98 So. 3d 1140
Ala.2012Background
- Bennett & Bennett Construction and the Skinners entered a construction-contract for remodeling the Skinners’ residence; contract contains an arbitration clause requiring mediation then arbitration under AAA Construction Industry Rules.
- Skinners sue Bennett for multiple claims including fraud in the inducement, outrage, breach of contract, breach of warranty, assault and battery, negligence, and related theories.
- Bennett moves to compel arbitration of all claims, arguing all claims arise from or relate to the contract or its breach.
- Skinners respond that their agreement to arbitrate was procured by fraud, supported by Barbara Skinner’s affidavit detailing alleged misrepresentations and prior assurances about arbitration.
- Trial court grants arbitration on breach-of-contract and breach-of-warranty claims, and denies arbitration on fraud and outrage claims, with other counts proceeding to trial.
- Bennett appeals the denial of arbitration for fraud in the inducement and outrage; the appellate court reverses and remands for arbitration of those claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud in the inducement is arbitrable | Skinner: fraud in inducement generally relates to the contract and should be arbitrated. | Bennett: fraud in inducement directed to contract as a whole or clause-specific claims should be arbitrated per precedent. | Fraud in inducement subject to arbitration |
| Whether the tort of outrage is arbitrable | Skinner: outrage claim arises from contract disputes and should be arbitrated. | Bennett: outrage arises from contract-related disagreements and is within arbitrable scope. | Outrage claim subject to arbitration |
Key Cases Cited
- Investment Mgmt. & Research, Inc. v. Hamilton, 727 So.2d 71 (Ala.1999) (fraud-in-inducement arising from contract generally subject to arbitration)
- Quality Truck & Auto Sales, Inc. v. Yassine, 730 So.2d 1164 (Ala.1999) (fraud-in-inducement following contract delegation to arbitration)
- Johnson Mobile Homes of Alabama, Inc. v. Hatcock, 855 So.2d 1064 (Ala.2003) (fraud-in-inducement generally subject to arbitration; scope depends on clause)
- ECS, Inc. v. Goff Group, 880 So.2d 1140 (Ala.2003) (cannot avoid broad arbitration language by recasting as tort)
- SCI Alabama Funeral Sens., Inc. v. Lanyon, 896 So.2d 495 (Ala.2004) (arbitration scope includes disputes arising out of contract; tort recastings still bound)
- Beaver Constr. Co. v. Lakehouse, L.L.C., 742 So.2d 159 (Ala.1999) (arc of arbitration includes contractual disputes framed as contract claims)
- Ex parte Lorance, 669 So.2d 890 (Ala.1995) (fraud-on-arbitration clause framework governing enforceability)