Southern Energy Homes, Inc. v. Ard

The plaintiffs Michael Ard and Marsha Ard purchased a manufactured home, manufactured by the defendant Southern Energy Homes, Inc. The Ards’ agreements, disputes, and claims against the retailer who sold them this manufactured home are not material to the issues dispos-itive of this appeal.

The Ards filed a civil action against both the retailer and Southern Energy. Only Count II (as amended), Count III, and Count V state discernible claims against Southern Energy. Count II (as amended) alleges in pertinent part:

“6. Defendant, Southern Energy Homes, Inc., issued an express warranty on said home providing that it would repair or replace defective materials and/or workmanship.

“7. Plaintiffs aver that said home contains numerous defects in material and workmanship and is unfit for habitation by the Plaintiffs and Plaintiffs’ family.

“8. Defendants have been notified of such defects by Plaintiffs, but have failed or refused to correct said defects.

“9. Defendants’ aforementioned failure or refusal to correct said defects constitutes a violation of the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act, 15 U.S.C. §§ 1501-12 (the ‘Magnuson-Moss Act’).”

Count III alleges, in pertinent part that “the defendant, Southern Energy Homes, Inc., either negligently, willfully, wantonly, or intentionally constructed a manufactured home for the Ards in a deficient manner.” Count III includes a catalog of specific defects in the manufactured home. While Count III also claims against “defendants” (plural) for certain “false and fraudulent misrepresentations,” Count III does not allege any representations made by Southern Energy. Finally, Count V alleges, in pertinent part, that Southern Energy “negligently, willfully, or wantonly installed and wired a furnace in a manufactured home for the plaintiffs in a deficient manner” and thereby caused the furnace to “catch on fire resulting in damage to the plaintiffs’ home.”

Southern Energy moved the trial court to stay the litigation and to compel arbitration. In support of its motion, it submitted a document entitled “SOUTHERN ENERGY WARRANTY LIMITED ONE-YEAR/FIVE-YEAR WARRANTY” containing the language of an arbitration agreement between the manufacturer and the purchaser. The Ards did not file any objection to the submission of this document. Thus, the record establishes Southern Energy’s prima facie case for the existence of the agreement to arbitrate. TranSouth Financial Corp. v. Bell, 739 So.2d 1110 (Ala.1999).

Southern Energy also submitted two affidavits by Don McNutt. Only one of these affidavits is material to the contested issues. It reads, in pertinent part:

“According to the books and records of Southern Energy Homes, Inc., the Ards requested and received warranty service from Southern Energy pursuant to the terms of the warranty issued by Southern Energy. At the time of service, Michael Ard signed a work order certifying that the parts and work described on the order have been furnished and the repairs had been made to his satisfaction.”

The only evidentiary material submitted by the Ards in opposition to the motion to stay and to compel arbitration is an exhibit consisting of the 19-page “Home Owner’s Manual” issued by Southern Energy. This Home Owner’s Manual is the source of the same “Southern Energy Warranty Limited One-Year ¡Five-Year Warranty” submitted by Southern Energy itself. Pages 4 and 5 of the manual contain this warranty material. This warranty material includes the following arbitration language:

“IF THE PROBLEM IS STILL NOT RESOLVED

“If your problems are not satisfactorily remedied through the steps set out above, you are entitled to have the dispute settled through binding arbitration as set out below.

“In the event of any dispute or claim, arising out of or in connection with the design, construction, warranty or repair of any product or component supplied by the Manufacturer, the condition of the product, the conformity of the product, the merchantability of the product, whether such product is or is not ‘new*, any representations, promises, undertakings or covenants made or allegedly made by the Manufacturer in connection with or arising out of any transaction or undertaking between the Manufacturer and any purchaser, or subsequent purchaser, the Manufacturer and the purchaser of this product agree to submit such dispute or claim to binding arbitration, pursuant to the provisions of 9 USC 1, et seq. and according to the Commercial Rules of Arbitration of the American Arbitration Association then existing.”

This language encompasses all of the claims alleged by the Ards against Southern Energy.

The Ards did not submit any other exhibits or any affidavit, deposition testimony, or other evidentiary material. The Ards did, however, submit to the trial court a brief presenting their arguments and authorities.

While the trial court granted the retailer’s motion to compel arbitration, the trial court denied Southern Energy’s motion to compel. The order of the trial court in its entirety reads as follows:

“ORDER

“The matter before the Court are two Motions to Compel Arbitration, one filed by Southland Quality Homes, Inc. (seller) and Southern Energy Homes, Inc. (manufacturer). The [Ards] argue that the Defendants’ Motions to Compel Arbitration would be a violation of the Magnuson-Moss Act. [The Ards] also rely on Wilson v. Waverlee Homes, Inc., 954 F.Supp. 1530 (N.D.Ala.1997).

“[The Ards’] reliance on ... ‘ “Waver-lee is misplaced. In Waverlee the plaintiffs only brought a claim against the manufacturer. In the present case claims have been brought against the seller and the manufacturer.

“In Capital Investment Group, Inc. v. Woodson, 694 So.2d 1268 (Ala.1997), it is stated:

“ ‘[S]ix elements must exist before binding arbitration is mandated:

“ ‘(1) That a valid and enforceable written agreement to arbitrate exists; (2) that a dispute exists between the parties; (3) that the dispute is referable to arbitration under the arbitration agreement; (4) that a demand for arbitration was made; (5) that the other party failed or refused to arbitrate; and (6) that the dispute arises from ... a contract involving interstate commerce.’ ... An arbitration agreement must be enforced as any other contract is enforced, in accordance with its terms. Both federal and state courts have consistently held that the duty to arbitrate is a contractual obligation and that a party cannot be required to submit to arbitration any dispute that he did not agree to submit. The language of the contract entered into by the parties determines whether a particular dispute should be submitted to arbitration under the contract. (Citations omitted).’

