Title Max of Birmingham, Inc. v. Edwards

• Decision Date: 18 May 2007
• Docket Number: 1051140.
• Citation: 973 So.2d 1050
• Parties: TITLE MAX OF BIRMINGHAM, INC. v. Jeffrey T. EDWARDS.
• Court: Alabama Supreme Court

973 So.2d 1050

TITLE MAX OF BIRMINGHAM, INC. v.Jeffrey T. EDWARDS.

1051140.

Supreme Court of Alabama.

May 18, 2007.

Jeffrey Ingram and Cassandra J. Harris of Galese & Ingram, P.C., Birmingham, for appellant.

Edwin M. Van Da11, Jr., and Julius Raymond Lowery, Pell City, for appellee.

SEE, Justice.

Title Max of Birmingham, Inc., appeals the denial of its motion to compelJeffrey T. Edwards to arbitrate his claims against Title Max alleging conversion and negligence in connection with the repossession of a 1998 model year Ford F-150 pickup truck.Because the trial court erred in failing to compel Edwards to arbitrate, w reverse and remand.

Facts and Procedural Background

Edwards entered into a pawn transaction with Title Max, pledging a security interest in his 2000 model year Ford 150 extended cab truck in exchange for a loan.Edwards had a 30-day grace period following the maturity date of the loan in which to repay the loan and to pay the other charges.The agreement evidencing the transaction ("the pawn agreement") gave Title Max the right to repossess the truck if the loan was not repaid and the other charges paid before the expiration of the grace period.Edwards defaulted on the loan.Pursuant to its contractual right, Title Max sent its agent, Jack Burke, to repossess the truck.

According to Edwards, Burke arrived at Edwards's house and informed him that he was repossessing the truck.When the key Title Max had given Burke to use in repossessing the truck did not fit the door or the ignition of the truck in Edwards's driveway, Burke had the truck towed away; the truck he had towed was a 1998 model year Ford F-150.Later, when Burke realized that he had repossessed the wrong truck, he left the 1998 truck at a gasoline station and returned to Edwards's house to inform Edwards of the mistake and to tell him where he had left his truck.Eventually, the police instructed Burke to return the truck to Edwards, but, according to Edwards, by that time the truck had been damaged and would no longer start.

Edwards sued Title Max and Burke in the Talladega Circuit Court, alleging conversion of the 1998 truck and negligent repossession.Title Max moved to stay the action and to compel binding arbitration pursuant to an arbitration provision that Edwards had signed as part of the pawn agreement.The arbitration provision reads, in pertinent part, as follows:

"For the purposes of this Waiver of Jury Trial and Arbitration Provision (hereinafter `Arbitration Provision'), the words `dispute' and `disputes' are given the broadest possible meaning and include, without limitation (a) all claims, disputes, or controversies arising from or relating directly or indirectly to the signing of this Arbitration Provision, [and] the validity and scope of this Arbitration Provision ...; (b) all federal or state law claims, disputes or controversies, arising from or relating directly or indirectly to this Pawn Ticket ...; (d) all common law claims, based upon contract tort, fraud, or other intentional torts; (g) all claims asserted by you individually against us ... including claims for money damages and/or equitable or injunctive relief; ....

"... This Arbitration Provision is made pursuant to a transaction involving interstate commerce and shall be governed by the [Federal Arbitration Act]."

The trial court denied Title Max's motion to compel Edwards to submit the dispute to arbitration.Title Max appeals.

Standard of Review

"A direct appeal is the proper procedure by which to seek review of a trial court's order denying a motion to compel arbitration."Homes of Legend, Inc. v. McCollough,776 So.2d. 741, 745(Ala.2000);Rule 4(d), Ala. R.App. P.We review the trial court's grant or denial of a motion to compel arbitration de novo.Bowen v. Security Pest Control, Inc.,879 So.2d 1139, 1141(Ala.2003).The party seeking to compel arbitration has the initial burden of proving the existence of a 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).The moving party"`"must produce some evidence which tends to establish its claim."'"Wolff Motor Co. v. White,869 So.2d 1129, 1131(Ala.2003)(quotingJim Burke Auto., Inc. v. Beavers,674 So.2d 1260, 1265(Ala.1995), quoting in turnIn re American Freight Sys., Inc.,164 B.R. 341, 345(D.Kan.1994)).Once the moving party meets this initial burden, the nonmovant then has the burden to present evidence tending to show that the arbitration agreement is invalid or inapplicable to the case.Polaris,879 So.2d at 1132.

