REL:4/13/2007 Elizabeth Homes v. Cato
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2006-2007
____________________
1050048
____________________
Elizabeth Homes, L.L.C., Carl Smith, and Jimmy Flanagan
v.
Cynthia L. Cato and Danny Cato
Appeal from Elmore Circuit Court
(CV-05-259)
SMITH, Justice.
The
defendants
below,
Elizabeth
Homes,
L.L.C.,
Jimmy
Flanagan, and Carl Smith, appeal from the trial court's order
denying
asserted
their
motion
against
Cynthia L. Cato.
them
to
by
compel
the
arbitration
plaintiffs,
We reverse and remand.
of
the
Danny
claims
Cato
and
1050048
Facts and Procedural History
Elizabeth Homes sells and constructs what it describes as
"single-family residential structures."
In June 2003, the
Catos and Elizabeth Homes entered into a "purchase agreement"
for the construction of a house on property owned by the
Catos.
The document contains an arbitration provision, which
states:
"[Elizabeth Homes] and [the Catos] acknowledge that
this agreement necessarily involves interstate
commerce by virtue of the materials and components
contained
in
the
dwelling
and
each
of
the
undersigned hereby agrees to arbitrate any and all
disputes arising under this agreement and to be
bound by the decision of the arbitrator which shall
be conducted pursuant to the Construction Industry
Rules of the American Arbitration Association."
(Emphasis added.)
After the Catos moved into the house, they sued Elizabeth
Homes,
seeking
damages
for
promissory
fraud,
breach
of
warranty, breach of contract, breach of implied contract,
negligence and wantonness in constructing the house and the
setting of its elevation, and negligence and wantonness in
damaging the flooring in the house.
The complaint further
named Elizabeth Homes' "managing member," Jimmy Flanagan, and
Elizabeth Homes' office manager, Carl Smith, as defendants.
2
1050048
The defendants filed a motion to compel the Catos to
arbitrate their claims pursuant to the arbitration provision
in the purchase agreement.
The motion was supported by an
affidavit by Flanagan and a copy of the purchase agreement.
The Catos filed a response, which included no evidentiary
support, and the trial court held a hearing on the motion.
Subsequently, the trial court denied the motion by a notation
on
the
case-action
summary.
Elizabeth
Homes,
Smith,
Flanagan appeal.
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."'
3
and
1050048
"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
arbitration
transaction
a
involving
controversy
commerce
thereafter
to
arising
settle
out
of
by
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
interstate commerce."
a
binding
contract
that
involves
Ex parte Conference America, Inc., 713
So. 2d 953, 955 (Ala. 1998).
The
defendants
produced
substantial
evidence--the
purchase agreement and Flanagan's affidavit--indicating that
the
parties
entered
into
a
contract
containing
a
written
provision to settle by arbitration a controversy thereafter
arising
out
of
the
contract.
4
Additionally,
there
is
no
1050048
dispute
in
the
transaction
in
record
this
or
case
on
appeal
involved
as
to
whether
interstate
the
commerce. 1
Therefore, the defendants' motion to compel arbitration was
properly supported by substantial evidence, and the burden
then shifted to the Catos to present evidence indicating that
the arbitration provision was invalid or that it did not apply
to the dispute here.
I.
First, as a threshold matter, the Catos argue that Smith
and Flanagan have failed to present any arguments on appeal,
because
the
appellants'
brief
contends
that
the
should be reversed only as to "Elizabeth Homes."
judgment
Thus, the
Catos argue, Smith and Flanagan have waived any error as to
them.
There
is,
however,
no
merit
to
this
argument.
The
statement of the case in Elizabeth Homes' brief states that
1
Flanagan's affidavit in support of the motion to compel
arbitration detailed that the materials used to construct the
house were specially ordered for Elizabeth Homes by Elizabeth
Homes' supplier from numerous out-of-state sources. Evidence
that a builder obtained materials and components for a house
from out-of-state suppliers is sufficient to establish that a
transaction for the construction and sale of a house
sufficiently involved interstate commerce for purposes of the
FAA. Elizabeth Homes, L.L.C. v. Gantt, 882 So. 2d 313, 315-17
(Ala. 2003).
