Articles Posted in Supreme Court of Alabama

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Adrienne Scott purchased from Jack Ingram Motors, Inc. ("Jack Ingram"), a new 2015 Nissan Juke automobile, which had been manufactured by Nissan. Scott took the vehicle to Jack Ingram after smelling fuel in the interior of the vehicle. Jack Ingram did not detect the smell; it inspected the fuel system of the vehicle, and found no leaks in the fuel system. Two days later, while Scott was driving the vehicle, it spontaneously caught fire. Scott sued Jack Ingram and Nissan, raising a number of claims stemming from the fire. Jack Ingram moved to compel arbitration of the claims filed against it based on the arbitration agreement Scott had signed in connection with the sale of the vehicle. Scott filed a response indicating that, although she was willing to arbitrate her breach-of-warranty and negligence claims against Jack Ingram, she objected to litigating part of the case, i.e., her claims against Nissan. Scott She indicated in her response that she was willing to arbitrate the case or to litigate the case, but she objected to having to do both. The trial court entered an order holding that, "in the interest of judicial economy," the entire matter should be arbitrated. Nissan filed a motion to reconsider, which the trial court denied. After review, the Alabama Supreme Court concluded the trial court exceeded its discretion by compelling Nissan to arbitrate the claims asserted against it by Scott. The trial court's order was reversed, and the case was remanded for further proceedings. View "Nissan North America, Inc. v. Scott" on Justia Law

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Daphne Automotive, LLC, and its employee, Robin Sanders appealed a circuit court order denying their motion to compel arbitration of the claims filed against them by Eastern Shore Neurology Clinic, Inc. ("Eastern Shore"), and Rassan Tarabein. Tarabein owned Eastern Shore and another company, Infotec, Inc. Tarabein hired his nephew, Mohamad Tarbin, as an employee of Infotec. As part of the nephew's compensation, Tarabein agreed to provide him with the use of a vehicle for as long as he was employed with Infotec. Accordingly, Tarabein purchased, through Eastern Shore, a vehicle from Daphne Automotive. Tarabein, the nephew, and the dealership agreed that the dealership would arrange for the vehicle to be titled in the nephew's name, but that Eastern Shore would be listed on the title as lienholder. In conjunction with the sale, the nephew signed the sales contract, which contained an arbitration clause. Tarabein executed only the documents to establish Eastern Shore as lienholder on the title for the vehicle. In January 2014, the Department of Revenue issued an original certificate of title for the vehicle that listed no lienholders to the nephew. A few months later, the nephew was terminated from his job with Infotec, and Tarabein attempted to take back the vehicle, but the nephew refused. According to Tarabein, the dealership never informed him that it had failed to list Eastern Shore as a lienholder on the application for the certificate of title. As a result, the nephew held title to the vehicle free and clear, and Eastern Shore held a reissued certificate of title for the same vehicle, listing it as lienholder. Eastern Short attempted to repossess the vehicle; the nephew avoided being arrested by producing the free-and-clear title to the vehicle. According to Tarabein, he became aware of the existence of the second certificate of title after the attempted arrest. Tarabein thereafter sued the dealership for a variety of claims; the dealer moved to compel arbitration. The Alabama Supreme Court concluded the dealership failed to meet its burden of proving the existence of a contract calling for arbitration: the sales contract was limited in its scope with respect to disputes arising to parties to the contract and the agreements, here, between the nephew and the dealership. Accordingly, the Court found the trial court did not err in denying the dealership’s motion to compel arbitration. View "Daphne Automotive, LLC v. Eastern Shore Neurology Clinic, Inc." on Justia Law

