Ex Parte Johnson

• Decision Date: 16 May 2008
• Docket Number: 1061762.,1061760
• Citation: 993 So.2d 875
• Parties: Ex parte Sabrina JOHNSON et al. (In re Champion Home Builders Company; Champion Homes of Boaz, Inc.; and Homes of Merit, Inc. v. Sabrina Johnson et al.) Ex parte Lamar Jenkins et al. (In re CMH Manufacturing, Inc., and Clayton Homes, Inc. v. Lamar Jenkins et al.)
• Court: Alabama Supreme Court

993 So.2d 875

Ex parte Sabrina JOHNSON et al.

(In re Champion Home Builders Company; Champion Homes of Boaz, Inc.; and Homes of Merit, Inc. v. Sabrina Johnson et al.)

Ex parte Lamar Jenkins et al.

(In re CMH Manufacturing, Inc., and Clayton Homes, Inc. v. Lamar Jenkins et al.)

1061760

1061762.

Supreme Court of Alabama.

May 16, 2008.

C. Lance Gould of Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., Montgomery, for petitioners.

Drayton Nabers, Jr., Lee E. Bains, Jr., Thomas W. Thagard III, Edward A. Hosp, and J. Ethan McDaniel of Maynard, Cooper & Gale, P.C., Birmingham; Bryant F. Williams, Ozark; and Gregory S. Ritchey and W. Scott Simpson of Ritchey & Simpson, PLLC, Birmingham, for respondents Champion Home Builders Company, Champion Homes of Boaz, Inc., and Homes of Merit, Inc.

David B. Hall, William L. Waudby, and Elizabeth R. Floyd of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., Birmingham; and W. Scott Simpson of Ritchey & Simpson, PLLC, Birmingham, for respondents CMH Manufacturing, Inc., and Clayton Homes, Inc.

Joe R. Whatley, Jr., W. Tucker Brown, Adam P. Plant, and Sara C. Hacker of Whatley Drake & Kallas, LLC, Birmingham; Lynn W. Jinks III and Christina D. Crow of Jinks, Daniel & Crow, P.C., Union Springs; and Thomas F. Campbell of Campell Litigation, PC, Birmingham, for amicus curiae Jason Parham and Walter Leonard, in support of the petitioners.

Robert A. Huffaker of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for amici curiae Business Counsel of Alabama, Alabama Civil Justice Reform Committee, Automobile Dealers Association of Alabama, and the Alabama Bankers Association, in support of the respondents.

On Applications for Rehearing

LYONS, Justice.

This Court's opinion of January 25, 2008, is withdrawn, and the following is substituted therefor.

Champion Home Builders Company; Champion Homes of Boaz, Inc.; Homes of Merit, Inc.; CMH Manufacturing, Inc.; and Clayton Homes, Inc., all mobile-home manufacturers and sellers (hereinafter sometimes referred to collectively as "the mobile-home companies"), instituted two separate declaratory-judgment actions in separate judicial circuits¹ against certain mobile-home owners who had previously instituted arbitration proceedings before the American Arbitration Association ("the AAA"), seeking to prevent the homeowners from proceeding with claims before the AAA brought on behalf of other similarly situated mobile-home owners. The homeowners' AAA proceedings sought class arbitration in Montgomery County for a class of Alabama mobile-home owners.

After filing the declaratory-judgment complaints in the Dale Circuit Court and the Geneva Circuit Court, the mobile-home companies asked the AAA and the law firm representing the homeowners in the AAA proceedings to stay those proceedings, which were being conducted in Montgomery County, pending the disposition of the declaratory-judgment actions. Those requests were denied, and the mobile-home companies filed motions in their separate declaratory-judgment actions asking the trial judge to stay the AAA proceedings in Montgomery County. The trial judge granted the mobile-home companies' motions, and the homeowners petitioned this Court for a writ of prohibition or, alternatively, a writ of mandamus. We grant the petitions and issue the writs of mandamus.

I. Factual Background and Procedural History

A. Case no. 1061760

We first address the declaratory-judgment action brought in the Dale Circuit Court by Champion Home Builders Company; Champion Homes of Boaz, Inc.; and Homes of Merit, Inc. ("the Dale mobile-home companies").

Sabrina Johnson, William Baker, Corine Crittenden, Albert Fritzke, Faye Fritzke, Larry Hutto, Sheila Hutto, Huey Nelson, and Cynthia Nelson ("the Dale homeowners") filed their complaint in arbitration with the AAA on December 22, 2006, asserting various claims relating to allegedly improper design and manufacture of mobile homes they had purchased. The Dale homeowners requested that the AAA permit arbitration of claims on behalf of a class of "thousands of [Alabama] homeowners who unwittingly purchased manufactured homes built by [the mobile-home companies] that were fundamentally defective for the jurisdictions in which they lived," and they alleged that "[t]he walls of their homes are literally rotting away as a result of a pervasive defect in their construction that [the mobile-home companies] have known about but failed to correct." Dale homeowners' petition at 6; arbitration complaint at 2.