5
1050048
Elizabeth Homes, L.L.C., Carl Smith, and Jimmy Flanagan would
be referred to "collectively" as "Elizabeth Homes."
The name
"Elizabeth Homes" when used in the appellants' brief thus
includes Smith and Flanagan.
Additionally, the notice of
appeal lists the "appellants" as Elizabeth Homes, Smith, and
Flanagan, and the appellants' brief refers in several places
to the "appellants."
We find no waiver on the part of Smith
and Flanagan.
II.
The Catos present numerous arguments on appeal as to why
the arbitration provision does not apply in this case.
First,
the Catos maintain that the defendants "failed to present any
evidence that the Purchase [Agreement] ever became a binding
contract" because the copy of the purchase agreement submitted
with the motion to compel arbitration was unauthenticated and
unsigned by Elizabeth Homes.
Rule 56(e), Ala. R. Civ. P., generally requires that
"[s]worn or certified copies" of documents referred to in an
affidavit
offered
supporting
or
opposing
a
motion
summary judgment be attached to the affidavit. 2
2
for
a
However, if
This Court applies, by analogy, the practice under Rule
56, Ala. R. Civ. P., dealing with summary-judgment motions, to
6
1050048
an affidavit or the documents attached to an affidavit fail to
comply with this rule, the opposing party must object to the
admissibility of the affidavit or the document and move to
strike.
Ex parte Elba Gen. Hosp. & Nursing Home, Inc., 828
So. 2d 308, 312-13 (Ala. 2001) (noting that a party must
object to evidence submitted in support of a motion for a
summary judgment that does not comply with Rule 56(e), Ala. R.
Civ. P.); Chatham v. CSX Transp., Inc., 613 So. 2d 341, 344
(Ala. 1993) ("A party must move the trial court to strike any
nonadmissible evidence that violates Rule 56(e). Failure to do
so waives any objection on appeal and allows this Court to
consider the defective evidence.").
agreement
submitted
certified copy.
with
The copy of the purchase
Flanagan's
The Catos, however,
affidavit
was
not
a
did not object to or
move to strike the purchase agreement when it was filed with
Flanagan's affidavit.
Therefore, they waived any objection
based on improper authentication of the purchase agreement.
See Berry Mountain Mining Co. v. American Res. Ins. Co., 541
So. 2d 4, 4-5 (Ala. 1989) (holding that a nonmovant who failed
to
move
to
strike
unauthenticated
documents
submitted
in
motions to compel arbitration.
Ex parte Greenstreet, Inc.,
806 So. 2d 1203, 1207 (Ala. 2001).
7
1050048
support of a motion for a summary judgment waived objection on
appeal as the admissibility of the documents).
The Catos also allege that the purchase agreement was not
signed
by
Elizabeth
Homes;
thus,
binding.
The record reveals
Elizabeth
Homes
on
the
they
argue,
it
is
not
that the signature line for
purchase
agreement
is
unsigned,
although Carl Smith's signature appears above it as a witness
to the Catos' signatures.
The purchase agreement states that
it becomes binding "upon written acceptance by [an Elizabeth
Homes]
officer
or
upon
[Elizabeth
Homes']
commencing
performance," but the Catos contend that Flanagan's affidavit
fails to state that Elizabeth Homes commenced performance.
The defendants respond to this argument as follows:
"Elementary logic dictates that Elizabeth Homes
could not have constructed the home without actually
'commencing' construction. Furthermore, the Catos'
Complaint is replete with assertions that Elizabeth
Homes constructed the house. It is absurd to even
suggest to this Court that despite the fact that all
of
the
parties
admit
that
Elizabeth
Homes
constructed
the
home,
Elizabeth
Homes
must
nevertheless specifically allege that it 'commenced'
construction. It is quite obvious from the record
that Elizabeth Homes 'commenced' construction. If
Elizabeth Homes had not commenced construction the
Catos would have absolutely no basis for relief
against the [defendants] as the entirety of the
Catos' Complaint is based on Elizabeth Homes'
construction of the home."
