Chesser v. AmSouth Bank, NA

• Decision Date: 27 September 2002
• Citation: 846 So.2d 1082
• Parties: William T. CHESSER v. AMSOUTH BANK, N.A.
• Court: Alabama Supreme Court

846 So.2d 1082

William T. CHESSER v. AMSOUTH BANK, N.A.

1002021.

Supreme Court of Alabama.

September 27, 2002.

G. Daniel Evans of The Evans Law Firm, P.C., Birmingham, for appellant.

James S. Witcher III of Gladden & Sinor, P.C., Birmingham, for appellee AmSouth Bank, N.A.

Rik S. Tozzi of Starnes & Atchison, L.L.P., Birmingham, for defendant Protective Life Insurance Corporation on application for rehearing.

On Application for Rehearing

BROWN, Justice.

The opinion of June 28, 2002, is withdrawn and the following opinion is substituted therefor.

William T. Chesser ("Chesser") appeals from the trial court's order compelling him to arbitrate his claims against AmSouth Bank, N.A. ("AmSouth"). We affirm.

Facts and Procedural History

On May 4, 1998, Chesser purchased a used 1995 GMC truck from Premiere Chevrolet, Inc., in Bessemer. AmSouth financed the purchase of the truck. After negotiating the terms of his purchase with a salesperson, Chesser met with Chris Ferguson, the business manager at Premiere Chevrolet, to finalize the necessary paperwork and to complete the sale. At that time, Chesser executed a buyer's order, an installment sales contract and security agreement, and an application for credit-disability and credit-life insurance coverage from Protective Life Insurance Corporation of Alabama ("Protective Life").

The buyer's order provided:

"Purchaser acknowledges the vehicle has been traveling in interstate commerce and had an impact on interstate commerce. In the event any dispute(s) under the terms of this contract or sale arise (including, but not limited to, the terms of agreement, the condition of the motor vehicle sold, the conformity of the motor vehicle sold to the contract, the representations, promises, undertakings or covenants made by Premiere Chevrolet, Inc. in connection with the sale of the motor vehicle, or otherwise dealing with the motor vehicle, any terms of financing in connection therewith, or any terms of any credit life and/or disability insurance purchased simultaneously herewith, or extended service or maintenance agreements(s)), Premiere Chevrolet, Inc. and the purchaser(s) agree to submit such dispute(s) to binding arbitration, pursuant to the provisions of 9 U.S.C. § 1, Et Seq., and according to the commercial rules of the American Arbitration Association then existing, in Bessemer, Alabama."

Similarly, the retail installment contract contained the following provision:

"[A]ny controversy, claim, dispute, or disagreement arising out of, in connection with, or relating to (1) the interpretation, negotiation, execution, collateralization, administration, repayment, modification, or extension of this Agreement or any assignment thereof; (2) any charge or cost incurred pursuant to this Agreement; (3) the collection of any amounts due under this Agreement or any assignment thereof; (4) an alleged tort relating in any way to this Agreement, collateral under this Agreement or any insurance or mechanical repair contract purchased pursuant to this Agreement; or (5) any breach of any provision of this Agreement, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association...."

Finally, the certificate of insurance Chesser received when he applied for the credit-life and credit-disability insurance coverage provided:

"The issuance of this coverage takes place in and substantially affects interstate commerce. Any dispute, controversy, or cause of action by the Policyholder, you or your beneficiary, or their respective assigns (each referred to in this Arbitration section as `claimant') arising out of or relating in any way to, this insurance, or to the sale or solicitation of this insurance, shall be settled by arbitration under the provisions of the Federal Arbitration Act, 9 U.S.C., section 1, et seq. Such arbitration shall be governed by the rules of the American Arbitration Association...."

Approximately seven months after he purchased the truck, Chesser underwent heart surgery and was unable to continue making the installment payments due on the AmSouth loan. Chesser contacted Premiere Chevrolet and told them that he wished to make a claim for benefits under the credit-disability policy he had purchased from Protective Life when he purchased the truck. Pursuant to Chesser's request, Premiere Chevrolet forwarded Chesser's claim to Protective Life. Protective Life subsequently denied Chesser's claim and refunded to AmSouth, as the lienholder on the vehicle, the $1,141.38 premium. AmSouth subsequently repossessed the truck on April 29, 1999, after Chesser failed to make several payments. Chesser maintains that although AmSouth received the refunded premium before it repossessed the truck, AmSouth failed to apply the refunded premium to the arrearage he owed on the loan. After it repossessed the truck, AmSouth hired RMS Remarketing Services to prepare the truck for sale at an automobile auction in Moody, Alabama.

On March 22, 2000, Chesser sued AmSouth, Protective Life, and Ferguson, alleging breach of contract, fraud, negligent failure to obtain insurance, wrongful possession and conversion, and bad-faith refusal to pay an insurance claim.¹ AmSouth responded by asserting that it was entitled to arbitrate Chesser's claims, and it moved to stay the action pending arbitration or, alternatively, to dismiss the action. Ferguson also moved to dismiss the action and to compel arbitration. Protective...