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    WAVERLEE HOMES, INC. v. Chris McMICHAEL and Brenda McMichael.
    1010966.
    Supreme Court of Alabama.
    Feb. 14, 2003.

      Joel A. Williams and Chaya Bail of Sad-ler Sullivan, P.C., Birmingham, for appellant.
    David M. Cowan and Robert Potter of Mann, Cowan & Potter, P.C., Birmingham; and Jeff Utsey of Utsey & Utsey, Butler, for appellees.
    Robert E. Sasser, Patrick L.W. Sefton, and Chad E. Stewart of Sasser, Littleton & Stidham, P.C., Montgomery, for amicus curiae Alabama Manufactured Housing Institute, in support of the appellant.
   HARWOOD, Justice.

Waverlee Homes, Inc., the defendant in an action pending in the Choctaw County Circuit Court, challenges a judgment entered upon an arbitration award, on the ground that the arbitrator was biased.

Chris McMichael and Brenda McMicha-el, purchasers of a mobile home and residents of Alabama, sued Causey & Graves d/b/a Holly Brook Homes, L.L.C. (hereinafter “Holly Brook”), a Mississippi entity and the seller of the home, as well as Waverlee Homes, Inc. (hereinafter “Wav-erlee”), an Alabama corporation and the manufacturer of the home, in the Choctaw County Circuit Court on December 29, 1999. As finally amended, the McMicha-els’ complaint sought compensatory and punitive damages on claims alleging fraud, breach of express and implied warranties, and negligent and/or wanton construction, inspection, transport, and setup of the home.

Pursuant to an arbitration provision contained in a “Manufactured Home Retail Installment Contract and Security Agreement” (“the retail installment contract”) executed by the McMichaels and Holly Brook during the purchase of the mobile home, Waverlee and Holly Brook filed motions to compel arbitration. On June 1, 2000, the trial court granted those motions and stayed the proceeding until the final disposition of the arbitration. The case was arbitrated on September 26, 2000. On August 28, 2001, Spencer Walker, the arbitrator, an attorney from Grove Hill, issued an order requesting all parties to divide the $2,756.25 arbitration costs equally; we infer from the record that all parties contributed their respective portions of the fee. On September 19, 2001, Holly Brook settled pro tanto with the McMichaels for $5,000. On Friday, September 21, 2001, Walker filed his “Report and Award of Arbitrator” with the clerk of the Choctaw Circuit Court, finding in favor of the McMichaels and awarding them damages in the amount of $490,000. Inconsistent with its order of August 28, 2001, the arbitrator’s award also assessed Waverlee $3,000, which represented the entire cost of the arbitration. The trial court entered a judgment on the arbitrator’s award on Monday, September 24, 2001.

On October 1, 2001, Waverlee filed a notice in the trial court to depose Robert C. Black, Jr., a Montgomery attorney, concerning a “deal” allegedly proposed by the McMichaels’ attorney, Jeff Utsey, in an arbitration proceeding in another similar case. The McMichaels filed a “Motion for Protective Order and/or in the Alternative, Motion to Quash,” which the trial judge granted. Waverlee then filed a post-judgment “Motion to Vacate Judgment and Arbitration Award and/or Petition to Vacate, Modify and Correct Arbitration Award and Judgment and for Other Relief,” pursuant to Rule 59(e), Ala.R.Civ.P., seeking to vacate the judgment entered on the arbitration award. In support of the motion, Waverlee referenced the proposed deposition of Black, made an offer of proof regarding the alleged deal Utsey proposed to Black, and submitted the affidavit of Joel Williams, its attorney. In the motion, Waverlee requested that the court, among other things, “vacate the arbitration award and the judgment of this Court entering the arbitration award rendered against Waverlee and in favor of the plaintiffs....”

On December 26, 2001, Waverlee again noticed the deposition of Robert Black, Jr. Thereafter, the McMichaels filed a response opposing Waverlee’s postjudgment motion and moved to strike the evidence submitted by Waverlee in its motion, asserting that it was inadmissible hearsay. The McMichaels also filed a motion to quash the second deposition subpoena of Robert Black, Jr., which the trial court granted. The trial court never ruled on Waverlee’s postjudgment motion to vacate the judgment entered on the arbitration award, and on January 9, 2002, that motion was denied by operation of law pursuant to Rule 59.1, Ala.R.Civ.P. On January 17, 2002, the trial court entered an “Order of Partial Dismissal”; that order dismissed Holly Brook from the action as a result of the pro tanto settlement. Waverlee appealed to this Court on February 11, 2002, challenging the trial court’s adoption of the arbitration award. Holly Brook is not a party to this appeal.

Waverlee argues on appeal that the denial of its motion to vacate the judgment entered on the arbitrator’s award must be reversed because, it says, (1) the $490,000 arbitration award was a result of partiality, bias, and corruption on the part of the arbitrator, and (2) the arbitrator acted arbitrarily and capriciously and in a manifest disregard of the law by issuing such an award. The dispositive issue for the purposes of this appeal is whether, in light of the evidentiary showing by Waverlee, the trial court erred in denying, without a hearing, Waveriee’s postjudgment motion to vacate the judgment confirming the award of the arbitrator.

Facts

The record contains the affidavit of Joel Williams attesting that after the trial court granted the motions to compel arbitration filed by Waverlee and Holly Brook, Williams sent a letter to Utsey naming six attorneys who he proposed could serve as arbitrators in the matter. Utsey’s letter in reply stated that he opposed all of the proposed arbitrators suggested by Williams and that any proposals for arbitrators should be made by David Jordan, the attorney for Holly Brook, as required by the retail installment contract entered into by the McMichaels and Holly Brook. The retail installment contract stated, in pertinent part:

“14. ARBITRATION: ALL DISPUTES, CLAIMS, OR CONTROVERSIES ARISING FROM OR RELATING TO THIS CONTRACT OR THE PARTIES THERETO SHALL BE RESOLVED BY BINDING ARBITRATION BY ONE ARBITRATOR SELECTED BY YOU WITH MY CONSENT.”

(Capitalization original.) The section of the retail installment contract entitled “Definitions” states, in pertinent part:

“ T, ‘me’, ‘my’, means the Buyers. You’, ‘your’ means the Seller and also the Assignee or their affiliates (after the Contract is assigned by the Seller).”

Williams attested that he subsequently had a telephone conversation with Jordan in which Jordan represented that he believed Utsey would agree to have Spencer Walker serve as arbitrator in the matter. Jordan stated that to his knowledge Walker had no relationship with Utsey and had no previous adversarial relationship with the mobile-home industry. On June 12, 2000, Williams received a letter from Jordan proposing Walker as arbitrator, stating Jordan’s belief that Walker “would be fair to all parties,” and stating that Utsey had agreed to accept Walker as arbitrator. Walker was selected to arbitrate the matter, but, according to Williams’s affidavit, he refused to allow Waverlee to depose the McMichaels or their experts during the arbitration proceeding.

Williams stated that on September 26, 2001, five days after Walker filed the arbitration award in favor of the McMichaels, Williams learned of certain circumstances relating to Walker and Utsey, including a letter authored by Utsey and sent to the Alabama State Bar on February 11, 1999, relating to another arbitration proceeding. Utsey’s letter to the Bar stated:

“I represent a purchaser against a manufacturer and seller of a mobile home. This case has been ordered to arbitration. The terms of the arbitration are that I pick one arbitrator, the seller picks one arbitrator and the two arbitrators together pick one arbitrator.
“Can I make an agreement with the seller that I will argue him out of this case or in the event a verdict is returned against them, either through a jury trial or an arbitration, I will never try and collect the judgment from his client? In return for this, I would be given the right to select his arbitrator.
“Before I do anything, I would like to know if this is unethical behavior. If this agreement is deemed ethical, do I have to inform the other parties to this case of the agreement? I thank you in advance and with warmest personal regards. I await your reply.”

The Bar’s letter in response, dated February 18, 1999, authored by an assistant general counsel for the Bar, stated:

“I am writing in response to your letter of February 11, 1999, requesting an ethics opinion from this office. A copy of your letter is attached hereto for reference purposes. In response to your request, I am providing you the following which is an informal opinion of the Office of General Counsel and is not binding on the Disciplinary Commission of the Alabama State Bar.
“Since the scheme for selecting arbitrators is specified in an arbitration agreement and not fashioned by a particular order, there is nothing unethical in proceeding in the manner you have described in your letter.
“I trust the above is sufficient to answer your inquiry. If you have any further questions, please feel free to contact this office.”

Williams attested that, upon learning of this exchange of letters, he formed the belief that Utsey, rather than Holly Brook, had actually selected Walker as the arbitrator.

Williams further attested that he also learned of court records in Choctaw and Clarke Counties showing that Walker had served as plaintiffs’ counsel in actions against Southern Energy Homes (“Southern Energy”), a mobile-home manufacturer, before Walker served as the arbitrator in this case. The records showed that in 1997, Walker had served as plaintiffs’ counsel in Rodney Todd v. Southern Energy Homes (case no. CV-97-022) in the Circuit Court of Choctaw County and that Walker and Utsey were cocounsel in that case, and that in 1998, Walker had served as plaintiffs’ counsel in Francis Curly v. Southern Energy Homes, Inc. (case no. CV-98-068) in the Circuit Court of Clarke County.

Williams stated that he also learned that in 1999 Walker was appointed as arbitrator in Doug N. Parmer v. Sanderson Mobile Homes (case no. CV-99-08-M) in the Circuit Court of Washington County even though Walker had served as plaintiffs’ counsel in earlier actions against Southern Energy. Williams represented that in the Parmer case counsel for the defendant had filed a motion objecting to Walker’s selection as arbitrator and his acceptance of that position. Williams stated that in 2000, in the case of Vera Smith v. Cedar Ridge Homes, Inc. (case no. CV-2000-114C) in the Circuit Court of Choctaw County, counsel for the defendant mobile-home manufacturer, during the process of selecting an arbitrator, had asked Walker if he had ever served as a plaintiffs attorney in any mobile-home cases, and Walker had responded that he had not. Williams also stated that later in the Smith case at a hearing held July 24, 2001, Walker was asked by the defendant mobile-home manufacturers’ counsel if he had arbitrated any mobile-home cases, and Walker responded that he had served as arbitrator in one case and had been on the panel of another case in which a decision had not been rendered. Walker arbitrated the Smith case.

