including those facts arising from the assignment by the retailer to the finance company, Conseco, which the Alabama Supreme Court held to be `quite relevant' to the substantial nexus with interstate commerce. [813 So.2d at 824.] 6. The relationships between the corporations providing the substantial nexus with interstate commerce and making the Order Compelling Arbitration appropriate in Lewis, supra, make this Court's Order Compelling Arbitration appropriate, and the Plaintiff's Motion to Alter, Amend or Vacate said Order is due to be denied. 7. Under substantially the same facts as in the case at bar, the Alabama Supreme Court held in Lewis, supra, that Conseco Financial Corp. (f/k/a Green Tree Financial Corp.) carried its burden of establishing that the sales transaction had a substantial effect on interstate commerce, and arbitration was ordered in that case and upheld, as it should be in this case, based upon the same rationale by which the Alabama Supreme Court rejected plaintiff's challenge to arbitration. The WLS defendants, while perhaps not formally stating that they were incorporating Eller's affidavit in defense of their motion to compel arbitration, nonetheless thoroughly described how, under Alabama law, Conseco's involvement in the single transaction at issue substantially affected interstate commerce, a conclusion with which we today concur. By specifically basing their argument on materials already before the trial courti.e., by referencing the trial court's attention to both motions to compel arbitration, and by specifically arguing that Conseco's involvement satisfied the interstate-commerce requirement for the entire transactionthe WLS defendants effectively incorporated Conseco's motion to compel arbitration in support of their own with regard to the interstate-commerce question. It is undisputed that Conseco's involvement was part of the underlying transaction; in fact, such a conclusion would be difficult to dispute under the facts before us. When examining whether a transaction substantially affects interstate commerce in the arbitration context, we do not employ a divide and conquer technique; rather, we examine all facets of a transaction. See Lewis, 813 So.2d at 824 (stating that [w]e cannot employ an unrealistically narrow construction of the `transaction' concept so as to limit our scrutiny to the events transpiring at the time of the sale [of a manufactured home], and that, with respect to the interstate-commerce question, even those facts arising from the assignment by [the seller of the manufactured home] to Green Tree, are quite relevant). Based on the above, we hold thatas we did with Conseco the WLS defendants have met their burden of demonstrating that the transaction substantially affected interstate commerce.
The WLS defendants contend, contrary to the assertions of the Lewises, that the Lewises cannot use our recent decision in Ex parte Thicklin, supra , as a defense to arbitration because, they say, that case does not apply to these facts. We agree. Ex parte Thicklin involved the sale of a mobile home. The buyer was given a written warranty that did not mention arbitration. The buyer sued the seller and the manufacturer, asserting various claims, including claims alleging Magnuson-Moss and express-warranty violations. Relying on Cunningham v. Fleetwood Homes of Georgia, Inc., 253 F.3d 611 (11th Cir.2001), we held that because the written warranty did not disclose to the buyer any arbitration requirement as it was required to do by the Magnuson-Moss Warranty Act, the trial court could not compel the buyer to arbitrate his Magnuson-Moss and express-warranty claims. Ex parte Thicklin, 824 So.2d at 728. The disclosure requirements mentioned in Ex parte Thicklin applied specifically to a written warranty, a term defined in the Magnuson-Moss Warranty Act as follows: (6) The term `written warranty' means (A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time, or (B) any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which written affirmation, promise, or undertaking becomes part of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product. 15 U.S.C. § 2301(6). In order to invoke Ex parte Thicklin as a defense to arbitration, a party resisting arbitration would have to demonstrate initially that a written warranty of the type described in 15 U.S.C. § 2301(6) had been issued by the party seeking arbitration. In this case, the Lewises have offered no written warranty given by the WLS defendants. In fact, the record reflects that the WLS defendants not only gave no written warranties, but that both express and implied warranties were specifically (and repeatedly) disclaimed in both the purchase agreement and the installment agreement. In their brief to this Court, the Lewises argue that the existence of a written warranty is evidenced by 1) the existence of a one-year warranty from the manufacturer mentioned in the purchase agreement, and 2) the indication in both the purchase agreement and the installment agreement that the mobile home purchased by the Lewises was new. However, neither of these facts bolsters the Lewises' argument. First, the one-year warranty mentioned in the purchase agreement was not given by the WLS defendants, but by the manufacturera fact made clear by the following language in the purchase agreement: 11. MANUFACTURER'S WARRANTIES. I UNDERSTAND THAT THERE MAY BE WRITTEN WARRANTIES COVERING THE UNIT PURCHASED, OR ANY APPLIANCE(S) OR COMPONENT(S), WHICH HAVE BEEN PROVIDED BY THE MANUFACTURER OF THE UNIT OR MANUFACTURER OF THE APPLIANCE(S) OR COMPONENT(S). YOU WILL GIVE ME COPIES OF ANY AND ALL WRITTEN WARRANTIES SUPPLIED BY THE MANUFACTURERS. DELIVERY BY YOU TO ME OF THE WARRANTY BY THE MANUFACTURER OF THE UNIT PURCHASED, OR ANY APPLIANCE(S) OR COMPONENT(S) DOES NOT MEAN YOU ADOPT THE WARRANTY(S) OF SUCH MANUFACTURERS. I ACKNOWLEDGE THAT THESE EXPRESS WARRANTIES MADE BY THE MANUFACTURER(S) HAVE NOT BEEN MADE BY YOU EVEN IF THEY SAY YOU MADE THEM OR SAY YOU MADE SOME OTHER EXPRESS WARRANTY. YOU ARE NOT AN AGENT OF THE MANUFACTURER(S) FOR WARRANTY PURPOSES EVEN IF YOU COMPLETE, OR ATTEMPT TO COMPLETE REPAIRS FOR THE MANUFACTURER(S). . . . . I UNDERSTAND THAT THERE IS A ONE YEAR WARRANTY ON THE CONSTRUCTION OF THE MOBILE HOME FROM THE MANUFACTURER. I ALSO UNDERSTAND THAT THIS WARRANTY DOES NOT COME FROM [WLS, Inc.], I HAVE PERSONALLY EXAMINED THE MOBILE HOME.... Second, even if the indication that the mobile home was new could be construed to be a warranty under state law, see Ala.Code 1975, § 7-2-313 (an issue on which we express no opinion), it would not fit either definition of a written warranty under the Magnuson-Moss Warranty Act. It certainly does not fit the definition in § 2301(6)(B), and, with regard to 6(A), a statement that a product is new simply does not affirm[ ] or promise[ ] that [the] material or workmanship [in the mobile home] is defect free or will meet a specified level of performance over a specified period of time. Because the Lewises did not produce a written warranty given by the WLS defendants, any defense to arbitration stemming from our decision in Ex parte Thicklin is unavailable.