Hyundai Construction Equipment Americas, Inc., and Hyundai Heavy Industries Co., Ltd. v. Southern Lift Trucks, LLC

Rel: May 12, 2023
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) 229-0650), of any typographical or other
errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2022-2023
_________________________
SC-2022-0675
_________________________
Hyundai Construction Equipment Americas, Inc., and Hyundai
Heavy Industries Co., Ltd.
v.
Southern Lift Trucks, LLC
Appeal from Washington Circuit Court
(CV-22-900029)
_________________________
SC-2022-0676
_________________________
SC-2022-0675 and SC-2022-0676
Hyundai Construction Equipment Americas, Inc., and Hyundai
Heavy Industries Co., Ltd.
v.
Southern Lift Trucks, LLC
Appeal from Washington Circuit Court
(CV-22-900029)
COOK, Justice.
These consolidated appeals arise out of a commercial dispute
between Southern Lift Trucks, LLC ("Southern"), and Hyundai
Construction Equipment Americas, Inc. ("Hyundai Construction") -- an
alleged subsidiary of Hyundai Heavy Industries Co., Ltd. ("Hyundai
Heavy Industries"). 1 Southern is a heavy-equipment dealer for Hyundai
Construction. Southern filed suit against Hyundai Construction and
Hyundai Heavy Industries (collectively referred to as "Hyundai")
asserting various claims, including claims under the Alabama Heavy
Equipment Dealer Act ("the AHEDA"), § 8-21B-1 et seq., Ala. Code 1975.
1Although Hyundai Heavy Industries is alleged to be a parent of
Hyundai Construction, it was not a signatory to the dealer agreements
at issue in these appeals.
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Southern also sought a preliminary injunction to prevent Hyundai (1)
from unlawfully terminating one of the dealer agreements at issue in
these appeals and (2) from unlawfully adding a second dealer in the
territory that was covered under another dealer agreement at issue. In
response, Hyundai moved to compel arbitration. The Washington Circuit
Court granted Southern's request for a preliminary injunction and
denied Hyundai's motion to compel arbitration.
In appeal no. SC-2022-0675, Hyundai appeals the trial court's order
granting Southern's request for a preliminary injunction. For the reasons
provided herein, we affirm in part and reverse in part the trial court's
order and remand the cause for the trial court to enter an order consistent
with this opinion.
In appeal no. SC-2022-0676, Hyundai appeals the trial court's order
denying its motion to compel arbitration. For the reasons provided
herein, we affirm in part and reverse in part the trial court's order and
remand the cause for the trial court to enter an order consistent with this
opinion.
Facts and Procedural History
Southern is a heavy-equipment dealer based in Mobile. In 2019, it
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entered into a dealer agreement with Hyundai Construction to serve as
a dealer of lift trucks manufactured by Hyundai Construction ("the
forklift agreement"). A year later, in 2020, it entered into a second dealer
agreement to serve as a dealer of construction equipment manufactured
by Hyundai Construction ("the construction-equipment agreement").
Among other things, the forklift agreement covered the sales,
service, and distribution of forklifts and other "lift trucks." The
construction-equipment agreement covered the sales, service, and rental
of the provision of parts for, and warranties regarding earth-moving
equipment used in the construction industry, such as excavators, wheel
loaders, rollers, and breakers.
The territories covered by the dealer agreements overlapped, but
were not identical. Specifically, the territory covered under the forklift
agreement included Washington, Clarke, Choctaw, Sumter, Marengo,
Wilcox, Baldwin, Conecuh, Escambia, Mobile, and Monroe Counties in
Alabama, as well as certain counties in Mississippi and Florida. The
territory covered under the construction-equipment agreement included
only Washington, Choctaw, Clarke, Baldwin, Conecuh, Escambia,
Mobile, and Monroe Counties in Alabama.
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When the parties entered into the dealer agreements, Southern was
the only dealer of lift trucks and construction equipment for Hyundai
Construction within those territories. However, neither agreement was
exclusive by its terms.
According to Southern, since entering into the dealer agreements,
it has incurred significant expenditures building its business location,
acquiring inventory and hiring and training full-time sales and mechanic
staff to promote, sell, and service Hyundai Construction's products in the
territories covered by the agreements. Southern provided evidence
indicating that it employed 6 salespeople (including 1 customer-service
specialist) -- having an average of 35 years' experience -- to handle
Hyundai Construction's products. In addition, Southern provided
evidence indicating that it maintained, on a full-time basis,
approximately 3 road and shop technicians, each with 10-20 years'
experience, who have been "Hyundai Factory Trained" to service
Hyundai Construction's product.
In both dealer agreements, Southern agreed to arbitrate any and
all disputes that it had with Hyundai Construction. For example, in the
forklift agreement, the parties agreed to the following:
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"In order to effectively resolve disputes between the
parties efficiently and at the least cost and inconvenience, the
parties agree to resolve their disputes pursuant to the terms
set forth in this Section 25. All disputes between the parties
relating to or arising out of this Agreement or the making,
performance or breach thereof, or the subject matter hereof,
shall be resolved by arbitration in the following manner:
"(a) The arbitration shall be conducted in
accordance with the American Arbitration
Association arbitration rules as in force on the
date this agreement is executed. The parties
hereby submit to the exclusive personal
jurisdiction of such arbitrators for all matters
unless such matters are required by law to be
submitted to a court or other venue; provided that
either party may apply to any court of competent
jurisdiction to seek an order compelling
arbitration or a declaratory judgment with respect
to the enforceability of any provision of this
Agreement.