“The Court finds that the six elements creating binding arbitration exist between the Ards and Southland. (See Southland Arbitration Agreement and [the Ards’] complaint).

“The same cannot be said of Southern [Energy’s] attempt to force arbitration. The Court finds there is no specific agreement between the Ards and Southern [Energy]. The Ards never signed an agreement with Southern [Energy] as they did with Southland. Additionally, Southern [Energy] is the manufacturer and a nonsignatory party to the transaction. It also appears that Southern [Energy] attempts to distance itself from [the Ards] and Southland in its written warranty and its answer wherein Southern [Energy] claims a lack of privity. A review of [the Ards’] complaint indicates different causes of action against the two Defendants with the exception of Count II, which addresses certain warranties.

“The case sub judiee is much similar to Ex parte Isbell, [708 So.2d 571 (Ala. 1997),] wherein Southern [Energy] is a party Defendant.

“Based on the holdings of Ex parte Isbell ... and [Woodson, supra ], Defendant’s (Southland Homes) Motion to Compel Arbitration is hereby granted.

“However, Defendant’s ([Southern Energy’s]) Motion to Compel Arbitration is hereby denied.”

Southern Energy appealed, and we reverse and remand.

The Ards argue that we should affirm the trial court on two theories. The first is that the Ards never made any agreement to arbitrate. The second theory is that the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act (Magnuson-Moss Act), 15 U.S.C. § 1501 et seq., invalidates the arbitration provisions in the Southern Energy warranty. We find both theories invalid for the reasons we will explain.

On the one hand, we recognize that parties cannot be required to arbitrate unless they have agreed to arbitrate. 9 U.S.C. § 4 and AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). On the other hand, the only pertinent evidentiary materials (as distinguished from arguments by counsel) are the Home Owner’s Manual containing the warranty and arbitration language and the already-quoted affidavit of Don McNutt. While the Ards’ arguments dispute their assent to the arbitration language and attack the effectiveness of the delivery of the arbitration language, no evidentiary materials of record support the Ards in this regard except the absence of any signatures by the parties in the Home Owner’s Manual. This absence of evidentiary materials in opposition to arbitration distinguishes this case from the otherwise similar case of Southern Energy Homes, Inc. v. Kennedy, 114, So.2d 540 (Ala.2000).

The Ards are contractually bound to the arbitration provisions for two reasons. First, the affidavit of Don McNutt establishes, without contradiction, that the Ards have accepted the benefits of the warranty containing the arbitration provisions. This acceptance constitutes the Ards’ acceptance of the arbitration provisions themselves. Rush v. Atomic Electric Co., 384 So.2d 1067 (Ala.1980). Second, the Ards have sued Southern Energy on the theory, among others, of express warranty. The only express warranty included in the evidentiary materials is the one containing the arbitration provisions. A plaintiff cannot simultaneously claim the benefits of a contract and repudiate its burdens and conditions. Value Auto Credit, Inc. v. Talley, 727 So.2d 61 (Ala.1999); Infiniti of Mobile, Inc. v. Office, 727 So.2d 42 (Ala.1999); Georgia Power Co. v. Partin, 727 So.2d 2 (Ala. 1998); Delta Constr. Corp. v. Gooden, 714 So.2d 975 (Ala.1998); Ex parte Dyess, 709 So.2d 447 (Ala.1997).

In further attack against the existence of an agreement to arbitrate, the Ards argue that the arbitration provisions are inconspicuous, in that the caption does not contain the word arbitration and the table of contents of the Home Owner’s Manual does not include the arbitration provisions. Because, in all other respects, the arbitration language is just as conspicuous as the other provisions of the warranty, however, we find that it is a binding part of the warranty. See Mall, Inc. v. Robbins, 412 So.2d 1197 (Ala.1982), and Gaylord Department Stores of Alabama, Inc. v. Stephens, 404 So.2d 586 (Ala.1981).

The Ards, in support of their theory that the Magnuson-Moss Act invalidates the arbitration provisions, cite Wilson v. Waverlee Homes, Inc., 954 F.Supp. 1530 (M.D.Ala.1997), Boyd v. Homes of Legend, Inc., 981 F.Supp. 1423 (M.D.Ala. 1997), and Rhode v. E & T Investments, Inc., 6 F.Supp.2d 1322 (M.D.Ala.1998). Indeed, this very Court, in Southern Energy Homes, Inc. v. Lee, 732 So.2d 994 (Ala. 1999), cites both Wilson and Boyd with approval and reaches the same holding— that the Magnuson-Moss Act invalidates arbitration provisions in a written warranty issued by a manufacturer of consumer goods. Justice See of this Court, however, filed a scholarly and thorough dissent in Lee. We now opine that Justice See’s dissent in Lee is correct and the majority opinion is incorrect. Therefore, we overrule the majority opinion in Lee and adopt Justice See’s dissent. On the rationale of Justice See’s dissent in Lee, we hereby hold that the Magnuson-Moss Act does not invalidate arbitration provisions in a written warranty.

Because the record establishes the valid formation of the agreement to arbitrate, and the arbitration provisions validly and legally bind the Ards, the trial court erred in denying Southern Energy’s motion to compel arbitration. Accordingly, the order denying this motion to compel arbitration is reversed and the cause is remanded to the trial court with instructions to vacate that order and to enter an order granting the motion, staying the court proceedings, and compelling arbitration.

REVERSED AND REMANDED.

HOOPER, C.J., and MADDOX, SEE, LYONS, and BROWN, JJ., concur.

HOUSTON, COOK, JOHNSTONE, and ENGLAND, JJ., dissent.