The Dunes of Gp, L.L.C. v. Bradford

• Decision Date: 13 April 2007
• Docket Number: 1051501.
• Citation: 966 So.2d 924
• Parties: THE DUNES OF GP, L.L.C. v. Virginia BRADFORD.
• Court: Alabama Supreme Court

966 So.2d 924

THE DUNES OF GP, L.L.C. v. Virginia BRADFORD.

1051501.

Supreme Court of Alabama.

April 13, 2007.

Daniel G. Blackburn and Cynthia J. Sherman of Blackburn & Conner, P.C., Bay Minette, for appellant.

Shawn T. Alves and J. Bradford Boyd Hicks of Stone, Granade & Crosby, P.C., Bay Minette, for appellee.

SMITH, Justice.

The Dunes of GP, L.L.C. ("The Dunes"), appeals from the trial court's denial of its motion to compel arbitration of an action against it filed by Virginia Bradford. We affirm.

Facts and Procedural History

In June 2004, Bradford entered into a preconstruction "purchase agreement" with The Dunes to buy a condominium unit in a development in Gulf Shores known as The Dunes Condominiums. The purchase agreement contained the following arbitration provision:

"Purchaser and Seller agree that all disputes between the parties which arise or remain unresolved after the closing shall be resolved by binding arbitration in accordance with Ala.Code Section 6-6-1, et seq., and the Resolution Resources Corporation Rules for Arbitration, as in effect on the date of the recordation of the Declaration. The decision of the arbitrator shall be final and the arbitrator shall have authority to award attorney's fees and allocate the costs of arbitration as part of any final award."

Bradford tendered $31,500 as an "initial earnest money deposit"; the earnest money was deposited with Gulf Shores Title Company, Inc. ("Gulf Shores Title").

For reasons unclear from the record, Bradford and The Dunes never closed on the transaction. Subsequently, both Bradford and The Dunes sought to obtain the $31,500 in earnest money deposited with Gulf Shores Title.

On December 12, 2005, Gulf Shores Title filed an action interpleading Bradford and The Dunes and seeking a judgment declaring which of them was the rightful owner of the $31,500. The Dunes answered and filed a cross-claim against Bradford, asserting that it was entitled to the $31,500. Bradford filed an answer, a cross-claim against The Dunes, and a third-party complaint against various parties, seeking specific performance of the purchase agreement and damages for breach of contract, fraud, civil conspiracy, and unjust enrichment.

On April 13, 2006, The Dunes filed a motion to compel Bradford to submit her claims against it to arbitration pursuant to the arbitration provision in the purchase agreement. Bradford filed a response, and the trial court held a hearing on the motion. On June 13, 2006, the trial court denied The Dunes' the motion. The Dunes appeals.

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.' Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999). Furthermore:

"`A motion to compel arbitration is analogous to a motion for summary judgment. TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala.1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction affecting interstate commerce. Id. "After 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."'

"Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000) (quoting Jim Burke Auto., Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (Ala.1995) (emphasis omitted))."

Vann v. First Cmty. Credit Corp., 834 So.2d 751, 752-53 (Ala.2002).

Discussion

The Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("the FAA"), provides that "[a] written provision in . . . a contract evidencing a transaction involving 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. The FAA "mandates the arbitration of claims encompassed by an arbitration clause that is contained in a binding contract that involves interstate commerce." Ex parte Conference America, Inc., 713 So.2d 953, 955 (Ala.1998).

In support of its motion to compel arbitration, The Dunes submitted a copy of the purchase agreement, which contains the arbitration provision, along with various documentary evidence establishing that the transaction that formed the basis for the purchase agreement involved interstate commerce. Therefore, the burden then shifted to Bradford to produce evidence indicating that the arbitration agreement was not valid or that it did not apply to the dispute in question.

Bradford argues that the language of the arbitration provision limits its scope to either disputes that arise after the closing of the transaction or disputes that remain unresolved after the closing. Bradford testified in a affidavit opposing the motion to compel that because the parties never closed on the purchase of the condominium, the arbitration provision does not apply because the triggering event—the closing—never occurred. Bradford argues that she does not contest the validity of the arbitration provision; instead, she contends that by its language it simply does not apply to the dispute in question. The Dunes, on the other hand, argues that the arbitration provision covers disputes that arise before the closing.

"`"Agreements to arbitrate are essentially creatures of contract," and ordinary contract rules govern the interpretation of arbitration provisions.' Orkin Exterminating Co. v. Larkin, 857 So.2d 97, 103 (Ala.2003) (quoting Blount Int'l, Ltd. v. James River-Pennington, Inc., 618 So.2d 1344, 1346 (Ala.1993)). `When interpreting a contract, a court should give the terms of the contract their clear and plain meaning and should presume that the parties intended to do what the terms of the agreement clearly state.' Brewbaker Motors, Inc. v. Belser, 776 So.2d 110, 112 (Ala.2000). Additionally, this Court will interpret the terms of a contract to give `effect to all terms used.' Sullivan, Long & Hagerty v. Southern Elec. Generating Co., 667 So.2d 722, 725 (Ala.1995). See also Board of Water & Sewer Comm'rs of Mobile v. Bill Harbert Constr. Co., 870 So.2d 699, 710 (Ala.2003) (`The law is settled that this Court is bound to construe contracts so as to give meaning to all provisions whenever possible.').

"The duty to arbitrate is a contractual obligation, and `a party cannot be required to arbitrate any dispute that he or she has not agreed to submit to arbitration.' [Georgia Power Co. v. Partin, 727 So.2d 2, 5 (Ala.1998)]."

Medical Servs., LLC v. GMW & Co., [Ms. 1041753, December 15, 2006] ___ So.2d ___, ___ (Ala.2006).

In interpreting an arbitration provision, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (emphasis added). "Thus, a motion to compel arbitration should not be denied `unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.' United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)." Ex parte Colquitt, 808 So.2d 1018, 1024 (Ala.2001) (emphasis added).

The Dunes' argument is as follows:

"While the mandatory binding arbitration clause in the present contract is not artfully drafted, the doubt regarding its scope must be construed in favor of arbitration. A practical interpretation of the...