Justia Arbitration & Mediation Opinion SummariesArticles Posted in Alabama Supreme Court
Robertson v. Mount Royal Towers
Joe Robertson appealed a circuit court order that held his claims against Mount Royal Towers were subject to an arbitration agreement and compelled him to arbitrate those claims. Finding that Robertson had not met his burden of showing that the arbitration agreements he signed were not applicable in this case, the Supreme Court affirmed the trial court's decision. View "Robertson v. Mount Royal Towers" on Justia Law
Posted in: Alabama Supreme Court, Arbitration & Mediation, Contracts, Injury Law
Guardian Builders, LLC v. Uselton
Guardian Builders, LLC, and Wayne Tackett (collectively "Guardian") appealed an order that denied its motion to vacate or modify an arbitration award entered in favor of Randy and Melissa Uselton. In April 2010, the Useltons sued Guardian alleging several claims arising from Guardian's construction of a house. Guardian subsequently filed a motion to compel arbitration, and the circuit court granted that motion. The arbitrator entered a final award in favor of the Useltons in the amount of $452,275.20. Upon review, the Supreme Court construed Guardian's motion to vacate or modify the arbitration award of as a notice of appeal under Rule 71B, thus effectuating the appeal of the award to the circuit court. However, because the clerk of the circuit court never entered the award as the judgment of that court, the circuit court's order denying Guardian's motion to vacate or modify was void. "Essentially, Guardian's appeal remains pending in the circuit court, awaiting further procedures under Rule 71B. Further, because Guardian has appealed from the arbitration award under Rule 71B, that award could not be entered as the judgment of the court under 71C. Thus, the circuit court lacked authority to enter a judgment on the award under Rule 71C and to award Better Business Bureau fees and facility costs in connection with the entry of that judgment." View "Guardian Builders, LLC v. Uselton " on Justia Law
SSC Montgomery Cedar Crest Operating Company, LLC v. Bolding
SSC Montgomery Cedar Crest Operating Company, LLC appealed a circuit court judgment denying its motion to compel arbitration of the medical-malpractice claim asserted against it by Linda Bolding, as attorney in fact and next friend of her father, Norton Means. In early 2012, Means was hospitalized after experiencing stroke and/or heart-attack symptoms. He was admitted to Cedar Crest, a nursing-home facility operated by SSC Montgomery, to receive rehabilitation and nursing services while he recovered. At the time Means was admitted to Cedar Crest, he was accompanied by his daughter, Michelle Pleasant, who completed the necessary paperwork on his behalf. Among the paperwork completed and signed by Pleasant was a dispute-resolution agreement (the "DRA") providing that the "parties" waived their right to a judge or jury trial in the event a dispute arose between them and instead agreed to resolve any such dispute by way of a dispute-resolution program consisting of mediation and binding arbitration. Several months later, Means was hospitalized again. In the second hospitalization, another of his daughters, Linda Bolding, whom Means had previously granted a durable power of attorney, sued SSC Montgomery, alleging that Cedar Crest staff had negligently cared for Means, causing him to suffer dehydration, malnourishment, and an untreated infection that combined to result in his second hospitalization. SSC Montgomery filed both its answer denying Bolding's allegations and a motion to compel arbitration pursuant to the terms of the DRA. Bolding subsequently filed a response, arguing that it would be improper to enforce the DRA because Pleasant had no legal authority to act on Means's behalf at the time Pleasant executed the DRA. Following a September hearing, the trial court entered an order denying SSC Montgomery's motion to compel arbitration. SSC Montgomery then appealed to the Supreme Court. Upon review, the Court concluded that Pleasant's signature on the arbitration agreement was ineffective to bind Means, and by extension his legal representative Bolding, because the evidence indicates he was mentally incompetent at the time Pleasant executed the agreement. View "SSC Montgomery Cedar Crest Operating Company, LLC v. Bolding" on Justia Law
