Ex parte Brice Bldg. Co., Inc.

• Decision Date: 17 July 1992
• Parties: Ex parte BRICE BUILDING COMPANY, INC. (Re ZAMORA SHRINE TEMPLE, A.A.O.N.M.S. and Zamora Shrine Temple Association v. BRICE BUILDING COMPANY, INC., et al.) BRICE BUILDING COMPANY, INC. v. ZAMORA SHRINE TEMPLE, A.A.O.N.M.S., and Zamora Shrine Temple Association. 1910190, 1910214.
• Court: Alabama Supreme Court

Page 132

607 So.2d 132

Ex parte BRICE BUILDING COMPANY, INC.

(Re ZAMORA SHRINE TEMPLE, A.A.O.N.M.S. and Zamora Shrine Temple Association v. BRICE BUILDING COMPANY, INC., et al.)

BRICE BUILDING COMPANY, INC. v. ZAMORA SHRINE TEMPLE, A.A.O.N.M.S., and Zamora Shrine Temple Association.

1910190, 1910214.

Supreme Court of Alabama.

July 17, 1992.

Rehearing Denied Oct. 30, 1992.

William S. Fishburne III and Stephanie R. White of Sadler, Sullivan, Herring & Sharp, P.C., Birmingham, for petitioners/appellants.

Warren B. Lightfoot, William R. Lucas, Jr., E. Glenn Waldrop, Jr. and S. Douglas Williams, Jr. of Lightfoot, Franklin, White & Lucas, Birmingham, for respondents/appellees.

KENNEDY, Justice.

These cases involve an issue of whether Alabama law is applicable in this case to a controversy about a predispute arbitration agreement or whether, instead, the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (the "FAA"), must be applied.

At the outset we note that this case is before this court both on appeal and on a petition for a writ of mandamus filed by the defendant, Brice Building Company, Inc. ("Brice"). Both relate to the same matter; Brice seeks review of an order of the trial court denying Brice's motion to compel arbitration of claims in a lawsuit filed against it by the plaintiffs, Zamora Shrine Temple, A.A.O.N.M.S. ("Zamora") and Zamora Shrine Temple Association. We consider the question to be properly before the court on the appeal; therefore, the petition for writ of mandamus is moot and is due to be dismissed. ¹

The record indicates the following facts.

Zamora is an unincorporated charitable and fraternal organization located in Jefferson County, Alabama. Zamora entered into a contract with an architectural firm located in Jefferson County, for design and supervisory services related to the construction of a Zamora office and headquarters complex (the "mosque") to be built in Jefferson County. Zamora then entered into a construction contract with Brice, a Delaware corporation, which has its principal place of business in Jefferson County. This construction contract incorporated material and design specifications that provided for the use, in certain instances, of building materials manufactured by specific out-of-state companies, and provided that an ornamental dome that would sit atop the mosque would be fabricated by and erected under the direction of a Torrence, California, company "or approved equal manufacturer." The contract also contained a predispute arbitration agreement providing that claims and disputes between Brice and Zamora would be, with exceptions not pertinent here, submitted to arbitration.

According to Zamora, about a year after completion of the mosque, the roof and walls of the mosque began to leak, resulting, Zamora says, in serious structural damage.

Zamora sued Brice regarding the alleged damage, and Brice moved to compel arbitration, invoking the arbitration clause in the parties' contract. The trial court denied Brice's motion.

Brice argues that the FAA applies to this case and preempts Alabama law; therefore, it says, the trial court erred in failing to apply FAA principles in determining the enforceability of the arbitration agreement.

The FAA was enacted to "revers[e] centuries of judicial hostility to arbitration agreements." Scherk v. Alberto-Culver Co., 417 U.S. 506, 510, 94 S.Ct. 2449, 2453, 41 L.Ed.2d 270 (1974), by "plac[ing] arbitration agreements 'upon the same footing as other contracts.' " 417 U.S. at 511, 94 S.Ct. at 2453. (Citation omitted.)

The FAA applies where the parties' contract "was one involving interstate commerce ... and the contract contained an arbitration agreement voluntarily entered into by the parties." Ex parte Warren, 548 So.2d 157, 159 (Ala.1989), cert. denied sub. nom. Jim Skinner Ford, Inc. v. Warren, 493 U.S. 998, 110 S.Ct. 554, 107 L.Ed.2d 550 (1989). Where it applies, the FAA serves to preempt any state law purporting to deny the enforcement of a predispute arbitration agreement, on public policy grounds, and provides for the enforcement of arbitration agreements. A.G. Edwards & Sons, Inc. v. Syvrud, 597 So.2d 197 (Ala.1992). Under Alabama law, for example, predispute arbitration agreements cannot be specifically enforced. Ala.Code 1975, § 8-1-41. As early as 1840, this Court stated that "[a] mere agreement to decide a controversy by arbitration cannot be enforced at law, or in equity, because no one can effectually waive his right to have his suits determined [by] the ... Courts." Bozeman v. Gilbert, 1 Ala. 90, 91 (1840).

Zamora argues that there was insufficient interstate involvement in its contract with Brice to make the FAA applicable. Zamora says, correctly, that if the FAA is not applicable, then the question of the enforceability of the arbitration provision is controlled by Alabama law.

The parties disagree as to the standard for determining whether the case involved "interstate commerce."

Brice says that Ex parte Costa & Head (Atrium), Ltd., 486 So.2d 1272, 1275 (Ala.1986), is determinative. In Costa we stated that "[t]he requirement of the FAA that an arbitration agreement 'involve interstate commerce' has been construed very broadly so that the slightest nexus of the agreement with interstate commerce will bring the agreement within the ambit of the FAA." Costa involved a construction contract between Costa and Duncan, Inc., for a building to be constructed in Alabama. The contract contained a predispute arbitration agreement. Duncan had its principal place of business in Knoxville, Tennessee. Duncan's parent company was a New York corporation with its principal place of business in Rochester, New York. Costa was a limited partnership composed in part of limited partners from outside Alabama. We held that the arbitration agreement between the parties involved interstate commerce and that the FAA applied.

Zamora asserts that Ex parte Warren, 548 So.2d at 157, implicitly overruled Costa to the extent that it states the standard for determining whether sufficient interstate commerce is involved.

In Warren the parties had entered an automobile sales contract that contained a predispute arbitration agreement; the defendant sought to compel arbitration of the issues involved in a lawsuit arising out of that agreement. We noted that although the vehicle in question was manufactured outside the State of Alabama, the sale of the vehicle "was solicited, transacted, and executed wholly within the State of Alabama," between Alabama residents and a Delaware...