8
1050048
(Appellants' reply brief at 5.)
The Catos cite Premiere Chevrolet, Inc. v. Headrick, 748
So. 2d 891 (Ala. 1999), for the proposition that a party
cannot enforce an agreement to arbitrate found in a contract
it has not signed.
However, the document at issue in Premiere
Chevrolet was part of a multi-document automobile transaction,
and the arbitration provision was part of a "buyer's order"
that specifically stated that it was not valid or "binding"
unless signed and accepted by the automobile dealer.
Here, Flanagan's affidavit states that Elizabeth Homes
"entered
discusses
into
a
Purchase
terms
"[t]he
Agreement"
the
of
with
Purchase
the
Catos
Agreement
and
between
Elizabeth Homes, LLC[,] and Cynthia L. Cato and Danny Cato
...."
The defendants further asserted in their motion to
compel
arbitration
that
Elizabeth
Homes
entered
into
the
purchase agreement with the Catos and constructed the house.
The
Catos
never
denied
these
assertions
or
presented
any
affidavits or evidence demonstrating that they did not enter
into
the
purchase
constructed.
affirmatively
agreement
Indeed,
that
or
the
Elizabeth
that
Catos'
Homes
9
the
house
was
complaint
constructed
the
never
states
house.
1050048
Although
the
evidence
are
defendants'
bare,
thus
motion
to
compel
complicating
and
our
supporting
review,
given
Flanagan's affidavit we hold that the defendants presented
substantial evidence that Elizabeth Homes entered into the
purchase agreement with the Catos.
The Catos also argue that the defendants have failed to
prove that the purchase agreement applies to the Catos' house:
"Further, [the defendants] failed to meet
[their] evidentiary burden of proving that the
unsigned contract applies to the home that is the
subject of the Catos' complaint.
Flanagan's
affidavit failed to state that [Elizabeth Homes]
constructed
a
home
for
the
Catos,
that
it
constructed only one home, or that the home on which
this suit is based is the home described in the
Purchase Agreement."
(Catos' brief at 14.)
As noted above in Vann, supra, the defendants, in moving
to compel arbitration, had the burden of producing substantial
evidence
of
arbitration
"the
and
existence
proving
of
that
a
contract
calling
that
contract
evidences
transaction affecting interstate commerce."
for
a
Once this was
done, the burden then shifted to the Catos to present evidence
indicating that the arbitration provision is invalid or that
it does not apply to the dispute in question.
10
1050048
In this case, the Catos' allege that Elizabeth Homes
constructed a house for them, and they seek damages stemming
from the construction of the house.
Flanagan testified in his
affidavit that Elizabeth Homes and the Catos entered into a
contract--the purchase agreement--for the construction of a
house; that contract contains an arbitration provision.
The
defendants thus met their burden of production.
Because the defendants met their burden of production,
the
burden
then
shifted
to
the
Catos
to
show
that
the
arbitration provision in the purchase agreement was invalid or
that it does not apply to this dispute.
Catos
did
provision.
court
that
not
challenge
the
validity
Vann, supra.
of
the
The
arbitration
Additionally, the Catos never argued to the trial
the
purchase
agreement
did
not
involve
the
construction of the house at issue, and they presented no
evidence on this point.
On appeal, the Catos still do not
deny that the purchase agreement was a contract to build the
house they argue was built negligently and wantonly.
Because
the Catos presented no evidence showing that Elizabeth Homes
constructed the house pursuant to some other agreement or
contract, whether written or oral, the Catos failed to meet
11
1050048
their burden in showing that the arbitration provision in the
purchase agreement does not apply.
the Catos' argument.
