Cook's Pest Control, Inc. v. Rebar

• Court: Alabama Supreme Court
• Writing for the Court: STUART, Justice.
• Citation: Cook's Pest Control, Inc. v. Rebar, 852 So.2d 730 (Ala. 2002)
• Decision Date: 13 December 2002
• Parties: COOK'S PEST CONTROL, INC., et al. v. Robert REBAR and Margo Rebar.

852 So.2d 730

COOK'S PEST CONTROL, INC., et al. v. Robert REBAR and Margo Rebar.

1010897.

Supreme Court of Alabama.

December 13, 2002.

Rehearing Denied January 13, 2003.

Nicholas B. Roth and Heather L. Necklaus of Eyster, Key, Tubb, Weaver & Roth, Decatur, for appellants.

Thomas F. Campbell and Bert J. Miano of Campbell & Baker, L.L.P., Birmingham, for appellees.

STUART, Justice.

Cook's Pest Control, Inc., and three of its officers and/or managers (hereinafter referred to collectively as "Cook's Pest Control") are defendants in an action filed by Robert Rebar and Margo Rebar in the Jefferson Circuit Court. Cook's Pest Control appeals from an order of the Jefferson Circuit Court denying its motion to compel arbitration. We affirm.

Background

On August 28, 2000, Cook's Pest Control and the Rebars entered into a one-year renewable "Termite Control Agreement." Under the agreement, Cook's Pest Control was obligated to continue treating and inspecting the Rebars' home for termites during the term of the agreement, which, with certain limited exceptions, continued so long as the Rebars continued to pay the annual renewal fee. The agreement contained a mandatory, binding arbitration provision. When the initial term of the agreement was about to expire, Cook's Pest Control notified the Rebars and requested that they renew the agreement for another year by paying the renewal fee. On August 16, 2001, Mrs. Rebar submitted a payment to Cook's Pest Control; with the payment she included an insert entitled "Addendum to Customer Agreement" (hereinafter referred to as "the addendum"). That addendum provided, in part:

"Addendum to Customer Agreement:

"To: Cook's Pest Control, Inc....

"Please read this addendum to your Customer Agreement carefully as it explains changes to some of the terms shown in the Agreement. Keep this document with the original customer Agreement.

"....

"Arbitration.

Cook's [Pest Control] agrees that any prior amendment to the Customer Agreement shall be subject to written consent before arbitration is required. In the event that a dispute arises between Cook's [Pest Control] and Customer, Cook's [Pest Control] agrees to propose arbitration if so desired, estimate the cost thereof, and describe the process (venue, selection of arbitrator, etc.). Notwithstanding prior amendments, nothing herein shall limit Customer's right to seek court enforcement (including injunctive or class relief in appropriate cases) nor shall anything herein abrogate Customer's right to trial by jury. Arbitration shall not be required for any prior or future dealings between Cook's [Pest Control] and Customer.

"Future Amendments.

Cook's [Pest Control] agrees that any future amendments to the Customer Agreement shall be in writing and signed by Customer and [an] authorized representative of Cook's [Pest Control].

"Effective Date.

These changes shall be effective upon negotiation of this payment or the next service provided pursuant to the Customer Agreement, whichever occurs first.

"....

"Acceptance be [sic] Continued Use.

Continued honoring of this account by you acknowledges agreement to these terms. If you do not agree with all of the terms of this contract, as amended, you must immediately notify me of that fact."

The addendum proposed new terms for the agreement and notified Cook's Pest Control that continued service or negotiation of the renewal-payment check by Cook's Pest Control would constitute acceptance of those new terms. After it received the addendum, Cook's Pest Control negotiated the Rebars' check and continued to perform termite inspections and services at the Rebars' home.

On August 30, 2001, the Rebars filed this action against Cook's Pest Control. The Rebars alleged fraud, negligence, breach of contract, breach of warranty, breach of duty, unjust enrichment, breach of the duty to warn, negligent training, supervision and retention of employees, and bad-faith failure to pay and bad-faith failure to investigate a claim.¹ Those claims were based upon Cook's Pest Control's alleged failure to treat and control a termite infestation in the Rebars' home and to repair the damage to the home caused by the termites.

Cook's Pest Control moved to compel arbitration of the Rebars' claims. In support of its motion, Cook's Pest Control relied upon the arbitration provision contained in the agreement; Cook's Pest Control also submitted the affidavit testimony of the president of the company, who testified regarding the effect of Cook's Pest Control's business on interstate commerce.

