Opinion ID: 1848885
Heading Depth: 1
Heading Rank: 4

Heading: Whether General Contract Defenses Prohibit Enforcement of the Arbitration Agreement

Text: Melvin contends that the arbitration agreement is unenforceable because, he argues, it is unconscionable, it is a contract of adhesion, and there is no mutuality of remedies. Johnnie's Homes argues that none of those defenses applies. First, Johnnie's Homes contends our caselaw has held that arbitration agreements are not unconscionable. In Southern Energy Homes, Inc. v. Gary, 774 So.2d 521 (Ala.2000), this Court addressed this very issue in terms of the burden of proof: Gary also argues that the clauses are unconscionable. However, Gary's affidavit states only that he has a 10th-grade education, that he did not know the arbitration clauses existed until his attorney informed him about them, that no one at [the dealership] advised him of the existence of the arbitration clauses and what they meant, that he does not know what arbitration is, and that he was given nothing in exchange for being required to sign an arbitration provision. Gary had the burden of proving that the arbitration clauses were unconscionable. [Ex parte] Napier, 723 So.2d [49] at 53 [(Ala.1998)]. He did not present substantial evidence that would support a finding that they were. See Napier, [ Ex parte Parker, 730 So.2d 168 (Ala.1999)], and [ Green Tree Fin. Corp. of Alabama v. Wampler, 749 So.2d 409 (Ala.1999)]. Therefore, we conclude that the arbitration clauses are enforceable as to Gary. 774 So.2d at 529 (footnote omitted.) Melvin provided essentially only the same quantum of proof that Gary provided: Evidence that he had a sixth-grade education; that he did not know the arbitration clause existed until after Patricia read the contract again at home; that no one at Johnnie's Homes informed him of the existence, or the substance, of the arbitration provision; and that he was not aware that he was given anything in return for signing the arbitration agreement. Presenting only this evidence, Melvin, like Gary, has failed to carry his burden of producing substantial evidence of unconscionability. Thus, we conclude that the arbitration provision is enforceable against him. Second, Johnnie's Homes states that [i]n Gary, this Court did not even address the plaintiffs argument regarding adhesion because it had rejected such an argument on numerous [previous] occasions. In Gary, this Court reiterated that in regard to arbitration agreements, certain defensesincluding the defense that an arbitration agreement is a contract of adhesionare without merit. See Gary, citing Ex parte McNaughton, 728 So.2d 592 (Ala.1998), cert. denied, 528 U.S. 818, 120 S.Ct. 59, 145 L.Ed.2d 52 (1999); Ex parte Napier, 723 So.2d 49 (Ala.1998); Ex parte Parker, 730 So.2d 168 (Ala.1999); and Green Tree Fin. Corp. of Alabama v. Wampler, 749 So.2d 409 (Ala.1999). Third, Johnnie's Homes contends that this Court has held that the doctrine of mutuality of remedies is not even applicable to disputes regarding the validity of arbitration agreements, but that that doctrine is limited to the availability of the ultimate redress for a wrong suffered by a plaintiff, not the means by which the ultimate redress is sought, quoting McNaughton, 728 So.2d at 598. In McNaughton, we explained: `A plaintiff does not seek as his ultimate redress an arbitration proceeding or a court proceeding. Instead, he seeks legal relief (e.g., damages) or equitable relief (e.g., specific performance) for his injury, and he uses the proceeding as a means to obtain that result. See Goodwin v. Ford Motor Credit Co., 970 F.Supp. 1007, 1014 (M.D.Ala.1997) (`[A]rbitration is not a remedy, but a choice-of-forum in which to seek remedies (just as a jury trial is no more or less a remedy than a bench trial)....'). Thus, an arbitration proceeding is not a remedy.' 728 So.2d at 598. Thus, Melvin's contention that the lack of mutuality of remedies invalidates the arbitration agreement is without merit. Finally, Johnnie's Homes contends that Melvin's argument of financial hardship is without merit. In Wampler, this Court stated: Because the general principles of Alabama contract law do not excuse performance on grounds of financial hardship, we cannot allow a party's poverty, standing alone and independent of other considerations justifying a finding of unconscionability, to constitute a defense to enforcement of an arbitration agreement. [ Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d 33, 37 (Ala.1998)]. 749 So.2d at 416. Although the record contains evidence indicating Melvin would have to pay a $2,000 fee to have his claims arbitrated and evidence indicating he has a limited financial capacity, this evidence standing aloneis not enough to persuade us to rule in Melvin's favor without some other showing that the arbitration provision is unconscionable. Some arbitration provisions permit the arbitrator to order the other party to pay all the fees or to pay a partial amount, depending on who wins and depending on the financial condition of the claimant. See generally Ex parte Dan Tucker Auto Sales, Inc., supra. Therefore, Melvin has failed to show that general contract defenses should prohibit enforcement of the arbitration provision against him.