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In case no. 1130590, Kathryn L. Honea appealed the denial of her motion to vacate an arbitration award entered in favor of Raymond James Financial Services, Inc. ("Raymond James"), and Bernard Michaud, an employee of Raymond James (collectively, "RJFS"). In case no. 1130655, RJFS appealed the trial court's denial of its motion to dismiss for lack of jurisdiction; that appeal was dismissed. Honea opened several investment accounts with Raymond James. Honea and Raymond James executed a "client agreement" that included an arbitration provision. Honea filed a complaint in the Jefferson Circuit Court asserting that she had opened four accounts with Raymond James and that Michaud had acted as her financial advisor as to those accounts. She alleged that RJFS engaged in "abusive brokerage practices" in that her investments were not diversified, "were far too risky," and "were of poor quality." The arbitration panel dismissed Honea's breach-of-fiduciary-duty, negligence, wantonness, fraud, and Alabama Securities Act claims and proceeded to hear the breach-of-contract claims. An arbitration panel entered an award in favor of RJFS. The arbitration panel found that "Michaud did not sufficiently know his client nor make sufficient inquiry to attempt to know his client, her holdings, and/or her investment experience. These failures contributed to losses in [Honea's] account." However, the arbitration panel "denied" Honea's breach-of-contract claims, stating that they were "barred by the applicable statutes of limitations." Although the Alabama Supreme Court found one contract appeared to govern this case and that RJFS breached its duties by failing to properly understand Honea's investment knowledge before March 2000, Honea contended that allegedly improper transactions--the excessive use of margin and overly aggressive, high-risk trading occurring after March 2000--represented independent breaches of the FINRA rules. Those claims accrued within the six-year limitations period before her complaint was filed. Further, any knowledge by Honea of her losses did not mean that the trading activity was proper. Thus, to the extent that any transactions after March 2000 would be considered separate breaches of contract unrelated to the failure to properly know Honea, her holdings, or her investment experience, or setting up an "unsuitable" account, the Court found Honea demonstrated probable merit--for purposes of a Rule 59(g) hearing--that those claims would not be barred by the statute of limitations. Honea demonstrated that, in relation to the certain breach-of-contract claims, she was entitled to a Rule 59(g) hearing on her motion to vacate the arbitration award. View "Honea v. Raymond James Financial Services, Inc." on Justia Law

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Rainbow Cinemas, LLC ("Rainbow"), Ambarish Keshani, and Harshit Thakker (collectively, "the defendants") appealed a circuit court order denying their motion to compel arbitration of a contract dispute with Consolidated Construction Company of Alabama ("CCC"). In the contract at issue here, CCC agreed to provide specified services in constructing a movie theater for Rainbow. The parties signed the American Institute of Architects "Document A101-2007 -- Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum" ("the agreement"). The agreement incorporated by reference American Institute of Architects "Document A201-2007 -- General Conditions of the Contract for Construction" ("the general conditions"). In 2016, after having already initiated the arbitration process, CCC sued the defendants. Among other things, CCC alleged that the defendants had fraudulently induced it into entering into the contract. Specifically, CCC alleged that the defendants knew that the contract required an initial decision maker and that the defendants also "knew they had not contracted for [initial-decision-maker] services from the [initial decision maker]." CCC alleged that the defendants "failed to inform CCC ... that Rainbow had not contracted with [architect Hay] Buchanan to act as [the initial decision maker]." The Alabama Supreme Court reversed and remanded, finding that the contract incorporated the AAA's Construction Industry Arbitration Rules, which state that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement." Although the question whether an arbitration provision may be used to compel arbitration between a signatory and a nonsignatory is a threshold question of arbitrability usually decided by the court, here that question was delegated to the arbitrator. The arbitrator, not the court, had to decide that threshold issue. View "Rainbow Cinemas, LLC v. Consolidated Construction Company of Alabama" on Justia Law

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Family Security Credit Union ("FSCU") appealed the trial court's denial of its motions to compel arbitration in eight separate but closely related cases. Action Auto Sales ("Action Auto") was a car-financing group that financed the vehicle inventory of Pine City Auto ("Pine City"), a used-car dealership. Action Auto held titles to the vehicles in inventory, and released a title only when a vehicle was sold, and Pine City paid off a proportional amount of the inventory financing. Pine City eventually went out of business without paying off the inventory financing on some of the vehicles it had sold. Action Auto sued Pine City and the purchasers of eight vehicles who had purchased vehicles from Pine City and financed those purchases through FSCU. Action Auto sought possession of the vehicles and money damages. The purchasers each filed counterclaims and cross-claims against Action Auto and Pine City and third-party claims against FSCU, alleging negligence, wantonness, and conspiracy. The purchasers' third-party claims against FSCU were based on FSCU's alleged failure to perfect its security interest in the vehicles before financing the purchasers of the vehicles. FSCU moved for each of those third-party claims to be submitted to arbitration. The purchasers opposed the motions to compel arbitration, but they did not submit any evidence. After review, the Alabama Supreme Court concluded the trial court erred in denying FSCU's motions to compel arbitration in each of the eight cases, and remanded all for further proceedings. View "Family Security Credit Union v. Etheredge" on Justia Law

