Opinion ID: 1935391
Heading Depth: 1
Heading Rank: 5

Heading: Cedar Ridge's Appeals as to Clarke and Watkins

Text: Cedar Ridge argues, like Cavalier, that the trial court erred when, relying on Ex parte Palm Harbor, it compelled it to arbitrate claims brought by Clarke and Watkins under the terms of the retail installment contracts. Belmont Homes, however, is inapposite to the issues raised in Cedar Ridge's appeals because, unlike Cavalier, which is not a party to the retail installment contracts at issue here, Cedar Ridge is a party to the retail installment contracts executed by Clarke and Watkins. We must, therefore, consider the operation of the Agreement for Binding Arbitration and the Acknowledgement and Agreement, all of which were executed by Cedar Ridge, in relation to the retail installment contracts. In Watkins's case, Cedar Ridge argues that Watkins's claims should be arbitrated under the Agreement for Binding Arbitration. Watkins filed no brief in this case. In Clarke's case, Cedar Ridge argues that Clarke's claims should be arbitrated under the Acknowledgement and Agreement or under the Agreement for Binding Arbitration. Clarke argues that Ex parte Palm Harbor controls in this case because the retail installment contract contains both an arbitration clause and a merger clause, and that, therefore, the merger clause in the retail installment contract works to extinguish the other agreements. Clarke's and Watkins's retail installment contracts are substantially similar, so we consider that issue first. Under general Alabama rules of contract interpretation, the intent of the contracting parties is discerned from the whole of the contract. Homes of Legend, Inc. v. McCollough, 776 So.2d 741, 746 (Ala.2000). [3] If the court determines that the terms [of the contract] are unambiguous (susceptible of only one reasonable meaning), then the court will presume that the parties intended what they stated and will enforce the contract as written. 776 So.2d at 746. Whether a contract is integrated is ordinarily a question of law for the court to decide. Ex parte Palm Harbor, 798 So.2d at 661. [A] contract may incorporate the terms of another document by reference. McDougle v. Silvernell, 738 So.2d 806, 808 (Ala.1999); Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d 33, 36 (Ala.1998)(Parties to a contract are bound by pertinent references therein to outside facts and documents.). Parties to a written contract may by mutual consent without other consideration orally alter, modify or rescind the contract. Watson v. McGee, 348 So.2d 461, 464 (Ala. 1977). When parties execute successive agreements and the two agreements cover the same subject matter and include inconsistent terms, the later agreement supersedes the earlier agreement. CMI Int'l, Inc. v. Intermet Int'l Corp., 251 Mich.App. 125, 130, 649 N.W.2d 808, 812 (2002). Further, it is not always necessary for a later contract to contain an integration clause in order for this later contract to supersede an earlier contract. Archambo v. Lawyers Title Ins. Corp., 466 Mich. 402, 414 n. 16, 646 N.W.2d 170, 177 n. 16 (2002). Cedar Ridge argues that because it executed the Agreement for Binding Arbitration contemporaneously with the retail installment contract, the two instruments should be read together as one contract. See Pacific Enters. Oil Co. (USA) v. Howell Petroleum Corp., 614 So.2d 409, 414 (Ala.1993)(It is well settled that `two or more instruments executed contemporaneously by the same parties in reference to the same subject matter constitute one contract and should be read together in construing the contract.'). This Court, however, substantially limited that rule in Ex parte Palm Harbor. In Ex parte Palm Harbor, one of the contemporaneously executed instruments contained an arbitration clause and a merger clause, none of the instruments incorporated the others by reference, and the arbitration provisions in the instruments without merger clauses contradicted the arbitration clause in the instrument with a merger clause; this Court held that the instrument containing the merger clause constituted the only contract between the parties. 798 So.2d at 661. If we apply the rule as stated in Ex parte Palm Harbor, because the retail installment contracts executed by Cedar Ridge contain a merger clause, it would initially appear that the arbitration clause in the retail installment contracts would extinguish the arbitration clauses in the Agreement for Binding Arbitration signed by Clarke and Watkins. Cedar Ridge argues, however, that its Agreement for Binding Arbitration is distinguishable from the agreements in Ex parte Palm Harbor because Cedar Ridge's Agreement for Binding Arbitration incorporates by reference the terms of the retail installment contract. The Agreement for Binding Arbitration reads in pertinent part: This agreement is a part of the contract of sale entered into this date between Buyer and Seller, the terms [and] provisions of which are incorporated herein by reference, and shall be binding upon and inure to the benefit of their respective heirs and assigns. Cedar Ridge argues correctly that a contract, such as the Agreement for Binding Arbitration, may incorporate the terms of another contract by reference. McDougle, 738 So.2d at 808. [4] Moreover, parties are free to modify agreements, and if the terms of a subsequent agreement contradict the earlier agreement, the terms of the later agreement prevail. See Watson, 348 So.2d at 464; CMI International, 251 Mich.App. at 130, 649 N.W.2d at 812. Also, the subsequent agreement need not contain its own merger clause to supersede the earlier integrated agreement. Archambo, 466 Mich. at 414 n. 16, 646 N.W.2d at 177 n. 16. Cedar Ridge asserts in this case that the Agreement for Binding Arbitration was entered into subsequent to the retail installment contract and thus modifies the retail installment contract, and that Cedar Ridge should be allowed to arbitrate its disputes with Clarke and Watkins under that agreement. In Clarke's case, Cedar Ridge also argues that because it and Clarke are both parties to the Acknowledgement and Agreement, and because it and Clarke entered into the Acknowledgement and Agreement subsequent to the retail installment contract, it should be allowed to arbitrate its dispute with Clarke under the terms of the Acknowledgement and Agreement. While Cedar Ridge argues correctly that a subsequent agreementthe Agreement for Binding Arbitration or the Acknowledgement and Agreementwould supersede a prior agreementthe retail installment contractthe record does not reveal the order in which the documents in this case were executed. Nor does the record reveal any reliable way for a court to determine the sequence. Likewise, the record does not reveal any mutual intent among the parties for an order of execution that would cause any particular document to supersede other documents. Instead, in each case, the evidence of record is, without any genuine factual dispute, that the documents were executed contemporaneously, on the same day, and were intended to be construed together. Therefore, in each case, the differences among the respective arbitration provisions in the documents constitute ambiguities, which should be construed against the defendants, who supplied the forms. Homes of Legend, 776 So.2d at 746 (if all other rules of contract construction fail to resolve the ambiguity, then, under the rule of contra proferentem, any ambiguity must be construed against the drafter of the contract). Thus, the trial court was right in compelling arbitration pursuant to the document the plaintiffs deemed most favorable to themthe main document in each casethe retail installment contract. Therefore, Cedar Ridge must arbitrate its disputes with both Watkins and Clarke under the terms of the retail installment contract. We recognize that because Cedar Ridge and Clarke are obligated to arbitrate their dispute under the retail installment contract, Clarke must arbitrate his disputes with Cedar Ridge and with Cavalier in separate proceedings conducted under the provisions of different arbitration agreements. Cavalier argues correctly that nothing in the Federal Arbitration Act provides for consolidated proceedings absent an expressed intention by the parties to do so. The Supreme Court of the United States held in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), [t]he preeminent concern of Congress in passing the [Federal Arbitration] Act was to enforce private agreements into which parties had entered, and that concern requires that we rigorously enforce agreements to arbitrate, even if the result is `piecemeal' litigation, at least absent a countervailing policy manifested in another federal statute.