Ex parte Perry

• Decision Date: 24 September 1999
• Citation: 744 So.2d 859
• Parties: Ex parte Helen PERRY. Re Helen Perry v. Hyundai Motor America, Inc., et al.
• Court: Alabama Supreme Court

744 So.2d 859

Ex parte Helen PERRY.

Re Helen Perry v. Hyundai Motor America, Inc., et al.

1970370.

Supreme Court of Alabama.

September 24, 1999.

Patrick J. Ballard of Tipler Law Offices, Birmingham, for petitioner.

William H. King III and William H. Morrow of Lightfoot, Franklin & White, L.L.C., Birmingham, for respondent Hyundai Motor America, Inc.

John Martin Galese and Jeffrey L. Ingram of John Martin Galese, P.A., Birmingham, for respondent Jim Burke Motors, Inc.

Bruce J. McKee of Hare, Wynn, Newell & Newton, Birmingham, for amicus curiae Alabama Trial Lawyers Ass'n, in support of the petitioner.

HOOPER, Chief Justice.

Helen Perry sued Hyundai Motor America, Inc. ("Hyundai"), and Jim Burke Motors, Inc., in the Jefferson Circuit Court, alleging fraud, breach of warranty, and other causes of action arising from her purchase of an automobile. The circuit court ordered her to arbitrate her claims. She petitions for a writ of mandamus directing the circuit court to set aside its arbitration order. We deny the writ.

Mrs. Perry alleges that Jim Burke Motors, an automobile dealership, hurried her through the purchase of her new Hyundai automobile and did not give her an opportunity to read the purchase-agreement form before she signed it. That purchase-agreement form contained an alternative-dispute-resolution agreement that required the purchaser to arbitrate "all disputes and controversies" with the seller.

Mrs. Perry began experiencing electrical problems with the car shortly after she purchased it. She contends that the dealership was unable to repair the electrical problems, and that its failure to repair resulted in her suing Jim Burke Motors (the dealership) and Hyundai (the manufacturer). She alleged fraud and misrepresentation in the sale of the car; suppression of material facts regarding the car; negligence; wanton or willful misconduct on the part of employees of Jim Burke Motors, both during the sale of the car and during her subsequent attempts to get the car serviced and/or replaced; breach of warranty (her breach-of-warranty claim included a claim under the Magnuson-Moss Act, 15 U.S.C. § 2301 et seq.); violation of Ala.Code 1975, § 8-20A-1 et seq. (the "Alabama Lemon Law"); and the tort of outrage. Mrs. Perry claims that when she filed her action she was not aware of any arbitration agreement, but she later amended her complaint to allege fraud, misrepresentation, and/or suppression of material fact in regard to the formation of the arbitration agreement.

Jim Burke Motors and Hyundai Motors filed motions to compel arbitration. Judge Jack Carl held a hearing on the motions and then granted them.

Mrs. Perry challenges the validity of the arbitration clause because of the manner in which she signed the purchase contract. She alleges that she was rushed through the contracting process and that the arbitration agreement was entered into during the contracting process and, therefore, that the arbitration agreement is unenforceable.

This Court has stated many times that the writ of mandamus is an extraordinary remedy and that one seeking it must show "(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Alfab, Inc., 586 So.2d 889, 891 (Ala.1991); see also, Martin v. Loeb & Co., 349 So.2d 9 (Ala.1977); Ex parte Houston County, 435 So.2d 1268 (Ala.1983); Ex parte Johnson, 638 So.2d 772 (Ala.1994). "Mandamus is an extraordinary remedy and will lie to compel the exercise of discretion, but not to compel its exercise in a particular manner except where there is an abuse of discretion." State v. Cannon, 369 So.2d 32, 33 (Ala.1979).

The arbitration provision in Mrs. Perry's contract was styled "Dispute Resolution Agreement." It stated:

"Buyer hereby acknowledges and agrees that all disputes and controversies of every kind and nature between Buyer and Jim Burke Motors, Inc. arising out of or in connection with the purchase of this vehicle will be resolved by arbitration in accordance with the procedure set forth on the reverse side of the buyer's order."

Mrs. Perry seeks to avoid the arbitration agreement on the basis that the dealer did not adequately disclose to her the existence of that agreement.

