Opinion ID: 1848885
Heading Depth: 1
Heading Rank: 3

Heading: Who Should Decide Whether Melvin Entered a Valid and Enforceable Arbitration Agreement?

Text: Johnnie's Homes contends that an arbitrator should decide whether Melvin agreed to arbitrate his claims, because, it contends, it treated the arbitration provision the same way it treated all other provisions of the contract and, it says, Melvin's illiteracy bears upon his comprehension of the entire contract, not just the arbitration agreement. Melvin contends that § 4 of the Federal Arbitration Act mandates that the court, not an arbitrator, should decide such controversies; that section provides: The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.... If the making of the arbitration agreement ... be in issue, the court shall proceed summarily to the trial thereof.... Where such an issue is raised, the party alleged to be in default may ... demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury.... (Emphasis suggested by Melvin Holt.) Anniston Lincoln Mercury Dodge v. Conner, 720 So.2d 898 (Ala.1998), involved a defendant, Conner, who had been born in South Korea. Although by 1995 she had lived in this country for more than 20 years, she alleged that when she purchased her truck from Anniston Lincoln Mercury Dodge (ALMD), she did not have a full understanding of the English language. When she visited ALMD, Conner was accompanied by a friend who was fluent in English. The purchase contract for the truck contained an arbitration provision. Conner sued. The trial court denied ALMD's motion to compel arbitration because it concluded that Conner's inability to understand the English language had caused the parties not to reach a meeting of the minds as to the agreement to arbitrate. This Court stated: The question whether the plaintiff should be bound by the arbitration agreement was a question that was required to be submitted and resolved by an arbitrator rather than by a court or a jury. . . . . Although the trial court correctly recognized that arbitration is a matter of contract interpretation, it concluded that the arbitration clause signed by Conner did not constitute a contract and, therefore, that Conner was not required to submit her claims to arbitration. ... [W]e must first determine [this] issue: Who should have decided whether Conner agreed to the terms of the arbitration clausethe circuit court or an arbitrator appointed as provided for by the agreement? ... ALMD argues that this case is governed by Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and we agree that several of the principles of law set out in Prima Paint are applicable. In Prima Paint, the United States Supreme Court held that when a party claims fraud in the inducement relating to the validity of the arbitration clause itself, an issue that goes to the `making' of the agreement to arbitrate, a court may adjudicate that claim; however, if the claim of fraud in the inducement actually bears upon the entire agreement and upon the activities of the parties in general, then an arbitrator, rather than a court, should adjudicate that claim, examining the making of the contract in its entirety. Id. at 403-04, 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270; see also Jones v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 604 So.2d 332 (Ala.1991). Although Prima Paint involved a charge of fraud in the inducement of the contract, the rationale of Prima Paint extends to efforts to rescind contracts on other grounds. See, e.g., Three Valleys Municipal Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1139 (9th Cir.1991). Conner argues that she should not be bound by the arbitration clause contained in her sales document, because, she says, her inability to understand English prevented her from effectively assenting to that clause. This argument falls squarely within the Prima Paint rule. Accordingly, the critical question is whether Conner can attack the validity of the arbitration clause itself without attacking the validity of the contract in its entirety. Although Conner alleges that she has challenged the making of the arbitration agreement itself, we must look beyond the ad hoc arguments of counsel in order to determine whether her claim actually bears upon the entire agreement and upon the activities of the parties in general. Jones, 604 So.2d at 337. ALMD argues that Conner's claims relate to the contract in its entirety and therefore should be resolved by an arbitrator. We agree. ... The facts of this case are similar to those addressed by the United States Court of Appeals for the Fifth Circuit in Villa Garcia v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 833 F.2d 545 (5th Cir.1987). In Villa Garcia, an investor sued a brokerage firm and several employees, alleging violations of the Securities Exchange Act of 1934. The defendants moved to compel arbitration, based on an arbitration agreement contained in the overall contract signed by the investor. The investor argued, in part, that the arbitration provision in the contract was unenforceable because of his inability to read English, which he said prevented his reading and understanding the contract. The court rejected this argument, stating that `[t]hese alleged facts and the overreaching claim they assertedly support should be decided by an arbitrator, not the district court, since they go to the formation of the entire [contract] rather than to the formation of the arbitration provision.' Id. at 548 (citations omitted). Likewise, in this case, Conner's allegation addresses the contract as a whole, rather than the arbitration provision itself. Conner has not alleged that ALMD treated the arbitration clause differently from the way it treated any other provision of the contract; instead, she has merely argued that the arbitration clause was fraudulently induced because ALMD, she says, failed to disclose the existence of that clause. That argument, it seems, is similar to the one advanced in the Villa Garcia case. That argument, in fact, if valid, could apply equally to virtually all of the other provisions of the contract. Cf. Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996) (arbitration agreements must be given treatment equal to that given to other agreements). Based on the foregoing, and based on our conclusion that Conner's allegation that she was unable to understand English bears upon the entire agreement, we hold that the trial court should not have decided whether Conner had agreed to the arbitration agreement; instead, that question, if presented, should have been answered by an arbitrator. Therefore, the trial court erred in holding that the arbitration clause was unenforceable.... 720 So.2d at 900-02 (emphasis added) (footnotes omitted.) Other than the fact that Conner's first language was not English and that Melvin is illiterate, the facts of Conner's case and the facts of this case are virtually the same: neither Conner nor Melvin Holt has a working command of the written English language; this fact, each of them alleged, hindered their ability to read, understand, and comprehend the terms of their respective contracts. Given these similarities, the result should also be the same: Because Melvin's claim goes to the making of the entire contract, not just the arbitration provision, and because he does not allege that Smith and Johnnie's Homes treated the arbitration provision any differently from the way Johnnie's Homes treated any other provision of the contract, the question whether Melvin, in signing the contract, agreed to arbitrate his claims should be decided by an arbitrator, not a court. Thus, the trial court improperly denied the motion to compel arbitration. Johnnie's Homes also argues that Melvin should be compelled to submit all of his claims to arbitration. Because we have decided that, given the specific nature of Melvin's claim, it is not the proper role of the courts to determine whether a valid and enforceable contract exists, by necessity we do not reach this particular issue, which is, instead, dependent on the arbitrator's ultimate determination of the question whether the contract is valid and enforceable.