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SSC Selma Operating Company, LLC, doing business as Warren Manor Health and Rehabilitation Center, and SavaSeniorCare Administrative Services, LLC, appealed a circuit court order denying their motion to compel arbitration of a retaliatory-discharge claim filed against them by Jackie Fikes. Fikes sued the companies, seeking to recover worker's compensation benefits pursuant to the Alabama Workers' Compensation Act, and alleging that the companies had discharged her from her employment in violation of Ala. Code 1975, sec. 25–5–11.1, solely because she had filed a claim for worker's compensation benefits. Fikes alleged that in 2013, she suffered a work-related injury when she attempted to lift a patient while working for the companies as a certified nurse assistant; that she underwent medical treatment for her work-related injury; and that she returned to work under light-duty restrictions until Spring 2014, at which time, she says, the companies wrongfully terminated her employment. Fikes requested in the complaint that the worker's compensation claim and the retaliatory-discharge claim be severed in order for the retaliatory discharge claim to be tried by a jury. The companies moved to compel arbitration of the retaliatory discharge claim pursuant to their employment-dispute resolution program ("the EDR program") under which Fikes had agreed to be bound. Fikes responded, arguing that the retaliatory-discharge claim was not covered by the EDR program. After review, the Alabama Supreme Court concluded Fikes failed to demonstrate her retaliatory-discharge claim was not covered by the EDR program. Accordingly, the Court reversed the trial court's order denying the companies' motion to compel arbitration of that claim. View "SSC Selma Operating Company, LLC v. Fikes" on Justia Law

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Robert Newell’s wife Lisa passed away at their home in 2013. Newell requested that Lisa's body be transported to Mobile Memorial Gardens Funeral Home. However, unbeknownst to Newell, Lisa's body was transported to Radney Funeral Home. The following day Newell, accompanied by his sister, two daughters, and a son-in-law, went to Mobile Memorial Gardens Funeral Home to make the final arrangements for Lisa. Richard Johnson III, an employee of Mobile Memorial Gardens, informed Newell at that time that Lisa's body had been transported to Radney Funeral Home instead of Mobile Memorial Gardens. According to Newell, Johnson informed him that Lisa's body had been transported to Radney because Radney was now a part of the Dignity Memorial Company (both a part of SCI Alabama Funeral Services, LLC) and because Mobile Memorial Gardens did not have a crematory service. Newell informed Johnson during the meeting that he wanted Lisa's remains cremated and that he wanted to conclude the process as soon as possible. Newell executed a contract providing for the disposition of Lisa's remains by cremation. Newell contended that after Lisa's memorial service, SCI did not return any of his telephone calls or e-mails inquiring as to the status of Lisa's remains. Newell eventually went to Radney Funeral Home, learning at that time that Lisa had not yet been cremated because the funeral home had not yet received the death certificate. Newell alleged that he was emotionally distraught over the state of Lisa’s remains, and ultimately sued SCI for negligence, wantonness, the tort of outrage, and fraud. SCI moved to compel arbitration, but Newell resisted, arguing the terms of the arbitration provision at issue were grossly favorable to SCI and that SCI had overwhelming bargaining power over a grieving husband. The trial court granted the motion. Newell appealed. Finding no error in the judgment granting SCI’s motion to compel arbitration, the Supreme Court affirmed. View "Newell v. SCI Alabama Funeral Services, LLC" on Justia Law