"(b) The arbitration tribunal shall be formed
of three arbitrators. The arbitrators shall be
persons who are familiar with the commercial and
manufacturing practices of heavy construction
equipment business. In the event of incapacity,
death or resignation of an arbitrator during the
course of the arbitration proceedings, a substitute
arbitrator shall be appointed or chosen pursuant
to procedures set forth above.
"(c) The arbitration shall take place in
Gwinnett County, Georgia or at such other
location as the parties may agree and shall be
conducted in the English language.
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"(d) The arbitration award shall be final,
binding on the parties, not subject to any appeal
and shall deal with question of cost of arbitration
and all matters related thereto.
"(e) Judgment upon the award rendered may
be entered by any court having jurisdiction, or
application may be made to such court for a
judicial recognition of the award or any order of
enforcement thereof."
(Emphasis added.) Likewise, the construction-equipment agreement
contained a virtually identical arbitration provision.
Immediately after Southern entered into the construction-
equipment agreement in 2020, Southern sold four pieces of construction
equipment. However, Southern made no sales of construction equipment
in 2021 or in 2022.
According to Southern, in August of 2021, Hyundai began efforts to
"oust Southern as a dealer," including by threatening to reduce
Southern's line of credit unless it agreed to stock a large inventory of
equipment that it was not contractually required to stock. Southern
claims that this was part of a plan to "create an environment in which it
would not be feasible for Southern to continue as a Hyundai dealer so
Hyundai could 'push out' Southern and install other dealers." Southern's
brief at 11. However, Hyundai explained that its offer was intended as
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an effort to help rectify Southern's lack of construction-equipment sales
and noted that, despite factory supply shortages and supply-chain delays,
its other construction-equipment dealers across the country were
recording record sales and profits. In the end, Southern did not agree
with Hyundai's demands.
On March 2, 2022, Hyundai Construction notified Southern of its
intent to terminate the construction-equipment agreement. Hyundai
Construction's correspondence to Southern informed Southern that it
had a cure period of 90 days from the date of the notice and that, if it did
not make corrective efforts during that cure period, the construction-
equipment agreement would officially terminate on June 30, 2022 -- or
120 days from the date of its March 2, 2022, notice.
Southern responded to the termination notice on March 5, 2022,
requesting information regarding Hyundai Construction's inventory of
construction equipment and sales of construction equipment in
Southern's territory before the construction-equipment agreement was
entered into.
In response to Southern's request, on March 8, 2022, Hyundai
Construction informed Southern that it was being terminated as a dealer
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because Southern had failed to adequately stock construction equipment
and had failed to take advantage of opportunities to place stock orders to
build an inventory. Southern disputes both of these justifications and
points to documents and testimony of Hyundai witnesses that cast doubt
on these proffered reasons.
That same day, Hyundai Construction granted a portion of
Southern's territory under the construction-equipment agreement to
another dealer located in southern Alabama -- Taylor Machine Works,
Inc., d/b/a Taylor Construction Equipment ("Taylor"). A few weeks later,
Hyundai Construction issued a press release stating that its construction
equipment was now being offered by Taylor through new "Hyundai-
authorized" locations in Southern's territory. Hyundai Construction then
listed Taylor as a dealer in that territory on its Web site. Likewise,
Taylor issued an advertisement announcing that it was proud to be a
dealer of construction equipment manufactured by Hyundai
Construction.
Hyundai Construction's actions, however, were not limited solely to
its construction equipment. On April 11, 2022, Hyundai Construction
sent a correspondence to Southern notifying Southern that it intended to
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assign an additional dealer -- Thompson Tractor Company ("Thompson")
-- to serve as a lift-truck dealer in the Alabama territory covered by
Southern under the forklift agreement. Hyundai Construction's
correspondence also advised Southern that it intended for this
arrangement to take effect after 60 days had passed and that it intended
for the new dealer and Southern to work together as Hyundai
Construction dealers.
Specifically, Hyundai Construction's correspondence stated:
"1. The cause of overlay of the territory is warranted due to
market conditions including anticipated future changes with
the competition.
"2. The past, present and anticipated retail sales and service
business transacted by Thompson that would improve
Hyundai Construction's market position within the assigned
territory.
"3. Overall market coverage with head-count to improve the
level of support of current and future customers."
Hyundai Construction informed Southern that it intended to add
Thompson as another lift-truck dealer in Southern's territory because of
an expected upcoming market opportunity. According to Hyundai
Construction, effective July 1, 2022, one of its major competitors,
Mitsubishi Logisnext Americas, canceled its relationship with Thompson
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and replaced Thompson with another heavy-equipment dealer. As a
result, Hyundai Construction believed that all of Thompson's customers
would be looking for a new lift-truck dealer and that this served as a good
reason to add Thompson to the territory.
Hyundai Construction framed the addition of this new dealer as
beneficial for Southern because, it explained, Southern would receive the
benefit of Thompson's infrastructure and servicing capabilities while
being able to continue to purchase and sell lift trucks manufactured by
Hyundai Construction. Not surprisingly, Southern did not see it the same
way.
It is undisputed that Southern's lift-truck sales, unlike its
construction-equipment sales, had been thriving during the previous two
years. Southern had often met or exceeded its sales goals, and, in the first
quarter of 2022 alone, its sales were 240% of its sales goals.