Bear Brothers, Inc. v. ETC Lake Development, LLC
Plaintiffs Joe F. Watkins, Patricia M. Smith, and RE/MAX Lake Martin Properties, LLC sued Bear Brothers, Inc., ETC Lake Development, LLC ("ETC Lake"), and E.T. "Bud" Chambers, among others, asserting claims related to the construction and development of a condominium project on Lake Martin. ETC Lake and Chambers crossclaimed against Bear Brothers seeking to recover losses suffered on the project as well as indemnification for the costs of litigating the plaintiffs' action and any damages for which they might be found liable to the plaintiffs. In January 2010, Bear Brothers moved the circuit court to compel arbitration of the cross-claim against it. The circuit court did not rule on that motion. Bear Brothers renewed its motion in July 2011, and the circuit court granted the motion to compel arbitration of the cross-claim in December. Bear Brothers then moved the circuit court "to stay [the] proceedings [in the plaintiffs' action] pending the outcome of a related arbitration." After a hearing, the circuit court denied the motion to stay. Bear Brothers appealed the circuit court's order denying the motion to stay to the Supreme Court; ETC Lake and Chambers moved to dismiss the appeal. Upon review, the Supreme Court concluded that the motion at issue in this case was a motion to stay related proceedings pending the arbitration of a crossclaim between codefendants and was filed separately from the initial motion to compel arbitration of the cross-claim and subsequent to the circuit court's order granting the motion. Thus, Bear Brothers did not demonstrate a right to appeal the denial of the motion to stay at this time, and accordingly the Court dismissed the appeal as being from a nonfinal judgment. View "Bear Brothers, Inc. v. ETC Lake Development, LLC" on Justia Law
SSC Selma Operating Company, LLC v. Gordon
SSC Selma Operating Company, LLC, doing business as Warren Manor Health & Rehabilitation Center ("SSC"), and Bernard Turk, the administrator of Warren Manor Health & Rehabilitation Center ("Warren Manor") (referred to collectively as "the Warren Manor defendants"), appealed a circuit court judgment denying their joint motion to compel arbitration of the medical-malpractice wrongful-death claims asserted against them by Ethel Gordon ("Gordon"), the administratrix of the estate of Jimmy Lee Gordon, Gordon's husband, pursuant to an arbitration agreement they allege Gordon had entered into with SSC. Upon review, the Supreme Court affirmed, finding that the circuit court properly denied the Warren Manor defendants' motion to compel arbitration of Gordon's claims against them because the trial court had yet to conduct a trial to resolve the issue identified by the Supreme Court in "Gordon I" — whether a valid arbitration agreement existed between Gordon and SSC. "Only if that issue is answered in the affirmative may the Warren Manor defendants properly move to compel arbitration. If that trial results in a judgment holding that there is no valid arbitration agreement, then the Warren Manor defendants may file a timely appeal challenging the trial court's ruling excluding any evidence they wished to submit at trial." View "SSC Selma Operating Company, LLC v. Gordon" on Justia Law
Southeast Construction, L.L.C. v. WAR Construction, Inc.