We thus see no merit in
See Chastain v. Robinson-Humphrey Co.,
957 F.2d 851, 855 (11th Cir. 1992) ("A party cannot place the
making of the arbitration agreement in issue simply by opining
that no agreement exists. Rather, that party must substantiate
the denial of the contract with enough evidence to make the
denial colorable."); Manning v. Energy Conversion Devices,
Inc., 833 F.2d 1096, 1103 (2d Cir. 1987) ("A party resisting
arbitration
on
the
ground
that
no
agreement
to
arbitrate
exists must submit sufficient evidentiary facts in support of
this claim ....").
III.
The Catos further allege that the claims asserted in this
case
are
outside
the
scope
of
the
arbitration
provision.
Specifically, the provision states that the parties agree "to
arbitrate any and all disputes arising under this agreement
...."
The Catos contend that this language is narrow and
indicates that the agreement to arbitrate covers a limited
range of disputes that arise under the terms of the purchase
agreement itself.
The claims for damages in their complaint,
12
1050048
they maintain, do not arise under the terms of the purchase
agreement.
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 (1983) (emphasis added; footnote omitted).
"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).
As this Court explained in Koullas v. Ramsey, 683 So. 2d
415,
416
(Ala.
arbitration
operation.
1996),
agreement
the
phrase
contemplates
"arising
a
under"
narrow
in
scope
an
of
In Koullas, the plaintiff, Ramsey, entered into a
contract in 1987 to sell and transfer to Koullas 60% of her
13
1050048
stock in her business, Apparel Creations of America, Inc.
contract
included
an
arbitration
clause
providing
The
that
disputes between the parties "'arising under this Agreement,'"
638 So. 2d at 417, would be settled by arbitration.
Several
years after the transaction, Ramsey sued Koullas, alleging
that as a corporate director of Apparel Creations, Koullas
converted profits of the corporation for his personal gain,
oppressed Ramsey's right to receive dividends, usurped Apparel
Creations'
corporate
opportunities
by
using
profits
to
establish and develop a separate corporation in which he was
the sole shareholder, and breached his fiduciary duty as a
corporate director.
Koullas, 683 So. 2d at 416.
Koullas moved to compel arbitration of Ramsey's claims
pursuant
contract.
to
the
arbitration
clause
contained
in
the
1987
Ramsey argued that her claims did not "arise under"
the terms of that contract and were therefore not subject to
the arbitration provision.
The trial court denied the motion
to compel arbitration, and Koullas appealed.
This Court noted:
"Where, as here, an arbitration clause refers to
disputes
or
controversies
'arising
under'
an
agreement, the clause will apply only to those
claims arising under the terms of the agreement, and
14
1050048
it will not extend to matters or claims independent
of, or merely collateral to, the agreement.
We
agree
that,
in
order
for
a
dispute
to
be
characterized as arising out of or relating to the
subject matter of the contract, and thus subject to
arbitration, it must at the very least raise some
issue that cannot be resolved without a reference to
or construction of the contract itself."
Koullas, 683 So. 2d at 417-18 (citation omitted).
We went on
to hold that Ramsey's claims against Koullas as a corporate
director did not require reference to or a construction of the
1987 contract:
"Nothing in the contract addresses the manner and
method by which Apparel Creations was to be managed
after the sale of the stock. It does not name
Koullas as a corporate director, and it does not
even mention how the shareholders would be involved
within the corporation. It does not address the
amount of salaries, commissions, or dividends that
would
be
paid
to
corporate
officials
or
stockholders. It is silent as to any duties or
responsibilities that the parties would owe to the
corporation after the sale and transfer of the
stock. Simply put, every term of the contract
relates exclusively to some aspect of the one-time
sale of corporate stock, which was completed in
1987, before Koullas even became a corporate
director of Apparel Creations.
"If Ramsey was alleging any wrongdoing in the
making of the sales contract or in its performance,
or was alleging violation of its provisions, then
Ramsey's claims might reasonably be said to 'arise
under' the contract and therefore be subject to the
limited arbitration clause contained therein. As it
is, Ramsey's allegations against Koullas arise
15
1050048
solely from his actions as a corporate director, not
as a buyer of stock under the sales contract."
