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ARBITRATION - ALABAMA TITLE LOANS, INC. V. KIMBERLY C. WHITE

In Alabama Title Loans, Inc. v. Kimberly C. White, [Ms. 1091642 Jul. 15, 2011] __ So. 3d __(Ala. 2011), the Alabama Supreme Court reversed a trial court's denial of Defendants' motion to compel arbitration. On May 29, 2009, the plaintiff borrowed $1,700.00 from Alabama Title Loans, securing the loan with her 2006 Nissan Sentra. Plaintiff signed an arbitration clause associated with this title loan. Plaintiff made a payment in June, which was primarily interest. Her principal was reduced to $1,698.33. Plaintiff signed a new title loan in June for the remaining balance. The June title loan contained an identical arbitration clause. In July, the plaintiff made another payment that primarily covered interest. Her principal was reduced to $1,697.91. Plaintiff signed another agreement for the remaining balance that also contained the same arbitration clause. Plaintiff claimed that she paid her loan in full in August and produced evidence to support this contention (i.e., proof that she had received her original certificate of title and had since then had used it as collateral for another loan with an unrelated finance company, which held the title at the time the vehicle was repossessed by Alabama Title Loans several months later). Defendants denied that the loan was paid in full and produced documentation showing that additional title loan agreements were signed in August and September. Plaintiff claimed that the signatures on those agreements were forgeries. In January 2010, Alabama Title Loans repossessed the Nissan Sentra, allegedly assaulting the plaintiff in the process. The police were called to the scene. The police ordered Alabama Title Loans to return the vehicle when it failed to produce the title it claimed gave them the right to repossess the car. The plaintiff sued Alabama Title Loans and the company that participated in the repossession, alleging assault and battery, negligence, wantonness, trespass, wrongful repossession, and conversion, among other things. Defendants moved to compel arbitration. The trial court denied the motion, but the Alabama Supreme Court reversed. Alabama Title Loans argued that the repossession of the vehicle was the result of the relationship between Alabama Title Loans and Plaintiff that was established through the various title loan agreements that were executed by the plaintiff from May through September and that the repossession "relates back" to each of those agreements. The plaintiff argued that she could not be compelled to arbitration based on the May, June, or July agreements (the only ones she admitted signing) because each of those contracts was extinguished when she either paid the interest and signed a new title loan agreement or paid the amount in full. The plaintiff claimed that an arbitration clause in an expired contract cannot be used to compel arbitration in a dispute that did not arise during the term of the contract or did not involve a right that accrued under the contract. She also argued that she could not be compelled to arbitration based on the post-July agreements because they contained forgeries. The Alabama Supreme Court focused on the language in the arbitration agreement that said it "shall survive the repayment of all amounts owed under this Agreement," and claimed that the language evidenced "the intent of the parties that any dispute that might arise between them should be arbitrated regardless of whether the amount borrowed pursuant to the title loan agreement had been repaid." In addition, because the arbitration agreements applied to any dispute related to "the vehicle," the scope of the arbitration clause in the May, June, and July 2009 agreements was broad enough to cover the repossession that occurred in January 2010. Because the plaintiff could be compelled to arbitration based on the May, June and July agreements, the Court did not need to address the issue related to the alleged forgeries.
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