The record as compiled by Waverlee purports to reveal that in 2000 Walker served as arbitrator in two other actions asserting claims factually similar to those in the present case and involving mobile homes; Utsey was counsel for the plaintiffs in those cases. The cases were in Wilcox County, Clowers v. Grand Manor, Inc. (case no. CV-00-76), and in Choctaw County, McGrew v. Harold Allen’s Mobile Home Factory Outlet (case no. CV-2000-141-M). In each of those cases, and in the Smith case and in the case at hand, Walker as arbitrator found in favor of the plaintiff against the defendant mobile-home manufacturer, even though the dealer was also a defendant. Likewise, in those three cases and in the present case the arbitrator made similar findings of fact as to the nature and extent of the plaintiffs’ damage. For example, Walker, as arbitrator, found that the plaintiffs in each case suffered from emotional distress as a result of embarrassment and humiliation they experienced when guests would visit their homes. Walker also found that each home had no market value and that the plaintiffs in each case had suffered mental anguish as a result of their fear that their homes would catch on fire because of the “great” amount of moisture in the homes. Walker also awarded substantial damages to the plaintiffs in each of the cases. As noted, the award in this case was $490,000. In Clowers, the plaintiff was awarded $590,000; in McGrew, the plaintiff was awarded $550,000; and in Smith, the plaintiff was awarded $360,000. The record further shows that in each of those cases, as in this case, the mobile-home manufacturer was taxed with a $8,000 arbitrator’s fee as the entire cost of the arbitration. The record also shows that the awards in McGrew, Smith, and the instant case were all issued on September 21, 2001, and the award in Clowers was issued on September 24, 2001.

Williams asserted further in his affidavit that he discovered, after the arbitration award was entered in this case, that Utsey had attempted to reach an agreement identical to the one described in the above-quoted letter to the Alabama State Bar, with attorney Robert Black, Jr., defense counsel for a mobile-home dealer in another action in which Utsey was counsel for the plaintiffs. Those events were described in “Defendant’s Motion to Reconsider Order Quashing Subpoena and Offer of Proof.” That offer of proof was made in support of Waverlee’s motion that the trial court reconsider its order quashing a deposition notice for the testimony of Robert Black, Jr., filed October 1, 2001, and in support of Waverlee’s motion to vacate the judgment or the arbitration award. In pertinent part, the offer of proof stated:

“Robert Black is an attorney in the Montgomery law firm of Hill, Hill, Carter, Franco, Cole & Black, PC. He represented a mobile home dealer in a case in which Jeff Utsey represented the Plaintiff in Choctaw County Circuit Court. The manufacturer was also a Defendant in that case. The Defendants filed Motions to Compel Arbitration. The Court granted the Motions.
“Mr. Utsey asked Mr. Black to come over to his office after the motions were heard to discuss the case and Mr. Black did so. At that meeting, Mr. Utsey attempted to get Mr. Black to enter into an agreement whereby the seller/dealer would allow Jeff Utsey to select the arbitrator of his choice (not the dealer’s choice) in exchange for the Plaintiff agreeing not to collect any possible award or judgment against that seller/dealer and to direct the case against only the manufacturer. Mr. Utsey gave to Mr. Black copies of the attached letters dated February 11, 1999, and February [18], 1999, between Mr. Utsey and the Alabama State Bar. Mr. Utsey stated that his selection would be Spencer Walker.
“Mr. Black rejected the proposal. In a subsequent Fleetwood Homes case, Mr. Utsey proposed agreement to Spencer Walker as the arbitrator. Mr. Black wrote a letter to Mr. Utsey rejecting Mr. Walker and reminding Mr. Ut-sey of the deal he had previously offered Mr. Black as outlined above. Mr. Utsey then sent a letter to Mr. Black denying the conversation and denying even knowing or talking to Robert Black.”

Williams also attested that at the arbitration hearing both sides presented reports from experts who had inspected the McMichaels’ home. Those reports are also included in the record. Each of Wav-erlee’s experts found only minor defects, if any, within the home. For instance, the record contains an inspection report of the McMichaels’ home issued by one of Waver-lee’s experts, Joe Teague, a housing inspector for Factory Built Housing Inspection Service. In his report, Teague stated:

“After reviewing all service work orders, Mr. Chesser’s report and my on-site inspection, I find it hard to understand Mrs. McMichael’s letter dated August 28, 1999. All the problems she addressed of this house had been corrected.
“My assessment of this house is, if Mr. and Mrs. McMichael will perform the normal maintenance and upkeep on their house as directed by the homeowner’s manual, then it will remain safe for many years to come.”

The largest estimate of damage expressed by any of the experts in this case was that stated in a report issued by inspector Larry Reynolds, an expert for the McMicha-els, who estimated the total cost of repairs to the mobile home, including labor and materials, to be between $4,500 and $5,500. However, Walker awarded the McMichaels $490,000 for emotional and financial damage based on their breach-of-warranty claims. The award does not purport to include punitive damages.

Discussion

At the outset, we note that the trial court’s judgment of September 24, 2001, entered on the arbitration award, was pursuant to that phrase in the arbitration clause contained in the retail installment contract entered into by the McMichaels and Holly Brook stating “[j]udgment upon the award rendered may be entered in any court having jurisdiction.” Waverlee moved, in the first instance, to vacate that judgment. Therefore, we consider whether the trial court erred by not setting aside its final judgment confirming Walker’s award, upon Waverlee’s postjudgment submission of evidence designed to support an inference that Walker’s award was the result of Walker’s bias in favor of the McMi-chaels. This Court has not previously had to address such a challenge to a judgment entered upon an arbitration award. Accordingly, we look to the decisions of other jurisdictions that have considered analogous situations for insight to assist our analysis.

In World Invest Corp. v. Breen, 684 So.2d 221 (Fla.Dist.Ct.App.1996), the plaintiff investor filed a petition in the circuit court to vacate an arbitration award in favor of the defendant investment corporation on the bases that the arbitrator was biased and that the award was arbitrary and capricious. The trial court dismissed the petition, and the plaintiff appealed. Citing O.R. Sec. v. Professional Planning Assocs., Inc., 857 F.2d 742 (11th Cir.1988), the Breen court stated, “When a petition to vacate an arbitration award alleges facially sufficient grounds for relief, the trial court must, at least, hold a limited eviden-tiary hearing to allow the movant to submit evidence to establish its claim.” 684 So.2d at 222. Thus, the Breen court held that the trial court erred in summarily dismissing the plaintiffs motion to vacate the arbitration award.

In Medina v. Foundation Reserve Ins. Co., 123 N.M. 380, 940 P.2d 1175 (1997), an insurer filed a motion to vacate an arbitration award of uninsured motorist benefits in favor of an insured, alleging that the insured procured the award through fraud, corruption, and undue means. The trial court denied' the motion. Concluding that substantial evidence had been proffered to support the assertion that the arbitration award was procured as a result of fraud, corruption, and undue means, the Supreme Court of New Mexico stated, “In evaluating the propriety of an arbitration award, the reviewing court will conduct an eviden-tiary hearing and enter findings of fact and conclusions of law upon any issue presented in the motion to vacate the award.” 123 N.M. at 383, 940 P.2d at 1178, citing Melton v. Lyon, 108 N.M. 420, 421, 773 P.2d 732, 733 (1989).

In Melton, property owners appealed the trial court’s order confirming an arbitration award in favor of a contractor who had constructed a “warehouse-office complex” for the property owners, which was to be later conveyed by the property owners as part of an acquisition of real estate for the development of a retirement community. The property owners sought to vacate the arbitration award on the ground that the arbitrator was biased as a result of his relationship with a competing developer specializing in the development of retirement communities in New Mexico and because the arbitrator had failed to disclose that relationship. The trial court ruled that the arbitrator’s failure to disclose his relationship with a competing developer was at most harmless error. The Supreme Court of New Mexico agreed with the trial court stating:

“It is not the function of the [trial] court to hear the case de novo and consider the evidence presented to the arbitrators, but rather to conduct an evidentia-ry hearing and enter findings of fact and conclusions of law upon each issue raised in the application to vacate or modify the award.”

Melton, 108 N.M. at 421, 773 P.2d at 733, citing State ex rel. Hooten Constr. Co. v. Borsberry Constr. Co., 108 N.M. 192, 769 P.2d 726 (1989). See also Casias v. Dairyland Ins. Co., 126 N.M. 772, 975 P.2d 385 (Ct.App.1999).

Also, in In re Arbitration Between Clawson & Habilitat, Inc., 71 Haw. 76, 783 P.2d 1230 (1989), a homeowner filed a motion to vacate an arbitration award in favor of a contractor hired by the homeowner to construct a driveway and retaining wall on the homeowner’s property, after a dispute between them had been referred to arbitration. Before the issuance of the arbitrator’s award, the parties believed that a settlement was likely and agreed that no arbitration award would be issued until after 3:00 p.m. on October 21, 1988. The arbitrator’s award was issued on November 1, 1988. In his motion to vacate the arbitrator’s award, submitted before the trial court’s confirmation of the award, the homeowner asserted that the parties had reached a settlement agreement before the release of the arbitrator’s award. However, the trial court confirmed the award. The homeowner appealed. On appeal, the Supreme Court of Hawaii stated that a question of fact existed as to whether there had been an agreement reached by the parties before 3:00 p.m. October 21, 1988. The court went on to hold that “whenever material facts are in dispute in determining whether an arbitration award should be vacated, the circuit court should conduct an evidentiary hearing and render findings of fact and conclusions of law in support of granting or denying the motion to vacate the arbitration award.” Clawson, 71 Haw. at 79-80, 783 P.2d at 1232.

