Opinion ID: 1844233
Heading Depth: 2
Heading Rank: 1

Heading: Did the trial court err and usurp the arbitrator's authority in deciding the threshold issue of arbitrability?

Text: The trial court determined that the arbitration agreement included in the note and security agreement was unconscionable and therefore unenforceable. American General Finance and Anderson appeal, arguing that whether the arbitration agreement was unenforceable was an issue for the arbitrator to decide rather than for the trial court. We disagree. The Federal Arbitration Act, 9 U.S.C. § 1 et seq. (the FAA), binds us to faithfully apply general principles of Alabama contract law when considering a challenge to the validity of an arbitration agreement. Green Tree Fin. Corp. v. Wampler, 749 So.2d 409, 416 (Ala.1999). As Justice Lyons noted in his concurring opinion in Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d 33 (Ala.1998): Alabama has long recognized the doctrine of unconscionability as a defense to enforcement of a contract. While Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), relegates challenges to the validity of a contract as a whole to the arbitrator, a challenge to the arbitration clause only is properly determined by the court. 718 So.2d at 43 (Lyons, J., concurring specially) (citation omitted). This Court reached the same conclusion in American General Finance, Inc. v. Branch, 793 So.2d 738 (Ala.2000), a case almost identical to this one. In Branch, this Court rejected an argument identical to the one raised by American General Finance and Anderson in this case: that because the parties had agreed that issues of arbitrability were to be decided by the arbitrator, the trial court had no authority to address the issue of unconscionability. The Branch Court stated: `[A] determination that, by the terms of the arbitration clause, the arbitrator is to decide issues of arbitrability, does not end the inquiry.' `Where the attack is addressed to the arbitration clause itself, as opposed to the contract as a whole, the court, and not the arbitrator, resolves the issue.' Thus, the threshold `issue of unconscionability of an arbitration clause is a question for the court and not the arbitrator.' 793 So.2d at 748 (quoting Green Tree Fin. Corp. v. Wampler, 749 So.2d 409, 413, 415 (Ala.1999), and citing Ex parte Napier, 723 So.2d 49 (Ala.1998)); Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d at 41 (Lyons, J., concurring specially). We agree with Branch and the cases cited in that opinion. Because Mrs. Ashby contends that the arbitration agreement included in the note and security agreement was itself unconscionable, the trial court did not err in holding that it had the authority to resolve that issue.