Nevertheless, Hyundai Construction alleged that Southern was not
fulfilling its duties as a lift-truck dealer because Southern did not have
the infrastructure to service the equipment sold. In support of its
contention, Hyundai Construction noted that Southern had failed to meet
its goals for parts sales and that none of its employees had ever been fully
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certified to service Hyundai Construction equipment. Hyundai
Construction also noted that Southern had only a single service facility
and that it was not sufficient in size. Southern vigorously disputed those
assertions.
It is undisputed that the AHEDA requires 60 days' notice before the
overlay of an additional dealer can occur and that Hyundai
Construction's notice that Thompson would be added as a dealer stated
that it would be effective as of June 13, 2022, i.e., after 60 days had
passed. However, shortly after receiving the notice regarding the
addition of Thompson, Southern became aware that some of its customers
had already been contacted and provided quotes and/or had been
informed that Thompson was the new lift-truck dealer for Hyundai
Construction in Southern's territory.
As a result, on May 26, 2022, Southern filed suit against both
Hyundai Construction and Hyundai Heavy Industries, alleging claims
under multiple provisions of the AHEDA, breach of contract, multiple
tort claims, and a claim of conspiracy. Southern also moved to
preliminarily enjoin Hyundai from (1) terminating either of the dealer
agreements with Southern and (2) permitting other dealers to market or
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sell construction equipment or lift trucks in Southern's territories under
those agreements. Finally, Southern sought a judgment declaring that
"all provisions of the Dealer Agreements that are inconsistent
with the AHEDA are unenforceable, null and void pursuant
to Ala. Code § 8-21B-9; all provisions of the Dealer
Agreements that are not 'reasonable' as defined by the
AHEDA are unenforceable, null and void pursuant to Ala.
Code § 8-21B-10; Hyundai violated the provisions of § 8-21B-
8(c) and, by extension, the Dealer Agreements, by entering
into a duplicative dealer agreement with Taylor for the same
Equipment Territory serviced by [Southern] without
providing [Southern] written notice at least 60-days prior
thereto; Hyundai violated the provisions of § 8-21B-8(c) and,
by extension, the Dealer Agreements, by deciding to enter into
agreements with Thompson and Taylor within [Southern's]
Territories without a reasonable basis; Hyundai violated the
provisions of § 8-21B-8(b) and, by extension, the Dealer
Agreements, because its actions with respect to [Southern]
were arbitrary, in bad faith, or unconscionable; Hyundai
unlawfully terminated or cancelled the Equipment Dealer
Agreements without good cause in violation of § 8-21B-4; and
Hyundai violated the provisions of § 8-21B-8(e) and, by
extension, the Dealer Agreements, by discriminating between
dealers with regards to price, programs, or terms of sale."
The trial court entered a temporary restraining order ("TRO") that
same day, granting Southern's request for injunctive relief. Hyundai then
moved to dissolve the TRO, moved to dismiss the action or, in the
alternative, to change venue, and moved to compel arbitration.
Following a hearing, on June 10, 2022, the trial court granted
Southern's motion for a preliminary injunction, enjoining Hyundai from
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(1) terminating the dealer agreements with Southern; (2) "entering into
agreements or otherwise permitting other dealers to sell Hyundai
Construction's Construction Equipment or Forklift Equipment" in
Southern's territories; and (3) "advertising or marketing (via website or
otherwise) that other dealers are authorized to sell" the equipment at
issue in Southern's territories. Hyundai appeals that decision in appeal
no. SC-2022-0675. See Rule 4(a)(1)(B), Ala. R. App. P.
On June 16, 2022, the trial court denied Hyundai's motion to compel
arbitration. Hyundai appeals that decision in appeal no. SC-2022-0676.
See Rule 4(d), Ala. R. App. P.
Standard of Review
First, "[w]hen this Court reviews the grant or denial of a
preliminary injunction, ' "[w]e review the ... [c]ourt's legal rulings de novo
and its ultimate decision to issue the preliminary injunction for [an
excess] of discretion." ' " Monte Sano Rsch. Corp. v. Kratos Def. & Sec.
Sols., Inc., 99 So. 3d 855, 861-62 (Ala. 2012) (quoting Holiday Isle, LLC
v. Adkins, 12 So. 3d 1173, 1176 (Ala. 2008), quoting in turn Gonzales v.
O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 428
(2006)). When the trial court, without a jury, receives ore tenus evidence,
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it " 'determines the weight and credibility of the testimony, and its
findings are presumed correct and will not be disturbed on appeal unless
the record reveals the [findings] to be plainly and palpably wrong or
manifestly unjust.' " Cadle Co. v. Friedman, 631 So. 2d 962, 964 (Ala.
1994) (quoting Wheeler v. Marvin's, Inc., 593 So. 2d 61, 63 (Ala. 1991)).
Next, with regard to the denial of a motion to compel arbitration,
this Court's standard of review is well settled:
" ' " 'This Court reviews de novo the denial of
a motion to compel arbitration. Parkway Dodge,
Inc. v. Yarbrough, 779 So. 2d 1205 (Ala. 2000). A
motion to compel arbitration is analogous to a
motion for a 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 the
c ontract evidences a transaction affecting
interstate commerce. Id. "[A]fter 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." Jim Burke Automotive, Inc. v. Beavers,
674 So. 2d 1260, 1265 n.1 (Ala. 1995) (opinion on
application for rehearing).' " '
"Hoover Gen. Contractors-Homewood, Inc. v. Key, 201 So. 3d
550, 552 (Ala. 2016) (quoting Elizabeth Homes, L.L.C. v.
Gantt, 882 So. 2d 313, 315 (Ala. 2003), quoting in turn
Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277, 280 (Ala.
2000))."