In the instant case, Waverlee submitted post-arbitration, postjudgment evidence describing specific circumstances relating to its contention that Walker, the arbitrator, was biased. That evidence, when taken in its entirety, raises a threshold inference' of possible bias based on Walker’s alleged failure to disclose any interest or bias that might affect his judgment, including any relationships between him and Ut-sey. The McMichaels did not submit any evidence to contradict Waverlee’s assertions of arbitrator bias, and there were therefore no material facts in dispute that would justify a finding by the trial court that Waverlee’s contentions were false. Thus, in light of Breen, Medina, Melton, and Clawson, supra, we conclude that Waverlee’s evidentiary showing in support of its postjudgment motion was sufficient, at that initial stage, to warrant a hearing for the purpose of determining whether adequate evidence exists to grant Waver-lee’s request to set aside the judgment of confirmation. Because it is the province of the trial court to assess the admissibility and weight of Waverlee’s evidence, and likewise that of any rebuttal evidence from the McMichaels, we do not comment on the merits of Waverlee’s allegations; rather, we conclude only that an evidentiary hearing is warranted.

The record does not contain a transcript of the arbitration proceeding. However, the fact that an appeal from an arbitration award is submitted without a record or transcript of an arbitration proceeding does not preclude this Court from reviewing the issue whether a hearing should have been conducted on an otherwise sufficiently supported motion challenging confirmation of the arbitration award. If the arbitrator was biased before the arbitration proceeding was conducted, the content of the proceeding would not be determinative of a challenge to the resulting award based on such bias. The cases of Sanderson Group Inc. v. Smith, 809 So.2d 823 (Ala.Civ.App.2001), and McKee v. Hendrix, 816 So.2d 30 (Ala.Civ.App.2001), cited by the McMichaels, are not to the contrary. For example, in Sanderson, the company that financed a manufactured home sued the purchaser seeking to repossess the home for failure of the purchaser to make the payments on the home. The purchaser counterclaimed against the financing company and filed a third-party complaint against the manufactured-home dealer and its salesperson. The dispute was ordered to arbitration. The arbitrator issued an order that, among other things, awarded damages in favor of the purchaser against the dealer for emotional distress caused by the dealer. The dealer moved to vacate the arbitration award on the basis that the arbitrator’s award of damages for mental anguish was in manifest disregard of the law. The trial court denied the dealer’s motion to vacate and confirmed the arbitrator’s award. The dealer appealed. No transcript of the arbitration proceedings was provided for the Court of Civil Appeals to review. Judge Crawley, author of the Court of Civil Appeals’ opinion, declared that “[w]ithout a transcript revealing evidence to support [the purchaser’s] conversion claim, we cannot conclude that the arbitrator ignored or refused to apply the law.” 809 So.2d at 880. Three of the other four judges on that court merely concurred in the result; the fourth concurred in the result as to the portion of the opinion concerning the statement in question.

In McKee, the purchasers of a new home sued the vendor and its agent, pursuant to a limited warranty on their home, as a result of certain repairs required to be performed on the home. The purchasers alleged breach of warranty, negligent repair, and breach of contract. The dispute was ordered to arbitration, and the arbitration proceeding was not transcribed. The arbitrator issued an order in favor of the purchasers. The purchasers moved for an order confirming and adopting the award, which the trial court granted. The defendants appealed. On appeal, the Court of Civil Appeals stated, with regard to the lack of a transcript of the arbitration proceedings, “no transcript of the arbitration hearing has been presented for this court’s review. A court reviews the confirmation of an arbitration award as it would any other judgment of a lower court; we cannot say the factual determination on this issue was ‘clearly erroneous.’ ” McKee, 816 So.2d at 36, citing Davis v. Prudential Sec., Inc., 59 F.3d 1186 (11th Cir.)

In the instant appeal, unlike the circumstances in Sanderson and McKee, Waver-lee is not seeking our review, in the first instance, of the actual arbitration proceeding. Rather, it is seeking to have the judgment confirming the arbitrator’s award vacated as a result of alleged bias on the part of the arbitrator. Of course, should that judgment be vacated, Waver-lee contends that the trial court should then enter a new judgment, based on the evidence presented, refusing to confirm the award.

On remand, the trial court must evaluate at that hearing the admissibility of the evidence offered by the parties concerning the validity of the arbitrator’s award and consider that evidence accordingly. Although we might simply remand this cause to the trial court on that basis, this case presents the unexplored issue in this State of what is required to show arbitrator bias as a basis for challenging an arbitration award. Accordingly, for guidance for the trial court on remand, we will discuss the legal principles that should govern its consideration of the facts pertaining to Wav-erlee’s assertion that the arbitrator’s award was flawed by bias and partiality.

Waverlee asserts that it discovered the evidence of the arbitrator’s bias only after the arbitrator’s award and the final judgment entered on that award by the trial court. Waverlee asserts that the arbitrator’s bias arises out of the relationship between the McMichaels’ counsel and the arbitrator and that the arbitrator had engaged in similar conduct in other cases. Waverlee argues that this bias was manifested by the arbitrator’s failure to disclose those circumstances to Waverlee and his refusal to consider expert testimony Wav-erlee attempted to present. These contentions were presented to the trial court in Waverlee’s postjudgment motion to vacate and the evidentiary submissions accompanying that motion.

The trial court granted the motions to compel arbitration pursuant to the arbitration provision set out in the retail installment contract; that provision specifically states that the arbitration would be governed by the Federal Arbitration Act (the “FAA”). Because the parties accepted and proceeded under that grant of the motions, on remand the trial court should consider the law pertaining to claims of arbitrator bias asserted under the FAA. Waverlee submitted to the trial court numerous attachments and exhibits as evi-dentiary support, which have been carried forward in its submission to this Court in opposition to the McMichaels’ motion to dismiss the appeal. Thus, the trial court must also consider the evidence we set out supra, along with any additional evidence elicited in the evidentiary proceedings on the postjudgment motion, when making its determination as to whether Waverlee has presented sufficient evidence of arbitrator bias to warrant vacation of the judgment of confirmation of the arbitrator’s award.

The evidence presented by Waverlee in support of its motion was recited previously to show the factual basis Waverlee asserted in support of its arguments to the trial court; we make no determination whether that evidence will be admissible and otherwise proper for the trial court’s consideration at the hearing on remand. At this stage it appears on the record uncontradicted, not having been stricken by the trial court or refuted by the McMi-chaels.

Waverlee argues that the arbitration award issued in this case by Walker is due to be vacated pursuant to 9 U.S.C. § 10(a)(1), (2), (3), or (4), as a result of Walker’s bias and partiality as shown by his relationship with Utsey, as well as the alleged “secret deal” that existed between Utsey and Holly Brook. 9 U.S.C. § 10(a) states:

“(a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—
“(1) Where the award was procured by corruption, fraud, or undue means. “(2) Where there was evident partiality or corruption in the arbitrators, or either of them.
“(3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
“(4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.”

An analysis of whether Waverlee is entitled to the vacation of the arbitrator’s award on the basis of alleged bias and partiality on Walker’s part should begin with a consideration of the seminal United States Supreme Court case of Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301 (1968). In that case, Commonwealth Coatings Corporation, a subcontractor, sued sureties on the prime contractor’s bond for payment allegedly due for work performed by Commonwealth. The dispute was ordered to arbitration pursuant to a provision contained in an applicable contract. In accordance with the provision, Commonwealth and the sureties each selected an arbitrator, who then jointly selected a supposedly neutral third arbitrator. However, the third arbitrator was a consultant who had regularly done business with the prime contractor. The prime contractor had paid the third arbitrator consulting fees of approximately $12,000 “over a period of four of five years,” id. at 146, 89 S.Ct. 337, before the arbitration, but that consulting relationship was not disclosed to Commonwealth until after the arbitration occurred. Commonwealth challenged the award based on the undisclosed relationship.

A plurality of the Court stated:

“It is true that arbitrators cannot sever all their ties with the business world, since they are not expected to get all of their income from their work deciding cases, but we should, if anything, be even more scrupulous to safeguard the impartiality of arbitrators than judges, since the former have completely free rein to decide the law as well as the facts and are not subject to appellate review. We can perceive no way in which the effectiveness of the arbitration process will be hampered by the simple requirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias.”

393 U.S. at 148-49, 89 S.Ct. 337 (emphasis added). Although the Court determined that the arbitration award was due to be set aside, the plurality holding did not discuss in detail a particular standard for courts addressing similar issues to follow. Rather, the plurality opined that “[w]e cannot believe that it was the purpose of Congress to authorize litigants to submit their cases and controversies to arbitration boards that might reasonably be thought biased against one litigant and favorable to another.” Id. at 150, 89 S.Ct. 337. In a concurring opinion, Justice White stated that the best means of avoiding allegations of arbitrator bias was complete disclosure of the existence of any financial transactions the arbitrator has had or is, at the time of the arbitration, negotiating with a party to the arbitration. It appears that the Court envisioned that an arbitrator’s award could be challenged on the basis of bias where the challenging party presented facts that, viewed reasonably, gave rise to an “impression of possible bias.”

Subsequent to Commonwealth Coatings, the interpretation of, and elaboration upon, what has often come to be referred to as the “reasonable impression of partiality” standard has varied somewhat among the different federal courts considering it. For example, in Middlesex Mutual Insurance Co. v. Levine, 675 F.2d 1197 (11th Cir.1982), the United States Court of Appeals for the Eleventh Circuit applied a rationale similar to the rationale in Commonwealth Coatings to a situation in which the arbitrator was aware, yet faded to disclose, that his family-owned insurance company had had significant and repeated business dealings with one of the parties to the arbitration, against whom the arbitrator ultimately found, and that the insurance company was involved in a dispute with that party at the time of the arbitration. Holding that the arbitrator’s award was due to be vacated, the court stated that an arbitration award must be vacated where pertinent facts relating to a supposedly neutral arbitrator demonstrate a “reasonable impression of partiality,” 675 F.2d at 1201, even though there was no evidence of fraud, corruption, or partiality, where the possibility of bias was “ ‘direct, definite and capable of demonstration rather than remote, uncertain and speculative.’ ” Id. at 1202 (quoting Tamari v. Bache Halsey Stuart, Inc., 619 F.2d 1196 (7th Cir.1980)).

