Brown v. Pool Depot, Inc.

• Court: Alabama Supreme Court
• Writing for the Court: JOHNSTONE, Justice.
• Citation: Brown v. Pool Depot, Inc., 853 So. 2d 181 (Ala. 2002)
• Decision Date: 20 December 2002
• Parties: David BROWN v. The POOL DEPOT, INC.

853 So.2d 181

David BROWN v. The POOL DEPOT, INC.

1011032.

Supreme Court of Alabama.

December 20, 2002.

Stan Brobston of Brobston & Brobston, P.C., Bessemer, for appellant.

James A. Kee, Jr., Angela C. Shields, and Olivia S. Matuszak of Kee & Selby, L.L.P., Birmingham, for appellee.

JOHNSTONE, Justice.

The plaintiff David Brown appeals the order of the trial court compelling him to arbitrate his tort claims against the defendant The Pool Depot, Inc. Brown argues that, because Pool Depot, a foreign corporation, was not qualified to do business in Alabama at the time Pool Depot contracted to sell and to install an aboveground pool at Brown's Alabama residence, Alabama's door-closing statute, § 10-2B-15.02, Ala.Code 1975, voids the pool contract and bars Pool Depot from enforcing the pool contract and its arbitration provision. We agree.

On February 29, 2000, a representative of Pool Depot, a Georgia corporation, approached Brown, an Alabama resident, to solicit Brown's purchase of an aboveground pool to be installed by Pool Depot at Brown's Alabama residence. On that day Brown executed a contract for the purchase and installation of the aboveground pool. The contract reads in part:

"The Pool Depot Incorporated Of Georgia "Date: 2-29-00 "Over 20,000 Pools Installed "Florida License, Tennessee License, Virginia License, Maryland License "120 Interstate North Parkway East * Suite 426 * Atlanta, Georgia 30339 (Local) XXX-XXX-XXXX * (Out of Area) 800-788-9832 * www.pooldepot.net "Purchasers affidavit: I (We) Attest that I (We) have Legal Ownership of the listed real property below "Name: David Brown "Address: 1713 Neil Road County: Jefferson "City: Birmingham State: AL Zip: 35214 "Phone______ "Section A) Pool Package includes: Purchase Price $9495.00 "1-1/2H.P. Pump, 150 lbs. capacity "sand filter system, automatic timer "underwater light, automatic pool sweep, Deposit Received $ 200.00 "25 GA sparkle print virgin vinyl liner "with tile border, automatic pool Balance Due $9295.00 "purification system, in-wall skimmer "chemical start-up kit, wall mounted fountain "solar blanket winter cover "Section B) Pool Size & Type "[x]24'Round [ ]27'Round [ ]Oval "[ ]A-frame ladder (to be used without a deck) "[x]In-pool ladder (to be used only with a deck) "Section C).... "Section D).... "Section E) Completely Installed: A leveling of plain dirt is included in the contract price. Any dig over 2 feet purchaser agrees to pay $8 per inch directly to the installation crew at the time of installation. The 2-foot dig does not include digging down into level ground to bury the pool, hauling in dirt, or any type of rock removal. These require additional charges and should purchaser [Brown] require dealer [Pool Depot] to perform such services, purchaser agrees to pay these additional charges to the dealer. Installation normally takes one or more days. Installation crew will supply approximately 2 tons of sand and concrete blocks (if deemed necessary by the installation crew). Installers use various types of equipment depending on the difficulty of installation. "Section F) Completion: Dealer [Pool Depot] and Purchaser [Brown] agree that the pool is completed when the pool is assembled. Dealer will not be expected to wait until purchaser's pool is filled with water to receive payment. (It has been our experience that this can take 2 or 3 days.) All monies due at completion are to be paid directly to the installation crew (½ at the commencement of work, the balance upon completion of work) unless specified otherwise. Dealer cannot be held responsible for installation if not installed by dealer." (Emphasis added.)

The contract also includes an arbitration provision. The contract states further that the purchaser can cancel the contract within three days of execution.

On March 16, 2002, Brown telephoned Pool Depot to cancel the contract. Thereafter, Pool Depot sent Brown a document entitled "Official Document, Lien Notice, Illegal Cancellation," which reads, in part:

"What is Illegal Cancellation? According to Section K, Number 15, `I(we) understand agree that no Verbal, Telephone, or Facsimile transmitted cancellation of this contract can be accepted and that no penalty or fee may be assessed by dealer if proper cancellation notification is given as defined by the 3-Day "Buyers Right to Cancel". I(we) agree that this agreement cannot be cancelled for any reason after the 3-Day "Buyer's Right to Cancel" has expired unless the entire purchase price is paid to dealer.' YOU DID NOT PROVIDE A LEGAL CANCELLATION NOTIFICATION AS DEFINED BY THE 3-DAY `BUYERS RIGHT TO CANCEL', THEREFORE YOU CANCELLED ILLEGALLY. You now owe us the Full Purchase Price.