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Performance Builders, LLC v. Lopas, 341 So. 3d 1084, 1088-89 (Ala.
2021).
Discussion
I. Appeal No. SC-2022-0676 -- Motion to Compel Arbitration
Hyundai argues that the parties are bound by valid contracts
calling for arbitration of Southern's claims. It contends, therefore, that it
has met its burden of demonstrating that arbitration is applicable and
that Southern has not provided any reason to deny arbitration in this
case.
A party seeking to compel arbitration must show the existence of a
contract calling for arbitration and that the contract evidences a
transaction involving interstate commerce. STV One Nineteen Senior
Living, LLC v. Boyd, 258 So. 3d 322, 324 (Ala. 2018). Specifically, the
party seeking to compel arbitration "must ' "produce some evidence which
tends to establish its claim" ' " for arbitration. Wolff Motor Co. v. White,
869 So. 2d 1129, 1131 (Ala. 2003) (citations omitted). " 'Once the moving
party meets that initial burden, the party opposing arbitration has the
burden of presenting evidence tending to show that the arbitration
agreement is invalid or that it does not apply to the dispute in question.' "
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STV, 258 So. 3d at 324 (quoting Alabama Title Loans, Inc. v. White, 80
So. 3d 887, 891 (Ala. 2011), citing in turn Bowen v. Security Pest Control,
Inc., 879 So. 2d 1139, 1141 (Ala. 2003)).
Hyundai, the party seeking to compel arbitration, met its initial
burden of proving the existence of two agreements calling for arbitration
and that the agreements involved interstate commerce. Specifically, it is
undisputed -- even by Southern -- that the dealer agreements between
Hyundai Construction and Southern contained nearly identical
arbitration provisions that expressly stated that the parties agreed to
arbitrate "[a]ll disputes between the parties relating to or arising out of"
those agreements. (Emphasis added.) It is also undisputed that the
agreements involved interstate commerce -- i.e., sales, service, and
distribution of construction equipment and lift trucks in Alabama and in
other southern states. Accordingly, the burden then shifted to Southern
to show that the arbitration provisions in the dealer agreements were
invalid or did not apply to the present dispute.
Southern argues that the arbitration provisions in the dealer
agreements contain express "carve-out" exceptions for matters that are
required by law to be "submitted to a court or other venue" and for certain
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declaratory-judgment actions. It further argues that the arbitration
provisions in the dealer agreements are not enforceable because Hyundai
has waived them. Finally, Southern contends that any arbitration
proceedings in the present case should not include Hyundai Heavy
Industries because the arbitration provisions, by their very terms, apply
only to disputes "between the parties" and Hyundai Heavy Industries
was not a party to the dealer agreements. We will address each argument
in turn.
A. Carve-outs
First, Southern argues that the arbitration provisions in the dealer
agreements are not broad enough to cover this dispute because the
arbitration provisions contain an "express carve-out." That "express
carve-out," Southern says, provides an exception to arbitration for
matters that " 'are required by law to be submitted to a court or other
venue.' " Southern's brief at 26.
We note, however, that Southern not only has quoted this clause
out of context, but also has quoted only a part of the sentence containing
the clause. To begin with, the scope of the arbitration provisions is stated
much earlier in the arbitration provisions, in clear and unambiguous
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language providing as follows: "All disputes between the parties relating
to or arising out of this Agreement or the making, performance or breach
thereof, or the subject matter hereof, shall be resolved by arbitration in
the following manner …." (Emphasis added). " 'This Court has held
[that] where a contract signed by the parties contains a valid arbitration
clause that refers only to claims "arising out of or relating to" the
contract, that clause has a broader application than an arbitration clause
that refers only to claims "arising from" the agreement.' " STV, 258 So.
3d at 325 (quoting Reynolds & Reynolds Co. v. King Autos., Inc., 689 So.
2d 1, 2-3 (Ala. 1996)) (emphasis omitted).
In contrast, the carve-out clause quoted by Southern is in subpart
(a) of each arbitration provision, which follows the paragraph containing
this unambiguous language stating the scope of the arbitration provision.
Immediately before subpart (a) are these words: "in the following
manner." In other words, the clause quoted by Southern is in a subpart
that relates to the "manner" of the arbitration and not the scope of the
arbitration provision. For instance, subpart (a) includes text about the
use of the procedural rules of the American Arbitration Association and
about personal jurisdiction. Likewise, the remaining subparts in that
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portion of each arbitration provision deal with similar "manner" or
procedural issues -- i.e., the number and qualifications of arbitrators; the
location of arbitration proceedings and the language to be used; the
finality of the arbitration award and the apportionment of costs; and the
judicial-recognition procedure for any arbitration award.
Further, we do not read the language quoted by Southern as an
"exception" to the mandatory language found in each arbitration
provision. As noted above, Southern omits key language from the
sentence containing the clause that makes clear that the sentence is
describing the parties' agreement to submit to the personal jurisdiction
of the arbitrators -- an issue not in dispute here -- and is, therefore, not
describing the scope of the arbitration provision. The full text of the
relevant portion of the sentence containing the clause in each dealer
agreement is as follows: "The parties hereby submit to the exclusive
personal jurisdiction of such arbitrators for all matters unless such
matters are required by law to be submitted to a court or other venue."
(Emphasis added.) It is simply not possible to read this as an "exception"
to the mandatory, unambiguous, and broad language regarding the scope
of the arbitration provision discussed above. When reviewing an
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agreement, we must review the entire agreement and not simply a
portion of one sentence of a subpart of a paragraph. See, e.g., State v.
