200 So. 3d 1157
Ala.2016Background
- PBG contracted with Corvias master subcontract for Ft. Rucker project; Dannelly submitted a bid and performed work under a PBG work order, but no arbitration clause appeared in the bid or work order.
- PBG later entered into a master subcontract with Corvias containing a broad arbitration provision; PBG signed by Corvias and PBG, but Dannelly did not sign either the master subcontract or PBG’s standard subcontract.
- PBG claimed arbitration was required for disputes between PBG and Dannelly based on the master subcontract or PBG’s standard subcontract, though no signed copies were located and Dannelly denied agreeing to those terms.
- Contractors sued PBG in 2013 for alleged breaches arising from retaining-wall failures; a stay and later arbitration had been sought, leading to a third-party complaint by PBG against Dannelly and SMCE in 2014.
- PBG moved to compel arbitration of its third-party claims against Dannelly and SMCE in December 2014; Dannelly opposed, arguing no contract requiring arbitration with it existed and the arbitration clause was too narrow or inapplicable.
- Circuit court granted arbitration in January 2015; Dannelly appealed, arguing lack of signed contract and inapplicability of the arbitration clause to its third-party claims; appellate court reversed and remanded for a jury trial on whether Dannelly and PBG entered PBG’s standard subcontract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a contract requiring arbitration existed between PBG and Dannelly | PBG: assent to master or standard agreements can be inferred and enforce arbitration. | Dannelly: no signed contract; affidavits create genuine issue about existence of an arbitration agreement. | In dispute, genuine issues about contract existence; reversal warranted on this basis. |
| Scope of the master subcontract arbitration to third-party claims against Dannelly | PBG contends third-party beneficiaries or broad scope apply. | Dannelly contends narrow scope and non-signatory status preclude arbitration. | Master subcontract arbitration provisions are too narrow to bind Dannelly to PBG’s third-party claims. |
| Whether Dannelly is a third-party beneficiary of the master subcontract and bound by arbitration | PBG argues third-party-beneficiary exception applies if intended benefits exist. | Dannelly argues lack of intentional benefit and scope; even if benefitted, narrow clause blocks arbitration. | Third-party-beneficiary exception does not render Dannelly bound given the narrow scope of the arbitration clause. |
| Effect of unsigned copies and evidentiary proof of contract existence | PBG points to Eichelberger affidavit showing agreement; Jenkins supports non-signed evidence can prove existence. | Dannelly relies on unequivocal denial of signed contract existence; Meadows requires genuine issue with evidence. | Eichelberger’s affidavit can establish initial burden; genuine factual issue remains due to conflicting affidavits. |
| Remand posture and potential jury trial on contract formation | Arbitration provisions should be enforced if contract exists; if not, trial on merits. | If no contract, proceed to trial on third-party claims. | Remand for jury trial to determine whether Dannelly and PBG entered PBG’s standard subcontract. |
Key Cases Cited
- Ex parte Rush, 730 So.2d 1177 (Ala. 1999) (mutual assent may be inferred; signatures not always required)
- Jenkins v. Atelier Homes, Inc., 62 So.3d 504 (Ala. 2010) (custodian-affidavit can prove existence of arbitration agreement)
- MTA, Inc. v. Merrill Lynch, 114 So.3d 27 (Ala.2012) (narrow arbitration scope precludes nonsignatories from arbitrating)
- Cook’s Pest Control, Inc. v. Boykin, 807 So.2d 524 (Ala.2001) (third-party-beneficiary and scope of arbitration clause considerations)
- Partin (Georgia Power Co. v. Partin), 727 So.2d 2 (Ala.1998) (benefits and burdens of contract must be shared by beneficiary)
- Ex parte Meadows, 782 So.2d 277 (Ala.2000) (to create genuine issue, unequivocal denial plus some evidence needed)