Bugs ‘R‘ United States, LLC v. McCants

• Decision Date: 18 November 2016
• Docket Number: 1150650
• Parties: BUGS 'R' US, LLC v. Autumn Willard MCCANTS.
• Court: Alabama Supreme Court

223 So.3d 913

BUGS 'R' US, LLC

v.Autumn Willard MCCANTS.

1150650

Supreme Court of Alabama.

November 18, 2016

Amber M. Whillock of Starnes Davis Florie LLP, Birmingham; and W. Warren Butler and Jordan W Gerheim of Starnes Davis Florie LLP, Mobile, for appellant.

Benjamin C. Maumenee, Silverhill, for appellee.

PER CURIAM.

Bugs "R" Us, LLC ("BRU"), appeals from the Baldwin Circuit Court's denial of its motion to compel arbitration in an action filed by Autumn Willard McCants against BRU alleging negligent and/or wanton termite inspection of a house she purchased. We reverse the judgment of the trial court and remand the case.

I. Facts

According to McCants, on November 6, 2014, she entered into an agreement with Adrian Johns and Myra Johns to purchase the property and residence located at 705 East Fifth Street in Bay Minette ("the property"). On January 13, 2015, BRU issued an "Official Alabama Wood Infestation Inspection Report" ("WIIR"), which indicated that an inspection had revealed no visible evidence of active or previous infestation of various organisms, including powder-post—wood-boring—beetles. The WIIR was signed by the BRU agent who performed the inspection on January 13, 2015. The document states that "[t]his report ... must be signed by the buyer [and] a legible copy of this signature page must be returned to the inspecting company by the person ordering the inspection." The WIIR did not contain an arbitration clause. The WIIR is signed by McCants and dated January 16, 2015. McCants alleges that the Johnses paid for the WIIR inspection and report.

Also on January 13, 2015, BRU issued a "Termite Damage Protection Agreement" ("the termite contract") for termite-control and protection services. The termite contract identifies McCants as the "customer." McCants alleges that the Johnses also paid for the termite contract. The termite contract states that it is "[e]ffective with the date of initial treatment for one year thereafter." The date of initial treatment, as indicated in the WIIR, was January 13, 2015. The termite contract is signed by a BRU representative and the signature is dated January 13, 2015. It is undisputed that the termite contract is also signed by McCants and that her signature is dated March 6, 2015. Just above the signature lines, the termite contract states: "The terms and conditions on the reverse side of this agreement including the mandatory arbitration agreement are part of this agreement."

The reverse side of the termite contract contains the following arbitration clause:

"7. Mandatory Arbitration: Purchaser and Bugs 'R' Us agree that any claim, dispute or controversy ('claim') between them or against the other or employees, agents, or assigns of the other , and any claim arising from or relating to this agreement or the relationships that result from the agreement, including but not limited to any tort or statutory claim, shall be resolved by neutral binding arbitration by the American Arbitration Association, under the rules of the AAA in effect at the time the claim is filed ('AAA rules') .... The decision of the arbitration shall be final and binding resolution of the claim. This arbitration agreement is made pursuant to a transaction involving interstate commerce and shall be governed by the federal arbitration act. 9 U.S.C. sections 1 – 16. Judgment upon the award may be entered in any court having jurisdiction. Neither party shall sue the other party with respect to any matter in dispute between the parties other than for the enforcement of the arbitration agreement or of the arbitrators' award. The parties understand that they would have had a right or opportunity to litigate disputes through a court and to have a judge or jury decide their case, but they chose to have any disputes decided through arbitration.

"8. Except as limited herein above, Bugs 'R' Us and customer understand and agree (1) that each of them is waiving rights to seek remedies in court, including the right to a jury trial ...."

(Emphasis added.)

On March 6, 2015, McCants closed on the property and obtained a warranty deed from the Johnses. McCants alleges that she closed on the property in reliance upon statements made by BRU in the WIIR. As already noted, on the same date, March 6, 2015, McCants signed the termite contract. McCants alleges that after she moved into the property she discovered that the residence "had a severe infestation of powder post beetles and was severely damaged by that infestation."

On October 22, 2015, McCants sued BRU in the Baldwin Circuit Court, alleging that BRU negligently and/or wantonly inspected the property and prepared and provided the WIIR, upon which she relied in purchasing the property, and that she subsequently discovered a severe infestation of wood-boring organisms that had caused significant damage to the property.

