Crown Pontiac, Inc. v. McCarrell

CourtSupreme Court of Alabama
Writing for the CourtALMON; HOOPER; MADDOX
Citation695 So.2d 615
PartiesCROWN PONTIAC, INC. v. Andrew McCARRELL. 1951171.
Decision Date25 April 1997

John Martin Galese and Jeffrey L. Ingram of John Martin Galese, P.A., Birmingham, for Appellant.

R. Stephen Griffis of Hooper & Griffis, P.C., Birmingham, for Appellee.

ALMON, Justice.

Crown Pontiac, Inc., appeals from an order of the circuit court denying its motion to compel arbitration of the claims stated against it in an action filed by Andrew McCarrell. The issue is whether a preliminary document containing McCarrell's signature 1 became a part of the later-executed contract, which was executed on the same form but on which McCarrell did not sign on the signature line below the arbitration clause.

McCarrell went to Crown Pontiac to look for a used sports car to purchase. Charles Locke, a salesman for Crown Pontiac, showed McCarrell a used 1990 model Nissan 300ZX. Locke wrote on a "Retail Buyer's Order" form: a price of $16,990 for the car and an allowance of $4,000 for the car that McCarrell proposed to trade in; information about the car, such as the odometer reading and the serial number; five items that McCarrell requested Crown Pontiac to correct or repair about the car if he decided to buy it; and other notes. The form included two sections conspicuously set off in boxes, entitled "Disclaimer of Warranties" and "Dispute Resolution Agreement." Each of these boxes contained a line underneath the text for the purchaser's signature. Underneath the dispute resolution agreement, on the line for the purchaser's signature, is McCarrell's signature. Locke did not tell McCarrell to sign on that particular signature line; rather, according to Locke's deposition testimony, he told McCarrell that anywhere on the form was fine, so long as McCarrell gave a signature.

McCarrell testified by deposition that Locke filled out this form on the day that he first went to Crown Pontiac and that he continued to look at other vehicles elsewhere. McCarrell bought the car on June 2, 1994. Locke testified by deposition that he filled out the form on the same day that McCarrell purchased the car. Crown Pontiac says that Locke took the first "retail buyer's order" form to Tom Reid, who was the manager for the defendant, and had Reid execute the form as acceptance of the transaction. At that point, Crown Pontiac alleges, the form went to Mike Williams, who was a finance manager, and Williams prepared another, typewritten retail buyer's order form--a final version of the contract on the same form as the one that Locke had written notes on.

The price of the Nissan 300ZX, the allowance for the trade-in, the balance due, and the monthly payments are all different on the two forms. For example, the price for the Nissan 300ZX on the second form is $17,999 and the trade-in value is $6,000. McCarrell signed the second retail buyer's order form in four different places--under the trade-in section, in the disclaimer-of-warranties box, under the merger clause, and at the bottom of the page. However, McCarrell did not sign in the box entitled "Dispute Resolution Agreement." One of McCarrell's four signatures on this second form appeared below the following merger clause:

"Purchaser agrees that the Retail Buyer's Order, Retail Sales Contract and Security Agreement relating to this transaction include all of the terms and conditions of this Agreement and that this Agreement cancels and supersedes any prior agreement and as of the date hereof comprises the complete and exclusive statement of the terms of the Agreement relating to the subject matters covered hereby. Purchaser further understands that verbal promises by salesmen are not valid and any promises or understandings not herein specified in writing are hereby expressly waived by the Purchaser."

Section 8-1-41(3), Ala.Code 1975, states that agreements to submit disputes to arbitration cannot be specifically enforced. However, where the agreement "evidences a transaction ... involving [interstate] commerce," the Federal Arbitration Act preempts this state policy and makes the agreement enforceable. 9 U.S.C. § 1 et seq. The FAA does not make all arbitration clauses in whatever writing enforceable; rather, it makes arbitration agreements enforceable. According to the United States Supreme Court in First Options of Chicago v. Kaplan, 514 U.S. 938, 943-44, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985, 993 (1995), this determination of whether the parties agreed to arbitrate their disputes should be judged by the "ordinary state-law principles that govern the formation of contracts."

In Doctor's Associates, Inc. v. Casarotto, --- U.S. ----, ----, 116 S.Ct. 1652, 1656, 134 L.Ed.2d 902, 908-09 (1996), the Supreme Court reiterated and explained what it meant by the rule stated in Kaplan:

"[T]he text of § 2 declares that state law may be applied 'if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally.' ... Thus, generally applicable contract defenses, such as fraud, duress or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2."

(Quoting Perry v. Thomas, 482 U.S. 483, 493, 107 S.Ct. 2520, 2527, 96 L.Ed.2d 426, 437 (1987) (citations and emphasis omitted).) Accordingly, in light of Kaplan and Casarotto, we turn to general Alabama contract law to determine whether the parties created an enforceable agreement to arbitrate.

In its order denying the motion to compel arbitration, the circuit court relied upon the following facts: 1) the second retail buyer's order form does not have McCarrell's signature on the arbitration clause, although he did sign that form in four other places; 2) the second retail buyer's order form contains a standard merger clause, which McCarrell specifically signed; and 3) the first retail buyer's order form, while seeming to contain McCarrell's signature under the arbitration clause, contains "handwritten terms and conditions which were not included in the final typewritten Retail Buyer's Order." Based on those specific facts, the circuit court concluded that the parties did not intend for the first retail buyer's order form to be binding. The circuit court further noted that "it would not seem appropriate for the Court to find a written agreement to arbitrate where it appears merely fortuitous that McCarrell placed his signature in the dispute resolution agreement 'box' rather than elsewhere on the form."

Relying on Neal v. Hardee's Food Systems, Inc., 918 F.2d 34 (5th Cir.1990), Crown Pontiac argues that the first retail buyer's order form was part of the overall agreement between the parties. In Neal, the parties entered into a franchise agreement concerning six Hardee's restaurants in Corpus...

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