That same court of appeals subsequently declared in Lifecare International, Inc. v. CD Medical, Inc., 68 F.3d 429 (11th Cir.1995), that the “mere appearance” of partiality would not support vacating an arbitrator’s award. In Lifecare, the court considered the “evident partiality” provision in 9 U.S.C. § 10(a)(2). The bias in the case was alleged to have occurred as a result of the failure of one of the arbitrators to disclose two previous contacts by the arbitrator’s law firm, for which he was “of counsel,” with the party who was awarded the judgment, as well as his failure to disclose a scheduling dispute he had previously experienced with an attorney from the firm representing the losing party, 18 months before the arbitration. The United States Court of Appeals for the Eleventh Circuit stated:

“In order to vacate on the ground of evident partiality in a nondisclosure case, the party challenging the arbitration award must establish that the undisclosed facts create a ‘reasonable impression of partiality.’ Middlesex Mut. Ins. Co. v. Levine, 675 F.2d 1197, 1201 (11th Cir.1982); Schmitz v. Zilveti, 20 F.3d 1043, 1046 (9th Cir.1994). This Court has reasoned that the alleged partiality must be ‘direct, definite and capable of demonstration rather than remote, uncertain and speculative.’ Levine, 675 F.2d at 1201; accord, Consol. Coal v. Local 1643, United Mine Workers, 48 F.3d 125, 129 (4th Cir.1995); Health Services Management Corp. v. Hughes, 975 F.2d 1253, 1264 (7th Cir.1992). Accordingly, the mere appearance of bias or partiality is not enough to set aside an arbitration award. Consol. Coal, 48 F.3d at 129; Health Services Management Corp., 975 F.2d at 1264; Florasynth, Inc. v. Pickholz, 750 F.2d 171, 173 (2nd Cir.1984); see Schmitz, 20 F.3d at 1046-47 (rejecting ‘appearance of bias’ standard).”

68 F.3d at 433. See also Gianelli Money Purchase Plan & Trust v. ADM Investor Servs., Inc., 146 F.3d 1309, 1312 (11th Cir.1998) (“[t]he alleged partiality must be ‘direct, definite and capable of demonstration rather than remote, uncertain and speculative’ ”); Scott v. Prudential Sec., Inc., 141 F.3d 1007 (11th Cir.1998) (“to vacate an arbitration award for evident partiality, the moving party must present evidence that would support a ‘reasonable impression of partiality’ on the arbitrator’s be-half_The assertion of partiality, however, must be ‘direct, definite and capable of demonstration rather than remote, uncertain and speculative.’ ”); Mays v. Lanier Worldwide, Inc., 115 F.Supp.2d 1330, 1348-49 (M.D.Ala.2000) (“In order to vacate on the ground of evident partiality in a nondisclosure case, the party challenging the arbitration award must establish that the undisclosed facts create a ‘reasonable impression of partiality.’ ... [T]he alleged partiality must be ‘direct, definite and capable of demonstration rather than remote, uncertain and speculative.’ ”).

In University Commons-Urbana, Ltd. v. Universal Constructors, Inc., 304 F.3d 1331 (11th Cir.2002), the most recent decision by the Eleventh Circuit Court of Appeals on this issue, a contractor appealed an arbitration award in favor of the developer in a dispute arising from a construction project. The contractor alleged that one of the arbitrators to the proceeding had failed to disclose the extent of his contact and relationship with counsel for the prevailing party, as well as his contact and relationship with the prevailing party itself and with one of its witnesses. The Eleventh Circuit Court of Appeals concluded that the arbitrator’s relationships and contacts resulted in the “appearance” of bias toward the prevailing party, but went on to hold that “ ‘the mere appearance of bias or partiality is not enough to set aside an arbitration award,’ Lifecare International, 68 F.3d at 433.” University Commons-Urbana, 304 F.3d at 1340. The court held that because of lack of an arbitration transcript and the incompleteness of the record otherwise, it could not say whether vacation of the award was warranted. It did hold, however, that further fact-finding was necessary, by way of an evidentiary hearing before the trial court, so that a determination could be made as to whether the arbitrator had adequately disclosed his interactions with the parties and attorneys involved in the arbitration.

Other courts have addressed similar issues and reached similar conclusions. For example, in Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir.1994), a post-arbitration investigation initiated by the losing party revealed that the law firm of one of the arbitrators had previously represented the parent company of the prevailing party in at least 19 cases over a 35-year period, the most recent of which occurred approximately 21 months before the arbitration. The losing party sought to have the arbitration vacated pursuant to 9 U.S.C. § 10(a)(2), arguing the arbitrator was “evidently partial.” The record revealed that the arbitrator had run a “conflict check” for the subsidiary company only, rather than for it and the parent company, even though he had reviewed documents that indicated that the entity participating in the arbitration was a subsidiary of the parent company. The arbitrator did not disclose before the hearing any of his firm’s earlier representations of the parent company. The United States Court of Appeals for the Ninth Circuit held that the arbitrator was “evidently partial” as a result of his failure to reveal the earlier representations, and, thus, that the arbitration award was due to be vacated. In reaching its conclusion, the court, examining the holding in Commonwealth Coatings, stated that “ ‘evident partiality’ is present when undisclosed facts show a ‘reasonable impression of partiality.’ ” 20 F.3d at 1046.

In Consolidation Coal Co. v. Local 1643, United Mine Workers of America, 48 F.3d 125 (4th Cir.1995), the United States Court of Appeals for the Fourth Circuit applied the “evident partiality” standard of 9 U.S.C. § 10 to a dispute arising from a collective bargaining agreement. In Consolidation Coal, the employer coal company filed an action challenging an arbitrator’s award in favor of the employee union, the United Mine Workers of America. The employer argued that the arbitrator failed to disclose that his brother was employed by the International United Mine Workers of America, and that that relationship had resulted in an award infected with partiality. Holding that no such partiality existed, the Fourth Circuit Court of Appeals stated:

“To demonstrate evident partiality under the FAA, the party seeking vacation has the burden of proving ‘that “a reasonable person would have to conclude that an arbitrator was partial” to the other party to the arbitration.’ Peoples [Sec. Life Ins. Co. v. Monumental Life Ins. Co.], 991 F.2d [141] at 146 [(4th Cir.1993)] (quoting Apperson [v. Fleet Carrier Corp.], 879 F.2d [1344] at 1358 [(6th Cir.1989)]). This reasonable person standard requires a showing of something more that the ‘appearance of bias,’ but not the ‘insurmountable’ standard of ‘proof of actual bias.’ Morelite [Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds], 748 F.2d [79] at 84 [(2d Cir.1980)]. This Court has reasoned that ‘[t]he alleged partiality must be “direct, definite, and capable of demonstration rather than remote, uncertain or speculative.” ’ Peoples, 991 F.2d at 146 (quoting Health Servs. Management Corp. v. Hughes, 975 F.2d 1253, 1267 (7th Cir.1992)). Furthermore, the party asserting evident partiality ‘must establish specific facts that indicate improper motives on the part of the arbitrator.’ Peoples, 991 F.2d at 146.”

Consolidation Coal, 48 F.3d at 129.

In Health Services Management Corp. v. Hughes, 975 F.2d 1253 (7th Cir.1992), the owner of a long-term health-care facility challenged an arbitration award in favor of the architect hired by the owner to perform architectural services for the health-care facility. Before arbitration of the dispute, the American Arbitration Association failed to notify counsel for the owner that all three arbitrators selected to arbitrate the case knew the architect and that two had had previous business dealings with him. However, when the arbitrators were questioned by the owner’s counsel about any potential conflicts of interest with the parties, the previous business relationships were disclosed. The arbitrators stated they did not believe that those relationships would prejudice them, and, relying on those representations, counsel for the owner agreed to proceed with the arbitration. The arbitrators rendered an award in favor of the architect, as to which the owner sought vacation. Denied that relief, he appealed. Holding that the relationships did not warrant a vacation of the award, the United States Court of Appeals for the Seventh Circuit stated that the relationships did not show “evident partiality.” “ ‘Evident partiality’ within the meaning of subsection (a) of the Federal Arbitration statute means more than the mere appearance of bias.... To set aside an award for arbitration partiality, ‘[t]he interest or bias ... must be direct, definite and capable of demonstration rather than remote, uncertain or speculative.’ ” 975 F.2d at 1264 (quoting Tamari v. Bache Halsey Stuart Inc., 619 F.2d at 1200, quoting in turn United States Wrestling Fed’n v. Wrestling Div. of the AAU, Inc., 605 F.2d 313, 318 (7th Cir.1979)).

In Morelite Construction Corp. v. New York City District Council Carpenters Benefit Funds, 748 F.2d 79 (2d Cir.1984), the United States Court of Appeals for the Second Circuit addressed the issue of what constitutes “evident partiality” under 9 U.S.C. § 10(a)(2). In Morelite, the losing party to an arbitration sought vacation of the arbitration award on the basis of bias because of the father-son relationship between the arbitrator and the vice president of the prevailing party. The court held that “evident partiality” within the meaning of § 10 of the FAA existed where a reasonable person would conclude that the arbitrator was partial to one party in the arbitration proceedings. The court con-eluded that a father-son relationship between the arbitrator and the vice president of the prevailing party did demonstrate “evident partiality,” and rendered the award subject to vacation.

In Sanko S.S. Co. v. Cook Industries, Inc., 495 F.2d 1260 (2d Cir.1973), the Second Circuit Court of Appeals again applied the standard, this time with greater emphasis on “appearance.” In that case, the owner of a ship filed a motion to vacate an arbitration award in favor of the charterer, alleging arbitrator bias caused by the existence of a business relationship between one of the arbitrators and the charterer. The Second Circuit Court of Appeals stated that “where dealings [between an arbitrator and a party] ‘might create an impression of possible bias’ they must be disclosed.” Cook, supra, 495 F.2d at 1263 (footnote omitted). The court stated further:

“[T]he better practice is that arbitrators should disclose fully all their relationships with the parties, whether these ties be of a direct or indirect nature. Although some unnecessary disclosure may result, if arbitrators err on the side of disclosure, ... it will not be difficult for courts to identify those undisclosed relationships which are too insubstantial to warrant vacating an award.”

495 F.2d at 1263-64 (footnotes omitted), citing Commonwealth Coatings v. Continental Cas. Co., 393 U.S. at 152, 89 S.Ct. 337 (White, J., concurring).

We conclude that the weight of authority developed after Commonwealth Coatings requires a review of the offered evidence pursuant to the “reasonable impression of partiality” standard, using the criteria developed in the federal cases reviewed above. The appropriate approach for the trial court to take in assessing Waverlee’s allegations that Walker was biased or partial in his arbitration of the underlying dispute is to consider whether Waverlee makes a showing through admissible evidence that the court finds to be credible, that gives rise to an impression of bias that is direct, definite, and capable of demonstration, as distinct from a “mere appearance” of bias that is remote, uncertain, and speculative.