Lorillard Tobacco Co., 1 So. 3d 1, 7 (Ala. 2008) ("In construing an
arbitration agreement, a court must construe the contract 'as a whole;
detached words or clauses standing alone are not controlling on the
question of interpretation, each being viewed in relation to the agreement
as an entity.' " (citation omitted)).2
Southern also argues that the following clause constitutes a second
"express carve-out" exception to the arbitration provisions at issue: "The
parties hereby submit to the exclusive personal jurisdiction of such
2Even if we were willing to read the clause quoted by Southern as
creating an exception to arbitration, we would still hold that the dealer
agreements require arbitration of the parties' dispute. Southern argues
that the AHEDA mandates that any contract provision that requires a
dealer to waive its rights to a jury trial is "void and unenforceable," citing
Ex parte Terex USA, LLC, 260 So. 3d 813, 822 (Ala. 2018), which barred
the application of an outbound-forum-selection clause because of the
applicability of the AHEDA. Thus, Southern concludes, this dispute is a
matter "required by law to be submitted to a court." The problem is that
Southern is claiming that the parties' dispute is required by Alabama law
to be submitted to a court. This argument ignores long-standing federal
law. The Federal Arbitration Act, 9 U.S.C. § 1 et seq., clearly preempts
a state law prohibiting arbitration of a particular cause of action. See
Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87 (1996). Such
federal preemption did not exist in Terex, which dealt with a forum-
selection clause. Thus, the parties' dispute is not one "required by law to
be submitted to a court."
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arbitrators for all matters unless such matters are required by law to be
submitted to a court or other venue; provided that either party may apply
to any court of competent jurisdiction to seek an order compelling
arbitration or a declaratory judgment with respect to the enforceability
of any provision of this Agreement." (Emphasis added.)
Unlike the language discussed earlier, the emphasized language
does appear to provide an "express carve-out" exception to the arbitration
provisions at issue ("provided that either party may …."). However, as
Hyundai correctly notes, the scope of that exception is limited because it
applies only "to a declaratory judgment" concerning the "enforceability of
any provision of this Agreement." Thus, those portions of Southern's
declaratory-judgment claim relating to the "enforceability of any
provision" of the dealer agreements are subject to this express carve-out.
B. Waiver
Next, Southern argues that the arbitration provisions in the dealer
agreements are not enforceable because, it says, Hyundai has waived
them. Specifically, Southern argues that Hyundai's motion to dismiss
merely mentioned arbitration in passing in a single sentence and did not
make a full-throated argument for arbitration until it filed its motion to
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compel arbitration on the eve of the hearing set for all motions.
" 'A party seeking to prove a waiver of a right to arbitrate carries a
heavy burden, and the courts will not lightly infer a waiver of the right
to compel arbitration.' " Conseco Fin. Corp.-Ala. v. Salter, 846 So. 2d
1077, 1081 (Ala. 2002) (quoting Lee v. YES of Russellville, Inc., 784 So.
2d 1022, 1028-29 (Ala. 2000)). This Court will find a waiver of the right
to compel arbitration only when " ' "the party seeking arbitration has so
substantially invoked the litigation process that to compel arbitration
will substantially prejudice the party opposing it." ' " Id. (citations
omitted; emphasis added); see also Crews v. National Boat Owners Ass'n
Marine Ins. Agency, Inc., 46 So. 3d 933, 941 (Ala. 2010).
A party's reference to the arbitrability of a plaintiff's claims in
judicial filings before it has moved the trial court to compel arbitration
evidences just the opposite of waiver -- that is, it evidences an intent not
to waive its right to arbitration. See ClimaStor IV, L.L.C. v. Marshall
Constr., L.L.C., 4 So. 3d 452, 457-58 (Ala. 2008); U.S. Pipe & Foundry Co.
v. Curren, 779 So. 2d 1171 (Ala. 2000) (holding that, by asserting a right
to arbitration in its answer, the defendant preserved its right, which it
later sought to enforce by filing a motion to compel arbitration). See also
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O'Neal v. Bama Exterminating Co., 147 So. 3d 403 (Ala. 2013) (finding
no waiver even though defendant waited 16 months after complaint was
filed to file motion to compel arbitration and had answered and
participated in discovery and had filed a motion for partial judgment on
the pleadings); Mutual Assurance, Inc. v. Wilson, 716 So. 2d 1160, 1164
(Ala. 1998)(" ' " 'Merely answering on the merits, asserting a counterclaim
(or cross-claim) or participating in discovery, without more, will not
constitute a waiver.' … [T]he earliest point at which waiver of the right
to arbitration may be found is 'when the other party files an answer on
the merits.' " ' ") (citations omitted).
This action was commenced on May 26, 2022. Hyundai filed its
motion to dismiss 6 days later on June 1, 2022, and then filed its motion
to compel arbitration 5 days after that on June 6, 2022 -- 11 calendar
days after the complaint was filed. Hyundai's motion was filed before any
hearings of any kind. The facts here do not support a finding of a waiver
of its arbitration rights by Hyundai. This is especially true when a
preliminary injunction is being sought, sharply increasing the demands
on all counsel. Thus, we are unpersuaded by Southern's waiver
argument.
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C. Hyundai Heavy Industries
Finally, we note that Southern correctly points out that Hyundai
Heavy Industries is not a signatory to either dealer agreement and, thus,
is not technically a party to either arbitration provision at issue.
Southern argues that any arbitration proceedings in the present case
should not include Hyundai Heavy Industries because, it says, the
arbitration provisions -- by their terms -- apply only to disputes "between
the parties." Southern's brief at 36-39 (citing Daphne Auto., LLC v.
