Green Tree Financial Corp. v. Wampler

• Decision Date: 27 August 1999
• Citation: 749 So.2d 409
• Parties: GREEN TREE FINANCIAL CORPORATION OF ALABAMA v. Gordon D. WAMPLER and Murlie Wampler. Oneonta Manufactured Mobile Home Outlet, Inc., et al. v. Gordon D. Wampler and Murlie Wampler.
• Court: Alabama Supreme Court

749 So.2d 409

GREEN TREE FINANCIAL CORPORATION OF ALABAMA v. Gordon D. WAMPLER and Murlie Wampler.

Oneonta Manufactured Mobile Home Outlet, Inc., et al. v. Gordon D. Wampler and Murlie Wampler.

1929.

Supreme Court of Alabama.

August 27, 1999.

Michael Leo Hall, Paul P. Bolus, and Pamela M. Arenberg of Burr & Forman, L.L.P., Birmingham, for appellant Green Tree Financial Corporation of Alabama.

S. Greg Burge and Joseph W. Buffington of Heninger, Burge & Vargo, L.L.P., Birmingham, for appellants Oneonta Manufactured Mobile Home Outlet, Inc.; Allen James; and Evelyn Sills.

J. Stanton Glasscox, Oneonta; and Steven D. King, Oneonta, for appellees.

LYONS, Justice.

Green Tree Financial Corporation of Alabama ("Green Tree"); Oneonta Manufactured Mobile Home Outlet, Inc. ("Oneonta"); Evelyn Sills; and Allen James—defendants in an action pending in the Blount Circuit Court—appeal from the trial court's order denying their motions to compel arbitration of the plaintiffs' claims. We reverse and remand.

The plaintiffs, Gordon D. Wampler and Murlie Wampler, purchased a mobile home from Oneonta, a mobile home dealership. Sills, acting on behalf of Oneonta, negotiated the sale to the Wamplers. The parties presented their versions of the transaction through affidavits.

The Wamplers contacted Oneonta in response to a newspaper advertisement concerning a "no-money-down" purchase plan. The Wamplers say they informed Sills that they were retired and that their only income was in the form of Social Security benefits. At that point, they say, Sills showed them a sales brochure that featured a payment plan with payments of $99 per month for the first six months, $199 per month for the next six months, and regular monthly payments thereafter of approximately $253.

On that first visit to Oneonta's place of business, the Wamplers executed what they have referred to as a sales contract. That contract did not contain an arbitration clause, but it did contain a merger clause stating that the agreement being signed constituted the entire understanding between the Wamplers and Oneonta. The Wamplers claim that they signed the contract because, they say, Sills told them that "today," i.e., the day they signed, was the last day the no-money-down plan was available and promised that she could get Mr. Wampler a job with Oneonta or with another mobile-home dealer. Sills denies having made such a promise.

Several days later, the Wamplers returned to Oneonta, at Sills's request. Upon their return, they say, Sills told them she had experienced difficulty in arranging the financing for their purchase of the mobile home and that she had been unable to arrange for monthly payments in the amount of $253 as they initially had discussed. Sills's affidavit states that the plan she had shown to the Wamplers on their first visit was available only to customers who owned their own land. Because the Wamplers would be renting a lot on which to place their mobile home, she said, they were not eligible for the plan that provided for reduced payments during the first year. The Wamplers say that Sills told them that a monthly payment of $292 was the best she could arrange for them, that she again told them that "today" was the final day they could obtain a no-money-down plan, and that she "reassured" them she would help Mr. Wampler obtain a job; after Sills had told them this, they say, they executed a series of documents. Those documents included one entitled "Manufactured Home Retail Installment Contract and Security Agreement" ("the Security Agreement"). The Security Agreement was assigned to Green Tree, a mobile-home financing company. The Security Agreement provides for a payment schedule of 240 payments of $292.22 each. It also contains an arbitration clause. The Wamplers' complaint states that "[s]hortly after [they] made their first $99.00 payment, Green Tree informed them that their monthly payments were $292.22." Complaint at 5. They also say they did not know the Security Agreement contained an arbitration clause. The Wamplers claim that Sills manipulated the documents in such a manner that they did not have an opportunity to review them or to ask questions as they signed them. They also say that Sills did not give them copies of the completed documents. Green Tree provided copies of the documents to the Wamplers, at their request, approximately two months later.

