Arbitration - Unconscionability - Scope of Arbitration Provision - Family Security Credit Union v. Etheredge

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Family Security Credit Union v. Etheredge, [Ms. 1151000, 1151001, 1151002, 1151003, 1151004, 1151005, 1151006, 1151007, May 12, 2017] __ So. 3d __ (Ala. 2017). This plurality opinion authored by Justice Main (Stuart, C.J., Parker, Bryan, JJ., concur, Bolin, Murdock, and Shaw, JJ., concur in the result), reverses the trial court’s order refusing to compel arbitration in eight consolidated cases. First noting that review of decisions on motions to compel arbitration is de novo, the Court holds that to avoid an arbitration agreement on the basis of unconscionability, a party must show both substantive and procedural unconscionability. Ms. *10-11. The plaintiffs did not present any evidence in the trial court in opposition to the motion to compel arbitration. “Having no evidence of procedural unconscionability before it (facts and circumstances surrounding execution of the arbitration agreement), the trial court erred in holding the arbitration provision in each contract is unconscionable.” Ms. *11.

The Court rejected the plaintiffs’ argument that the arbitration provision was not enforceable by reason of lack of mutuality of remedy:

“‘[t]he doctrine of mutuality of remedy is limited to the availability of the ultimate redress for a wrong suffered by a plaintiff, not the means by which that ultimate redress is sought. A plaintiff does not seek as his ultimate redress an arbitration proceeding or a court proceeding. Instead, he seeks legal relief (e.g., damages) or equitable relief (e.g., specific performance) for his injury, and he uses the proceeding as a means to obtain that result.’”

Ms. *12, quoting Green Tree Fin. Corp. of Alabama v. Vintson, 753 So. 2d 497, 504 (Ala. 1999)(quoting Ex parte McNaughton, 728 So. 2d 592, 598 (Ala. 1998)). Applying this principle, the Court rejected the purchasers’ argument that the arbitration provision was unenforceable by reason of lack of mutuality because FSCU had the option of suing on the agreement in court whereas the purchasers were limited to arbitration.

Finally, the Court rejected the purchasers’ argument that the scope of the arbitration provision did not encompass their claims of negligence and wantonness. The Court noted the broad language of the agreement that “any controversy or claim arising out of or relating to this agreement shall be settled by binding arbitration.” Ms. *16. The Court concluded that “[a]ll the claims relate to the title of the vehicles purchased through contracts that were assigned to FSCU through the agreements containing the arbitration provision. Without the agreement containing the arbitration provision, no relationship as to the vehicles would exist between the purchasers and FSCU. Accordingly, the broad language of the arbitration provision encompasses the purchasers’ claims against FSCU.” Ms. *17.

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