Southeast Construction, L.L.C. ("SEC") appealed a circuit court's judgment and WAR Construction, Inc. ("WAR") filed a cross-appeal (which was treated as a petition for a writ of mandamus). The matter came before the Supreme Court following the appeal of the entry of the arbitration panel's ruling on the parties' respective construction contract claims. The decision resulted in a net award to WAR of $373,929. SEC filed a motion for modification of the award. WAR responded with a "Motion for Clerk's Entry of Arbitration Award as Final Judgment" pursuant to Rule 71C, Ala. R. Civ. P. The circuit court entered an order in which it declined to have the award entered as a judgment at that time. Eventually the court did enter an order based upon the arbitration award, and the parties appealed. "Given the nature of the award made by the arbitrators in this case and the nature of the resulting judgment the circuit court properly ordered the clerk to enter, it is apparent that the circuit court must take some additional responsibility for enforcing that award and the resulting judgment. To the extent WAR complain[ed] in its petition of the circuit court's reluctance to do so, [the Supreme Court agreed] with WAR" and, accordingly, ordered the circuit court to take appropriate action to enforce the judgment it has entered based upon the arbitrators' award. View "Southeast Construction, L.L.C. v. WAR Construction, Inc. " on Justia Law
Regions Bank v. Baldwin County Sewer Service, LLC
Morgan Keegan & Company, Inc. and Regions Bank (hereinafter referred to collectively as "Regions") appealed an order of the Baldwin Circuit Court which granted in part and denied in part their motions to compel arbitration in an action filed against them by Baldwin County Sewer Service, LLC ("BCSS"). In 2001 BCSS began discussing with AmSouth Bank ("AmSouth"), the predecessor-in-interest to Regions Bank, options to finance its existing debt. AmSouth recommended that BCSS finance its debt through variable-rate demand notes ("VRDNs").1 In its complaint, BCSS alleged that in late 2008 it received a notice of a substantial increase in the variable interest rates on its 2002, 2003, 2005, and 2007 VRDNs, which constituted BCSS's first notice that the interest-rate-swap agreements recommended by Regions did not fix the interest rate on the VRDNs but, instead, exposed BCSS to "an entirely new increased level of market risk in the highly complex derivative market." BCSS sued Regions Bank and Morgan Keegan asserting that Regions falsely represented to BCSS that swap agreements fixed BCSS's interest rates on all the BCSS debt that had been financed through the VRDNs. Following a hearing on the motions to compel arbitration, the trial court entered an order in which it granted the motions to compel arbitration as to BCSS's claims concerning the credit agreements but denied the motions to compel arbitration as to BCSS's claims concerning the failure of the swap transactions to provide a fixed interest rate. The trial court reasoned that the "Jurisdiction" clause in a master agreement, in combination with its merger clause, "prevent[ed] any argument that the VRDN arbitration agreement applies to disputes concerning the swap agreements" and that those clauses demonstrated that it was "the parties' intention, as it relates to the interest-swap agreement and any transaction related to that agreement, that the parties would not arbitrate but instead [any dispute] would be resolved by proceedings in a court of competent jurisdiction." Upon review, the Supreme Court concluded that Regions presented evidence of the existence of a contract requiring arbitration of the disputes at issue. The Court reversed the order of the trial court denying the motions to compel arbitration of BCSS's claims concerning the master agreement and the swap agreement and remanded the case for further proceedings. View "Regions Bank v. Baldwin County Sewer Service, LLC " on Justia Law
Posted in: Alabama Supreme Court, Arbitration & Mediation, Banking, Contracts, Securities Law
Lexington Insurance Co. v. Southern Energy Homes, Inc.
Lexington Insurance Company and Chartis, Inc. appealed a circuit court order that appointed a third arbitrator to the arbitration panel established to settle a dispute between Lexington and Southern Energy Homes, Inc. ("SEH"). From January 1, 2002, through October 31, 2004, SEH purchased from Lexington three commercial general-liability ("CGL") policies. An endorsement to a CGL policy insuring SEH from January 1, 2002, through December 31, 2002, provided that SEH is responsible for a $100,000 self-insurance retention ("SIR") "per occurrence." Endorsements to two successive CGL policies that together provided coverage to SEH through October 31, 2004, provide that SEH is responsible for a $250,000 SIR per occurrence. The SIR applied both to costs of defense incurred by SEH and to amounts SEH pays in settlement or pursuant to a judgment. From January 1, 2002, through October 31, 2004, SEH was named as a defendant in 46 lawsuits alleging property damage and personal injury resulting from SEH's using a vinyl-on-gypsum product in the homes it manufactured. SEH gave notice of these lawsuits to Lexington, and that it had exhausted its SIR amounts in the litigation and was entitled to reimbursement from Lexington. More than 120 days passed without SEH receiving a decision from Lexington as to whether it agreed with SEH's claim for this amount. SEH made an arbitration demand pursuant to the arbitration clauses of the CGL policies, including the SIR endorsement to the 2002 policy. Upon review of the policies in question, the Supreme Court concluded that the circuit court erred in appointing the third arbitrator. The order was reversed and the case was remanded for further proceedings. View "Lexington Insurance Co. v. Southern Energy Homes, Inc. " on Justia Law
Malfatti v. Bank of America, N.A.
