Smith v. Mark Dodge, Inc.
Smith v. Mark Dodge, Inc.
Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 377
W. Bruce Smith appeals from an order of the Mobile Circuit Court granting motions to compel arbitration filed by Mark Dodge, Inc., and DaimlerChrysler Corporation. We affirm.
"[Smith] and [Mark Dodge] agree that all claims, demands, disputes or controversies of every kind or nature between them arising from, concerning or relating to any of the negotiations involved in the sale, lease, or financing of the vehicle, the terms and provisions of the sale, lease or financing arrangements, the arrangements for financing, the purchase of insurance, extended warranties, service contracts or other products purchased as an incident to the sale, lease or financing of the vehicle, the performance or condition of the vehicle, or any other aspects of the vehicle and its sale, lease or financing shall be settled by binding arbitration. . . . Without limiting the generality of the foregoing, it is the intention of [Smith] and [Mark Dodge] to resolve by binding arbitration all disputes concerning the vehicle, its sale, lease or financing, and its condition, including disputes concerning the terms and conditions of the sale, lease or financing, the condition of the vehicle, any *Page 378 damage to the vehicle, the terms and meaning of any of the documents signed or given in connection with the sale, lease, or financing of the vehicle, or negotiations for the sale, lease, or financing of the vehicle, or any terms, conditions, representations, or omissions made in connection with the financing, credit life insurance, disability insurance, vehicle extended warranty or service contract or other products or services acquired as an incident to the sale, lease or financing of the vehicle.
". . . . [Smith] and [Mark Dodge] further agree that any question regarding whether a particular controversy is subject to arbitration shall be decided by the Arbitrator."
On November 24, 2003, Smith purchased diesel fuel for his truck from a third party. The fuel, contaminated with water, immediately damaged the engine of the truck. Smith had the truck transported to Mark Dodge for repairs that same day. Although the necessary repairs were not covered under either the warranty or the service contract, Mark Dodge performed those repairs in return for payment from Smith's insurance company.
In May 2004, while Smith was driving the truck, the engine again malfunctioned. Smith took the truck to Mark Dodge for repairs. Mark Dodge expressed its willingness to perform the necessary repairs but explained that the repairs were not covered by either the service contract or the warranty and that the cost for the repairs thus would have to be borne by either Smith or his insurance company. The record does not reflect whether these later repairs were performed.
Smith filed this action in the Mobile Circuit Court, alleging that Mark Dodge had been negligent and wanton in repairing the truck in November 2003 and that it and DaimlerChrysler had breached the warranty in May 2004 when Mark Dodge refused to perform the repairs under the warranty.1 He also alleged that DaimlerChrysler had breached the service contract in 2004. Mark Dodge and DaimlerChrysler each moved to compel arbitration, and the trial court granted each motion. Smith appeals.
A threshold issue is which forum should decide the question of the scope of the arbitration agreement. In First Options ofChicago, Inc. v. Kaplan,
"Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, see, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., [
514 U.S. 52 ,57 (1995)]; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,473 U.S. 614 ,626 (1985), so the question `who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter."
The concluding sentence of the arbitration agreement, which is sometimes referred to as a "First Options clause" and which is quoted above, unquestionably demonstrates that the parties agreed to arbitrate the arbitrability of any controversy. Consequently, any question whether Smith's claims against Mark Dodge are arbitrable is itself for an arbitrator to determine. Polaris,
Despite this Court's usually faithful adherence to the FirstOptions rule, we note that Smith cites Capitol Chevrolet Imports, Inc. v. Payne,
After reviewing the briefs submitted in Payne, however, we note that that case is distinguishable from the present one on the basis of its procedural posture. Although the arbitration agreement in Payne contained a First Options clause, the appealing defendants in that case failed to argue that its presence in the agreement required submitting to arbitration the question regarding the scope of the agreement. In Payne, by not addressing the First Options clause issue, this Court was simply following the well-settled rule that we do not reverse a trial court's judgment on a ground not raised on appeal. Robinov. Kilgore,
The arbitration agreement contains a First Options clause, which has been brought to this Court's attention by one of the parties, and we reaffirm prior holdings that an arbitration agreement containing a First Options clause, clearly and unmistakably manifesting the intention of the parties to arbitrate the question whether a particular dispute or controversy is arbitrable, requires that such a dispute or controversy be submitted to arbitration. We therefore conclude that the trial court was correct in granting Mark Dodge's motion to compel arbitration.
