Justia Alabama Supreme Court Opinion Summaries

Articles Posted in Arbitration & Mediation
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Plaintiff Gerriann Fagan appealed a circuit court order granting defendant Warren Averett Companies, LLC's motion to compel arbitration. Fagan was the owner of The Prism Group, LLC, a human-resources consulting firm. In February 2015, Warren Averett approached her and asked her to join Warren Averett and to build a human-resources consulting practice for it. In February 2015, she agreed to join Warren Averett, entering into a "Transaction Agreement" which provided that: Fagan would wind down the operations of The Prism Group; Fagan would become a member of Warren Averett; Warren Averett would purchase The Prism Group's equipment and furniture; Warren Averett would assume responsibility for The Prism Group's leases; and that Warren Averett would assume The Prism Group's membership in Career Partners International, LLC. The Transaction Agreement further provided that Fagan would enter into a "Standard Personal Service Agreement" ("the PSA") with Warren Averett; that Fagan's title would be president of Warren Averett Workplace; and that Fagan would be paid in accordance with the compensation schedule outlined in the PSA. Fagan alleged that she subsequently resigned from Warren Averett when she was unable to resolve a claim that Warren Averett had failed to properly compensate her in accordance with the PSA. On or about February 28, 2019, Fagan filed a demand for arbitration with the American Arbitration Association ("AAA"). The employment-filing team of the AAA sent a letter dated March 4, 2019, to the parties informing them of the conduct of the arbitration proceedings. On April 18, 2019, the employment-filing team notified the parties that Warren Averett had failed to submit the requested filing fee and that it was administratively closing the file in the matter. On April 30, 2019, Fagan sued Warren Averett in circuit court. The Alabama Supreme Court determined Warren Averett's failure to pay the filing fee constituted a default under the arbitration provision of the PSA. Accordingly, the trial court erred when it granted Warren Averett's motion to compel arbitration. View "Fagan v. Warren Averett Companies, LLC" on Justia Law

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Russell Construction of Alabama, Inc. ("Russell"), appealed a circuit court order that vacated an arbitration award in favor of Russell and against Christopher Peat. In 2015, Russell and Peat entered into a contract pursuant to which Russell agreed to construct a residence for Peat on "a cost plus a fee basis." The documents executed in connection with the contract provided, in the event of a controversy or dispute, first for mediation and then for arbitration in accordance with the rules of the American Arbitration Association. Upon completion of the residence, a dispute arose between Russell and Peat regarding Russell's performance and the balance due Russell under the contract. In January 2018, Russell filed a formal demand for arbitration, seeking $295,408 allegedly due from Peat for the construction of the residence. Peat counterclaimed, alleging breach of fiduciary duty and breach of contract and disputing his consent to costs incurred by Russell; Peat sought specific performance and an award of $255,000 on his counterclaims. Thereafter, in May 2018, the parties reached, as a result of mediation, a settlement agreement. In essence, the settlement agreement required Russell to make certain repairs to the residence; required Peat to pay Russell $245,408 on or before June 15, 2018, at which time Russell agreed to release its recorded lien; and required Peat to deposit into escrow an additional $50,000 to ensure completion, by the end of August 2018, of a "punch-list" to the satisfaction of a third-party "Construction Consultant." The Alabama Supreme Court determined the circuit court did not err to the extent that it set aside the judgment entered pursuant to the arbitrator's Final Award. The Court affirmed the trial court's July 25, 2019 order to the extent that it vacated any judgment on the arbitrator's Final Award related to Russell's and Peat's breach of the provisions of the settlement agreement that remained in effect after the Modified Partial Final Award and the distribution of the outstanding $50,000 at issue. The Court reversed that same order to the extent it purported to vacate any judgment on the Modified Partial Final Award of $258,959.89 and remanded this case for further proceedings. View "Russell Construction of Alabama, Inc. v. Peat" on Justia Law

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Plaintiff Warner Wiggins appeals a circuit court's order compelling him to arbitrate his claims against Warren Averett, LLC. Warren Averett was an accounting firm. Eastern Shore Children's Clinic, P.C. ("Eastern Shore"), a pediatric medical practice, was a client of Warren Averett. In September 2010, while Wiggins, who was a medical doctor, was a shareholder and employee of Eastern Shore, Warren Averett and Eastern Shore entered an agreement pursuant to which Warren Averett was to provide accounting services to Eastern Shore ("the contract"). The contract contained an arbitration clause. Thereafter, Wiggins and Warren Averett became involved in a billing dispute related to the preparation of Wiggins's personal income-tax returns. In 2017, Wiggins filed a single-count complaint alleging "accounting malpractice" against Warren Averett. Warren Averett filed an answer to Wiggins's complaint, asserting, among other things, that Wiggins's claims were based on the contract and were thus subject to the arbitration clause. A majority of the Alabama Supreme Court concluded the determination of whether Wiggins' claims were covered under the terms of the arbitration clause was delegated to an arbitrator to decide. Therefore, it affirmed the trial court's order. View "Warner W. Wiggins v. Warren Averett, LLC" on Justia Law