Eastern Shore Neurology Clinic, Inc., 245 So. 3d 599, 606 (Ala. 2017), and
Cook's Pest Control, Inc. v. Boykin, 807 So. 2d 524, 527 (Ala. 2001)). It
also argues that Hyundai Heavy Industries is actively disputing in the
trial court whether it is a third-party beneficiary of the dealer
agreements and therefore cannot claim such status for the purpose of
arbitration.
Hyundai Heavy Industries argues, however, that it is Southern that
is claiming that Hyundai Heavy Industries is a third-party beneficiary of
the entire dealer agreements and that, as a result, Southern is equitably
estopped from disputing that the arbitration provisions apply to it in the
present case. Hyundai Heavy Industries also argues that the claims
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against it are "intertwined" with Southern's claims against Hyundai
Construction and that Southern has alleged both a conspiracy and an
agency relationship between both entities. As a result, Hyundai Heavy
Industries contends that the arbitration provisions apply to it and that
arbitration must be compelled in this case.
It is undisputed that Southern asserted in its complaint that the
allegedly wrongful actions taken by Hyundai Construction "at all
relevant times … described herein were taken at the direction of and/or
for the benefit of [Hyundai Heavy Industries] in an agency capacity."
(Emphasis added.) Further, Southern specifically alleged in its
complaint that Hyundai Construction and Hyundai Heavy Industries
"conspired together via concerted action to achieve an unlawful purpose
and/or to achieve their purposes by unlawful means, including via direct
and flagrant violations of the AHEDA, as set forth more fully herein."
Southern also alleged in its complaint that Hyundai Heavy Industries
was the parent company of Hyundai Construction.3
3Southern also argues to this Court that the preliminary injunction
should apply to Hyundai Heavy Industries based on these very
allegations and argues that an injunction would be "meaningless" if it did
not apply to Hyundai Heavy Industries. Southern's brief at 43.
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SC-2022-0675 and SC-2022-0676
In Assurant, Inc. v. Mitchell, 26 So. 3d 1171 (Ala. 2009), the
plaintiff sued an insurer and its parent company asserting breach-of-
contract, bad-faith, and other tort claims. The trial court denied the
motion of the parent company to compel arbitration. In that case, the
arbitration agreement contained language indicating that it applied only
to disputes "between" the contracting parties. It stated that arbitration
applied to disputes "between YOU and US," with "US" being the insurer.
Id. at 1172. Nevertheless, this Court reversed the trial court's order
denying the parent company's motion to compel arbitration and ordered
arbitration because the plaintiff had "alleged an agency or alter ego
relationship" by alleging that the parent company was acting "by and
through" the insurer to commit the alleged wrongs. Id. at 1175. This
Court cited a number of cases in support of its holding. See Jim Walter
Homes, Inc. v. Spraggins, 853 So. 2d 913, 919-20 (Ala. 2002) (recognizing
that a nonsignatory parent company was entitled to invoke right to
arbitration); Ex parte Gray, 686 So. 2d 250 (Ala. 1996) (recognizing that
a nonsignatory "agent" was allowed to invoke right to arbitration);
Stevens v. Phillips 852 So. 2d 123, 131 (Ala. 2002) (recognizing that an
agent "stands in the shoes" of her principal). See also McDougle v.
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SC-2022-0675 and SC-2022-0676
Silvernell, 738 So. 2d 806, 809 (Ala. 1999) (recognizing that a closing
attorney, as agent of title insurer, had standing to enforce an arbitration
provision even though the attorney was not a party to the agreement
containing arbitration provision).
The same is true here. Southern has expressly alleged an "agency
capacity" between Hyundai Construction and Hyundai Heavy Industries
and has specifically alleged that the parent -- Hyundai Heavy Industries
-- was acting by and through the subsidiary -- Hyundai Construction. In
fact, there are no allegations that any actions taken in this case were
taken by Hyundai Heavy Industries alone. Instead, the actions taken
were alleged to have been taken by Hyundai Construction as the agent
and co-conspirator of Hyundai Heavy Industries. Under these
circumstances, we are unpersuaded by Southern's argument and hold
that any arbitration proceedings held in this dispute must include both
Hyundai Construction and Hyundai Heavy Industries.
D. Summary
" 'In interpreting an arbitration provision, "any doubts concerning
the scope of arbitrable issues should be resolved in favor of arbitration,
whether the problem at hand is the construction of the contract language
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itself or an allegation of waiver, delay, or a like defense to arbitrability." ' "
STV, 258 So. 3d at 325 (citations omitted; emphasis altered). " ' "Thus, a
motion to compel arbitration should not be denied unless it may be said
with positive assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute." ' " Id. (citations
omitted; emphasis altered). Based on the foregoing, we conclude that
Southern met its burden by demonstrating that the arbitration
provisions do not apply only to portions of its declaratory-judgment claim.
However, it failed to meet its burden to demonstrate that the arbitration
provisions do not apply to its other claims. For these reasons, we affirm
the trial court's order denying Hyundai's motion to compel arbitration as
to any portions of Southern's declaratory-judgment claim relating to the
"enforceability of any provision" of the dealer agreements, but we reverse
the trial court's order denying Hyundai's motion as to all of Southern's
other claims.
II. Appeal No. SC-2022-0675 -- The Preliminary Injunction
Next, Hyundai contends that the trial court erred in issuing a
preliminary injunction. Specifically, Hyundai argues that the trial court
was without jurisdiction to issue the preliminary injunction in the
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SC-2022-0675 and SC-2022-0676
present case and that the evidence presented during the hearing on the
motion below did not support a finding that Southern was entitled to
injunctive relief.
