Delta Const. Corp. v. Gooden
Decision Date | 24 April 1998 |
Parties | DELTA CONSTRUCTION CORPORATION v. Stephen C. GOODEN, d/b/a Gooden Heating and Air Conditioning Company. 1970111. |
Court | Alabama Supreme Court |
John D. Sours of Wasson, Sours & Harris, P.C., Atlanta, GA; and James K. Haygood, Jr., and Roger W. Pierce of Haygood, Cleveland, Pierce & Speakman, Auburn for appellant.
J. Michael Williams, Sr., of Gullage & Williams, Auburn, for appellee.
The defendant, Delta Construction Corporation ("Delta"), appeals from the trial court's order denying its motion to compel arbitration of a dispute between it and the plaintiff, Stephen C. Gooden, d/b/a Gooden Heating and Air Conditioning Company. 1 We reverse and remand.
This action arose out of the construction of a 2-story, 40-bed personal care facility in Lee County. Delta, a Georgia corporation, served as the general contractor, agreeing to provide the necessary labor and materials for the project. Gooden, an Alabama resident and one of a number of subcontractors hired by Delta, performed heating, ventilation, and air conditioning work, pursuant to a written contract with Delta. The facility is owned by Plantation South of Auburn Partnership ("Plantation South"), an Alabama general partnership; the property is named Plantation South of Auburn. After a controversy arose as to whether he was entitled to an additional $32,000 under his contract with Delta, Gooden filed an action in the Lee County Circuit Court on May 7, 1996, naming both Delta and Plantation South as defendants and seeking damages based on allegations of breach of contract, negligence, and fraud. 2 Gooden alleged that Delta had "negligently supervised the coordination of subcontractors in the performance of [the] work" and that that negligence had caused him "to suffer many delays and [to] incur large amounts of overtime." Gooden further alleged that Delta had refused to compensate him for additional costs that he had incurred, compensation that, he says, he was promised and entitled to under the terms of his contract. Delta filed a counterclaim, based on allegations of breach of contract, specifically allegations that Gooden had performed substandard work and had not completed the job. Delta moved to compel Gooden to arbitrate his claims, pursuant to the following broad-form predispute arbitration provision contained in the contract between Delta and Gooden:
(Emphasis added.) The trial court denied Delta's motion by an order dated July 23, 1997, stating in pertinent part:
3
Although several specific issues are presented, the basic question is whether the trial court erred in denying Delta's motion to compel arbitration. We conclude that it did.
Acknowledging that on its face Ala.Code 1975, § 8-1-41(3), prohibits the specific enforcement of a predispute arbitration agreement, Delta contends that its contract with Gooden "involves" interstate commerce and, therefore, that the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA"), preempts state law so as to render the agreement enforceable. Gooden contends, among other things, that his contract with Delta does not involve interstate commerce and, therefore, that the FAA is inapplicable, and that, even if the FAA is applicable, arbitration is not mandated because, he says, Delta has failed to comply with Ala.Code 1975, § 10-2B-15.02(a)--commonly referred to as Alabama's "forum" or "door-closing" statute. 4 Failure to comply with § 10-2B-15.02(a), Gooden asserts, renders the arbitration provision unenforceable by Delta. In response to this latter argument, Delta acknowledges that § 10-2B-15.02(a) (1997 cum. supp.) currently provides:
However, Delta points out that this particular provision was not in effect on April 10, 1995, when it entered into its contract with Gooden. Section 10-2A-247 was repealed by Ala. Acts 1994, Act No. 94-245, p. 457, § 3, effective January 1, 1995. Act No. 94-245 repealed Chapter 2A, relating to business corporations, and replaced that chapter with Chapter 2B. Portions of Chapter 2B were subsequently repealed, and the current provisions were added by Ala. Acts 1995, Act No. 95-663, p. 1374, § 3, effective August 1, 1995. The statute that was in effect when Delta and Gooden entered into their contract provided:
§ 10-2B-15.02, Ala.Code 1975 (1994 repl. vol.). Delta argues that it has now qualified to do business in Alabama and, therefore, that it can enforce the arbitration provision in its contract. Citing National American Ins. Co. v. Boh Brothers Constr. Co., 700 So.2d 1363 (Ala.1997), Delta argues, in the alternative, that application of this forum-closing provision would violate the Commerce Clause of the United States Constitution because, it says, it was at all times relevant to this case engaged in interstate commerce.
It is well settled that the FAA preempts contrary state law (contrary law based on § 8-1-41(3) and public policy) and renders enforceable a predispute arbitration agreement contained in a contract that "involves" interstate commerce. Jim Burke Automotive, Inc. v. Beavers, 674 So.2d 1260 (Ala.1995); Lopez v. Home Buyers Warranty Corp., 670 So.2d 35 (Ala.1995). Recently, in Hurst v. Tony Moore Imports, Inc., 699 So.2d 1249 (Ala.1997), four Justices, in a plurality decision, explained that United States Supreme Court precedent indicates that even an intrastate transaction "involves" interstate commerce if it has virtually any tangible effect on the generation of goods or services for interstate markets and their distribution to the consumer. 699 So.2d at 1255, 1257. 5 It also appears to be settled that a construction contract supplying both material and labor, such as the one involved here between Delta and Plantation South, is an example of the kind of contract that is considered intrastate, even though some of the material and labor is procured from outside the state. See Building Maintenance Personnel, Inc. v. International Shipbuilding, Inc., 621 So.2d 1303 (Ala.1993); Green Tree Acceptance, Inc. v. Blalock, 525 So.2d 1366, 1370 (Ala.1988), and the cases cited therein; see, also, 15 Am.Jur.2d Commerce § 39 (1976); 36 Am.Jur.2d Foreign Corporations §§ 348-351 (1968); Annot., Construction Work By Foreign Corporation As Doing Business for Purposes of Statute Requiring Foreign Corporation To Qualify As Condition of Access To Local Courts, 90 A.L.R.3d 937 (1979); Annot., What Constitutes Doing Business Within State for Purposes of State "Closed-Door" Statute Barring Unqualified or Unregistered Foreign Corporation from Local Courts--Modern Cases, 88 A.L.R.4th 466 (1991).
Delta's construction activities in the present case were significant and relatively lengthy, and they cannot be characterized as being in any way incidental to an interstate transaction. The record indicates that although Delta apparently does not maintain a permanent...
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