On January 28, 2016, BRU filed a motion to compel arbitration. BRU attached the termite contract, without any attachment, to its motion, and it submitted an affidavit from the owner of BRU, Robert Urias, who testified that BRU's business involves interstate commerce. Urias did not mention the termite contract in his affidavit.

McCants filed three responses to BRU's motion to compel arbitration, two of which are relevant here. In her first response, McCants noted that the front page of the termite contract contains the following sentence: "This agreement is void without an attached completed graph of the premises." She further observed that the termite contract BRU attached to its motion to compel arbitration did not include a graph of the property. Consequently, McCants argued, the termite contract was void on its own terms. McCants's third response included her affidavit, in which she testified that she

"never talked with Bugs R Us or its employees until after closing. Bugs R Us issued the [WIIR] and also the Termite [contract] on 1/13/15 as a result of its dealings with Adrian and Myra Johns. Fifty two (52) days after issuance of the [WIIR] and the Termite [contract], [the Johnses] at closing purchased and paid defendant Bugs R Us for its services in issuing two documents to satisfy a requirement of the sale of the home to [McCants]: $75.00 [WIIR]; and $100.00 termite [contract]. I, Plaintiff, was not obligated to and never paid defendant Bugs R Us to issue either the [WIIR] or Termite [contract]. On or about fifty two (52) days after [BRU] issued the termite letter, [I] bought the home on 3/6/2015 from [the Johnses] in reliance upon statements made by [BRU] in its 1/13/2015 [WIIR]. Until 3/6/2015 after closing, I, Plaintiff, never owned or had any property interest in the home .... [I] den[y] that [I] ever negotiated with, or contracted with, or reached a meeting of the minds with Bugs R Us to issue a [WIIR] and/or a termite [contract]. I never agreed with Bugs R Us about anything. I, Plaintiff, suffered no detriment and had no claim against Bugs R Us on 1/13/15, 1/16/15, or on 3/6/15 until after closing."

On February 15, 2016, BRU filed a reply to McCants's responses to its motion to compel. BRU attached to its reply an attachment to the termite contract that consisted of a graph of the property and McCants's signature dated March 6, 2015.

On February 23, 2016, the trial court entered an order that simply stated: "Motion to Compel Arbitration filed by Bugs R Us, LLC, is hereby DENIED." BRU filed a timely appeal of that order.

II. Standard of Review

" '[T]he standard of review of a trial court's ruling on a motion to compel arbitration at the instance of either party is a de novo determination of whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review.' Ex parte Roberson , 749 So.2d 441, 446 (Ala. 1999). Furthermore:

" 'A motion to compel arbitration is analogous to a motion for summary judgment. TranSouth Fin. Corp. v. Bell , 739 So.2d 1110, 1114 (Ala. 1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction affecting interstate commerce. Id. "After a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question." '

" Fleetwood Enters., Inc. v. Bruno , 784 So.2d 277, 280 (Ala. 2000) (quoting Jim Burke Auto., Inc. v.Beavers , 674 So.2d 1260, 1265 n.1 (Ala. 1995) (emphasis omitted))."

Vann v. First Cmty. Credit Corp. , 834 So.2d 751, 752–53 (Ala. 2002) (emphasis omitted).

III. Analysis

Under the foregoing standard, BRU has the burden of proving the existence of an arbitration agreement and that the contract containing the arbitration agreement evidences a transaction affecting interstate commerce. BRU introduced an arbitration agreement that contains signatures of a BRU representative and McCants, and, through the uncontradicted affidavit testimony of BRU's owner, BRU demonstrated the relation of the termite contract to interstate commerce.

McCants contends, however, that BRU did not meet its burden of proving the existence of an arbitration agreement because, she says, the termite contract was never introduced into evidence in the trial court. McCants notes that the termite contract was attached to BRU's motion to compel arbitration but that it was not authenticated in accordance with Rule 44, Ala. R. Civ. P. In other words, BRU failed to present any testimony verifying the authenticity of the termite contract because the only testimony it produced concerned the interstate nature of the transaction underlying the contract. McCants argues that the same is true of the attachment to the termite contract containing a graph of the property that BRU attached to its reply in response to McCants's opposition to the motion to compel arbitration. Nothing accompanies that document to authenticate it.

To this effect, McCants has filed with this Court a ...