Johnson Mobile Homes of Alabama v. Hathcock
Johnson Mobile Homes of Alabama v. Hathcock
Dissenting Opinion
I concur insofar as the main opinion affirms the trial court in its denial of the motion of the defendants "JMH" to compel Mrs. Hathcock to arbitrate her claims. I further concur that Mrs. Hathcock cannot enforce any contract between Mr. Hathcock and JMH. I respectfully dissent, however, insofar as the main opinion reverses the trial court in its denial of the motion of JMH to compel Mr. Hathcock to arbitrate his claims.
The record contains substantial evidence that JMH misrepresented used goods as new in order to induce Mr. Hathcock to sign the documents. Section
"[A] party cannot be forced to arbitrate if the contract containing the arbitration clause, which gives the arbitration clause viability, is found to be void." Alabama Catalog Sales v. Harris,
Therefore, the trial court did not err in holding the contracts containing the arbitration provisions void ab initio and in denying the motion of JMH to compel Mr. *Page 1070 Hathcock to arbitrate his claims. Of course, if we were to affirm these rulings by the trial court and were to allow Mr. Hathcock to proceed to litigate his claims in court, he could not there pursue his claims for breach of warranty and for bad faith based on the contract held void abinitio by the trial court.
Opinion of the Court
Johnson Mobile Homes of Alabama, Inc., and Johnson Homes of Meridian, Inc. (hereinafter collectively referred to as "JMH"), defendants in an action pending in the Tuscaloosa Circuit Court, appeal from that court's order denying their motion to compel arbitration. JMH argues that the legality of the contract underlying its arbitration agreement with Michael Hathcock is an issue for an arbitrator, rather than the trial court, to decide. JMH also argues that Michael Hathcock's wife Patsy should be compelled to arbitrate her claims, even though she did not sign an arbitration agreement.
On July 23, 1997, Michael Hathcock purchased a mobile home from JMH. In connection with this purchase, Michael Hathcock signed a contract for the sale of the mobile home ("the sale contract"), a freestanding arbitration agreement, and an "Installment Note, Security Agreement, and Disclosure Statement." The freestanding arbitration agreement provided, in part, as follows:
"The seller and buyer(s) agree that this transaction involves interstate commerce. The seller and the buyer(s) also agree that in the event of any controversy, dispute, and/or difference of opinion arising out of or related in any manner to their contract, or arising out of or related in any manner to any negotiations *Page 1066 and/or representations made in connection with the sale of the mobile home or the execution of the contract, then such controversy and/or dispute shall be resolved through binding arbitration, in accordance with the rules of the American Arbitration Association.
"The buyer(s) agree that the scope of the disputes, controversies, and/or differences of opinion to which this arbitration agreement applies shall include, but not be limited to, the following: [t]he terms of the contract; its breadth and scope; all documents concerning any goods and/or services acquired by the buyer(s); the condition of the mobile home; the conformity of the mobile home sold to the contract; the representations, promises, undertakings, and/or covenants made by the seller and/or any of its agents, servants, and/or employees in connection with the sale of the mobile home and/or otherwise dealing with the mobile home; the terms of financing of the transaction; any terms and/or provisions of any credit life and/or disability insurance purchased at or about the time of the transaction; and any terms, coverages, and/or provisions of any property insurance and/or other types of insurance purchased at or about the time of the transaction."
The "Installment Note, Security Agreement, and Disclosure Statement" contained the following arbitration provision:
"27. Arbitration Agreement and Jury Trial Waiver. Any controversy or claim arising out of or in any way related to this Note, or any default hereunder, or the purchase, sale, delivery, set-up, quality, or financing of the Manufactured Home or any related furniture, appliance, or other property, product or service, whether based on contract, an alleged tort, or other legal theory, shall be resolved by binding arbitration administered by the American Arbitration Association (`AAA') under its Commercial Financial Disputes Arbitration Rules. . . . Any question whether a particular controversy or claim is subject to arbitration shall be decided by the Arbitrator."
The Hathcocks lived in the mobile home until October 27, 1997, when a fire destroyed the home and the Hathcocks' personal possessions inside the home. The Hathcocks recovered $84,784.12 from their insurance company to compensate them for their loss.
On July 30, 1999, the Hathcocks sued JMH, alleging (1) that JMH had represented to them that the mobile home they had purchased was new, when, in fact, it was not and (2) that an improperly installed and/or manufactured electrical box caused the fire in their home.1 On September 3, 1999, JMH moved to dismiss, or, alternatively, to compel arbitration. The trial court issued an order denying the motion on August 3, 2000, finding "that the underlying [sale] contract was void ab initio in that it violated the Alabama Deceptive Trade Practices Act." In addition, it found that Patsy Hathcock was not a signatory to the contract and, therefore, was not subject to the arbitration agreement signed by Michael Hathcock.
JMH filed a timely notice of appeal with this Court on September 12, 2000. On October 17, 2000, Johnson Homes of Meridian, Inc. ("Johnson-Meridian"), filed a petition in bankruptcy in the United States *Page 1067 Bankruptcy Court for the Southern District of Mississippi. On May 21, 2001, this Court stayed the appeal pending the resolution of Johnson-Meridian's bankruptcy proceedings. On December 21, 2001, the bankruptcy judge granted the Hathcocks relief from the automatic stay to permit them to proceed in their action against JMH. On August 5, 2002, the Hathcocks filed in this Court a copy of the order granting them relief, and we returned the case to our active docket. On September 19, 2002, we ordered the parties to re-brief the issues raised on appeal in light of the significant amount of time that had passed since the parties' original submission.
The Federal Arbitration Act,
Oakwood Mobile Homes, Inc. v. Barger,"Fraud in the inducement consists of one party's misrepresenting a material fact concerning the subject matter of the underlying transaction and the other party's relying on the misrepresentation to his, her, or its detriment in executing a document or taking a course of action."
"`[A]ny claims as to fraud in the inducement of the contract generally . . . are subject to arbitration.'" Quality *Page 1068 Truck Auto Sales, Inc. v. Yassine,
The complaint in this case does not differentiate between Patsy's claims and Michael's claims. Rather, the complaint refers to Patsy Hathcock and Michael Hathcock collectively as "the plaintiffs." Patsy argues, however, that her claims are "distinct from the claims advanced in the complaint stemming from the contract itself." (The Hathcocks' Brief at 15.) Accordingly, to the extent that her claims are not based on the underlying sale contract, the trial court did not err in finding that Patsy Hathcock is not required to arbitrate her claims, if she has any.3
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
Houston, Lyons, Brown, Harwood, and Stuart, JJ., concur.
Moore, C.J., and Johnstone, J., concur in part and dissent in part.
Dissenting Opinion
I concur in Part III of the main opinion, in which this Court affirms the trial court's finding that Patsy Hathcock is not required to arbitrate her claims insofar as they do not relate to the underlying sale contract. I dissent from the remainder of the opinion, which reverses the trial court's denial of the motion to compel arbitration *Page 1069
filed by Johnson Mobile Homes of Alabama, Inc. See my dissent in SelmaMedical Center v. Fontenot,
Reference
- Full Case Name
- Johnson Mobile Homes of Alabama, Inc., and Johnson Homes of Meridian, Inc. v. Michael Hathcock and Patsy Hathcock.
- Cited By
- 10 cases
- Status
- Published