Ex parte Kent Corp.

• Decision Date: 04 March 1994
• Citation: 641 So.2d 242
• Parties: Ex parte KENT CORPORATION. (In re KENT CORPORATION v. UNISYS CORPORATION and Steve Kittleson). 1930240.
• Court: Alabama Supreme Court

Page 242

641 So.2d 242

Ex parte KENT CORPORATION.

(In re KENT CORPORATION v. UNISYS CORPORATION and Steve Kittleson).

1930240.

Supreme Court of Alabama.

March 4, 1994.

Rehearing Denied April 29, 1994.

J. Gusty Yearout of Yearout, Myers & Traylor, P.C., Birmingham, for petitioner.

E. Glenn Waldrop, Jr. and J. Banks Sewell III of Lightfoot, Franklin, White & Lucas, Birmingham, for respondents.

HOUSTON, Justice.

The plaintiff, Kent Corporation, petitions this Court for a writ of mandamus directing the Honorable William A. Jackson of the Circuit Court of Jefferson County, among other things, to vacate his order of November 4, 1993, compelling arbitration on its claims against Unisys Corporation and Steve Kittleson (hereinafter collectively referred to as "Unisys") alleging fraud, breach of contract, breach of a duty of good faith and fair dealing, and extortion. We deny the writ.

Alabama Code 1975, § 8-1-41(3), prohibits the enforcement of predispute agreements to arbitrate. Alabama caselaw, likewise, prohibits the enforcement of such agreements. See Wells v. Mobile County Bd. of Realtors, Inc., 387 So.2d 140 (Ala.1980). However, if a written agreement calls for arbitration and the agreement is based on a transaction involving interstate commerce, then under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA"), the arbitration agreement may be enforceable. See Henderson v. Superior Insurance Co., 628 So.2d 365 (Ala.1993); Maxus, Inc. v. Sciacca, 598 So.2d 1376 (Ala.1992). "[I]n regard to arbitration clauses to which it applies, [the FAA] preempts state laws that would bar enforcement." Henderson v. Superior Insurance Co., at 367; see Ex parte Alabama Oxygen Co., 452 So.2d 860 (Ala.1984) (approving Justice Maddox's dissent in Ex parte Alabama Oxygen Co., 433 So.2d 1158, 1168-76 (Ala.1983)). The standard for evaluating whether the FAA compels arbitration in Alabama is " '[W]hether at the time [the parties] entered into [the contract] and accepted the arbitration clause, they contemplated substantial interstate commerce.' " Ex parte Warren, 548 So.2d 157 (Ala.), cert. denied, 493 U.S. 998, 110 S.Ct. 554, 107 L.Ed.2d 550 (1989), 548 So.2d at 160, quoting Metro Industrial Painting Corp. v. Terminal Construction Co., 287 F.2d 382, 387 (2d Cir.), cert. denied, 368 U.S. 817, 82 S.Ct. 31, 7 L.Ed.2d 24 (1961). See Henderson v. Superior Insurance Co., supra; Lopez v. Home Buyers Warranty Corp., 628 So.2d 361 (Ala.1993); Ex parte Jones, 628 So.2d 316 (Ala.1993); Continental Grain Co. v. Beasley, 628 So.2d 319 (Ala.1993).

The evidence in this case, presented ore tenus, established the following: Kent is an Alabama corporation whose only place of business is in Alabama. Unisys is a Delaware corporation headquartered in Pennsylvania. Kent contracted with Unisys for the sale and licensing of computer hardware and software and for the provision of a support system for the computer software through a telephone "hot line," which used interstate telephone lines. All of Kent's negotiations with the sales representatives of Unisys took place in Alabama; and the contract and the agreements made the basis of this action were entered into in Alabama. The contract provided for the arbitration of "any controversy or claim arising out of or related to this Agreement or the breach thereof." Section 21.1. The contract also provided that the laws of Pennsylvania would govern and that all notices to Unisys would be directed to Unisys in Pennsylvania. The computer system and all of the equipment Kent purchased from Unisys were customized for Kent's needs, were assembled and built out of state, and then were shipped to Kent's place of business in Alabama. The computer was used at all times in Alabama, and any problems with the computer system were handled by local technicians. Using the computer to generate, issue, and mail the necessary invoices, purchase orders, and checks across state lines, Kent purchased raw materials throughout the United States and sold its products throughout the United States. The telephone "hotline," for which Kent agreed to pay $11,000 per year or $55,000 for the initial 5-year term of the contract for this service, allowed Kent to call, 24 hours a day, to Unisys's computer support consultants and "troubleshooters" in Pennsylvania, with all calls terminating at Unisys's office in...