I.C.E. Contractors Inc. v. Martin & Cobey Constr. Co. Inc.

• Decision Date: 17 September 2010
• Docket Number: 1080619.
• Citation: 58 So.3d 723
• Court: Alabama Supreme Court
• Parties: I.C.E. CONTRACTORS, INC.v.MARTIN & COBEY CONSTRUCTION COMPANY, INC.

58 So.3d 723

I.C.E. CONTRACTORS, INC.

v.MARTIN & COBEY CONSTRUCTION COMPANY, INC.

1080619.

Supreme Court of Alabama.

Sept. 17, 2010.

John R. Baggette, Jr., of Sirote & Permutt, P.C., Huntsville, for appellant.Michael L. Fees, Allen L. Anderson, and Stacy L. Moon of Fees & Burgess, P.C., Huntsville, for appellee.PER CURIAM.

I.C.E. Contractors, Inc. (“ICE”), appeals from the trial court's order granting a motion to compel arbitration filed by Martin & Cobey Construction Company, Inc. (“Martin & Cobey”). We reverse and remand.

Facts and Procedural History

On October 31, 2008, ICE sued Martin & Cobey, Scannell Properties # 78, LLC (“Scannell”), Regions Bank (“Regions”), and FedEx Freight East, Inc. (“FedEx”). ¹ The complaint alleged breach of contract and other claims against Martin & Cobey arising from the alleged failure of Martin & Cobey to pay for construction materials and/or equipment supplied to Martin & Cobey by ICE. The complaint alleged that Martin & Cobey, on or about December 11, 2007, had entered into the contract it allegedly breached. Martin & Cobey answered the complaint on December 8, 2008.

On December 9, 2008, Martin & Cobey filed a motion to compel arbitration and to stay the matter pending arbitration. Attached to the motion was a document entitled “Standard Short Form Agreement Between Contractor and Subcontractor” (“the form agreement”) and dated October 15, 2007. The form agreement named Martin & Cobey and ICE as the parties to the agreement, and it provided that if neither direct discussions nor mediation resolved a dispute between the parties, the parties agreed to use arbitration to resolve the dispute. However, the form agreement was not signed by Martin & Cobey or ICE.

On December 31, 2008, ICE filed an opposition to Martin & Cobey's motion to compel arbitration. Attached to the opposition was an affidavit of the president of ICE, Guy W. Smith. Smith testified that ICE never agreed to the terms of the form agreement and that ICE never entered into any agreement that would obligate ICE to arbitrate the claims set forth in its complaint.

On January 7, 2009, Martin & Cobey responded to ICE's opposition to the motion to compel arbitration. In that response, Martin & Cobey argued that the form agreement is the only contract in evidence and that ICE is estopped from objecting to arbitration because, it argued, ICE is seeking the benefits of the form agreement without the responsibilities of the form agreement. The response also contended that “even if ICE is not estopped from objecting to arbitration, the issues within the above-styled matter are so intertwined with the issues contained in the [ongoing] arbitration between Martin & Cobey and Scannell that compelling arbitration is appropriate.” ²

On January 8, 2009, ICE replied to Martin & Cobey's response to ICE's opposition to the motion to compel arbitration. Attached to this reply was another affidavit of the president of ICE. He testified that ICE did not perform any work under the terms of the form agreement. He further testified:

“The agreement between ICE and Martin & Cobey with regard to the work performed by ICE on the Scannell project was comprised of various estimates and change orders which were submitted to Martin & Cobey by ICE and approved by Martin & Cobey, as well as job specifications, emails, and other correspondence between Martin & Cobey and ICE. An example of these documents is the fax dated December 11, 2007 from ICE to Martin & Cobey attached hereto as Exhibit ‘A’ which was a revised pricing proposal for the project based on specifications provided by Martin & Cobey to ICE as of December 11, 2007. Martin & Cobey accepted this proposal and ICE commenced work on the project after December 11, 2007. Martin & Cobey and ICE did not enter into any agreement to perform work on the project prior to December 11, 2007.”

A hearing was held on the motion to compel arbitration on January 9, 2009. On January 12, 2009, the trial court ordered a stay of further proceedings and granted Martin & Cobey's motion to compel arbitration. ICE appealed.

Standard of Review

“ ‘[T]he standard of review of a trial court's ruling on a motion to compel arbitration at the instance of either party is a de novo determination of whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review.’ ” Vann v. First Cmty. Credit Corp., 834 So.2d 751, 752–53 (Ala.2002) (quoting Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999) (emphasis omitted)). “The party seeking to compel arbitration has the initial burden of proving the existence of a written contract calling for arbitration and proving that that contract evidences a transaction involving interstate commerce.” Polaris Sales, Inc. v. Heritage Imports, Inc., 879 So.2d 1129, 1132 (Ala.2003). “ ‘ “[A]fter a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question.” ’ ” Kenworth of Birmingham, Inc. v. Langley, 828 So.2d 288, 290 (Ala.2002) (quoting Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000), quoting in turn Jim Burke Auto., Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (Ala.1995)).

Discussion

ICE contends that the trial court erred in ordering that its claims against Martin & Cobey be arbitrated because, ICE says, Martin & Cobey did not meet its initial burden of proving the existence of a contract calling for arbitration. In Alabama, one of the requisite elements of a valid contract is mutual assent to the essential terms of the contract. Avis Rent A Car Sys., Inc. v. Heilman, 876 So.2d 1111, 1118 (Ala.2003). ICE contends that Martin & Cobey did not prove mutual assent to the terms, including the arbitration provision, of the unsigned form agreement attached to Martin & Cobey's motion to compel arbitration. We agree.

“ ‘Whether a contract exists must be determined under general state-law contract principles. Crown Pontiac, Inc. v. McCarrell, 695 So.2d 615 (Ala.1997). The purpose of a signature on a contract is to show mutual assent, see Ex parte Holland Mfg. Co., 689 So.2d 65 (Ala.1996); Lawler Mobile Homes, Inc. v. Tarver, 492 So.2d 297 (Ala.1986); Ex parte Pointer, 714 So.2d 971 (Ala.1997); however, the existence of a contract may also be inferred from other external and objective manifestations of mutual assent. Unless a contract is required by a statute to be signed (the [Federal Arbitration Act] contains no such requirement), or by the Statute of Frauds to be in writing (the contract here is not subject to Alabama's S...