Alabama caselaw provides that a trial court has jurisdiction to
enter preliminary injunctive relief to maintain the status quo between
the parties, even when the dispute should be sent to arbitration. See
Spinks v. Automation Pers. Servs., Inc., 49 So. 3d 186, 190 (Ala. 2010)
("[W]e conclude that the trial court had jurisdiction to issue a preliminary
injunction to preserve the status quo pending completion of the
arbitration proceeding." (emphasis added)); and Holiday Isle, 12 So. 3d
at 1177 (stating that the "trial court had jurisdiction to enter a
preliminary injunction to order equitable relief to preserve the status
quo" and reasoning that the American Arbitration Association
Commercial Rules recognize such an option). A trial court may grant
such equitable relief " 'where an arbitral award could not return the
parties substantially to the status quo.' " Holiday Isle, 12 So. 3d at 1177(quoting Drago v. Holiday Isle, L.L.C., 537 F. Supp. 2d 1219, 1222 (S.D.
Ala. 2007)).
As explained previously, Southern is the dealer for two separate
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lines of equipment and is a party to two separate dealer agreements. We
must, therefore, analyze each agreement separately.
As to the construction-equipment agreement, the preliminary
injunction was not necessary "to preserve the status quo." The status quo
as to the construction equipment was no sales taking place. The
undisputed facts are that Southern had not sold a single piece of
construction equipment since 2020. Even if there are any sales in the
future by the new dealer -- Taylor -- and even if liability is found,
damages would appear simple to calculate. Likewise, it is difficult to
understand how there could be irreparable harm given the complete lack
of sales of construction equipment, and Southern has not provided such
an explanation in its briefing.4 We, thus, reverse the trial court's order
insofar as it granted Southern's motion for a preliminary injunction as to
the construction-equipment agreement.
Whether the trial court erred in granting a preliminary injunction
as to the forklift agreement is a closer call. First, Southern has provided
4Although Southern argues that the lack of sales could be attributed
to failures and problems of Hyundai (for instance, supply-chain issues),
it remains true that there have not been any such sales for two years.
That is the status quo.
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evidence of both significant and consistent sales of lift trucks and other
equipment subject to the forklift agreement. It has also provided
significant evidence indicating that it has invested a great deal in its
efforts to serve as a dealer of Hyundai Construction's lift-truck
equipment, including hiring staff dedicated to selling and servicing the
equipment, training such staff, and building a reputation and a client
base.5 Southern also argues that § 8-21B-13, Ala. Code 1975, a part of the
AHEDA, specifically provides that any party who has suffered "bodily
injury, loss of profit, or property damage as a result of a violation of" the
provisions of the AHEDA "may bring a civil action … to enjoin further
violations."
Hyundai argues, however, that there would be no irreparable harm,
noting that money damages would be adequate and that such damages
can be easily calculated by reviewing historical sales numbers. Hyundai
5For example, Southern provided evidence indicating that it
employs 6 salespeople (including 1 customer-service specialist) -- having
an average of 35 years' experience -- to handle Hyundai Construction's
products. In addition, Southern provided evidence indicating that it
maintained, on a full-time basis, approximately 3 road and shop
technicians, each with 10-20 years' experience, who have been "Hyundai
Factory Trained" to service Hyundai Construction's products.
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further argues the forklift agreement is nonexclusive and that the
"unending" injunction provides Southern with more relief than it is
entitled to under either the forklift agreement or the AHEDA. It further
argues that it did not terminate the forklift agreement but merely added
another dealer in the same territory and that the additional dealer will
actually benefit Southern.
First, although it is true that the AHEDA provides that it may be
enforced by injunction, § 8-21B-13 does not dictate the result here
because it provides for a final injunction, not a preliminary injunction.
However, we agree that such express statutory provisions bear on
whether a trial court should enter a preliminary injunction, given that
the legislature has made an affirmative decision to provide the remedy of
injunction. For instance, if we reverse the preliminary injunction on this
record of significant sales and significant investment by Southern in
people, marketing, training, and relationships, we risk providing a
hollow victory should Southern ultimately prevail, thereby eviscerating
the remedy that the legislature has provided. Strong sales numbers are
the status quo today. Our ruling is confined to this record at this time,
and we emphasize that we do not intend to announce a bright-line rule
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SC-2022-0675 and SC-2022-0676
that a preliminary injunction should be granted in all AHEDA cases (or
in all cases in which the legislature has listed an injunction as a possible
remedy for a statutory violation).
Second, Southern has provided evidence of harm to its reputation
and goodwill, as well as evidence of customer attrition, and the trial court
found that such harm was occurring. In other words, Southern not only
has provided evidence of potential harm, but has provided actual
evidence that the status quo was changing. As noted above, shortly after
the notice regarding the addition of Thompson as a dealer, Southern
became aware that some of its customers had already been contacted and
provided quotes and/or had been informed that Thompson was the new
Hyundai Construction dealer for lift-truck equipment in Southern's
territory. In other words, the status quo was changing and was changing
before the expiration of the 60 days' notice period required under the
AHEDA.
Third, Southern contends that the preliminary injunction as to the
forklift agreement is not "indefinite." We agree. As it currently stands,
the preliminary injunction will last for the duration of the action -- or
until otherwise dissolved upon a motion from one of the parties. It is not
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unlimited in time.