The United States Bankruptcy Appellate Panel of the Court of Appeals for the Ninth Circuit ("the BAP") certified a question to the Alabama Supreme Court: "In Alabama, is a 'default' judgment premised upon discovery sanctions or other post-answer conduct of the defendant sufficient to support the application of issue preclusion in a later proceeding?" Debtor-Defendant Anthony Malfatti was one of three principals of TA Financial Group ('TAF') purportedly designed to assist credit card holders in arbitration of disputes with the card issuers. The arbitration providers were selected by the card holders from a list provided by TAF. Among the arbitration providers was Arbitration Forum of America, Inc. ('AFOA'). AFOA was not conducting legitimate arbitrations; every arbitration resulted in an award in favor of the card holder, which was then reduced to judgment. Malfatti claims he was unaware that AFOA's practices and the judgments stemming therefrom were illegitimate. At some time after the banks involved learned of the judgments, they filed cross-complaints against the card holders to set aside the judgments as fraudulently obtained. In September 2005, the banks, including Bank of America, N.A. (USA) filed Amended Third Party Complaints against, among others, Malfatti and TAF, alleging tortious interference with contract, abuse of process, wantonness, and civil conspiracy, and sought an injunction against further arbitrations. The Banks moved for default judgments against Malfatti and TAF for failing to comply with discovery orders, repeated failures to appear for depositions, and failure to respond to written discovery. Malfatti and TAF filed a motion to set aside the defaults. The court found Malfatti and TAF to be jointly and severally liable for compensatory damages, awarded punitive damages against Malfatti, and found Malfatti to be liable for punitive damages awarded against TAF under the alter ego doctrine. Malfatti filed for Chapter 7 bankruptcy the Banks filed an adversary proceeding alleging the debt owed to them by Malfatti was nondischargeable. Upon review, the Alabama Supreme Court answered the certified question in the negative: "[f]or purposes of determining whether an issue is precluded by the doctrine of collateral estoppel, Alabama law makes no distinction between a simple default and a penalty default." View "Malfatti v. Bank of America, N.A." on Justia Law
Auto Owners Insurance, Inc. v. Blackmon Insurance Agency, Inc.
Auto Owners Insurance, Inc. ("Auto Owners"), appealed a circuit court's denial of its motion to dismiss or, in the alternative, to compel arbitration in an action against it filed by Blackmon Insurance Agency, Inc. Blackmon served as an agent for Auto Owners since 1995. The agency agreement the parties signed provided for commission to Blackmon for the sale of Auto Owners policies; the agreement also included an arbitration agreement should there be a dispute among them. In 2010, Blackmon filed a complaint in the circuit court seeking a declaratory judgment as to the arbitrability of a dispute between Blackmon and Auto Owners as to which Auto Owners had already initiated arbitration proceedings. In its complaint, Blackmon alleged that Auto Owners had initiated the arbitration proceedings against Blackmon in Eaton County, Michigan. Blackmon also alleged that in the Michigan arbitration proceeding Auto Owners bases its claims on a 2005 document and 2009 supplemental agreement. Auto Owners moved to dismiss, or in the alternative, to compel arbitration. The circuit court denied Auto Owners' motion, and Auto Owners appealed. Upon review of the documents at the heart of this dispute, the Supreme Court concluded the circuit court erred in denying Auto Owners' motion to compel arbitration. The Court therefore reversed the circuit court and remanded the case with instructions that the lower court grant the motion and either issue a stay of these proceedings pending arbitration, or dismiss the case. View "Auto Owners Insurance, Inc. v. Blackmon Insurance Agency, Inc." on Justia Law
Posted in: Alabama Supreme Court, Arbitration & Mediation, Business Law, Contracts