FIRST AMER. TITLE INS. CORP. v. Silvernell

• Decision Date: 01 October 1999
• Citation: 744 So.2d 883
• Parties: FIRST AMERICAN TITLE INSURANCE CORPORATION v. Gary D. SILVERNELL and Barbara J. Silvernell. Lan Darty et al. v. Gary D. Silvernell and Barbara J. Silvernell.
• Court: Alabama Supreme Court

744 So.2d 883

FIRST AMERICAN TITLE INSURANCE CORPORATION v. Gary D. SILVERNELL and Barbara J. Silvernell.

Lan Darty et al. v. Gary D. Silvernell and Barbara J. Silvernell.

1921.

Supreme Court of Alabama.

October 1, 1999.

John S. Bowman, Jr., and Theresa R. Jenkins of Balch & Bingham, L.L.P., Montgomery; and James L. Martin, Eufaula, for appellant First American Title Ins. Corp.

Alan C. Livingston and William W. Nichols of Lee & Mclnish, Dothan, for appellants Lan Darty, Alfred Saliba Realty Corp., and Coldwell Banker Residential Affiliates.

Deborah W. Hicks, Eufaula; and F. Paul Bland, Jr., and Sarah Posner, Trial Lawyers for Public Justice, Washington, D.C., for appellees.

PER CURIAM.

These appeals raise the question whether the trial judge erred in denying the defendants' motions to compel arbitration of a number of claims involving different defendants. The defendants, Lan Darty, Alfred Saliba Realty Corporation, Coldwell Banker Real Estate Corporation (all collectively referred to as "the real estate agents") and First American Title Insurance Corporation ("First American") claim that the judge did err in denying the motions. They ask us to reverse the order denying their motions to compel arbitration. For the reasons discussed below, we conclude that the trial court erred in denying First American's motion to compel arbitration, but that it correctly denied the other defendants' motions to compel. Accordingly, we affirm in part, reverse in part, and remand.

Facts and Procedural History

These appeals arise from the same litigation this Court considered in McDougle v. Silvernell, 738 So.2d 806 (Ala.1999). The underlying dispute arose from the Silvernells' purchase of real estate in Barbour County. At the time this dispute arose, Darty was an agent employed by Alfred Saliba Realty Corporation, which was an affiliate of Coldwell Banker Real Estate Corporation. It appears undisputed that Darty, and through him Saliba and Coldwell, acted as the Silvernells'"buyer broker" and assisted them in locating the property. Additional facts, as we stated them in McDougle, are as follows:

"Charles McDougle, a licensed attorney, handled the closing and also served as the agent and signatory for [First American], which, during the closing, issued to the Silvernells a `Commitment For Title Insurance.' That commitment read in part:

"`First American Title Insurance Company, a corporation of California, herein called the Company, for a valuable consideration, hereby commits to issue its policy or policies of title insurance as identified in Schedule A, in favor of the proposed Insured named in Schedule A, as owner or mortgagee of the estate or interest covered hereby, in the land described or referred to in Schedule A, upon payment of the premiums and charges therefor; all subject to the provisions of Schedules A and B and to the Conditions and Stipulations hereof.

"`....

"`This Commitment is preliminary to the issuance of such policy or policies of title insurance and all liability and obligations hereunder shall cease and terminate six (6) months after the Effective Date hereof or when the policy or policies committed for shall issue, whichever first occurs, provided that the failure to issue such policy or policies is not the fault of the Company.

"`....

"`Conditions and Stipulations.

"`....

"`... In no event shall [the Company's] liability exceed the amount stated in Schedule A for the policy or policies committed for and such liability is subject to the insuring provisions, the Exclusions from Coverage and the Conditions and Stipulations of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein.'

"... Following the closing, First American issued a title insurance policy to the Silvernells; that policy contained the following arbitration provision:

"`Unless prohibited by applicable law, either the Company or the insured may demand arbitration pursuant to the Title Insurance Arbitration Rules of the American Arbitration Association. Arbitrable matters may include, but are not limited to, any controversy or claim between the Company and the insured arising out of or relating to this policy, any service of the Company in connection with its issuance or the breach of a policy provision or other obligation. All arbitrable matters when the Amount of Insurance is $1,000,000 or less shall be arbitrated at the option of either the Company or the insured. All arbitrable matters when the Amount of Insurance is in excess of $1,000,000 shall be arbitrated only when agreed to by both the Company and the insured. Arbitration pursuant to this policy and under the Rules in effect on the date the demand for arbitration is made or, at the option of the insured, the Rules in effect at Date of Policy shall be binding upon the parties. The award may include attorneys' fees only if the laws of the state in which the land is located permit a court to award attorneys' fees to a prevailing party. Judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

"`The law of the situs of the land shall apply to an arbitration under the Title Insurance Arbitration Rules.