Finally, the nonexclusive nature of the forklift agreement does not
dictate the result here; the AHEDA is part of Alabama law, and, as long
as it is constitutional, it supersedes applicable provisions of the forklift
agreement. Ex parte Terex USA, LLC, 260 So. 3d 813, 822 (Ala. 2018).
It is not our role to question the wisdom of the legislature's choices.
Ultimately, this is a close call in this case. However, based upon the
evidence provided in the record and the trial court's findings, we cannot
say that the trial court exceeded its discretion in enjoining the overlay of
Thompson as a dealer in Southern's territory under the forklift
agreement.
Based on the foregoing, we affirm the trial court's order insofar as
it granted Southern's motion for a preliminary injunction as to the
forklift agreement. However, we reverse the trial court's order insofar as
it granted a preliminary injunction related to the construction-
equipment agreement.
Conclusion
In appeal no. SC-2022-0675, we affirm the trial court's order insofar
as it granted Southern's motion for a preliminary injunction as to the
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forklift agreement. However, we reverse the trial court's order insofar as
it issued a preliminary injunction related to the construction-equipment
agreement, and we remand the cause for the trial court to enter an order
consistent with this opinion.
In case no. SC-2022-0676, we affirm the trial court's order insofar
as it denied Hyundai's motion to compel arbitration as to any provisions
of Southern's declaratory-judgment claim relating to the "enforceability
of any provision" of the dealer agreement. However, we reverse the trial
court's order insofar as it denied Hyundai's motion to compel arbitration
as to Southern's other claims, and we remand the cause for the trial court
to enter an order consistent with this opinion.
SC-2022-0675 -- AFFIRMED IN PART; REVERSED IN PART;
AND REMANDED.
SC-2022-0676 -- AFFIRMED IN PART; REVERSED IN PART;
AND REMANDED.
Wise, Stewart, and Mitchell, JJ., concur.
Parker, C.J., concurs in part and dissents in part, with opinion.
Shaw, Bryan, Sellers, and Mendheim, JJ., concur in the result.
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PARKER, Chief Justice (concurring in part and dissenting in part).
In appeal number SC-2022-0676, I concur in affirming the circuit
court's denial of the motion to compel arbitration filed by Hyundai
Construction Equipment Americas, Inc., and Hyundai Heavy Industries,
Co., Ltd. (collectively "Hyundai"), as to portions of the declaratory-
judgment claim asserted against them by Southern Lift Trucks, LLC
("Southern"). And I concur in reversing the denial of the arbitration
motion as to Southern's other claims that were not based on the Alabama
Heavy Equipment Dealer Act ("AHEDA"), § 8-21B-1 et seq., Ala. Code
1975. But I would affirm that denial as to Southern's other claims that
were based on AHEDA, because those claims were within the arbitration
provisions' exception for "matters … required by law to be submitted to a
court …."
" 'Agreements to arbitrate are essentially creatures of contract,' and
ordinary contract rules govern the interpretation of arbitration
provisions." Orkin Exterminating Co. v. Larkin, 857 So. 2d 97, 103 (Ala.
2003) (citation omitted). "When interpreting a contract, a court should
give the terms of the contract their clear and plain meaning …."
Brewbaker Motors, Inc. v. Belser, 776 So. 2d 110, 112 (Ala. 2000). Here,
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the arbitration provisions expressly exempt from arbitration matters
that are "required by law to be submitted to a court." Section 8-21B-13 of
AHEDA provides: "Notwithstanding the terms, provisions, or conditions
of any dealer agreement, any person who suffers bodily injury, loss of
profit, or property damage as a result of a violation of [AHEDA] may
bring a civil action in a court of competent jurisdiction in this state …."
With that language, AHEDA guarantees heavy-equipment dealers "the
right to bring an action under the AHEDA in this State, and no contrary
provision in a dealer agreement will foreclose the dealer's right to do so."
Ex parte Terex USA, LLC, 260 So. 3d 813, 822 (Ala. 2018) (emphasis
omitted) (dispute regarding in-state versus out-of-state venue). That is,
AHEDA claims are conditionally "required by law to be submitted to a
court": If a dealer chooses to bring the action in State court, it must be
adjudicated there rather than by arbitration.
Here, Southern exercised its right to bring AHEDA claims in court,
so those claims were "required by law to be submitted to a court."
Accordingly, the arbitration provisions' language does not require
arbitration of Southern's AHEDA claims.
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In appeal number SC-2022-0675, I concur in reversing the
preliminary injunction prohibiting Hyundai from terminating the
construction-equipment agreement. Southern has not demonstrated that
it had no adequate remedy at law via a damages judgment at the end of
the case. But I would also reverse the preliminary injunction prohibiting
Hyundai from adding another forklift dealer, because Southern has not
demonstrated that it satisfied the elements necessary to obtain a
preliminary injunction. See State ex rel. Marshall v. TY Green's Massage
Therapy, Inc., 332 So. 3d 413, 427 (Ala. 2021) (Parker, C.J., concurring
in result) ("To obtain a preliminary injunction, a plaintiff must
demonstrate that (1) without the injunction, the plaintiff will suffer an
irreparable injury; (2) the plaintiff has no adequate remedy at law; (3)
the plaintiff has a reasonable likelihood of success on the merits
(sometimes stated as a 'reasonable chance'); and (4) the hardship that the
injunction will impose on the defendant will not unreasonably outweigh
the benefit to the plaintiff."); Capmark Bank v. RGR, LLC, 81 So. 3d
1258, 1267 (Ala. 2011) (listing elements).
39