Analysis

The issue presented by this appeal is whether a court or the arbitrators should determine the scope of the arbitration provision in this case and whether it includes Edwards's claims against Title Max.Title Max argues that the parties agreed to arbitrate the arbitrability of any dispute between them and that the arbitration provision in the pawn agreement, quoted in part above, is broad enough to require Edwards to arbitrate his claims of conversion and negligent repossession.Edwards argues that the property that forms the basis of his claims against Title Max is the 1998 model year Ford F-150 truck and that there is no contract concerning that property; he asserts, therefore, that "[t]here is no privity between the parties concerning the transaction which gave rise to the lawsuit."Edwards's briefat 5.

Section 2 of the Federal Arbitration Act,9 U.S.C. § 1 et seq., provides, in pertinent part:

"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, save upon such grounds as exist at law or in equity for the revocation of any contract."

Section 2 has the effect of preempting conflicting Alabama law, in particular § 8-1-41(3),Ala.Code 1975, which makes predispute agreements to arbitrate unenforceable.Garikes, Wilson, & Atkinson, Inc. v. Episcopal Found. of Jefferson County, Inc.,614 So.2d 447, 448(Ala.1993).It thereby makes enforceable a predispute arbitration agreement in a contract evidencing a transaction that involves interstate commerce.McCollough,776 So.2d at 745.

Title Max had the initial burden of producing "some evidence" that a contract calling for arbitration exists and that the underlying transaction involves interstate commerce.Polaris,879 So.2d at 1132.Edwards does not question that the pawn transaction involved interstate commerce; therefore, we turn to whether a contract requiring the arbitration of this dispute exists.The arbitration provision, quoted above, appears in the record.Edwards does not dispute that he signed an arbitration provision as part of the pawn transaction that gave Title Max a security interest in the 2000 model year Ford F-150.The arbitration provision on its face applies to "all claims, disputes, or controversies arising from or relating directly or indirectly to the signing of this Arbitration Provision" as well as to "all claims asserted by [Edwards] individually against [Title Max]."Title.Max, therefore, has put forward sufficient evidence indicating that it and Edwards entered into a contract that contains an arbitration agreement.

Because Title Max met its burden to prove the existence of a contract calling for arbitration, the burden then shifted to Edwards "to present evidence showing that the arbitration provision in the contract does not apply to the dispute in question."Medical Servs., LLC v. GMW & Co.,969 So.2d 158, 161(Ala.2006).Edwards argues that the arbitration provision does not apply to "other property" in his possession, that is, to property other than the 2000 model year Ford F-150 truck, the title to which he pawned when he entered the pawn agreement.Therefore, he argues, there is no contract requiring arbitration regarding any claims he might have against Title Max and Burke relating to the 1998 model year Ford F-150 truck.

"[A]party who contests the existence of a contract containing an arbitration provision cannot be compelled to arbitrate that threshold issue because an arbitrator derives his authority solely from the parties' agreement.Only a court can resolve the question whether a contract exists."Edward D. Jones & Co. v. Ventura,907 So.2d 1035, 1040(Ala.2005).However, Edwards does not contest that he signed a contract with Title Max containing an arbitration provision; instead, he essentially argues that his claims do not fall within the scope of the arbitration provision he signed.Arbitration is a matter of contract, and this Court applies the ordinary state-law principles governing contracts in construing an agreement to arbitrate.Polaris Sales,879 So.2d at 1133."`When a court construes a contract, "the clear and plain meaning of the terms of the contract are to be given effect, and the parties are presumed to have intended what the terms clearly state."'"H & S Homes, L.L.C. v. Shaner,940 So.2d 981, 988(Ala.2006)(quotingPolaris Sales,879 So.2d at 1133, quoting in turnStrickland v. Rahaim,549 So.2d 58, 60(Ala.1989))."`[I]n applying general state-law principles of contract interpretation to the interpretation of an arbitration agreement within the scope of the Act, due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself' resolved in favor of arbitration.'"McCollough,776 So.2d at 745(quotingVolt Info. Sciences, Inc. v. Board of Trs. of Leland Stanford Junior Univ.,489 U.S. 468, 475-76, 109 S.Ct. 1248, 103 L.Ed.2d 488(1989)).

In Jim Burke Automotive, Inc. v. McGrue,826 So.2d 122(Ala.2002), this Court confronted the question whether the parties intended to arbitrate the issue of arbitrability.The arbitration agreement there provided that the...