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SAI Montgomery BCH, LLC, d/b/a Classic Cadillac and Andrew Harper, general manager for Cadillac appealed a trial court order denying their motions to compel arbitration. The matter arose over a lease agreement. Customers made two lease payments before the car they lease was seized by law enforcement, and the lessees arrested for theft of property. A grand jury ultimately refused to return an indictment, and the lessees sued the Cadillac dealership and its general manager for malicious prosecution, slander, defamation and conversion, amongst other things. Because the Alabama Supreme Court concluded the trial court was without jurisdiction to enter the order appealed from, it dismissed the appeal. View "SAI Montgomery BCH, LLC v. Williams" on Justia Law

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Jason Blanks, Peggy Manley, Kimberly Lee, Nancy Watkins, Randall Smith, Trenton Norton, Earl Kelly, Jennifer Scott, and Alyshia Kilgore (referred to collectively as "the customers") appealed the denial of a motion to compel arbitration and a declaratory judgment entered in an action brought by TDS Telecommunications LLC, and its two affiliates, Peoples Telephone Company, Inc., and Butler Telephone Company, Inc. (referred to collectively as "the Internet providers"). The customers subscribed to Internet service furnished by the Internet providers; their relationship was governed by a written "Terms of Service." The customers alleged that the Internet service they have received was slower than the Internet providers promised them. At the time the customers learned that their Internet service was allegedly deficient, the Terms of Service contained an arbitration clause providing that "any controversy or claim arising out of or relating to [the Terms of Service] shall be resolved by binding arbitration at the request of either party." In the declaratory-judgment action, the trial court ruled that the Internet providers were not required to arbitrate disputes with the customers. The Alabama Supreme Court determined the arbitration clause in the applicable version of the Terms of Service included an agreement between the Internet providers and the customers that an arbitrator was to decide issues of arbitrability, which included the issue whether an updated Terms of Service effectively excluded the customers' disputes from arbitration. Accordingly, the Supreme Court reversed the trial court's denial of the customers' motion to compel arbitration and its judgment declaring the updated Terms of Service "valid and enforceable," and remanded the case for further proceedings. View "Blanks et al. v. TDS Telecommunications LLC" on Justia Law

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Valley National Bank ("VNB") petitioned the Alabama Supreme Court for a writ of mandamus to direct the Montgomery Circuit Court to dismiss a declaratory-judgment action filed against VNB by Jesse Blount, Wilson Blount, and William Blount. William owned a 33% interest in Alabama Utility Services, LLC ("AUS"). William also served as the president of WWJ Corporation, Inc. ("WWJ"), and WWJ managed AUS. Wilson and Jesse, William's sons, owned all the stock of WWJ. In May 2013, William transferred his 33% interest in AUS to WWJ, and WWJ then owned all of the interest in AUS. In July 2015, VNB obtained a $905,599.90 judgment against William in an action separate from the underlying action. On August 31, 2015, Asset Management Professionals, LLC, purchased from WWJ all the assets of AUS for $1,600,000. On July 17, 2018, the Blounts filed a declaratory-judgment action seeking a judgment declaring "that (a) William's transfer of his interest in AUS to WWJ was not fraudulent as to [VNB], (b) William was not the alter ego of AUS or WWJ, (c) the sale of AUS did not result in a constructive trust in favor of [VNB], and (d) the [Blounts] did not engage in a civil conspiracy." VNB responded by filing a motion to dismiss pursuant to Rule 12(b)(1) and (b)(6), Ala. R. Civ. P., asserting the lack of subject-matter jurisdiction and the lack of a justiciable controversy. The parties were referred to mediation, which was unsuccessful. The Supreme Court determined that with regard to the Blounts' complaint, insofar as it sought a judgment declaring that William's transfer of his interest in AUS to WWJ was not fraudulent as to VNB and that the Blounts did not engage in a civil conspiracy, a declaratory-judgment action was inappropriate as a means of resolving those issues. Therefore, VNB had demonstrated a clear legal right to have its motion to dismiss granted as to those claims. With regard to the alter-ego claim and the constructive-trust claim, VNB did not demonstrate "a clear legal right" to have those claims dismissed. The Court therefore granted in part, and denied in part, the petition for mandamus relief. View "Ex parte Valley National Bank." on Justia Law

