Regions Bank v. Jerry Wayne Neighbors

Rel: 11/14/14
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
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the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
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Regions Bank
v.
Jerry Wayne Neighbors
Appeal from Montgomery Circuit Court
(CV-13-901459)
BRYAN, Justice.
Regions Bank ("Regions") appeals from an order denying
its motion to compel arbitration. We reverse and remand.
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In 1999, Jerry Wayne Neighbors obtained from Union
Planters Bank a loan in the amount of $64,100, which was
secured by a mortgage on real property owned by Neighbors and
his then wife. Regions is the successor in interest to Union
Planters Bank. As part of the loan transaction, Neighbors
executed a dispute-resolution agreement ("the DRA"), which
provides, in pertinent part: "Borrower and Lender irrevocably
agree to settle all disputes between them ... by negotiation,
mediation, and arbitration ...." The DRA further provides
that "'disputes' means all past, present, and future
disagreements, controversies, claims, and counterclaims
between Borrower and Lender and includes without limitation
all matters relating to this Agreement, any extension of
credit, any tort, any insurance, any service, or any product."
The DRA also states: "Borrower and Lender intend for this
Agreement to cover the broadest range of disputes and legal
issues that may be arbitrated under federal law. Borrower and
Lender agree that any questions as to the scope of this
Agreement shall be determined by the arbitrator (including,
without limitation all issues of formation, consideration,
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capacity, fairness, unconscionability, mutuality, duress,
fraud, adhesion, arbitrability, revocability, and waiver)."
In 2008, a loan-modification agreement was executed,
purportedly amending the mortgage. Neighbors denies that he
signed the loan-modification agreement; he claims that his
signature on that document was forged. The loan-modification
agreement also contains an arbitration provision.
In 2013, Neighbors sued Regions, alleging that Regions
had negligently and wantonly allowed an imposter to forge
Neighbors's signature on the loan-modification agreement.
Relying on the DRA, Regions moved to compel the arbitration of
Neighbors's claims. 1 Neighbors opposed the motion to compel
arbitration. Following a hearing, the trial court denied the
motion to compel, without stating a reason. Regions appealed
pursuant to Rule 4(d), Ala. R. App. P., which authorizes an
1
When the original loan documents were executed, they were
supplemented by a rider that included an arbitration agreement
separate from the DRA. However, the rider indicates that the
arbitration agreement therein would not apply if there is a
"separate Alternative Dispute Resolution Agreement," like the
DRA. However, the arbitration provision in the rider would
apply if the DRA were determined to be invalid or
unenforceable. Regions sought arbitration under the DRA, not
the arbitration provision in the rider or the arbitration
provision in the loan-modification agreement.
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appeal from an order either granting or denying a motion to
compel arbitration.
"'This Court's review of an order
granting or denying a motion to compel
arbitration is de novo. ...'
"United Wisconsin Life Ins. Co. v. Tankersley, 880
So. 2d 385, 389 (Ala. 2003). 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.'"
"'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,
753 (Ala. 2002)."
Cartwright v. Maitland, 30 So. 3d 405, 408–09 (Ala. 2009).
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In this case, there is no dispute regarding the existence
of the DRA and the fact that it evidences a transaction
affecting interstate commerce. Rather, the parties disagree
about whether Neighbors's claims are covered by the DRA.
Regions argues that the scope of the DRA is broad enough to
include Neighbors's claims. Regions also argues that the
issue whether the scope of the DRA encompasses Neighbors's
claims is a threshold issue that, under the terms of the DRA,
should be decided by the arbitrator; this argument is
dispositive. Neighbors argues that, because the dispute in
this case involves an alleged forgery, the dispute cannot be
subject to the provisions of the DRA. Neighbors also suggests
that the DRA does not cover his claims because, he says,
pursuant to the terms of the judgment divorcing him and his
wife, he stopped making payments on the original mortgage in
2006 when his ex-wife remarried. Although Neighbors
characterizes the dispute otherwise, we conclude that the
dispute in this case concerns the scope of the DRA.
Whether a specific dispute falls within the scope of an
arbitration agreement is a threshold question of "substantive
arbitrability," a term sometimes used by this Court, or simply
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"arbitrability" as the United States Supreme Court has called
it. Brasfield & Gorrie, L.L.C. v. Soho Partners, L.L.C., 35
So. 3d 601, 604 (Ala. 2009) (discussing the difference between
questions of "substantive arbitrability" and "procedural
arbitrability"); Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83-85 (2002) (discussing the difference between
"questions of arbitrability," which this Court has sometimes
referred to as questions of "substantive arbitrability," and
"procedural questions," which this Court has sometimes
referred to as questions of "procedural arbitrability"). As
a threshold matter, a court decides issues of substantive
arbitrability "[u]nless the parties clearly and unmistakably
provide otherwise." AT&T Techs., Inc. v. Communications
Workers of America, 475 U.S. 643, 649 (1986). In this case,
the DRA shows that the parties clearly and unmistakably agreed
to have an arbitrator, not a court, decide substantive-
arbitrability issues concerning the scope of the DRA and,
indeed, all issues of "arbitrability." The DRA provides that
"Borrower and Lender agree that any questions as to the scope
of this Agreement shall be determined by the arbitrator
(including, without limitation all issues of ... arbitrability
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...)." Thus, as an initial matter, the arbitrator must decide
whether Neighbors's claims fall within the scope of the DRA.
The trial court erred in denying the motion to compel
arbitration. We therefore reverse the order and remand the
case for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
Stuart, Bolin, Parker, Main, and Wise, JJ., concur.
Shaw, J., concurs in the result.
Moore, C.J., and Murdock, J., dissent.
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MURDOCK, Justice (dissenting).
I respectfully dissent.
I do not agree that the issue of arbitrability was for
the arbitrator to decide in this case. Whether the dispute at
issue falls within the scope of the dispute-resolution
agreement was for the trial court to decide. See Anderton v.
The Practice-Monroeville, P.C. [Ms. 1121417, Sept. 26, 2014]
___ So. 3d ___, ___ (Ala. 2014) (Murdock, J., dissenting);
Auto Owners Ins., Inc. v. Blackmon Ins. Agency, Inc., 99 So.
3d 1193, 1199 (Ala. 2012) (Murdock, J., dissenting).
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