"If you do not work out this problem by calling 1-800-788-1831, Ext 1. (ask for Mr. Clark), within 10 days we may, at our option, file the attached lien against your personal residence and/or any other personal property that you may own, including but not limited to your personal residence, checking or savings account, retirement account, car, furniture, etc., that will accrue interest at 1-and-½% per month, (18% per year), until the lien is paid in full....

"If you choose not to work this problem out with us after we file the lien and disagree with our legal position, we will be glad to go to Binding Arbitration as contained on the front of the Pool Contract you signed (See Pool Contract Section G Binding Arbitration Agreement). Neither you nor us can file a lawsuit as, according to the Arbitration agreement, the only option is to go to Binding Arbitration in Cobb County, Georgia. If we lose, (we have never lost an arbitration hearing), we will release the lien. If we win, the arbitrator will order you to pay us.

"Most consumers are surprised [ (this emphasis added) ] to find out in a legal proceeding, such as an arbitration hearing, the written Pool Contract always rules the outcome. What a salesperson or company representative allegedly says has no bearing on how an arbitrator rules....

"Sincerely,

"Mr. Clark

"P.S. Let's be reasonable. Why pay the FULL PURCHASE PRICE OR OUR ATTORNEY FEES (under Section N, `Attorney Fees: Purchaser agrees to pay Pool Depot's attorney fees necessary to defend any disputes and/or allegations arising in any manner relating to this agreement'), and your ATTORNEY FEES and still not have a pool to swim in?

"P.S. We also TAPE RECORDED the sale. Remember President Clinton paid Paula Jones approximately $900,000 and got fined an additional $85,000 by the judge for testifying different from what was on the tape. The new Independent Counsel, after Kenneth Starr, also has the option to indict President Clinton for `PERJURY' after he leaves office. I think you will agree `PERJURY' is a serious offense."

Attached to the "Illegal Cancellation" document was another document purporting to be a lien by Pool Depot against Brown's home for $9,295, the purchase price for the pool minus the $200 deposit Brown had already paid.

After receiving the "Illegal Cancellation" document and the purported lien, Brown sued Pool Depot for fraudulent inducement and "tortious attempt to collect a debt by the threat of criminal prosecution." (Complaint, p. 3, C. 4.) The complaint alleges that "Defendant does not have a Certificate of Authority to do business in Alabama and is not license[d] to do business in this State ... [, and,] [t]herefore, the contract signed by the parties is void." (Id.) Brown attached to his complaint a copy of the pool contract.

Pool Depot moved to compel Brown to arbitrate his claims pursuant to the arbitration provision in the pool contract. Brown opposed the motion on the ground that the contract and its arbitration provision were void under Alabama's door-closing statute because Pool Depot had not qualified to do business in Alabama until some months after the execution of the Brown pool contract.

Pool Depot responded that, although it was not qualified to do business in Alabama when it entered the Brown pool contract, Pool Depot, as a business engaged in interstate commerce, was protected by the Commerce Clause of the United States Constitution from the operation of Alabama's door-closing statute to void the Brown pool contract. Pool Depot submitted as evidentiary support for this argument an affidavit from Pool Depot vice president Frank Loureire stating that the components of the aboveground pools are manufactured in other states, are shipped to Georgia for assembly, and are shipped to their final destination for installation. Loureire stated that Pool Depot "is a national company which does business nationwide." Loureire stated further that all monies paid to Pool Depot were deposited in an account in Atlanta, Georgia. While Loureire expressly denied that Pool Depot had ever had any offices in Alabama, he did not deny that it had agents in Alabama.

This appeal requires us to decide whether the business Pool Depot contracted to do in Alabama was localized in Alabama so as to constitute intrastate activity that incurred the governance of Alabama's door-closing statute, which would, in that case, void the Brown pool contract and bar Pool Depot from enforcing the contract and its arbitration provision. Alabama's door-closing statute, § 10-2B-15.02(a), Ala.Code 1975, provides:

"A foreign corporation transacting business in this state without a certificate of authority ... may not maintain a proceeding in this state without a certificate of authority. All contracts or agreements made or entered into in this state by foreign corporations prior to obtaining a certificate of authority to transact business in this state shall be held void at the action of the foreign corporation or by any person claiming through or under the foreign corporation by virtue of the contract or agreement; but nothing in this section shall abrogate the equitable rule that he who seeks equity must do equity."

Addressing whether a nonqualified foreign corporation may...