AMERIQUEST MORTG. CO., INC. v. Bentley

• Decision Date: 27 November 2002
• Citation: 851 So.2d 458
• Parties: AMERIQUEST MORTGAGE COMPANY, INC., and Diana Harmon v. Kathryn BENTLEY, individually and d/b/a Kathryn Bentley & Associates.
• Court: Alabama Supreme Court

851 So.2d 458

AMERIQUEST MORTGAGE COMPANY, INC., and Diana Harmon v. Kathryn BENTLEY, individually and d/b/a Kathryn Bentley & Associates.

1011791.

Supreme Court of Alabama.

November 27, 2002.

Wilson F. Green and F.A. Flowers III of Burr & Forman, L.L.P., Birmingham, for appellants.

George Huddleston, Birmingham, for appellee.

HOUSTON, Justice.

Ameriquest Mortgage Company, Inc., and Diana Harmon, the defendants in an action pending in the Jefferson Circuit Court, appeal from an order denying their motion to compel arbitration of various tort and contract claims filed against them by Kathryn Bentley, individually and d/b/a Kathryn Bentley & Associates. We reverse and remand.

I.

Kathryn Bentley owns and operates a real estate appraisal business, Kathryn Bentley & Associates, in Jefferson County, Alabama. Bentley performed real estate appraisals for Ameriquest Mortgage Company, Inc. ("Ameriquest"), from May 1998 to January 2000.

In January 2000, Bentley accepted an offer to work for Ameriquest at its Birmingham office as a retail account executive. Her job duties with Ameriquest consisted of originating loans on behalf of the company. The employment agreement Bentley signed upon acceptance of the Ameriquest job stated that her employment was on an "at-will basis" and that it was also conditioned upon her signing an arbitration agreement. The contract provided: "As a condition of employment, you will be required to sign the standard Mutual Agreement to Arbitrate Claims ..., which will apply during your employment with the Company and thereafter." Bentley and a representative of Ameriquest both signed the employment contract and the arbitration agreement.¹ The arbitration agreement signed by both parties reads as follows:

"MUTUAL AGREEMENT TO ARBITRATE CLAIMS

"I recognize that differences may arise between Ameriquest Mortgage Company (collectively `the Company') and me during or following my employment with the Company, and that by entering into this Agreement to Arbitrate Claims (`Agreement'), I anticipate gaining the benefits of a speedy, impartial dispute-resolution procedure.

"....

"Claims Covered by the Agreement

"The Company and I mutually consent to the resolution by arbitration of all claims (`claims'), whether or not arising out of my employment (or its termination), that the Company may have against me or that I may have against the Company or against its officers, directors, employees or agents in their capacity as such or otherwise. The claims covered by this Agreement include, but are not limited to, claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, religion, national origin, age, marital status, medical condition, or disability); claims for benefits (except where an employee benefit or pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one), and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance, except claims in the Claims Not Covered section below.

"Except as otherwise provided in this Agreement, both the Company and I agree that neither of us shall initiate or prosecute any lawsuit or administrative action (other than an administrative charge of discrimination) in any way related to any claim covered by this Agreement.

"Claims Not Covered by the Agreement

"Claims I may have for workers' compensation or unemployment compensation benefits are not covered by this Agreement.

"Also not covered are claims by the Company for injunctive and/or other equitable relief for unfair competition and/or the use and/or unauthorized disclosure of trade secrets or confidential information, as to which I understand and agree that the Company may seek and obtain relief from a court of competent jurisdiction.

"....

"Arbitration Procedures

"The Company and I agree that, except as provided in this Agreement, any arbitration shall be in accordance with the then-current Model Employment Arbitration Procedures of the American Arbitration Association (`AAA') before an Arbitrator who is licensed to practice law in the state of California (`Arbitrator'). The arbitration shall take place in or near the city in which I am or was last employed by the Company, if I am or was employed in the State of California. If I am or was employed outside the State of California, then at the Company's headquarters in Orange, California.

"....

"Interstate Commerce

"I understand and agree that the Company is engaged in transactions involving interstate commerce and that my employment involves such commerce.

"....

