Ex parte Smith

• Decision Date: 29 August 1997
• Citation: 706 So.2d 704
• Parties: Ex parte Melvin SMITH, et al. (In re Melvin SMITH, et al. v. ALL STAR MOBILE HOMES, INC., et al.). 1951127.
• Court: Alabama Supreme Court

Page 704

706 So.2d 704

Ex parte Melvin SMITH, et al. (In re Melvin SMITH, et al. v. ALL STAR MOBILE HOMES, INC., et al.).

1951127.

Supreme Court of Alabama.

Aug. 29, 1997.

Rehearing Denied Nov. 21, 1997.

Fred D. Gray and Stanley F. Gray of Gray, Langford, Sapp, McGowan, Gray & Nathanson, Tuskegee, for petitioners.

Les Hayes III of Melton, Espy, Williams & Hayes, P.C., Montgomery; and Robert Thompson, Tuskegee, for respondents All Star Mobile Homes, Inc., and Gary Spoonemore.

BUTTS, Justice.

Melvin Smith, Louise Pugh, Willie B. Johnson, and Joseph Collins, the plaintiffs in an action pending in the Macon Circuit Court, petition for a writ of mandamus directing the circuit court to vacate its order requiring arbitration of their claims against the defendant All Star Mobile Homes, Inc. We grant the petition.

I.

The facts before us, which are minimal, indicate the following: On July 30, 1993, Joseph Collins; his wife Willie B. Johnson; his stepson Melvin Smith; and his daughter-in-law Louise Pugh traveled to a sales lot operated by All Star Mobile Homes in Columbus, Georgia; there they negotiated with agent Gary Spoonemore to purchase a certain Spring Hill mobile home. They allege that Spoonemore told them they could reserve that particular mobile home with a $300 down payment and that Johnson paid Spoonemore this amount. Spoonemore filled out a purchase agreement for the mobile home. That agreement contained an arbitration clause; however, the plaintiffs did not sign that agreement.

On August 15, 1993, the plaintiffs were told that their credit application for the purchase of the mobile home had been approved and that they were required to pay an additional $7,550 down payment on the mobile home. They paid this amount to All Star on August 16, 1993; however, their credit had not actually been approved at that time.

In September 1993, All Star sold the mobile home that was the subject of the July 30 contract, i.e., the mobile home the plaintiffs had "reserved" with their down payment. All Star did not inform the plaintiffs of this until October 16, 1993, when an All Star agent at the Columbus location informed them that the mobile home had been sold to another customer and that they would have to choose another model. The plaintiffs chose a different model from All Star's sales lot in Phenix City, Alabama. They allege that an All Star agent told them that, as a down payment on this second mobile home, they could apply $5,000 of the $7,850 down payment they had already made on the first mobile home. They say the All Star agent told them that the contract for the purchase of the second mobile home would then be complete and that All Star would refund to them the remaining $2,850 from the down payment they had made on the first mobile home.

The plaintiffs went to All Star's Phenix City lot on October 16, 1993, and executed a new purchase agreement, which contained this statement: "Disputes arising out of this agreement are subject to compulsory and binding arbitration." All Star did not deliver the mobile home to the plaintiffs; rather, it later informed them that their credit application was not, after all, accepted, and it refunded $2,850 of the $7,850 down payment. All Star apparently did not return the remaining $5,000.

On January 24, 1994, the plaintiffs sued All Star, alleging fraud in the inducement, fraudulent suppression, and conversion of the unpaid portion of the down payment they had made on the mobile home. All Star answered the complaint approximately one month later, and the plaintiffs thereafter sought to begin discovery. From March 10, 1994, until November 14, 1994, the parties filed various discovery motions and conducted depositions. On November 14, 1994, All Star moved to stay the proceedings and to compel arbitration of the claims, pursuant to the arbitration agreement contained in the purchase agreement the plaintiffs had signed. The trial court granted this motion.

II.

We first recognize that a petition for the writ of mandamus is the proper means by which to test a trial court's order compelling arbitration or an order staying proceedings pending arbitration. Long v. Industrial Development Board of the Town of Vincent, 619 So.2d 1387 (Ala.1993). The plaintiffs argue that All Star Homes waived its right to compel arbitration. They correctly state that a party may waive its right to arbitrate a dispute if it substantially invokes the litigation process and thereby prejudices the party opposing arbitration. Companion Life Insurance Co. v. Whitesell Manufacturing, Inc., 670 So.2d 897 (Ala.1995). No rigid rule exists for determining what constitutes a waiver of the right to arbitration; this issue must be resolved on the particular facts of each case. Huntsville Golf Development, Inc. v. Aetna Casualty & Surety Co., 632 So.2d 459 (Ala.1994).

The plaintiffs argue that, while waiting nearly 10 months from the filing of the complaint to ask for arbitration, All Star consistently responded to their discovery requests; answered their amended complaint; and participated in their deposition of All Star's agent Spoonemore. Moreover, during that period All Star conducted its own deposition of Melvin Smith. All Star claims that it took Smith's deposition merely to verify Smith's signature on the purchase agreement as a prerequisite to moving to compel arbitration; however, the facts before us indicate that Smith's deposition is more than 200 pages long and focused on the evidence supporting Smith's claims.

All Star relies upon several cases in which defendants' considerable delays in moving to compel arbitration were held not to constitute a waiver. In one of them, Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So.2d 1 (Ala.1986), we held that a delay of more than one year before moving to compel arbitration was not a waiver of the defendants' right to arbitration. However, during that year, the plaintiff was simultaneously litigating similar claims against the defendant as part of a class action in a Federal court. The plaintiff subsequently opted out of the Federal class action, in order...