For the foregoing reasons, the judgment is reversed and the cause is remanded to the trial court for further proceedings consistent with this opinion.

REVERSED AND REMANDED WITH DIRECTIONS.

HOUSTON, LYONS, BROWN, JOHNSTONE, and STUART, JJ., concur.

MOORE, C.J., and SEE and WOODALL, JJ., concur in the result.

      . The record does not provide the outcome of the defendants' motion objecting to Walker’s selection as arbitrator.

      .The record compiled by Waverlee reflects that in McGrew, Walker found the dealer, Harold Allen’s Mobile Home Factory Outlet, Inc., to be without fault. In Smith, Cedar Ridge Homes, Inc., the dealer, settled post-arbitration. In Clowers, there is nothing in the record regarding the disposition of the arbitration as to the dealer, Cedar Ridge Homes, Inc., but Walker did order all damages to be paid by the manufacturer, Grand Manor, Inc.

      . The arbitrator's award for each case contained in the record does not explain how excessive moisture in the respective mobile homes would increase the likelihood that one would catch fire.

      . Nothing in the record indicates the current status of those three cases or whether the awards were challenged or appealed.

      . The record does not contain the date on which Williams or Waverlee learned of this information.

      6. The offer of proof does not further identify this case.

      . While the opinion does not explicitly state that the trial court held an evidentiary hearing as to the property owners' claims, we infer, based on its findings, that such a hearing did take place.

      . The opinion did not address the possibility that a settlement agreement could have been reached before November 1, 1988, but after October 21, 1988. The actual date the homeowner contended a settlement was reached is not contained in the opinion.

      . The McMichaels petitioned this Court to dismiss Waverlee's appeal as untimely. That petition was addressed and denied in a separate order issued by this Court.

        . The contacts arose out of instances where the law firm at which the arbitrator was "of counsel” was consulted, before the arbitration at issue, by the prevailing party for the purpose of obtaining representation in the dispute out of which the arbitration arose. In addition, the losing party sought to have the arbitrator's law firm, before his association with it, review an amendment to a distributorship agreement between the parties to the arbitration at issue in the case.

      . We note that there was no transcript of the arbitration proceeding in University Commons-Urbana.


source: Caselaw Access Project

author: STUART, Justice. SEE, Justice

license: Public Domain

text:
    John ELLIOTT et al. v. WINSTON COUNTY.
    1011910.
    Supreme Court of Alabama.
    Feb. 14, 2003.
    Nickolas J. Steles of Ashe, Tanner & Wright, P.C., Tuscumbia, for appellants.
    Hobson Manasco, Jr., Haleyville, for ap-pellee.
   STUART, Justice.

AFFIRMED; NO OPINION.

See Rule 53(a)(1), (a)(2)(C), and (a)(2)(F), Ala. R.App.P.

MOORE, C.J., and HOUSTON, BROWN, JOHNSTONE, HARWOOD, and WOODALL, JJ., concur.

SEE and LYONS, JJ., dissent.

SEE, Justice

(dissenting).

I respectfully dissent.

Winston County filed a declaratory-judgment action against John Elliott, David Elliott, and Sharon Melson (John, David, and Sharon are siblings and are hereinafter referred to collectively as “the Elliotts”), seeking to have an old dirt roadbed that runs across the Elliotts’ property declared a public road and seeking to compel the Elliotts not to block public access to Smith Lake by way of the road. The trial court entered a judgment in favor of the County, and the Elliotts appealed.

The Elliotts own lots 6 and 7 in what they refer to as the Yellow Creek Subdivision # 2 in Winston County. The property sits on the east side of Smith Lake. The Elliotts’ property borders Smith Lake and a pier extends from their property into Smith Lake. A roadbed, alleged in this case to be the old “Yellow Creek Road,” runs through one of the Elliotts’ lots from Tidwell Drive to Smith Lake. The Elliotts’ deed makes no mention of a right-of-way or easement for a road through either lot. Winston County levies property taxes on the Elliotts’ property, which includes the roadbed. In 1979, when the Elliotts’ father purchased the property, the roadbed was washed out, gullied, and overgrown with brush.

In 1981, the Elliotts and several neighbors constructed a concrete boat-launch ramp at the point where the roadbed meets Smith Lake. The Elliotts and their neighbors agreed that only seven property owners could use the ramp; they strung a cable across the ramp, which they locked to prevent public access. The Elliotts subsequently built a gate across the boat ramp. It is necessary to pull into the Elliotts’ circular driveway to use the ramp. The Elliotts have granted permission to use their driveway to launch boats only to seven neighbors.

In October 1989, the Winston County engineer sent the Elliotts a letter stating that Yellow Creek Road is a public road and that if they did not remove the cable across the boat ramp, the County would remove the cable. In June 2000, Winston County filed the present declaratory-judgment action against the Elliotts.

At trial, Charles Gilbreath, the county engineer from 1987 to 1989, testified that he remembered riding on Yellow Creek Road as a child in 1940 or 1941. He recalled that the land through which the road ran was unimproved and wooded in the 1940’s and 1950’s; there were no fences along the road and only two houses. Gilbreath testified that before the area was flooded to create Smith Lake, in the 1960’s, people used Yellow Creek Road to travel between the towns of Houston and Arley. Gilbreath identified Yellow Creek Road on several maps. Gilbreath admitted that the location of the road on a 1933 map varied by a quarter mile from its location on a 1953 map. Gilbreath recalled a “rock cut” along Yellow Creek Road; he identified the roadbed through the Elliotts’ land as being Yellow Creek Road, because he recognized the “rock cut” along the roadbed near the boat ramp. Gilbreath testified that when the land was flooded to create Smith Lake, the County built County Road 63 to connect Houston and Arley because people could no longer use Yellow Creek Road to travel between the two towns.

Several Winston County employees testified that Winston County has graded Yellow Creek Road at various times since the 1940’s. Sometimes the County graded the road to the water’s edge, while other times it graded only a portion of the road.

Jimmy Mitchell, one of the Elliotts’ neighbors, testified that in the 1970’s he cut down some trees that had grown in the road so that he could get his boat down the road to Smith Lake. Mitchell said that he had not seen the County do any maintenance on the road since 1969, and that in 1969, around the time he purchased his land, there were no houses on Yellow Creek Road. Mitchell testified that before the group of neighbors built the ramp, a person needed a four-wheel-drive vehicle to get to the lake by way of the road. Mitchell stated that he was at his Smith Lake property every Friday for about 10 years and that he never saw anyone use Yellow Creek Road to put a boat in the lake until after the Elliotts and their neighbors built the boat ramp. Mitchell admitted that he was not on his Smith Lake property during the week and that he could not always see the ramp when he was fishing. Mitchell was one of the neighbors who participated in building the concrete ramp.

Tommy Littrell, another neighbor, testified that before the neighbors put in the concrete boat ramp, the road was grown over with brush. Littrell recalled that the road was covered with brush in 1965 and that he did not recall ever seeing anyone from the County grade below where the Elliotts had strung the cable. Littrell testified that he did not help pour the concrete for the boat ramp, but he did help clear the road when the ramp was built. He said that he does not have a key to the cable, but that he uses the ramp to put his boat in the water if other people with keys are around the ramp.

Gerald Tucker, another neighbor, testified that he first put his boat in Smith Lake using Yellow Creek Road in 1979. He said that he did not have to cut down any trees, but that he did have to remove limbs and other brush from the road to get to the lake. Tucker said that he thought the property on which the neighbors built the ramp was owned by Alabama Power Company because, he said, no one owns the property below the 510-foot watermark. Tucker was part of the group of the Elliotts’ neighbors that built the boat ramp.

Based on this testimony, the County argued that it had obtained a prescriptive easement to Yellow Creek Road by 1937, and that that easement continued after Smith Lake was created in the 1960’s. The trial court found that Yellow Creek Road was a public road to the water’s edge of Smith Lake, and it ordered the Elliotts to remove any obstacles that would restrict the public’s use of the road. This Court affirms the trial court’s judgment without opinion. I dissent.

The Elliotts argue to this Court that the trial court erred when it found that the County had obtained a highway easement for the portion of Yellow Creek Road that runs across their property, making it a public road, or, alternatively, that the trial court erred by not finding that, if the County had a highway easement, it abandoned the easement when Smith Lake was created in the 1960’s and the road became a dead-end into the lake. I agree with the Elliotts that the County failed to demonstrate that it had acquired a prescriptive easement over the Elliotts’ land. I also believe that the shift in use from roadway to boat ramp prevents the County from maintaining its road easement as a boat-ramp easement.

The trial court’s judgment was based upon ore terms testimony.

“ ‘Our standard of review is whether the trial court’s judgment is supported by the evidence. Unless there is not sufficient evidence to support the trial court’s decree or unless the trial court’s decree is otherwise plainly and palpably erroneous or contrary to the great weight of the evidence, the trial court’s decree must be affirmed.’ ”

Smith v. Smith, 482 So.2d 1172, 1174 (Ala.1985) (quoting Menefee v. Lowery, 375 So.2d 798, 795 (Ala.1979)).

I believe that in this case the trial court misapplied the law to the facts when it found that the County had demonstrated that Yellow Creek Road is a public road. Generally,

“[a] public way or road is established in one of three ways: first by a regular proceeding for that purpose; second, by a dedication of the road by the owner of the land it crosses and subsequent acceptance by the proper authorities; or, third, by virtue of its being generally used by the public for 20 years.”

Auerbach v. Parker, 544 So.2d 943, 945 (Ala.1989).

“ ‘ “[A]n open, defined roadway, through reclaimed land, in continuous use by the public as a highway without let or hindrance for a period of twenty years becomes a highway by prescription....’”
“Where[, however,] a road runs over wooded or ‘unimproved’ land, or land which, though once reclaimed, has been ‘turned out’ or left open and unused, there is no presumption of dedication by mere use; rather there is a presumption of permissive use, and the user must establish his use as adverse to that of the owner. ‘This principle is grounded on sound policy. Otherwise, an owner with no present use for the land over which the road runs would be required to suffer the expense of taking affirmative action to prevent travel over his unused land to avoid having a public road established on that land.’ ”

McInnis v. Lay, 533 So.2d 581, 583-84 (Ala.1988)(emphasis omitted).