Koullas, 683 So. 2d at 418.
As in Koullas, we must examine the individual claims in
the complaint to determine whether the dispute "arises under"
the purchase agreement.
The defendants argue on appeal that
the Catos are attempting to "circumvent the contract and its
arbitration provision by couching their complaint in terms of
tort and implied contract" and are "careful to avoid
mention
of
the
[Purchase]
Agreement
(Appellants' brief at 10, 6.)
in
their
any
complaint."
The Catos claim that they have
simply elected to "forgo" claims under the contract to "avoid
arbitration."
(Catos' brief at 17.)
In determining the nature of a cause of action, this
Court looks to allegations in the body of the complaint, not
the caption or label the party applies.
Rutley v. Country
Skillet Poultry Co., 549 So. 2d 82, 84 (Ala. 1989) ("[A]
caption to a pleading is only the label by which to identify
it and is not the determining factor of what the pleading
actually is or what it
states. A court must look to the
allegations in the body of the complaint in order to determine
the nature of a plaintiff's cause of action.").
16
The substance
1050048
of the plaintiff's allegations control, not the effort given
by the plaintiff to style the claims throughout litigation.
Bailey v. Faulkner, 940 So. 2d 247, 253 (Ala. 2006) ("Faulkner
places great reliance on the fact that he has been careful to
style his claims throughout this litigation as negligence and
wantonness claims, rather than as an alienation-of-affections
claim.
However, '[t]his Court has always looked to substance
over form.' Southern Sash Sales & Supply Co. v. Wiley, 631 So.
2d 968, 971 (Ala. 1994)." (footnote omitted)).
Count
I
of
the
Catos'
complaint,
styled
"promissory
fraud," alleges that in June 2003 the Catos discussed with
Elizabeth Homes the "possibility" of constructing a house on
their
property.
represented
that
It
it
alleges
would
that
build
Elizabeth
the
house
Homes
"to
orally
the
same
standards as" a model home, that these representations were
false, and that Elizabeth Homes never intended to construct
the house to the same standards as the model home.
Although
not stated directly, it appears that the complaint alleges
that the house, as built, did not conform to the standards of
the model home.
As a result, the Catos allege that they
suffered "annoyance, inconvenience, mental anguish," and they
17
1050048
allege that the value of the house is less than it should be.
Additionally, the Catos allege in Count II of the complaint
that these representations created an "oral warranty" that
Elizabeth Homes breached.
The purchase agreement states that Elizabeth Homes would
build a "Standard Seville [3] model in substantial conformity
with plans and specifications" and recites that the Catos, as
purchasers, understand that Elizabeth Homes would perform the
scope of work shown in certain plans and specifications.
The
purchase agreement further contains a merger or integration
clause, which states that the purchase agreement constitutes
"the entire contract" and that there are no other oral or
written
promises or agreements except those set forth in
certain documents named in the purchase agreement.
Elizabeth
Homes argues that the purchase agreement specifies how the
house is to be built, and any claim that the house did not
conform to a party's expectation must therefore arise under
that agreement.
The Catos first argue that Elizabeth Homes has not proven
that
their
claim
arises
under
3
the
purchase
agreement.
It appears that "Standard Seville" is the name of one of
the styles of house that Elizabeth Homes offers.
18
1050048
Instead, they argue: "The complaint specifically alleges an
oral representation. [Elizabeth Homes] offered no evidence to
establish the claim is based on a written contract."
brief
at
22.)
The
respective burdens.
Catos,
however,
(Catos'
misunderstand
the
As discussed above, it is the Catos'
burden to demonstrate that the arbitration agreement in the
purchase agreement does not apply to this dispute.