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Several former employees of Alabama Psychiatric Services, P.C. ("APS"), filed a putative class action against APS and Managed Health Care Administration, Inc. ("MHCA"), an affiliate of APS, alleging APS had not paid the former employees for unused vacation time after they lost their jobs when APS went out of business. APS and MHCA moved the circuit court to compel arbitration pursuant to arbitration agreements the plaintiffs had entered into with APS. APS and MHCA asked the circuit court to determine, as a threshold question, whether class arbitration was available in this case because the arbitration agreements at issue did not expressly mention class arbitration. The circuit court issued an order granting the motion to compel arbitration, declining to decide whether class arbitration was available, concluding that that issue was to be decided by the arbitrator. The case proceeded to arbitration. The arbitrator issued a clause-construction award ("the award"), concluding that the relevant arbitration agreements authorized class arbitration in this case. APS and MHCA sought review of the award by the circuit court, which denied the motion to vacate the arbitrator’s award. The parties then applied to the Alabama Supreme Court, which noted multiple procedural irregularities in the circuit court’s order. The issue of whether the circuit court erred regarding its order not vacating the arbitration agreement was not properly before the Supreme Court. APS and MHCA attempted to challenge that part of the order compelling arbitration in which the circuit court declined to decide the availability of class arbitration. However, to properly challenge that aspect of the earlier order, APS and MHCA should have appealed the order. APS and MHCA also argued the circuit court erred by failing to apply a de novo standard of review of the arbitrator’s award. The Supreme Court determined the circuit court did not err in this respect. The Supreme Court therefore affirmed the circuit court in denying the motion to vacate the arbitrator’s award, and dismissed appeal 1171150 as redundant. View "Alabama Psychiatric Services, P.C. v. Lazenby et al." on Justia Law

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Greenway Health, LLC, and Greenway EHS, Inc. (formerly EHS, Inc.) (collectively, "the Greenway defendants"), and Sunrise Technology Consultants, LLC, and Lee Investment Consultants, LLC (collectively, "the Sunrise defendants"), appealed separately a circuit court order denying their motion to compel the arbitration of certain claims asserted against them by Southeast Alabama Rural Health Associates ("SARHA"). Because the Alabama Supreme Court determined the Greenway defendants failed to establish the existence of a contract containing an arbitration provision, the Sunrise defendants' argument based on an intertwining-claims theory also failed. The Court therefore affirmed the trial court's denial of the Greenway defendants' and the Sunrise defendants' motions to stay proceedings and to compel arbitration. View "Greenway Health, LLC, and Greenway EHS, Inc. v. Southeast Alabama Rural Health Associates" on Justia Law

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William Carroll, M.D., Loring Rue, M.D., and Gustavo Heudebert, M.D. (collectively, defendants), appealed a circuit court's denial of their motion to compel arbitration of claims asserted against them by Paul F. Castellanos, M.D. Dr. Castellanos alleged that he was an "internationally recognized" physician with a specialty practice as a "laryngologist and bronchoesophagologist (airway surgeon)" who was "recruited to come to the University of Alabama at Birmingham in 2005 to establish a center of excellence for the treatment of voice and aero digestive disorders at University of Alabama, Birmingham Academic and Medical Center" ("UAB Medical Center"). University of Alabama Health Services Foundation, P.C. ("UAHSF") and Dr. Castellanos executed a "Physician Employment Contract" describing the details of his employment, which contained an arbitration provision. The questions whether the individual defendants, as nonsignatories to the employment contract, could enforce the arbitration provision in that contract and whether the arbitration provision encompassed Dr. Castellanos's claims against the individual defendants were questions for the arbitrator, not the court, pursuant to the arbitration provision in the employment contract. The Alabama Supreme Court determined the circuit court erred in denying the individual defendants' motion to compel arbitration. The Court therefore reversed the order and remanded the case for further proceedings. View "Carroll v. Castellanos" on Justia Law

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The issue this case presented for the Alabama Supreme Court’s review was who had the power to determine the location of an arbitration proceeding: an arbitrator or Circuit Court. The Court concluded that, under the facts of this case, the arbitrator had that power; thus, reversed and remanded. View "Alliance Investment Company, LLC v. Omni Construction Company, Inc., a/k/a OCC, Inc" on Justia Law