The Wamplers sued Green Tree, Oneonta, Sills, and James (the president of Oneonta). The original complaint alleged fraud, suppression, negligence and/or wantonness, violations of the Alabama Mini-Code (§§ 5-19-1 et seq., Ala.Code 1975), and negligent and/or wanton supervision, all of these claims arising from their purchase of the mobile home. The Wamplers amended their complaint to add as defendants Green Tree Agency, Inc., and American Family Home Insurance Company, alleging against these two defendants breach of contract, violations of the Alabama Mini-Code, breach of fiduciary duty, fraud, suppression, unjust enrichment, and conspiracy. These claims arose from the sale of insurance in conjunction with the purchase of the mobile home. The Wamplers have dismissed their claims against American Family. Although Green Tree Agency remains a defendant in the case, it is not a party to this appeal.

The Security Agreement included a paragraph entitled "ARBITRATION," calling for arbitration of all disputes (paragraph 14), and a separate paragraph entitled "WAIVER OF JURY TRIAL" (paragraph 15). Immediately above the signature line, in bold print, and with all words in capital letters, there appears the following:

"MY SIGNATURE BELOW ACKNOWLEDGES I UNDERSTAND PARAGRAPHS 14 AND 15 ABOVE REQUIRE BINDING ARBITRATION AND WAIVE MY RIGHT TO A JURY TRIAL IF A DISPUTE ARISES UNDER THIS CONTRACT.

". . . .

"BUYER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS CONTRACT. CAUTION— IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT."

The Wamplers each signed the Security Agreement just below the statements quoted above. James signed the Security Agreement on behalf of Oneonta, as its president.

Green Tree, Oneonta, Sills, and James moved to compel arbitration and to stay all proceedings, based on the Security Agreement executed by the Wamplers and Oneonta and later assigned to Green Tree. The trial court, after hearing oral argument and reviewing affidavits and the pertinent documents, denied the motions. Green Tree, Oneonta, Sills, and James appeal from the order denying their motions to compel arbitration.

In the trial court, the Wamplers argued (1) that their purchase of the mobile home did not have a sufficient connection with interstate commerce to make the Federal Arbitration Act ("the FAA"), 9 U.S.C. § 1 et seq., applicable; (2) that the relevant agreement between the parties was the earlier of the two contracts, which contained no arbitration agreement; (3) that the Security Agreement containing the arbitration provision is a contract of adhesion; and (4) that the arbitration provision is unconscionable. The Wamplers maintained that Allstar Homes, Inc. v. Waters, 711 So.2d 924 (Ala.1997), entitled them to a jury trial on the issue whether they were fraudulently induced to enter into the agreement containing the arbitration clause. The trial court agreed; it denied arbitration, relying on Allstar.

Green Tree and the other appellants (hereinafter referred to collectively as "Green Tree") contend here on appeal (1) that Allstar is distinguishable from this case and that Ex parte Rager, 712 So.2d 333 (Ala.1998), requires arbitration; (2) that Allstar conflicts with Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and therefore should be overruled; (3) that the plaintiffs' claim of fraudulent inducement is, as a matter of law, insufficient as a basis for denying arbitration, or that, in any event, an evidentiary hearing is necessary; (4) that the plaintiffs presented no evidence supporting their claim of unconscionability; (5) that § 5-19-6, Ala.Code 1975, does not bar the enforcement of the arbitration agreement; and (6) that the agreement admittedly signed by the Wamplers involves interstate commerce and binds them to arbitration.

The Wamplers respond by arguing (1) that Allstar governs this case; (2) that Allstar does not conflict with Prima Paint; (3) that a court should determine whether the first agreement or the second agreement controls; and (4) that the Security Agreement is one of adhesion and is unenforceable because the Wamplers were unable to obtain alternative financing and because the arbitration clause is one-sided in that it permits Green Tree to choose between arbitration and litigation while denying that choice to the Wamplers. The Wamplers do not contradict Green Tree's assertion that § 5-19-6 does not bar enforcement of the arbitration agreement, nor do they dispute the applicability of the FAA; therefore, we do not address these issues.

I.

We first consider whether the Wamplers' attack on the enforceability of the Security Agreement containing the arbitration clause presents a question for the court or a question for the arbitrator. Since the trial court issued its order in this action denying arbitration, this Court has released several decisions dealing with the issues here presented. In Investment Management & Research, Inc. v. Hamilton, 727 So.2d 71 (Ala.1999), the Court thoroughly analyzed Prima Paint and how it was affected by the subsequent decision in First Options of Chicago, Inc., v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). From Investment Management, we can formulate certain rules.

When deciding the threshold issue whether the court or the arbitrator decides a challenge to the enforcement of an arbitration clause entered into by the parties, the court first must satisfy itself that the terms of the arbitration clause are broad enough to permit the arbitrator to...