On May 8, 2007, the Dale mobile-home companies commenced their declaratory-judgment action in the Dale Circuit Court against the Dale homeowners. The Dale mobile-home companies asked the trial court to declare that the Dale homeowners must individually arbitrate their previously instituted arbitration claims in accordance with the arbitration provision of each mobile-home company's contract, a provision that contains a forum-selection clause that requires arbitration to take place in the jurisdiction of the original retail sale of the mobile home; to declare the Dale homeowners' previously instituted class-action arbitration complaint to be contrary to Alabama law, impermissible, and a breach of the contracts between the Dale mobile-home companies and the Dale homeowners; and to compel the Dale homeowners to arbitrate their claims individually in the correct jurisdiction.

The Dale mobile-home companies state in their declaratory-judgment complaint that the arbitration agreement contained in the contracts executed by Johnson, Crittenden, and the Nelsons ("the Dale contract 1") provides:

"ARBITRATION AND LIMITATION OF REMEDIES. It is agreed that any controversy, claim or dispute between or among the Manufacturer, homeowner, independent dealer, finance company or any other person or entity arising from or relating to the Manufactured Home, its sale, transportation, setup, repair, installation, use, design, manufacture, financing, insurance, any other condition, the manufacturer's limited warranty, any contract or any alleged promise, representation, agreement or instrument relating to or delivered in connection with the Manufactured Home, or any alleged breach thereof, and any claim based on or arising from an alleged tort or claim of any kind whatsoever, including any claim relating to the validity of this arbitration and limitation of remedies provision [collectively `Claim(s)'], and if the Claim(s) cannot be resolved through direct discussion or negotiations, the Claim(s) first shall be mediated as administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to binding arbitration.² Thereafter, any unresolved Claim(s) shall be settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and any judgment on the award rendered by the arbitrator(s) may be entered in any Court having jurisdiction thereof. ... All mediation or arbitration proceedings shall be conducted in the jurisdiction of the original retail sale or at any other place selected by agreement of all parties."

The Dale mobile-home companies further state in their declaratory-judgment complaint that "[t]he operative language of the Arbitration Agreements provided to the remaining defendants [Baker, the Fritzkes, and the Huttos] is substantively the same [as the agreements provided to Johnson, Crittenden, and the Nelsons]." Complaint at 5. The materials submitted in this mandamus proceeding by the Dale homeowners and the Dale mobile-home companies include a document entitled "Manufacturer's Limited Warranty & Arbitration Agreement." Although the parties include this document as an exhibit without identifying it further, it appears to be the arbitration agreement provided to Baker, the Fritzkes, and the Huttos ("the Dale contract 2"). This document provides:

"ARBITRATION AGREEMENT: It is agreed that any controversy, claim or dispute between or among the Manufacturer, homeowner, independent dealer, finance company or any other person or entity arising from or relating to the Manufactured Home, its sale, transportation, setup, repair, installation, use, design, manufacture, financing, insurance, any other condition, the manufacturer's limited warranty, any contract or any alleged promise, representation, agreement or instrument relating to or delivered in connection with the Manufactured Home, or any alleged breach thereof, and any claim based on or arising from an alleged tort or claim of any kind whatsoever, including any claim relating to the validity of this arbitration and limitation of remedies provision [collectively `Claim(s)'], and if the Claim(s) cannot be resolved through direct discussion or negotiations,—and unless the parties otherwise agree on a different mediation or arbitration process—then the Claim(s) first shall be mediated as administered by the American Arbitration Association (`AAA') under its applicable mediation Rules before resorting to binding arbitration. Thereafter, any unresolved Claim(s) shall be settled by binding arbitration administered by the AAA in accordance with its applicable arbitration Rules for such Claim(s), and any judgment on the award rendered by the arbitrator(s) may be entered in any Court having jurisdiction thereof. The parties reserve their rights to resolve the Claim(s) in an applicable small claims court for disputes or Claim(s) within the scope of the small claims court's jurisdiction. ... All mediation or arbitration proceedings shall be conducted in the jurisdiction of the original retail sale or any other place selected by agreement of all parties.

". . . .

"A copy of the applicable Rules of the AAA is available upon request by contacting the American Arbitration Association [at an address or Web site provided]."

The Dale contract 1 specifically designates the Commercial Arbitration Rules of the AAA as applicable to the pending...