"`A copy of the Rules may be obtained from the Company upon request.'

"Upon discovering certain defects in their title, the Silvernells sued McDougle, his law firm, [First American and the real estate agents], seeking damages based on allegations of fraud, wantonness, negligence, and breach of fiduciary duty."

McDougle, 738 So.2d at 806-07. McDougle and his law firm moved to compel arbitration. The real estate agents subsequently joined in that motion and adopted the grounds asserted therein. First American later filed its own motion seeking an order compelling arbitration. The trial court denied each of those motions.

In McDougle, this Court held that the Silvernells were bound by the provisions of the arbitration agreement included in the Silvernell-First American contract of insurance. McDougle, 738 So.2d at 809. Further, this Court held in McDougle that McDougle and his law firm had standing to compel arbitration because McDougle had served as First American's agent at the closing. Id.

Discussion

I. First American's Appeal— Case No. 1980394

First American states the legal issue presented by its appeal as follows:

"The sole issue presented on appeal is whether the Circuit Court of Barbour County erred in denying First American's motion to compel arbitration of the Silvernells' claims against it, as expressly provided by the owner's policy of title insurance which was issued to the Silvernells by First American."

In McDougle, this Court determined that the Silvernells were bound by the terms of the arbitration provision in their contract with First American. That conclusion was a necessary step in reaching this Court's conclusion in that case that McDougle and his law firm had standing to move for an order compelling arbitration of the claims against them.

We conclude that the order denying First American's motion to compel arbitration is due to be reversed, on the authority of McDougle, which contains a more complete discussion of the reasons that led us to the conclusion we reached in that case.

II. The Real Estate Agents' Appeal— Case No. 1980521

The issue presented by this appeal, whether the real estate agents have a right to compel arbitration, is different from the issue presented by First American. Significantly, the real estate agents were not signatories to the agreement in which the arbitration clause appeared; nor were they agents of First American—unlike the lawyer in McDougle, in which this Court held that the lawyer and his law firm, even though they were nonsignatories to the agreement, had such a right. We first state our standard of review.

It is well settled that when an appellate court reviews on appeal a trial court's denial of a motion to compel arbitration, the reviewing court applies a de novo standard of review. Crimson Industries, Inc. v. Kirkland, 736 So.2d 597 (Ala. 1999); Patrick Home Center, Inc. v. Karr, 730 So.2d 1171 (Ala.1999).¹ Applying that standard of review, we conclude that the trial court properly denied the real estate agents' motions to compel arbitration.

The Silvernells—the plaintiffs—describe their relationship with the real estate agents as follows:

"The Real Estate Agents, specifically Darty, acted as the Silvernells' buyerbroker for the transaction. Under the contract, however, the Real Estate Agents represented the Seller, and the Seller gave Darty a power of attorney to sign the closing statement."

Brief of Appellees at 3. The real estate agents describe their relationship with the Silvernells as follows:

"In or about December, 1993, the Silvernells engaged the services of Defendant Lan Darty, a real estate broker with Alfred Saliba Realty in Dothan, Alabama, to help them obtain property in Alabama suitable for hunting. Darty subsequently located and showed to the Silvernells property in Barbour County known as the `Bama Hill Farm.' The Silvernells eventually made an offer on the property which, after much negotiation, was accepted by the seller."

Brief of Appellants at 4. The real estate agents concede that they were not signatories to the arbitration agreement, but they contend that the Silvernells' claims against them are intimately founded in and intertwined with the claims the Silvernells have made against McDougle, his law firm, and First American.

The real estate agents cite Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir.1993); McBro Planning & Development Co. v. Triangle Electrical Construction Co., 741 F.2d 342, 344 (11th Cir.1984); and Ex parte Napier, 723 So.2d 49 (Ala.1998), in support of their argument. The court of appeals for one federal circuit has written:

"[A] signatory [i

...