There is no evidence in the record to support the conclusion that there was public use of Yellow Creek Road adverse to the Elliotts or their predecessors in interest. Gilbreath’s testimony indicated that people used the road to travel between Houston and Arley at least as early as the late 1930’s, and that the road appeared on County maps; however, Gilbreath’s testimony also indicated that at that time the land through which the road ran was wooded and unimproved. The record is devoid of testimony indicating that anyone made any improvements to the land before the property that became Smith Lake was flooded. Gilbreath’s testimony indicated only that he recalled some houses set along Yellow Creek Road, but this Court held in Mclnnis, that “[w]e can see no basis upon which to conclude that the character of a tract of wooded or ‘unimproved’ land should be altered by its mere proximity to another tract, or other tracts, of ‘improved’ land.” 533 So.2d at 584. Where land is unimproved, “there is no presumption of dedication by mere use.” McInnis, 533 So.2d at 585.

No testimony in the record indicates that anyone used Yellow Creek Road for any purpose in the 1960’s. Some testimony in the record indicates that some people may have used four-wheel-drive vehicles to travel on the road to launch boats into Smith Lake without the Elliotts’ permission during the 1970’s after the land had been improved by the construction of the Elliotts’ house.

Testimony indicates that the Elliotts, with the help of their neighbors, poured a private concrete boat ramp and strung a cable across the ramp to prevent adverse public use of their land. Because the testimony in this case indicated that the land was unimproved through at least the 1960’s and that the Elliotts blocked access to their land once the land had been improved, the County failed to prove either that it obtained an easement by prescription during the period when the land was unimproved or during the period after the Elliotts improved it.

Even if the County had acquired a prescriptive highway easement in the Elliotts’ property in 1937, the general rule is that the public acquires by prescription only an easement in a highway, not ownership in fee simple of the land on which the highway lies, and that when the highway is abandoned “the land becomes discharged of the servitude.” Purvis v. Busey, 260 Ala. 373, 377, 71 So.2d 18, 21 (1954).

The Elliotts argue that the County abandoned its highway easement in Yellow Creek Road when the property that became Smith Lake was flooded and Yellow Creek Road then dead-ended at the lake, effectively turning the road into a boat ramp. The fact that a portion of a highway may no longer be usable for travel, however, or “the failure of the county authorities to keep the road in repair” does not “necessarily work an abandonment.” Purvis, 260 Ala. at 373, 71 So.2d at 22 (“The fact that the part of the eliminated curve immediately south of respondent’s land has been destroyed results in Road B being a cul-de-sac_The mere fact that Road B forms a cul-de-sac does not deprive it of its character as a public highway.”). Thus, the County could retain its highway easement even though the creation of Smith Lake turned the road into a cul-de-sac, but the County does not have a boat-ramp easement in the road, because it never acquired a boat-ramp easement.

At the time the County claims that it acquired a highway easement in the El-liotts’ land in 1937, people did not launch boats from the road. Smith Lake was not created until the 1960’s. The record indicates only that it is possible that some people may have launched boats into Smith Lake after traveling over Yellow Creek Road during the 1970’s. The El-liotts placed a cable across the concrete boat ramp in 1981 when the ramp was constructed. Therefore, nothing in the record indicates adverse public use of the Elliotts’ boat ramp sufficient to allow the County to claim a boat-ramp easement. Hereford v. Gingo-Morgan Park, 551 So.2d 918, 921 (Ala.1989)(“ ‘To establish an easement by prescription, the claimant must use the premises over which the easement is claimed for a period of twenty years or more, adversely to the owner of the premises, under claim of right, exclusive, continuous, and uninterrupted, with actual or presumptive knowledge of the owner.’ ” (quoting Bull v. Salsman, 435 So.2d 27, 29 (Ala.1983))).

“As a general rule, one holding an easement cannot change the character of that easement or ‘enlarge upon [that] easement for other purposes.’ ” Chatham v. Blount County, 789 So.2d 235, 241 (Ala.2001) (citations omitted). See also Baptist Found. of Alabama v. Penn, 295 Ala. 122, 126, 324 So.2d 766, 769 (1975)(an “existing public easement ... cannot be changed or enlarged”). Further, an easement holder may not “ ‘materially increase the burden upon the servient estate.’ ” Blalock v. Conzelman, 751 So.2d 2, 6 (Ala.1999)(quot-ing White v. Walsh, 105 Cal.App.2d 828, 832, 234 P.2d 276, 278 (1951)). The record indicates that public use of the boat ramp would materially alter the burden that would be placed on the Elliotts’ property because people must turn around in the Elliotts’ drive in order to launch a boat from Yellow Creek Road.

Because the County failed to prove that it acquired a prescriptive boat-ramp easement, and because public use of the boat ramp shifts the use of the easement and materially changes and enlarges the burden on the Elliotts’ property, I believe that the trial court erred when it ordered the Elliotts to permit public access to the boat ramp. Therefore, I dissent.

      . Smith Lake is "an APCo [Alabama Power Company] hydroelectric development. APCo acquired much of the land around what is now Smith Lake in the years prior to the development of the lake. Later, however, APCo sold off some parcels of that land.... APCo retained the fee title to land lying at elevations less than 510 feet above mean sea level, and retained a flood easement over lands lying between 510 and 522 feet above mean sea level....” Alabama Power Co. v. Drummond, 559 So.2d 158, 159 (Ala.1990).

      . I would note that the change from highway use to boat-ramp use also could result in cars and trailers being parked in the area, in groups using the landing as a staging area, and for picnicking and other activities.


author: STUART, Justice.

text:
    BEAN DREDGING, L.L.C., and Midstream Fuel Services, Inc. v. ALABAMA DEPARTMENT OF REVENUE.
    1011664.
    Supreme Court of Alabama.
    Feb. 14, 2003.

      Blake A. Madison and David E. Rains of Tanner & Guin, L.L.C., Tuscaloosa, for appellant Bean Dredging, L.L.C.
    William H. Pryor, Jr., atty. gen., and J. Wade Hope, asst, counsel, Department of Revenue, and asst. atty. gen., for appellee.
   STUART, Justice.

Bean Dredging, L.L.C., and Midstream Fuel Services, Inc., appeal from a decision of the Montgomery Circuit Court affirming an order issued by an administrative law judge of the Department of Revenue dismissing their case. Bean and Midstream assert that they are entitled to a refund of $58,863 for State sales taxes paid on fuel and supplies during the period from March 1995 through September 1997.

Bean and Midstream assert that they are entitled to a refund because, they say, Bean’s dredges are exempt from sales taxes on fuel and supplies under § 40-23-4(a)(10), Ala.Code 1975. This Court has not previously interpreted § 40-23-4(a)(10), and we must now determine whether the dredges were engaged in interstate commerce and thus entitled to a sales-tax exemption under § 40-23-4(a)(10), Ala.Code 1975. We conclude that dredges working to maintain navigable waterways so that those waterways may be used for commerce are engaged in interstate commerce and thus are eligible for the sales-tax exemption provided by § 40-23-4(a)(10), Ala.Code 1975. We reverse and remand.

Facts

Bean is headquartered in New Orleans, Louisiana, and Midstream is located in Mobile, Alabama. In its normal course of business, Bean contracts with the United States Army Corps of Engineers (“the Corps”) to dredge ports, rivers, and harbors throughout the United States. Bean contracted with the Corps to dredge Mobile Bay and the Mobile River during the audit period in issue (March 1995-Decem-ber 1997); it assigned two vessels to perform the dredging — the Eagle I and the Dave Blackburn.

Mobile Bay and the Mobile River are federal navigation channels. The federal government appropriates federal money annually for maintenance of the channels so that they will remain available for the flow of commerce. The contract between Bean and the Corps stated that the dredges were to work primarily in Mobile Bay between March 1995 and December 1997 but that Bean could pull the dredges at any time and send them to other dredging projects in the United States, a circumstance that actually occurred during the contract.

The Eagle I is a large self-propelled oceangoing hopper dredge. The Eagle I stored the material dredged from Mobile Bay in its hull and then transported it to various predetermined disposal sites in federal waters two to eight miles offshore. The Dave Blackburn, which was destroyed by fire in 1996, was a stationary hydraulic dredge supported by tugs and barges. It also dredged materials from Mobile Bay; however, instead of storing and transporting the materials it pumped the materials through a pipeline and disposed of them at Gilliard Island in Mobile Bay or beside the Mobile Bay ship channel. Both the Eagle I and the Dave Blackburn were stationed in New Orleans, Louisiana, and their employees receive their orders and were paid from New Orleans.

During the contract and audit period, Bean purchased fuel and supplies from Midstream in Mobile, Alabama. The fuel and supplies were used on both the Eagle I and the Dave Blackburn. Bean paid Alabama sales tax on the fuel and supplies; it is from this payment of sales tax that Bean and Midstream jointly petitioned for a refund.

An administrative law judge with the Department of Revenue denied Bean and Midstream’s petition for a refund of the sales taxes and applied the law as outlined in State Department of Revenue v. Orange Beach Marina, Inc., 699 So.2d 1279 (Ala.Civ.App.1997). The administrative law judge recognized that different types of vessels were involved in Orange Beach Marina, but in denying the petition took notice of the Court of Civil Appeals’ holding in that case that to qualify for an exemption the vessels must travel between a port in Alabama and a port in another state or country. While the administrative law judge criticized the Court of Civil Appeals’ rationale in Orange Beach Marina as being too narrow, the judge agreed with the ultimate holding denying the exemption. Thus, Bean and Midstream’s request for a sales-tax refund was denied. The administrative law judge did not dispute that dredging Mobile Bay constitutes an activity that affects interstate commerce for Commerce Clause purposes but found that the broad standard for determining whether an activity affects interstate commerce cannot be applied to the sales-tax exemption statute, § 40-23-4(a)(10), which must be narrowly construed. The administrative law judge therefore found that the statute, when read narrowly, does not apply to dredges.

