Alabama Heavy Equipment Dealer Act – Arbitration – Preliminary Injunction

Hyundai Construction Equipment Americas, Inc. et al. v. Southern Lift Trucks, LLC; [Ms. SC-2022-0675; SC-2022-0676, May 12, 2023] __ So. 3d __ (Ala. 2023). In Case No. SC-2022-0676, the Court (Cook, J.; Wise, Stewart, and Mitchell, JJ., concur; Parker, C.J., concurs in part and dissents in part; Shaw, Bryan, Sellers, and Mendheim, JJ., concur in the result) affirms in part and denies in part the Washington Circuit Court’s denial of a motion to compel arbitration filed by Hyundai Construction Equipment Americas, Inc. (“Hyundai Construction”) and its parent Hyundai Heavy Industries Co., Ltd. (“Hyundai Heavy Industries”) of claims filed by Southern Lift Trucks, LLC (“Southern”), a heavy-equipment dealer for Hyundai Construction.

In 2019, Southern executed a dealer agreement with Hyundai Construction to serve as a dealer of lift trucks manufactured by Hyundai Construction (“the forklift agreement”). Ms. **2-3. In 2020, Southern entered into a second dealer agreement to serve as a dealer of construction equipment manufactured by Hyundai Construction (“the construction-equipment agreement”). Southern was quite successful selling Hyundai lift trucks but had little to no sales under the construction equipment agreement. When Hyundai sought to terminate the construction equipment agreement and to add another lift-truck dealer in Southern’s territory, 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.

The Court rejects Southern’s argument that Hyundai waived enforcement of the arbitration provision and reiterates

“‘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).

Ms. *23.

A 5-member majority of the Court reiterates that non-signatories may enforce arbitration provisions on agency and alter-ego theories. Ms. *27, citing “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).” The Court notes “Southern alleged Hyundai Construction acted “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.” Ms. *28.

The main opinion affirms the denial of the motion to compel arbitration of “those portions of Southern’s claim for declaratory relief relating to the ‘enforceability of any provision’ of the dealer agreements” because those claims are subject to an “express carve-out” provision of the arbitration provision,” Ms. *22, but reverses the order denying arbitration of the other claims. Chief Justice Parker, who dissented in part, would also affirm denial of arbitration “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 ....’” Ms. *37.

The Court also affirms in part and reverses in part the circuit court’s order granting Southern’s request for a preliminary injunction and notes “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.” Ms. *30. The Court reverses the injunction as to the construction-equipment agreement, because “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 ... and even if liability is found, damages would appear simple to calculate.” Ms. * 31.

The Court affirms the preliminary injunction as to the forklift agreement and rejects Hyundai’s argument that the nonexclusive terms of the forklift agreement precluded a preliminary injunction because “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).” Ms. *35.

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