However,
the Catos presented no evidence in opposition to the motion to
compel arbitration indicating that Elizabeth Homes had entered
into
an
agreement,
purchase
whether
agreement.
oral
or
Additionally,
written,
there
is
outside
no
the
evidence
indicating that Elizabeth Homes or its agents made any oral
representations
to
the
Catos
that
differ
specifications stated in the purchase agreement.
from
the
Therefore,
the Catos failed to meet their burden of showing that the
arbitration provision in the purchase agreement does not apply
to
their
claim
that
the
house
did
not
conform
to
their
expectations.
The purchase agreement, as noted above, states that the
house will conform to certain specifications and plans.
Any
claim
the
by
the
Catos
that
the
19
house
deviated
from
1050048
specifications or design they agreed to with Elizabeth Homes
thus "arises under" the purchase agreement.
The
Catos,
citing
National
Auction
Group,
Inc.
v.
Hammett, 854 So. 2d 65 (Ala. 2003), argue that they are the
"masters" of the complaint, that the complaint alleges "an
oral representation," and that this Court cannot assume that
the
Catos
must
be
suing
under
Hammett, however, is inapposite.
the
purchase
agreement.
In that case, a defendant
attempted to compel arbitration of the plaintiff's claims
pursuant
to
an
arbitration
between two defendants.
compel
arbitration,
provision
found
in
a
contract
This Court refused the attempt to
noting
that
the
complaint
expressly
alleged that the defendants had breached a different contract,
and it did not allege a breach of the contract containing the
arbitration provision.
Hammett, 854 So. 2d at 70.
In Hammett, the plaintiff was not a party to the contract
that
contained
an
arbitration
provision;
instead,
the
plaintiff was suing based on the alleged breach of a different
contract.
In
the
instant
case,
the
Catos
presented
no
evidence indicating that they were parties to a contract or
agreement
with
Elizabeth
Homes
20
other
than
the
purchase
1050048
agreement.
entered
Indeed, the Catos do not even deny that they
into
the
purchase
agreement.
Thus,
Hammett
is
inapplicable.
In Counts III, IV, V, and VI of the complaint, the Catos
allege
that
Elizabeth
Homes
was
negligent
and
wanton
in
constructing the house and setting the elevation of the house.
Specifically,
"undertook
the
to
complaint
construct
a
alleges
home"
that
and
Elizabeth
"locate
or
Homes
set
the
elevation" but negligently and wantonly "performed th[ese]
undertaking[s]."
to
exercise
care
The Catos allege that Elizabeth Homes' duty
in
building
the
house
and
setting
the
elevation arises by operation of law and is independent of any
contractual duty Elizabeth Homes might have had.
The "arise
under"
the
language
of
the
arbitration
provision,
Catos
conclude, does not extend to disputes that are independent of
or collateral to the purchase agreement.
Even assuming that the Catos are correct in arguing that
Elizabeth Homes' duty to not act negligently or wantonly in
constructing and setting the elevation of the house is a duty
imposed by law and not by the purchase agreement, we are hardpressed to nevertheless accept that the claims do not "arise
21
1050048
under" the purchase agreement.
As noted above, Elizabeth
Homes undertook to construct a house for the Catos pursuant to
the purchase agreement.
The Catos claim that Elizabeth Homes
breached certain standards of care in building that house.
While
the
standard
of
care
to
which
Elizabeth
Homes
was
required to adhere may have arisen by operation of law or
outside
the
purchase
agreement,
Elizabeth
Homes'
duty
to
actually build the house and set the elevation clearly arises
under
the
purchase
agreement,
which
provides
specifications and standards for constructing the house.
the
In
any event, it is "'well established that a party may not avoid
broad language in an arbitration clause by attempting to cast
its complaint in tort rather than contract.'"
Beaver Constr.
Co. v. Lakehouse, L.L.C., 742 So. 2d 159, 165 (Ala. 1999)
(quoting McBro Planning & Dev. Co. v. Triangle Elec. Constr.
Co., 741 F.2d 342, 344 (11th Cir. 1984)).
