Opinion ID: 1611515
Heading Depth: 2
Heading Rank: 2

Heading: Effect of Contract Provision Calling for Sharing Arbitration Costs

Text: The trial court also found that those contracts of the plaintiffs and the members of the putative class that fall within the purview of the Alabama Small Loan Act are not subject to arbitration due to the invalidity of those contracts. All of the contracts in question contained arbitration clauses that provided that the parties to the contracts share the costs of arbitration. The trial court reasoned that because the Small Loan Act (§ 5-18-1 et seq., Ala.Code 1975) does not permit any charges in a loan contract other than those listed in the Act, [2] and arbitration costs are not among those listed, the cost-sharing clauses voided the contracts. The defendants argue, for the first time on appeal, that these contracts were made under the Alabama Mini-Code (§ 5-19-1 et seq.), rather than the Small Loan Act, that the Mini-Code does not prohibit the sharing of these costs, and that, therefore, the sharing of arbitration costs is permissible and does not void the contracts. Because the defendants did not argue at the trial court level that the Mini-Code, as opposed to the Small Loan Act, governed the loans at issue, the argument is not properly before this Court. The argument is irrelevant as to Hughes, because we have already determined that the defendants have waived their right to compel arbitration against her. The right to compel arbitration has not been waived as to Hall and the members of the putative classes she may represent, so the question whether the Mini-Code or the Small Loan Act applies to these contracts may play a part in determining whether the defendants can invoke the arbitration clauses in these contracts. Because the trial court did not have the opportunity to rule on the question of which statutory scheme applies to these contracts, we leave this question open for the trial court's determination on remand. [3] In sum, because the defendants substantially invoked the litigation process as to Hughes, we affirm the trial court's ruling that the defendants waived their right to compel arbitration as to her. Because the defendants have not had ample opportunity to substantially invoke the litigation process as to Hall and the members of the putative classes she may represent, we reverse the trial court's decision that the defendants had waived their right to arbitration as to those plaintiffs. Finally, because the issue whether the Small Loan Act or the Mini-Code applies to these contracts was not argued at the trial court level, we make no determination on that issue and leave it for the trial court's determination in subsequent proceedings in this case. AFFIRMED IN PART; REVERSED IN PART; AND REMANDED. MOORE, C.J., and HOUSTON, LYONS, and HARWOOD, JJ., concur. WOODALL and STUART, JJ., concur in the result. JOHNSTONE, J., concurs in part and dissents in part. SEE, J., dissents.