Mrs. Perry argues that she was confused regarding her agreement to arbitrate. She alleges that her confusion regarding the arbitration agreement caused her to be confused as to the entire contract. The record indicates that Mrs. Perry was capable of reading and inquiring into the contents of the contract before she signed the agreement, and that she signed it voluntarily. The contract language was clear. The trial court correctly decided against Mrs. Perry on the question whether her confusion was so great as to entitle her to avoid the agreement. Mrs. Perry did not present in support of her fraud allegation evidence directed solely at the arbitration agreement. Therefore, as a matter of law, Mrs. Perry does not have a claim for fraud directed solely at the arbitration clause. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Jones v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 604 So.2d 332 (Ala.1991).

Mrs. Perry, relying on Allstar Homes, Inc. v. Waters, 711 So.2d 924 (Ala.1997), argues that when a party contends that an arbitration agreement was not formed "knowingly, willingly, and voluntarily," the question whether it was is to be answered by a jury and that no presumption favoring arbitration should be applied. Mrs. Perry contends that she presented the trial court substantial evidence indicating that she did not knowingly, willingly, and voluntarily agree to arbitrate any disputes arising from her purchase of the automobile. She claims that the trial court erroneously ignored this evidence and not only refused to grant a jury trial of the issues raised, but resolved all doubts in favor of the existence of the arbitration agreement. Mrs. Perry argues that the trial court's actions are contrary to the law announced by this Court in Allstar Homes.

Allstar Homes contains language that could be construed to mean what Mrs. Perry argues. However, we disagree with that construction and offer a clarification of that part of this Court's 1997 opinion in Allstar Homes that would lead a party to believe that merely alleging fraudulent inducement as to the arbitration clause in an agreement allows that party to avoid the arbitration agreement. A party must provide substantial evidence of fraud in the inducement, particularly related to the arbitration clause, in order to avoid arbitration.

The majority's analysis in Allstar Homes confused the question of the validity of an arbitration clause and the question of fraud in the inducement of a contract containing an arbitration clause. The United States Supreme Court distinguished between these two questions in decisions rendered before this Court decided Allstar Homes. We explain our perception of the United States Supreme Court's analysis and conclusions in Prima Paint, supra, and First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).

In Prima Paint, the Supreme Court held that in cases governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, issues concerning fraud in the inducement of a contract in general should be decided by an arbitrator, while claims of fraud in the inducement of an arbitration agreement in particular should be decided by the trial court. Mrs. Perry presented insufficient evidence of fraud committed by Hyundai or Jim Burke Motors with respect to inducing her to agree to the specific clause requiring arbitration of disputes. She simply alleges that she did not take the time to read the entire contract and that Jim Burke Motors was under a duty to specifically point out the arbitration provision to her.

First, we note that one has no duty to disclose a specific provision of a contract, even if it deals with alternative dispute resolution. Second, Mrs. Perry was responsible for reading the contract, to which she committed herself when she signed. If she felt hurried, she could have slowed the process down or could have refused to sign the contract until she had had time to read it in its entirety. At the bottom of the "Buyer's Order" appears this precautionary statement: "Caution: it is important that you read this buyer's order thoroughly before you sign it." To support its decision in Allstar, this Court expanded too broadly the rationale of the Supreme Court in First Options. The Supreme Court stated in First Options:

"The first question—the standard of review applied to an arbitrator's decision about arbitrability—is a narrow one. To understand just how narrow, consider three types of disagreement present in this case. First, the Kaplans and First Options disagree about whether the Kaplans are personally liable for MKI's debt to First Options. That disagreement makes up the merits of the dispute. Second, they disagree about whether they agreed to arbitrate the merits. That disagreement is about the arbitrability of the dispute. Third, they disagree about who should have the primary power to decide the second matter. Does that power belong primarily to the arbitrators (because the court reviews their arbitrability decision deferentially) or to the court (because the court makes up its mind about arbitrability independently)? We consider here only this third question."

514 U.S. at 942, 115 S.Ct. 1920. The question in First Options was a narrow one, and it is not the question the Supreme Court addressed in Prima Paint.

The facts of Prima Paint are distinguishable from the facts in First Options. In First Options, the Court held that because one of the parties objecting to arbitration had not signed the arbitration portion of the...