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Timothy Bevel appeals from an order granting a motion to compel arbitration. In March 2015, Bevel financed the purchase of a used Bennington brand boat and a Yamaha brand boat motor from Guntersville Boat Mart, Inc., and he rented a boat slip on Lake Guntersville to dock the boat. The sale and boat-slip rental were documented by a one-page bill of sale, which contained an arbitration provision. According to Bevel, the boat was seized several months after the transaction for allegedly defaulting on payments on the boat and boat-slip rental. Bevel disputed that he owed those payments. The matter was submitted to arbitration. The Supreme Court found, however, that the arbitration provision at issue here did not become part of the contract between the parties, and, thus, it could not be enforced against Bevel. Accordingly, the Court reversed the trial court's order compelling arbitration, and the case remanded the case for further proceedings. View "Bevel v. Marine Group, LLC" on Justia Law

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University Toyota and University Chevrolet Buick GMC (collectively referred to as "the University dealerships") appealed a circuit court order allowing Beverly Hardeman and Vivian Roberts to pursue their claims against the University dealerships in arbitration proceedings. conducted by the American Arbitration Association ("the AAA") instead of the Better Business Bureau of North Alabama ("the BBB"), the entity identified in the controlling arbitration agreements. In conjunction with their purchases of new vehicles from the University dealerships’ predecessor, Jim Bishop, Hardeman and Roberts purchased service contracts entitling them to no-cost oil changes for as long as they owned their respective vehicles. When the Jim Bishop dealerships were sold and rebranded as the University dealerships, initially the University dealerships honored the no-cost oil-change service contracts sold by the Jim Bishop dealerships. However, they eventually stopped providing no-cost oil changes to customers who held those contracts. On October 29, 2015, Hardeman and Roberts filed a demand for arbitration with the BBB, the dispute-resolution entity identified in arbitration agreements they had executed when they purchased their vehicles, on behalf of themselves and all similarly situated individuals, based on the University dealerships' refusal to honor the service contracts. Because a trial court can compel arbitration only in a manner consistent with the terms of the applicable arbitration agreement, the Supreme Court reversed the trial court's order compelling arbitration and remanded the case for the entry of a new order compelling Hardeman and Roberts to arbitrate their claims against the University dealerships before the BBB if they chose to pursue those claims. View "University Toyota v. Hardeman" on Justia Law

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FMR Corp. n/k/a FMR LLC, Fidelity Management Trust Company, and Fidelity Brokerage Services LLC (collectively, "Fidelity") appealed a circuit court order denying their motion asking the court to compel Elizabeth Howard n/k/a Elizabeth Hart ("Hart") to arbitrate Fidelity's dispute with her regarding her responsibility to indemnify Fidelity for losses it might suffer if Hart's stepchildren prevailed on claims they asserted against Fidelity that were the subject of a separate pending arbitration proceeding. In 2006, Hart's husband, Frederick Howard, opened an individual retirement account with Fidelity ("the Fidelity IRA"), funding it with money previously been held in a retirement account administered by Howard's former employer. Although Howard had previously designated his three children from a prior marriage as beneficiaries of the employer's retirement account, he did not designate any beneficiary for the Fidelity IRA at the time it was opened or at anytime thereafter. Howard died in 2011. His will left all his personal property to the children, explaining that Hart "has a sizeable separate estate of her own." However, because Howard never designated a beneficiary for the Fidelity IRA, Fidelity distributed the money held in that account to Hart in accordance with the terms of the Fidelity IRA, which provided that any assets in the account would become the property of a surviving spouse when the account holder died if no beneficiary had been named. The Howard children unsuccessfully challenged that distribution in Probate Court. Then the Howard children sued Fidelity and Hart, asserting claims of undue influence, fraud, and conversion against Hart and a claim of negligence against Fidelity, contending their father was incompetent at the time the Fidelity IRA was opened and that Hart was the impetus behind the opening of the Fidelity IRA, Fidelity was negligent for failing to implement adequate procedures governing its online-account-opening process that would prevent either fraudulent activity or invalid actions by incompetent individuals. Fidelity moved the Circuit Court to compel arbitration, noting in its motion that Howard, Hart, and the Howard children had all executed documents related to accounts with Fidelity that contained arbitration provisions. The Supreme Court reversed, finding that the circuit court denied Fidelity's motion notwithstanding the submission of competent evidence establishing Fidelity had a right to arbitrate these claims. View "FMR Corp. n/k/a FMR LLC, et al. v. Howard n/k/a Hart" on Justia Law