The Montgomery Circuit Court affirmed the administrative law judge’s decision, which strictly construed the exemption statute in favor of the State and applied the Orange Beach Marina requirement that to qualify for the sales-tax exemption the cargoes must be transported between a port in Alabama and a port in another state or country. Additionally, the circuit court also recognized that Bean’s captains could have obtained certificates at the time they purchased the fuel and supplies stating that they were purchasing the fuel and supplies for consumption aboard a vessel engaged in interstate commerce, but they failed to do so. It is from the circuit court’s affirmance of the administrative law judge’s denial of a sales-tax refund under § 40-28-4(a)(10), Ala.Code 1975, that Bean and Midstream appeal.

Standard of Review

The circuit court reviews de novo an order of an administrative law judge in the State Department of Revenue; however, the order is presumed prima facie correct and the burden is on the appealing party to show otherwise. § 40-2A-9(g)(2), Ala. Code 1975.

This Court’s standard of review is different from that applied by the circuit court in reviewing an administrative law judge’s order. When reviewing a case in which the trial court sat without a jury and heard evidence in the form of stipulations, briefs, and the writings of the parties, this Court sits in judgment of the evidence; there is no presumption of correctness. Old Southern Life Ins. Co. v. Williams, 544 So.2d 941, 942 (Ala.1989); Craig Constr. Co. v. Hendrix, 568 So.2d 752, 756 (Ala.1990). When this Court must determine if the trial court misapplied the law to the undisputed facts, the standard of review is de novo, and no presumption of correctness is given the decision of the trial court. State Dep’t of Revenue v. Gar ner, 812 So.2d 380, 382 (Ala.Civ.App.2001); see also Ex parte Graham, 702 So.2d 1215 (Ala.1997). In this case the trial court based its decision upon the stipulations, briefs, writings, and arguments of the parties’ attorneys. No testimony was presented. Therefore, we must sit in judgment of the evidence, and the trial court’s ruling carries no presumption of correctness.

Issue and Analysis

The sole issue before this Court is whether Bean’s dredges — the Eagle I and the Dave Blackburn — were engaged in interstate commerce so that the purchase of the diesel fuel and supplies for the dredges was exempt from Alabama sales tax under § 40-23-4(a)(10), Ala.Code 1975. This is a case of first impression. Therefore, we must apply rules of statutory construction to § 40-23-4(a)(10), Ala.Code 1975, and determine whether the dredges were, for purposes of the statute, “engaged in interstate commerce.” We hold that, although the tax-exemption statutes are to be construed against the taxpayer, Bean and Midstream have shown that dredging is substantially related to interstate commerce and that it thus falls within the meaning of “engaged in interstate commerce” intended by the Alabama Legislature.

I. Statutory Construction

It is this Court’s responsibility to give effect to the legislative intent whenever that intent is manifested. State v. Union Tank Car Co., 281 Ala. 246, 248, 201 So.2d 402, 403 (1967). When interpreting a statute, this Court must read the statute as a whole because statutory language depends on context; we will presume that the Legislature knew the meaning of the words it used when it enacted the statute. Ex parte Jackson, 614 So.2d 405, 406-07 (Ala.1993). Additionally, when a term is not defined in a statute, the commonly accepted definition of the term should be applied. Republic Steel Corp. v. Horn, 268 Ala. 279, 281, 105 So.2d 446, 447 (1958). Furthermore, we must give the words in a statute their plain, ordinary, and commonly understood meaning, and where plain language is used we must interpret it to mean exactly what it says. Ex parte Shelby County Heath Care Auth., 850 So.2d 332 (Ala.2002).

Additionally, when the highest administrative officials charged with the duty of administering the tax laws have construed a tax statute, their construction should be given favorable consideration. Standard Dredging Corp. v. State, 271 Ala. 22, 28, 122 So.2d 280, 285 (1960); State v. Birmingham Rail & Locomotive Co., 259 Ala. 443, 448, 66 So.2d 884, 889 (1953). While tax-exemption clauses are to be construed most strongly against the taxpayer, they are not to be so strictly construed as to defeat the intent and purpose of the exemption. Union Tank Car Co., 281 Ala. at 248-49, 201 So.2d at 404. The exemption should also be construed against the taxpayer when competing reasonable constructions are offered. Ex parte City of Tuscaloosa, 757 So.2d 1182, 1188 (Ala.1999). The pertinent portion of the statute at issue provides:

“(a) There are exempted from the provisions of this division and from the computation of the amount of the tax levied, assessed, or payable under this division the following:....
“(10) The gross proceeds from the sale or sales of fuel and supplies for use or consumption aboard ships, vessels, towing vessels, or barges, or drilling ships, rigs or barges, or seismic or geophysical vessels, or other watercraft ... engaged in foreign or international commerce or in interstate commerce....
“For purposes of this subdivision, it shall be presumed that vessels engaged in the transportation of cargo between ports in the State of Alabama and ports in foreign countries or possessions or territories of the United States or between ports in the State of Alabama and ports in other states are engaged in foreign or international commerce or interstate commerce, as the case may be. For the purposes of this subdivision, the engaging in foreign or international commerce or interstate commerce shall not require that the vessel involved deliver cargo to or receive cargo from a port in the State of Alabama.”

§ 40-23-4(a)(10), Ala.Code 1975.

The phrase “interstate commerce” is not defined within the statute. Therefore, we must apply the commonly accepted definition of “interstate commerce” and give it its plain, ordinary, and commonly understood meaning. This Court has recognized that interstate commerce is distinguished from other commerce by the additional phrase “among other states.” Miller Transporters, Inc. v. Alabama Public Serv. Comm’n, 454 So.2d 1373, 1375 (Ala.1984). This Court has also stated that the term “interstate commerce” does not “lend[] itself to a definition simplistically applied in all cases.” 454 So.2d at 1375. We have stated:

“ ‘ “Interstate commerce” is not a technical legal conception, but a practical one drawn from the course of business, and what falls within it must be determined upon consideration of established facts and known commercial methods; there is no single concept of interstate commerce which can be applied to every federal [or state] statute regulating commerce.’ ”

Miller Transporters, 454 So.2d at 1375 (quoting 15A Am.Jur.2d Commerce § 4 (1976)).

The lower courts have mistakenly assumed that interstate commerce may be proven only by showing that the cargo or persons on the dredges were transported from a port in Alabama to a port in another state or a foreign country. See Orange Beach Marina, supra; but see also State v. Zewen, 270 Ala. 52, 116 So.2d 373 (1959). We find that the circuit court in this case placed undue emphasis upon the word “presumed” and the phrase “transportation of cargo between ports in the State of Alabama and ports in foreign countries ....” in the statute and ignored the intent of the Legislature that vessels “engaged in foreign, or international commerce or in interstate commerce” be exempt from sales taxes for fuel and supplies used on board the vessel.

A “presumption” is not evidence or confirmation of a fact; it is “[a] legal inference or assumption that a fact exists”; it merely “shifts the burden of production ... to the opposing party.” Black’s Law Dictionary 1203 (7th ed.1999). Therefore, port-to-port activity is but one way to satisfy the requirement that a vessel be “engaged in interstate commerce.” The statute even mentions other vessels that may be “engaged in ... interstate commerce” without transporting cargo to other states, i.e., “towing vessels, or barges, or drilling ships, rigs or barges, or seismic or geophysical vessels.”

As the taxpayers, Bean and Midstream always had the burden of showing that Bean was engaged in interstate commerce and that it was thus exempt from the sales tax on fuel and supplies. Lack of port-to-port activity does not result in a presumption that the vessel is not engaged in interstate commerce, it merely rebuts the presumption in favor of interstate commerce. Therefore, Bean and Midstream had the burden of proving that Bean was engaged in interstate commerce by means other than port-to-port activity.

II. Dredging and Interstate Commerce

To determine whether dredging falls ■within the meaning of “engaged in interstate commerce” as intended by § 40-23-4(a)(10), Ala.Code 1975, we must read the statute as a whole, because the meaning of the phrase “engaged in interstate commerce” depends upon the context in which it appears. Ex parte Jackson, 614 So.2d at 406-07. When determining whether a party is engaged in interstate commerce within the context of § 40-23-4(a)(10), we must construe the exemption against the taxpayer and give favorable consideration to the construction of the statute by the highest tax-administration official. Ex parte City of Tuscaloosa, 757 So.2d at 1188; Standard Dredging Corp., 271 Ala. at 28, 122 So.2d at 285. Nevertheless, we must not so strictly construe the statute as to defeat the statutory purpose. Union Tank Car Co., 281 Ala. at 248-49, 201 So.2d at 404.

To determine whether an activity constitutes interstate commerce this Court must consider the course of business and determine its relation to interstate commerce. Miller Transporters, Inc., 454 So.2d at 1375. Therefore, in this case we must look at the activity of the dredges. In Standard Dredging Corp., this Court “assume[d], without deciding,” that Standard’s maintenance dredging of Mobile Bay constituted interstate commerce within the meaning of the Commerce Clause. 271 Ala. at 29, 122 So.2d at 285. Therefore, this Court did not address whether dredging constituted interstate commerce.

Waterways are navigable when they are used or are susceptible of being used as highways for commerce, over which trade and travel may be conducted; they are navigable waters of the states when they form by themselves or by connecting with other waters a continued highway over which commerce may be carried on with other states or with foreign countries. The Daniel Ball, 77 U.S. (10 Wall.) 557, 563, 19 L.Ed. 999 (1870). Neither party contends that Mobile Bay and the Mobile River are not navigable waterways and thus not highways for commerce.

The United States Supreme Court has held that employees working on toll bridges over navigable waterways are engaged in interstate commerce for purposes of the application of the Fair Labor Standards Act (“the FLSA”). Overstreet v. North Shore Corp., 318 U.S. 125, 63 S.Ct. 494, 87 L.Ed. 656 (1943). The Court determined that toll bridges and roads over waterways that connect to other states are instrumentalities of interstate commerce and that maintaining, repairing, and operating those bridges and roads constituted being “engaged in interstate commerce.” Id. at 130, 63 S.Ct. 494. The Court reasoned that if the toll bridge and roads were not properly operated and maintained they would present an obstacle to interstate commerce. Id. Thus, the Court held that the employees engaged in operating and maintaining the toll bridge so that there could be interstate passage of persons and goods over them were so closely related to that interstate movement as a practical matter that those employees must be regarded as engaged in interstate commerce. Id. at 132, 63 S.Ct. 494. See, e.g., Mitchell v. Empire Gas Eng’g Co., 256 F.2d 781, 784 (5th Cir.1958)(summariz-ing cases holding that the deepening of navigable waters, the construction of retaining walls to provide harbor facilities for Naval vessels, the construction and repair of dikes and revetments on the Mississippi River, and the construction of new and relocated locks on the Gulf Intracoas-tal Waterway have all been held to be “commerce” within the meaning of the FLSA); VanKlaveren v. Killian-House Co., 210 F.2d 510, 513 (5th Cir.1954)(per-sons engaged in the maintenance and repair of interstate instrumentalities are within the coverage of the FLSA).

