McDonald v. H & S HOMES, LLC

• Court: Alabama Supreme Court
• Writing for the Court: STUART, Justice.
• Citation: McDonald v. H & S HOMES, LLC, 853 So.2d 920 (Ala. 2003)
• Decision Date: 10 January 2003
• Parties: Christina L. McDONALD v. H & S HOMES, L.L.C., and Russ D'Olympio.

853 So.2d 920

Christina L. McDONALD v. H & S HOMES, L.L.C., and Russ D'Olympio.

1011805.

Supreme Court of Alabama.

January 10, 2003.

Michael S. Harper of Harper & Smith, P.C., Tallassee; and Frank H. Hawthorne, Jr., of Hawthorne & Hawthorne, L.L.C., Montgomery, for appellant.

James E. Williams and Flynn Mozingo of Melton, Espy & Williams, P.C., Montgomery; and Michael C. Daniel of Forston, Bentley & Griffin, P.A., Athens, Georgia, for appellees.

STUART, Justice.

H & S Homes, L.L.C., whose business is selling manufactured homes, and Russ D'Olympio, the general manager of H & S, are defendants in an action filed by Christina L. McDonald in the Montgomery Circuit Court. McDonald appeals from the trial court's May 9, 2002, order setting aside the selection of an arbitrator. We reverse and remand.

Facts and Background On January 28, 2000, McDonald contracted to purchase a manufactured home from H & S. At the time of this purchase, McDonald signed a "retail installment contract and security agreement" ("the installment contract"). The installment contract named GreenPoint Credit, L.L.C., as the assignee. The installment contract contained the following arbitration provision:

"ARBITRATION OF DISPUTES AND WAIVER OF JURY TRIAL:

"a. Dispute Resolution. Any controversy or claim between or among you and me or our assignees arising out of or relating to this Contract or any agreements or instruments relating to or delivered in connection with this Contract, including any claim based on or arising from an alleged tort, shall, if requested by either you or me, be determined by arbitration, reference, or trial by a judge as provided below....

"b. Arbitration. Since this Contract touches and concerns interstate commerce, an arbitration under this Contract shall be conducted in accordance with the United States Arbitration Act (Title 9, United States Code), notwithstanding any choice of law provision in this Contract. The Commercial Rules of the American Arbitration Association (`AAA') also shall apply...."

Simultaneously with the signing of the installment contract, McDonald executed a purchase contract with H & S; the purchase contract referenced and incorporated a separate "stand-alone" arbitration agreement. That arbitration agreement provided, in part:

"All disputes, claims, or controversies arising from or relating to the Contract or the relationships which result from the Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration by one arbitrator selected by Assignee with consent of Buyer(s)....

"....

"The parties agree and understand that all disputes arising under case law, statutory law, and all other laws, including, but not limited to, all contract, tort and property disputes, will be subject to binding arbitration [in] accord with this Contract. The parties agree and understand that the arbitrator shall have all powers provided by the law and the Contract."

D'Olympio, on behalf of H & S, and McDonald signed this arbitration agreement; the agreement was incorporated by reference into McDonald's purchase contract with H & S.¹

On February 26, 2001, McDonald filed this action against H & S and D'Olympio. In her complaint, McDonald alleged fraud, suppression, misrepresentation, deceit, negligence, wantonness, and conversion arising out of her purchase transaction.

H & S and D'Olympio filed motions to compel arbitration. Those motions were supported with briefs and evidentiary submissions, which established that McDonald signed the arbitration agreement and the installment contract containing an arbitration provision, and that her purchase of the manufactured home substantially affected interstate commerce. The trial court granted H & S and D'Olympio's motions to compel arbitration, ordering McDonald to arbitrate her claims.

On July 26, 2001, McDonald filed with the trial court a motion for clarification. In her motion, McDonald pointed out that she had signed two arbitration provisions in connection with her purchase of the mobile home and that the parties could not agree which provision controlled this dispute. McDonald asked the trial court for guidance as to which arbitration provision governed.

On October 3, 2001, the trial court issued its order finding that the stand-alone arbitration agreement and the installment contract containing an arbitration provision had been executed on the same date, were part of a continuing transaction, and should be read and construed "as if in one form." The trial court concluded its order by stating, "[I]t is hereby ORDERED that [McDonald] shall comply with the provisions contained in the Retail Installment Contract." Neither McDonald, H & S, nor D'Olympio appealed from this order.

Sometime after that order was entered, McDonald's counsel contacted the attorney for GreenPoint Credit, the assignee of the installment contract. Without providing notice to H & S or D'Olympio, the attorneys for McDonald and GreenPoint Credit mutually agreed that attorney Kenneth Mendelsohn would be the arbitrator for this dispute. Upon receiving notice that Mendelsohn had been appointed as arbitrator, H & S and D'Olympio objected, asserting that he had not been appointed pursuant to the procedures specified in the installment contract. On April 30, 2002, H & S moved the trial court to set aside as invalid McDonald and GreenPoint's selection of Mendelsohn as the arbitrator. On May 9, 2002, the trial court entered an order reading, in part, as follows:

"1. That the parties, Christina McDonald and H & S Homes, L.L.C. shall select an arbitrator in accordance with the Rules of [the] American Arbitration Association.

"2. That the selection of an arbitrator by the assignee is due to be and is hereby set aside."

McDonald filed a motion pursuant to Rule 59(e), Ala. R. Civ. P., asking the trial court to alter, amend, or vacate its May 9, 2002, order. The trial court denied this motion.

McDonald appeals from the trial court's May 9, 2002, order setting aside the selection of Kenneth Mendelsohn as the arbitrator. We reverse and remand.

Standard of Review

"This Court's review of an order granting a motion to compel arbitration is de novo." BankAmerica Housing Servs. v. Lee, 833 So.2d 609, 617 (Ala.2002). The order appealed from in this case is not an order compelling arbitration; it is, however, an order interpreting an arbitration provision.² "When a trial court compels arbitration, it must do so in a manner consistent with the terms of the arbitration provision." BankAmerica Housing Servs., 833 So.2d at 618.

We consider the issue on appeal to be whether the trial court has properly interpreted and applied the parties' arbitration agreements. Arbitration agreements are governed by general principles of contract law. Oakwood Acceptance Corp. v. Hobbs, 789 So.2d 847 (Ala.2001). The interpretation of an unambiguous contract provision is a question of law, which we review de novo. See, e.g., Sharer v. Creative Leasing, Inc., 612 So.2d 1191 (Ala.1993). For these reasons, we conclude that the appropriate standard of review in this case is de novo.

Analysis

McDonald asserts that the trial court's order of May 9, 2002, setting aside the appointment of Mendelsohn as the arbitrator must be reversed. McDonald asserts that Mendelsohn was appointed in a manner fully consistent with the trial court's October 3, 2001, order, in which the trial court ordered that the arbitration agreement and the arbitration provision in the installment contract be read and construed as if in one agreement and that McDonald comply with the provisions of the installment contract.

First, McDonald asserts that because neither party appealed the trial court's order of October 3, 2001, ordering that the...