Vann v. First Community Credit Corp.

• Decision Date: 08 March 2002
• Citation: 834 So.2d 751
• Parties: David VANN and Brenda Vann v. FIRST COMMUNITY CREDIT CORPORATION.
• Court: Alabama Supreme Court

834 So.2d 751

David VANN and Brenda Vann v. FIRST COMMUNITY CREDIT CORPORATION.

1010113.

Supreme Court of Alabama.

March 8, 2002.

Rehearing Denied May 3, 2002.

Jay E. Emerson, Jr., and Robert D. Lee of Higgs & Emerson, Huntsville, for appellants.

Gary P. Wolfe and R. Wayne Wolfe of Wolfe, Jones & Boswell, Huntsville, for appellee.

HOUSTON, Justice.

The plaintiffs in this action, David Vann and Brenda Vann, appeal from the trial court's order granting a motion by the defendant, First Community Credit Corporation (hereinafter "First Community"), to compel arbitration. We affirm.

The Vanns executed a note, along with an arbitration agreement, with First Community to purchase a 1995 Pontiac Grand Prix from an automobile dealer. The Vanns also purchased property insurance on the vehicle and credit-life insurance from First Community; the premiums for the policies for that insurance were included in the total amount due on the note and consequently on the monthly payments the Vanns were to make on the note. The Vanns claim that First Community's agents represented that the amount of the premiums could be removed from the monthly payment amount if the Vanns later purchased equivalent insurance on their own.

Subsequently, the Vanns purchased property insurance on the vehicle from another source; they then requested that the property-insurance premiums for the policy purchased from First Community be deducted from the monthly payments. The Vanns claim that in response to their request First Community's employees told them that the only way to remove the premiums from their payments would be to refinance the loan.

The Vanns sued First Community, claiming that First Community made the following fraudulent misrepresentations: (1) that the Vanns were required to purchase the insurance to secure the financing, (2) that the premiums would be deducted from the monthly payments the Vanns were to make on the note if the Vanns subsequently purchased separate insurance, and (3) that the Vanns had to refinance the note to remove the insurance premiums from their payments. The Vanns also claimed that First Community was estopped from refusing to remove the insurance premiums from their payments and that they suffered emotional distress from First Community's intentional acts.

First Community submitted evidentiary exhibits and moved the trial court to compel arbitration. The Vanns objected to the motion and submitted evidentiary exhibits with their reply. The trial court granted the motion to compel arbitration. The Vanns appeal.

On October 1, 2001, Rule 4(d) of the Alabama Rules of Appellate Procedure became effective. Rule 4(d) provides that orders both granting and denying a motion to compel arbitration are reviewable by appeal. Previously, a party could obtain review of an order granting a motion to compel arbitration only by a petition for a writ of mandamus. Court Comment to Amendment to Rule 4(a)(1) and Adoption of Rule 4(d) effective October 1, 2001, Ala. R.App.P. Because the Vanns filed their notice of appeal on October 2, 2001, the amended rule allowing review by appeal governs this action.

"[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)).

The Vanns maintain that the arbitration agreement they signed in conjunction with the note is unconscionable; therefore, they argue, the trial court erred in compelling arbitration. In determining whether a contract is unconscionable, courts look to four factors: "(1) whether there was an absence of meaningful choice on one party's part, (2) whether the contractual terms are unreasonably favorable to one party, (3) whether there was unequal bargaining power among the parties, and (4) whether there were oppressive, one-sided or patently unfair terms in the contract." Layne v. Garner, 612 So.2d 404, 408 (Ala.1992).

The pertinent portions of the arbitration agreement in this case read as follows:

"[T]he borrower and [First] Community Credit Corporation, by executing this Agreement, waive their right to trial by jury of disputes, claims or controversies between themselves arising out of or relating to this Agreement or any agreements or instruments relating to this agreement, and the Borrower and [First] Community Credit Corporation agree that all such disputes, claims or controversies shall be resolved exclusively by binding arbitration ... [A]ny dispute, claim, or controversy between the Borrower and [First] Community Credit Corporation, whether based in contract, tort or otherwise, in any way arising out of or relating to this Agreement or any agreements or instruments relating to this Agreement shall be resolved exclusively by binding arbitration....

". . . .

"No provision of, or the exercise of any rights under this paragraph shall limit the right of any party to exercise (in addition to its right to arbitrate) any self-help remedies or the right of set-off, to realize upon or foreclose against any personal or real property collateral or security whether pursuant to a power of sale or by judicial foreclosure or otherwise, or to obtain provisional or ancillary remedies such as injunctive relief, or the appointment of a receiver, or to seek or obtain any other traditionally equitable relief which does not claim money damages from any court, agency or tribunal before, after or during the pendency of any arbitration."

The Vanns argue...