See also ECS, Inc.
v. Goff Group, Inc., 880 So. 2d 1140 (Ala. 2003) (holding that
a finance company's claims against an underwriter must be
arbitrated pursuant to a provision requiring arbitration of
claims "arising out" of a contract, even though the finance
company stated its claims in tort rather than in contract and
22
1050048
the finance company was not a signatory to the contract).
It
appears that the Catos' claims are essentially claims of a
breach of the purchase agreement styled as tort claims.
We
thus hold that the Catos failed to demonstrate that these
claims do not arise under the terms of the purchase agreement.
Counts VII and VIII of the complaint allege that after
the house was constructed, an agent of Elizabeth Homes came to
check certain "electrical issues."
The Catos claim that,
while performing the work, the agent negligently and wantonly
damaged part of the vinyl flooring in the house when the agent
moved their tanning bed.
The Catos argue that these claims
are not arbitrable because, they say, the defendants did not
prove that the claims were related to the purchase agreement,
there was no evidence to establish that Elizabeth Homes' agent
was performing a service under a warranty, and even if the
work
is considered work under a warranty or the purchase
agreement, they could still allege a tort claim separately
from the contract.
The
occurred
defendants
either
argue
during
the
that
the
course
of
damage
the
to
floor
construction
during the course of repairs made pursuant
23
the
to
or
a warranty
1050048
provision
found
in
the
agreement. 4
purchase
Thus,
they
maintain, the claims asserted in Counts VII and VIII arise
under the purchase agreement.
Again,
it
was
the
Catos'
burden
to
show
that
arbitration provision does not apply to these claims.
the
There
is no evidence indicating that Elizabeth Homes' agent, in
checking "electrical issues," was performing work outside the
purchase
agreement
agreement.
was
or
pursuant
purchase agreement.
that
to
some
other
contract
or
For all that appears from the record, this work
performed
proven
pursuant
these
to,
and
under
the
terms
of,
the
We thus conclude that the Catos have not
claims
fall
outside
the
scope
of
the
arbitration provision.
In Count IX, the Catos claim that the defendants breached
an implied contract to construct the house in a "good and
workmanlike manner."
The Catos maintain that this claim is
based on an implied, not an express, contract, and that the
defendants presented no evidence to show that the Catos' claim
was based on the purchase agreement.
4
In Counts X and XI the
The provision cited by the defendants actually states
that any liability on Elizabeth Homes' part for a breach of
the contract will be limited to the actual cost of repairing
or correcting the breach.
24
1050048
Catos appear to allege that the defendants breached a contract
and committed promissory fraud in failing to complete repairs
pursuant to a "punch list."
Specifically, they claim that as
they were preparing to move into the house, they presented
Elizabeth
Homes
with
a
list
incomplete work in the house.
of
problems,
defects,
or
They state: "[I]n order to
induce the plaintiffs to pay the defendants the balance due
for
the
home,
the
defendants
promised
and
contracted
to
complete the items on the punch list."
As to all three counts, the Catos have again failed to
present any evidence showing that the arbitration provision in
the purchase agreement does not apply.
There is no evidence
indicating that the parties entered into an implied contract
outside the purchase agreement or that a separate contract was
created based on the "punch list."
all
appear
to
revolve
around
construction of the house.
Furthermore, these claims
alleged
deficiencies
in
the
Because the duty to construct the
house, and the specifications describing that duty, were all
imposed by the purchase agreement, we cannot conclude with
"positive assurance" that the Catos' claims do not fall under
25
1050048
the terms of the purchase agreement or within the scope of its
arbitration provision.
Conclusion
We hold that the defendants have met their burden in
supporting their motion to compel arbitration, and the Catos
failed to demonstrate that the arbitration provision in the
purchase agreement does not apply in this case.
Therefore,
the trial court erred in denying the motion to compel.
The
trial court's order is reversed, and the case is remanded for
proceedings consistent with this opinion.
REVERSED AND REMANDED.
Cobb, C.J., and See, Woodall, and Parker, JJ., concur.
26