"Consideration

"The promises by the Company and by me to arbitrate differences, rather than litigate them before courts or other bodies, provide consideration for each other.

"Employment Agreement

"This Agreement is not, and shall not be construed to create, any contract of employment, express or implied. Nor does this agreement in any way alter the `at-will' status of my employment.

"Voluntary Agreement

"I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I UNDERSTAND ITS TERMS, THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME RELATING TO THE SUBJECTS COVERED IN THE AGREEMENT ARE CONTAINED IN IT, AND THAT I HAVE ENTERED INTO THE AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

"I FURTHER ACKNOWLEDGE THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT OPPORTUNITY TO THE EXTENT I WISH TO DO SO.

"/s/ M. Kathryn Bentley "Signature of Associate ".... "01/27/00 "Date"

(Capitalization original.)

The following facts were presented during the argument on the motion to compel arbitration. Bentley worked for Ameriquest originating loans until March 2000. Bentley became dissatisfied with her compensation, and she believed that Ameriquest had unilaterally changed the terms and conditions of her compensation package. Bentley decided to return to her real estate appraisal business. Bentley terminated her employment with Ameriquest, but claims that she left only after Ameriquest allegedly represented to her that the company would use her as a preferred real estate appraiser if she terminated her employment.

On June 19, 2000, Bentley learned that she had been removed from Ameriquest's "preferred appraiser's list." She was shown a facsimile transmission from Diana Harmon, an Ameriquest representative in California, which stated that Bentley had been removed from the preferred appraiser's list "for cause" because of a perceived conflict of interest. Harmon claimed that Bentley had been removed from the list because she had "refused to assure Ms. Harmon that she will not allow her prior experience as an Ameriquest Account Executive to interfere with her professional responsibilities as an independent appraiser."

Bentley sued Ameriquest and Harmon in the Circuit Court of Jefferson County, Alabama. In her complaint, she alleged breach of contract, fraud, defamation, and tortious interference with business relations against both defendants. All of the claims are based on the alleged representations by Ameriquest to Bentley while she was employed at Ameriquest.

Ameriquest and Harmon moved to stay the proceedings and to compel arbitration based on the arbitration agreement signed by Bentley. In support of their motion, Ameriquest and Harmon submitted a copy of the arbitration agreement, a copy of the employment agreement, and the affidavit of Ginger Crawford, human resources manager for Ameriquest. Crawford's affidavit stated, in pertinent part, that Ameriquest is a Delaware corporation whose headquarters are in California. The affidavit also stated:

"4. While employed as an account executive at Ameriquest, plaintiff received monthly payments from the Ameriquest headquarters in Orange, California."

In her response to the motion to compel arbitration, Bentley argued that the arbitration agreement did not apply to the claims she was asserting because, she says, the claims are unrelated to her employment with Ameriquest and, even if they were, her employment contract did not sufficiently affect interstate commerce so as to invoke the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA").

The trial court denied Ameriquest and Harmon's motion to compel arbitration. In its order, the trial court found that the arbitration agreement was unenforceable for three reasons: 1) no binding arbitration agreement was formed by the parties because there was no separate written acknowledgment of the arbitration agreement executed by the parties; 2) the arbitration agreement fails for lack of consideration because continued at-will employment was the recognized consideration for the agreement and Bentley's claims arose after her at-will employment with Ameriquest was terminated; and 3) because Ameriquest and Harmon did not meet their burden of showing that the employment contract between the parties substantially affects interstate commerce. Ameriquest and Harmon appeal.

II.

The appeal of an order denying a motion to compel arbitration is subject to de novo review. Celtic Life Ins. Co. v. McLendon, 814 So.2d 222, 224 (Ala.2001); Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000); Patrick Home Ctr., Inc. v. Karr, 730 So.2d 1171, 1172 (Ala.1999). A trial court is required to stay or dismiss proceedings and to compel arbitration if the parties have entered into a valid contract containing an arbitration agreement. Ex parte Colquitt, 808 So.2d 1018, 1022 (Ala.2001). The party seeking to compel arbitration has the initial burden of producing a written arbitration agreement, covering a transaction that "substantially affects interstate commerce." Sisters of the Visitation v. Cochran Plastering Co.,...