A party typically manifests its assent to arbitrate a dispute by signing the contract containing the arbitration provision. Exparte Stamey,
This Court has crafted one exception to that exception: unless the arbitration provision contains sufficiently broad language that indicates that the nonsignatory was contemplated as a party, we have repeatedly held that the nonsignatory lacks "standing" to enforce the arbitration agreement. Med Ctr. Cars,Inc. v. Smith,
If an arbitration agreement is written in broad language so that it applies to "[a]ll disputes, claims or controversies arising from or relating to this Contract or the relationshipswhich result from this Contract," Ex parte Napier,
Conversely, if the language of the arbitration provision is party specific and the description of the parties does not include the nonsignatory, this Court's inquiry is at an end, and we will not permit arbitration of claims against the nonsignatory. See Jim Burke Auto., Inc. v. McGrue,
The arbitration agreement signed by Smith and Mark Dodge provides, in pertinent part:
"[Smith] and [Mark Dodge] agree that all claims, demands, disputes or controversies of every kind or nature between them arising from, concerning or relating to any of the negotiations involved in the sale, lease, or financing of the vehicle, the terms and provisions of the sale, lease or financing arrangements, the arrangements for financing, the purchase of insurance, extended warranties, service contracts or other products purchased as an incident to the sale, lease or financing of the vehicle . . . shall be settled by binding arbitration. . . .
". . . .
"This Agreement is binding upon, and inures to the benefit of [Smith] and [Mark Dodge] and the officers, employees, agents and affiliated entities of each of them. . . .
"[SMITH] AND [MARK DODGE] UNDERSTAND THAT THEY ARE AGREEING TO RESOLVE THE DISPUTES *Page 382 BETWEEN THEM DESCRIBED ABOVE BY BINDING ARBITRATION, RATHER THAN BY LITIGATION IN ANY COURT."
(Boldface type and capitalization in original; all other emphasis added.)
Much of the text of the arbitration agreement seems to apply only to Smith and Mark Dodge, reciting as it does twice that Smith and Mark Dodge shall settle by arbitration the claims, demands, disputes, and controversies "between them." The agreement further explains, however, that it is "binding upon" not only Smith and Mark Dodge, but also other described parties. DaimlerChrysler notes that one category of additional parties is "affiliated entities" of either party. DaimlerChrysler argues that it is one of Mark Dodge's "affiliated entities." That term is undefined in the arbitration agreement. (In Rogers, supra, the term "our affiliate corporations" was defined in the arbitration agreement as "our parent corporations, subsidiary corporations, and sister corporations."
The adjective "affiliated" is defined as "closely associated with another typically in a dependent or subordinate position."Merriam-Webster's Collegiate Dictionary 21 (11th ed. 2003). The verb "affiliate" is defined as "to attach as a member or branch: bring or receive into close connection." Webster's Third NewInternational Dictionary 35 (Merriam-Webster, Inc. 1981). A fair reading of these dictionary definitions indicates that to be affiliated with one another, Mark Dodge and DaimlerChrysler must be somehow closely connected. The record reflects that the two are intimately associated. Their association was such that in issuing the service contract, DaimlerChrysler could presume to commit that the contract was "between [Smith] and the selling Dealer." Mark Dodge was an automobile dealership selling Dodge vehicles, one of DaimlerChrysler's line of vehicles, and was an "Authorized DaimlerChrysler Service Contract Dealer." Smith purchased the vehicle from Mark Dodge and, according to Smith's contentions on appeal, Mark Dodge and DaimlerChrysler jointly warranted the vehicle. Because Smith has not supplied this Court with a reply brief or otherwise challenged below or here DaimlerChrysler's contention that it is due recognition as an entity affiliated with Mark Dodge, we take DaimlerChrysler's assertion to be uncontradicted; consequently, we cannot conclude that the trial court erred in implicitly finding that DaimlerChrysler had standing to seek to enforce the arbitration agreement against Smith. We therefore proceed to determine whether DaimlerChrysler may enforce the arbitration agreement against Smith.
DaimlerChrysler seeks to compel arbitration as to Smith's allegation of breach of contract and breach of warranty. Smith alleges that by refusing to offer coverage under the service contract for the second round of necessary repairs, DaimlerChrysler breached its service contract and the warranty. DaimlerChrysler may enforce the arbitration agreement against Smith only if Smith's claims against DaimlerChrysler are "intimately founded in and intertwined with" the claims made against Mark Dodge. Stamey,
AFFIRMED.
NABERS, C.J., and STUART and BOLIN, JJ., concur.
SEE, J., concurs in the result.
Reference
- Full Case Name
- W. Bruce Smith v. Mark Dodge, Inc., and Daimlerchrysler Corporation.
- Cited By
- 52 cases
- Status
- Published