Jim Burke Automotive, Inc. v. Murphy
| Decision Date | 25 June 1999 |
| Citation | 739 So.2d 1084 |
| Parties | JIM BURKE AUTOMOTIVE, INC. v. Johnny C. MURPHY. |
| Court | Alabama Supreme Court |
John Martin Galese and Jeffrey L. Ingram of John Martin Galese, P.A., Birmingham, for appellant.
Lloyd W. Gathings II and Robert W. Shores of Gathings & Associates, Birmingham; and E.L. Brobston of Brobston & Brobston, Bessemer, for appellee.
Johnny C. Murphy sued Jim Burke Automotive, Inc. ("Burke"); Chrysler Credit Corporation ("Chrysler"); and MS Diversified Corporation, MS Life Insurance Company, and MS Dealer Service Corporation (collectively, the "MS Companies"), seeking compensatory and punitive damages for fraud, fraudulent suppression, negligent hiring and supervision, and violations of state consumer-lending law. Murphy filed the action in his individual capacity and on behalf of a class of similarly situated customers of Burke. Murphy claimed that he and the class members had been charged excessive premiums for credit-life insurance they had bought on loans they had taken to finance their purchases of motor vehicles from Burke.
Burke moved to compel arbitration of Murphy's claims, arguing that Murphy had voluntarily executed a valid arbitration agreement that obligated him to arbitrate all disputes with Burke arising out of or in connection with the purchase of his vehicle. Initially, the trial court granted Burke's motion to compel arbitration and then denied Murphy's motion to "reconsider" that ruling. Several months later, however, Murphy filed a second motion to reconsider, arguing that the arbitration agreement was an unenforceable contract of adhesion. The trial court agreed and granted Murphy's motion. Because we conclude that Murphy failed to prove that the arbitration agreement was unconscionable, we reverse and remand.
On December 16, 1993, Murphy purchased a 1993 Dodge Colt automobile from Burke. The purchase was financed by Chrysler. As part of that purchase, Burke executed a retail installment contract, which was assigned to Chrysler, and a buyer's order, which contained an arbitration agreement. The arbitration agreement provided:
"Buyer hereby acknowledges and agrees that all disputes and controversies of every kind and nature between buyer and Jim Burke Automotive 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 this buyer's order."
The reverse side of the document stated in pertinent part:
"All disputes and controversies of every kind and nature between the parties hereto arising out of or in connection with this contract, its subject matter or its negotiation, as to the existence, construction, validity, interpretation or meaning, performance, nonperformance, enforcement, operation, breach of contract, breach of warranty, continuance or termination thereof or any claim alleging fraud in fact, fraud in the inducement, deceit, or suppression of any material fact shall be submitted to binding arbitration...."
In connection with the sale, Murphy also purchased credit-life and credit-disability insurance from MS Life Insurance Company and a service contract from MS Dealer Service Corporation.
Murphy defaulted on the installment contract in 1995, and Chrysler repossessed the car. After Chrysler sold the car, a deficiency amount was established. In January 1997, Chrysler sued Murphy in the United States District Court for the Northern District of Alabama to recover the deficiency owed under the retail installment contract. Murphy answered Chrysler's complaint. In August, Murphy filed this action in the Jefferson Circuit Court, Bessemer Division, alleging various individual and class-action claims against Chrysler, Burke, and the MS Companies, including fraud, fraudulent suppression, negligent hiring and supervision, and violations of state consumer-lending law.
In September 1997, Chrysler, relying on the arbitration agreement, moved the federal district court to compel arbitration of the claims raised in Murphy's action filed in the state circuit court. The MS Companies moved to intervene in regard to Chrysler's motion to compel arbitration. Chrysler and the MS Companies then moved to stay the proceedings in the state circuit court. Burke did not seek to intervene in the federal action, but instead moved the state circuit court to stay the proceedings and to compel arbitration. In December 1997, the state circuit court granted Burke's motion, and in April 1998 that court denied Murphy's motion to reconsider the ruling granting Burke's motion. In July, Murphy filed in the state circuit court a second motion to reconsider. In August, before the state circuit court had ruled on Murphy's second motion to reconsider, the federal district court granted the motions by Chrysler and the MS Companies to stay the proceedings on the claims pending against them in the state circuit court and to compel arbitration of those claims.
The federal district court held, among other things, that Murphy was collaterally estopped from arguing that the arbitration agreement was an unenforceable contract of adhesion because Murphy had made that argument to the state circuit court and it had been denied. The federal district court further held that, even if the doctrine of collateral estoppel did not apply, Murphy had not made "a sufficient showing of unfairness, unconscionability, or coercion to warrant a conclusion that the [arbitration] agreement is an adhesion contract." Murphy did not appeal the federal district court's decision. In September, the state circuit court granted Murphy's second motion to reconsider and vacated its prior order compelling arbitration of Murphy's claims against Burke, holding that the arbitration agreement was an unenforceable contract of adhesion.
Section 2 of the Federal Arbitration Act ("FAA") provides that "[a] written provision in any ... contract evidencing a transaction involving interstate commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable." 9 U.S.C. § 2. Moreover, the Supreme Court of the United States has stated that the FAA establishes a strong federal policy favoring arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, at 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (). Accordingly, trial courts are required to stay or dismiss proceedings and to compel arbitration when the parties have entered into a valid contract containing an arbitration agreement, and a trial court's denial of a motion to compel arbitration is subject...
To continue reading
Request your trial
-
Alabama Catalog Sales v. Harris
...of law. Therefore, our review is "de novo." See Green Tree Fin. Corp. v. Vintson, 753 So.2d 497 (Ala.1999); Jim Burke Automotive, Inc. v. Murphy, 739 So.2d 1084 (Ala.1999); Patrick Home Ctr., Inc. v. Karr, 730 So.2d 1171 The ultimate issue in this case is whether the trial court, or an arbi......
-
Green Tree Financial Corp. v. Vintson
...arbitration clause to the Vintsons. See Patrick Home Center, Inc. v. Karr, 730 So.2d 1171, 1174 (Ala.1999); Jim Burke Automotive, Inc. v. Murphy, 739 So.2d 1084, 1087 (Ala. 1999). 5. "[I]t is neither this Court's duty nor its function to perform a [party's] legal research." City of Birmingh......
-
Ex parte Roberson
...to compel arbitration is de novo." Patrick Home Center v. Karr, 730 So.2d 1171, 1172 (Ala.1999). See also, Jim Burke Automotive, Inc. v. Murphy, 739 So.2d 1084 (Ala.1999); Kenworth of Dothan, Inc. v. Bruner-Wells Trucking, Inc., 745 So.2d 271 (Ala.1999). If, however, the trial court grants ......
-
Celtic Life Ins. Co. v. McLendon
...v. Bruno, 784 So.2d 277, 280 (Ala.2000); First American Title Ins. Corp. v. Silvernell, 744 So.2d 883 (Ala. 1999); Jim Burke Auto., Inc. v. Murphy, 739 So.2d 1084 (Ala.1999); Crimson Indus., Inc. v. Kirkland, 736 So.2d 597 (Ala. 1999). The proponent of arbitration has the initial burden of ......