Coastal Ford, Inc. v. Kidder

• Decision Date: 18 April 1997
• Citation: 694 So.2d 1285
• Parties: COASTAL FORD, INC. v. Delmar KIDDER. 1960005.
• Court: Alabama Supreme Court

Page 1285

694 So.2d 1285

COASTAL FORD, INC. v. Delmar KIDDER.

1960005.

Supreme Court of Alabama.

April 18, 1997.

M. Mallory Mantiply of Mantiply & Associates, Mobile, for Appellant.

No brief filed for Appellee.

SHORES, Justice.

The defendant, Coastal Ford, Inc. ("Coastal"), appeals from an order denying its motion to stay the proceedings in this case pending arbitration. We reverse and remand.

On March 5, 1996, Delmar Kidder filed a complaint alleging that Coastal had committed fraud by misrepresenting the mileage of a used pickup truck it sold to Kidder. On April 23, 1996, Coastal moved to dismiss or to stay proceedings in the case pending arbitration pursuant to the parties' agreement. The trial court initially granted Coastal's motion to stay pending arbitration and transferred the case to its "administrative docket." However, after Kidder filed a motion to reconsider that action, the trial court held a hearing and then denied Coastal's motion to stay proceedings pending arbitration. This appeal followed. ¹

On June 13, 1995, Kidder purchased a 1990 Ford F-150 pickup truck from Coastal. Kidder's complaint alleges that when he bought the truck Coastal represented to him that it had been driven 42,785 miles, but that it actually had traveled 142,785 miles. At the time of the purchase, Kidder signed a written purchase agreement entitled "Retail Buyer's Order" (the "contract"). On this document, directly above Kidder's signature, is an arbitration provision that reads as follows:

"ARBITRATION

"Buyer/Lessor acknowledges and agrees that the vehicle purchased or leased has traveled in interstate commerce. Buyer/lessor acknowledges that the vehicle and other aspects of the sales or lease transaction are involved in, or have a direct impact upon, interstate commerce.

"Buyer/lessor and dealer agree that all claims, demands, disputes, or controversies of every kind or nature that may arise between them concerning any of the negotiations leading to the sale or lease of the vehicle, terms and provisions of the sale or lease arrangements for financing, purchase of insurance, purchase of extended warranties or service contracts, the performance or condition of the vehicle, or any other aspects of the vehicle and its sale or lease shall be settled by binding arbitration conducted pursuant to the provision of 9 U.S.C. Section 1 et seq. and according to the Commercial Rules of the American Arbitration Association. Without limiting the generality of the foregoing, it is the intention of the buyer/lessor and the dealer to resolve by binding arbitration all disputes between them concerning the vehicle, its sale or lease, and its condition, including disputes concerning the terms and conditions of the sale or lease, the condition of the vehicle, any damage to the vehicle, the terms and meaning of any of the documents signed or given in connection with the sale or lease, any representations, promises or omissions made in connection with negotiations for the sale or lease of the vehicle, or any terms, conditions or representations made in connection with financing, credit life insurance, disability insurance, and vehicle extended warranty or service contract purchased or obtained in connection with the vehicle.

"Either party may demand arbitration by filing with the American Arbitration Association a written demand for arbitration along with a statement of the matter in controversy. A copy of the demand for arbitration shall simultaneously be served upon the other party. The buyer/lessor and the dealer agree that the arbitration proceedings to resolve all such disputes shall be conducted in the city where the dealer's facility is located."

Coastal also supplied Kidder with an odometer disclosure statement, as required under federal law. See 49 U.S.C. § 32705. That statement, dated the day of the sale and signed by Kidder and Coastal's representative, declares that upon transfer of ownership the odometer read 42,785 miles and "to the best of [Coastal's] knowledge that it reflect[ed] the actual mileage" of the truck.

On appeal, the issue before this Court is whether the trial court properly denied Coastal's motion to stay the proceedings pending arbitration. Coastal argues that the trial court erred in denying its motion because, it argues, Kidder had entered into an enforceable agreement to arbitrate any dispute arising out of the sale of the truck.

We would initially note that the trial court's reasons for denying Coastal's motion to stay the proceedings pending arbitration are unclear. The trial court did not state its reasons for denying that motion, and the record does not contain a transcript of the hearing at which this motion was argued. In his motion to reconsider the earlier order granting a stay pending arbitration, Kidder argued only that a hearing was required before a stay could be ordered and he stated that he "contests the validity of the arbitration clause." Furthermore, Kidder has not submitted a brief to this Court.

Section 8-1-41(3), Ala.Code 1975, prohibits specific enforcement of "[a]n agreement to submit a controversy to arbitration." However, § 2 of the Federal Arbitration Act, 9 U.S.C. § 2, provides that a

" written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

This Court has recognized that, under this section, the Federal Arbitration Act preempts conflicting state law where an arbitration agreement is voluntarily entered into and is contained in a contract that involves interstate commerce. Ex parte Jones, 628 So.2d 316 (Ala.1993); A.G. Edwards & Sons, Inc. v. Syvrud, 597 So.2d 197 (Ala.1992). Formerly, this Court narrowly interpreted the language "a contract evidencing a transaction involving commerce," requiring a showing that at the time they entered into the agreement to arbitrate the parties "contemplated substantial interstate activity." See, e.g., Ex parte Warren, 548 So.2d 157 (Ala.), cert. denied, 493 U.S. 998, 110 S.Ct. 554, 107 L.Ed.2d 550 (1989); Ex parte Jones, supra; Continental Grain Co. v. Beasley, 628 So.2d 319 (Ala.1993); Allied-Bruce Terminix Companies, Inc. v. Dobson, 628 So.2d 354 (Ala.1993). However, this reading, which had the effect of restricting the applicability the Federal Arbitration Act, was rejected by the United States Supreme Court in Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). In reversing the judgment of this Court, the United States Supreme Court in Allied-Bruce Terminix held that, rather than examining the parties' contemplation of interstate activity, a court considering whether there is "a contract evidencing a transaction involving commerce" should simply look to whether the transaction involved interstate commerce "in fact." Id., 513 U.S. at 276-80, 115 S.Ct. at 841-42, 130 L.Ed.2d. at 766. The United States Supreme Court further held that the language of § 2 gives the Federal Arbitration Act very broad applicability, "reaching to the limits of Congress' Commerce Clause power." Id., 513 U.S. at 270, 115 S.Ct. at 837, 130 L.Ed.2d at 764; U.S. Const., Article I, § 8, cl. 3. See also Allied-Bruce Terminix Companies, Inc. v. Dobson, 684 So.2d 102 (Ala.1995) (opinion on remand). Thus, regardless of any conflicting state law, under § 2 of the Federal Arbitration Act, an arbitration provision in a contract that, in fact, involves interstate commerce is put on " 'the same footing' as other terms of a contract." Ex parte Phelps, 672 So.2d 790, 793 (Ala.1995), quoting Allied-Bruce Terminix, 513 U.S. at 275, 115 S.Ct. at 840, 130 L.Ed.2d at 769.

We first look to whether the Federal Arbitration Act is applicable to the arbitration agreement contained in the contract for the purchase of the used truck. We note that nothing in the record suggests that the contract itself between Kidder and Coastal is invalid or...