The Rebars opposed the motion to compel arbitration, asserting, among other things, that a binding, mandatory arbitration agreement no longer existed.² The Rebars asserted that a binding, mandatory arbitration agreement no longer existed because the agreement between the parties had been modified when it was renewed in August 2001. The Rebars presented to the trial court a copy of the addendum and a copy of the canceled check they had written to Cook's Pest Control in payment of their renewal fee, which Cook's Pest Control had accepted and negotiated. The Rebars also submitted the affidavit of Mrs. Rebar, who testified that after Cook's Pest Control had received the addendum and had negotiated the check for the renewal fee, Cook's Pest Control inspected the Rebars' home.

On December 18, 2001, the trial court denied Cook's Pest Control's motion to compel arbitration. In its order, the trial court stated:

"The Motion to Compel Arbitration, filed by [Cook's Pest Control] on October 10, 2001, came before the Court on December 7, 2001 for hearing and was taken under advisement.

"The Motion is submitted upon the Motion, together with the `Subterranean Termite Control Agreement Sentricon Colony Elimination System' dated 8/28/00, which was in effect for one year. [The Rebars] have filed, on November 14, 2001, Plaintiff's Opposition to Cook's [Pest Control's] Motion to Compel Arbitration with documents attached thereto, which includes Exhibits 1, 2, A, B, C, D, E, and 3.

"The contract that was entered into on August 28, 2000, which is Exhibit B to Plaintiff's Opposition to Cook's [Pest Control's] Motion to Compel Arbitration, was for a period of one year and contained an arbitration clause. Thereafter, the same expired and the [Rebars] paid for a termite bond and at the same time made an addendum to the termite agreement, which is Exhibit C to Plaintiff's Opposition to Cook's [Pest Control's] Motion to Compel Arbitration. In said Exhibit C, under `Arbitration,' the language reads as follows:

"`Cook's [Pest Control] agrees that any prior amendment to the Customer Agreement shall be subject to written consent before arbitration is required. In the event that a dispute arises between Cook's [Pest Control] and Customer, Cook's [Pest Control] agrees to propose arbitration is [sic] so desired, estimate the cost thereof, and describe the process (venue, selection of arbitrator, etc.). Notwithstanding prior amendments, nothing herein shall limit Customer's right to seek court enforcement (including injunctive or class relief in appropriate cases) nor shall anything herein abrogate Customer's right to trial by jury. Arbitration shall not be required for any prior or future dealings between Cook's [Pest Control] and Customer.'

"The defendant Cook's Pest Control, Inc. accepted said premium with said addendum by the plaintiffs. However, at this hearing, Cook's [Pest Control] does not wish to be bound by the provisions of the addendum made by the [Rebars].

"Cook's [Pest Control] could have canceled the termite agreement, but no cancellation was made. The addendum provides in effect that arbitration is not enforceable and is not required unless [the Rebars] agree thereto, and nothing shall limit the right of [the Rebars] to seek court enforcement nor shall anything herein abrogate the [Rebars'] right to trial by jury. (The provision actually reads `customer'; and in this case, [the Rebars] are customers.)

"The agreement having expired, and the defendants Cook's Pest Control, Inc. having accepted the premium, changing the terms of the prior agreement, which had expired, the said defendant Cook's Pest Control, Inc. became bound by the provisions provided in the addendum, which is [the Rebars'] Exhibit C to Plaintiff's Opposition to Cook's [Pest Control's] Motion to Compel Arbitration.

"Therefore, the Motion to Compel Arbitration, filed by the defendants is OVERRULED AND DENIED."

Cook's Pest Control filed a "motion to reconsider"; that motion was denied by operation of law.

Cook's Pest Control appeals, asserting the following arguments:

"I. The trial court erred by incorrectly assuming that Cook's [Pest Control] could have cancelled its ongoing obligations of the termite agreement with [the Rebars] and in interpreting Cook's [Pest Control's] continued inspection and retreatment of the [Rebars'] home as acceptance of the [Rebars] attempted unilateral modification of the contract.

"II. The trial court erred because, as a matter of law, Cook's [Pest Control] is entitled to arbitration.

"A. The trial court erred in failing to recognize that there was no previous agreement between the parties which contemplate[d] future amendments to the contract.

"B. The trial court erred in failing to take into account that an at-will, unilateral business relationship cannot be fundamentally altered by the customer, as the promisor."

Analysis

Cook's Pest Control argues that the trial court incorrectly found that it accepted the terms included in the addendum by continuing to inspect and treat the Rebars' home after it received the addendum and negotiated the Rebars' check for the renewal fee. Cook's Pest Control argues that, under the terms of the agreement, it was already obligated to continue inspecting and treating the Rebars' home. Cook's Pest Control also argues that the addendum was an improper attempt to unilaterally modify an existing contract. We reject those...