Applying the reasoning of the United States Supreme Court, we hold that dredging a navigable waterway is substantially related to interstate commerce. Indeed, without dredging, the waterways would surely become impassable, and interstate commerce would be obstructed. Mobile Bay and the Mobile River are both navigable waterways and instrumentalities of interstate commerce. Failure to maintain these waterways would prevent shipping from the Gulf of Mexico to the northern portions of the State and beyond that to other states. Bean’s dredges removed silt from Mobile Bay and the Mobile River to allow the passage of shipping vessels, which include vessels from both other states and from foreign countries. This dredging is necessary to keep the navigable waters open and to allow the flow of interstate commerce. Therefore, like operating a toll bridge that permits and furthers interstate commerce, dredging constitutes being engaged in interstate commerce.

In addition to Overstreet, our holding today is also supported by the United States Court of Appeals for the Seventh Circuit and by the District Court of Puerto Rico. Walling v. Great Lakes Dredge & Dock Co., 149 F.2d 9 (7th Cir.1945); Cuascut v. Standard Dredging Corp., 94 F.Supp. 197 (D.P.R.1950). In Cuascut the sole issue was the extent to which, for the purposes of the FLSA, the plaintiffs were engaged in commerce while performing dredging operations. Cuascut, 94 F.Supp. at 200. The court first addressed the dredging operations being performed and found that San Juan Bay had been used for many years as a highway of interstate commerce. Id. The court further found that those dredging operations that constituted either repair, maintenance, or improvement of the bay as a highway of interstate commerce were engaging in commerce and brought the plaintiffs within the coverage of the FLSA. Id.

Analogously, the parties in this case do not dispute that Mobile Bay and the Mobile River are highways of interstate commerce. Nor do the parties dispute that Bean was removing silt from the bay and the river in order to allow passage of vessels. Thus, Bean was maintaining and improving Mobile Bay and the Mobile River as highways of interstate commerce, which constitutes being engaged in interstate commerce.

Additionally, in Walling, the parties stipulated that the employees on the dredges in the Great Lakes were engaged in interstate commerce and that dredging constituted interstate commerce. Walling, 149 F.2d at 10. Therefore, it was apparent to the parties in Walling that dredging constituted interstate commerce. Similarly, we also find that dredging highways of interstate commerce, such as Mobile Bay and the Mobile River, constitutes being engaged in interstate commerce.

The administrative law judge narrowly interpreted the statute to exclude dredges because, the judge reasoned, dredges do not involve foreign, international, or interstate commerce within the meaning of the statute. The administrative law judge reasoned that because § 40-23-4(a)(10), Ala. Code 1975, is an exemption statute, a broad construction of the Commerce Clause cannot be applied in construing that statute. He further reasoned that the phrase “engaged in interstate commerce” must be strictly construed to include only vessels actually engaged in commerce while traveling from an Alabama port to ports in other states or countries. Furthermore, the administrative law judge reasoned that Overstreet and Cuascut, which both involved the FLSA, did not apply to this case because the FLSA is to be liberally construed in favor of ensuring coverage under the FLSA for employees.

We disagree with the administrative law judge’s opinion. Even subjecting the statute to the strict construction to which it is entitled as an exemption statute, when read in its entirety the statute includes vessels that do not travel from port to port. Section 40-23-4(a)(10), AJa.Code 1975, exempts: “ships, vessels, towing vessels, or barges, or drilling ships, rigs or barges, or seismic or geophysical vessels, or other watercraft.” (Emphasis added.) If the Legislature intended port-to-port activity to be the sole requirement for exemption it would not have included vessels such as seismic and geophysical vessels or drilling ships or barges, which do not necessarily travel port to port. Nor would the Legislature have made port-to-port activity an indication of a “presumption” of, rather than a requirement for, engaging in interstate commerce. Furthermore, other sections of the statute make specific exclusions or requirements when a certain activity or subject is not to be exempted. Therefore, when the statute is read in its entirety, it does not require that vessels be engaged in port-to-port activity in order to be engaged in interstate commerce.

Furthermore, we recognize that the FLSA is liberally interpreted to protect employees and that tax-exemption statutes, on the other hand, are to be narrowly construed. However, the statute is not to be so narrowly construed as to defeat its purpose, which is to allow certain tax exemptions for interstate activities. We find it difficult to reconcile the fact that workers on a dredge, engaged in dredging a navigable waterway, are engaged in interstate commerce for the purposes of the FLSA, while the ship performing the dredging is not. Therefore, it follows that if employees of a dredge are engaged in interstate commerce, the dredge must also be so engaged.

Moreover, we also recognize that the meaning of interstate commerce for similar transactions should not differ drastically from jurisdiction to jurisdiction. We acknowledge the analogous commercial and industrial tax-exemption statute enaet-ed by the Virginia legislature. Va.Code Ann. § 58.1-609.3.4 (Michie 2002). However, unlike § 40-23-4(a)(10), Ala.Code 1975, Virginia’s statute specifically mentions dredges. It reads: “This exemption shall include dredges, their supporting equipment, attendant vessels, and fuel and supplies for use or consumption aboard such vessels, provided the dredges are used exclusively or principally in interstate or foreign commerce.” Va.Code Ann. § 58.1-609.3.4.

While our Legislature did not specifically note that dredges were exempt from sales taxes for their fuel and supplies as previously discussed, dredges are an integral part of continuing interstate commerce upon Mobile Bay and the Mobile River. Therefore, the requirements of § 40-23-4(a)(10), Ala.Code 1975, are satisfied and Bean’s dredges should be exempt from fuel-and-supplies sales tax as provided by § 40-23-4(a)(10).

III. State Department of Revenue v. Orange Beach Marina, Inc.

The Department of Revenue and the lower court relied upon State Department of Revenue v. Orange Beach Marina, Inc., 699 So.2d 1279 (Ala.Civ.App.1997). However, the facts in that case are substantially different from the facts of this case. In Orange Beach Marina, the marina challenged the sales tax on diesel fuel sold to vessels that traveled into foreign waters but that did not travel to another state’s port or to a foreign port under § 40-23-4(a)(10), Ala.Code 1975. 699 So.2d at 1280-81.

The marina had three basic types of diesel-fuel customers: charter fishing vessels, vessels owned by businesses, and pleasure craft. 699 So.2d at 1280. For the tax period in question, 40% of the marina’s sales of diesel fuel was to charter fishing vessels, 40% to pleasure craft, and 20% to vessels owned by businesses. Id. Those vessels traveled into federal and international waters but did not travel to foreign ports or to ports of other states. Id. The only fact the marina provided for its argument that it met the requirements for the sales-tax exemption was that the vessels traveled into foreign waters. The facts of that case did not demonstrate that any other interstate activity was involved. The Court of Civil Appeals concluded that charter fishing vessels that did not travel to another state’s port or to a foreign port were not engaged in interstate commerce and that vessels owned by businesses and those used for pleasure also were not engaged in interstate commerce and were thus not exempt from the sales tax. Orange Beach Marina, 699 So.2d at 1281.

We first note that dredges are physically and materially different vessels than are charter fishing vessels, “business vessels,” and pleasure craft. The Court of Civil Appeals’ decision is limited to those three types of vessels; it does not apply to dredges, which have a completely different purpose. It is understandable that for a fishing vessel to be engaged in interstate commerce it must visit a port outside of Alabama; it is also understandable that business vessels and pleasure craft cannot be considered engaged in interstate commerce when they merely enter federal or foreign waters and then return to an Alabama port. However, dredges are significantly different. A dredge, as previously stated, has a substantial relationship with interstate commerce because of the service it performs in removing silt to maintain interstate channels of commerce.

In addition to Orange Beach Marina, the circuit court relied upon State v. Zewen, 270 Ala. 52, 116 So.2d 373 (1959). Yet that case is also inapplicable. Zewen involved only shrimp and fishing boats that did not transport cargo to ports in other states or to foreign ports. Id. Furthermore, the statute being interpreted in Zewen, Title 51, § 755(r), Code of Alabama (1940), is similar in purpose to § 40-23-4(a)(10), Ala.Code 1975, but contains very important and distinct differences.

The language of the statute being interpreted in Zewen requires that the vessels seeking exemption be “ ‘plying on the high seas either in intercoastal trade between ports in the State of Alabama and ports in other states of the United States or its possessions or in foreign commerce between ports in the State of Alabama and ports in foreign countries.’ ” 270 Ala. at 54, 116 So.2d at 374. This language is significantly different from the language of § 40-23-4(a)(10), Ala.Code 1975, which “presumes” that the transportation of cargo between Alabama ports and ports of other states or other countries is engaging in commerce. There is no such presumption in Title 51, § 755(r), Code of Alabama (1940); rather, the language states that travel from port to port is a requirement for the exemption. Therefore, Zewen is inapplicable to this case. For these reasons, we conclude that Orange Beach Marina and Zewen are inapplicable to this case and that Bean’s dredges were engaged in interstate commerce pursuant to § 40-23-4(a)(10), Ala.Code 1975, and are thus exempt from fuel-and-supplies sales tax.

IV. Certificates of Consumption of Supplies and Fuel for Vessel Engaged in Interstate Commerce

Section 40-23-4(a)(10), Ala.Code 1975, provides that proof that the fuel and supplies were purchased for use or consumption aboard vessels engaged in interstate commerce may be had by the captain’s securing a signed certificate stating that the fuel and supplies were being purchased for use or consumption aboard vessels engaged in interstate commerce. The State points out that the captains of Bean’s dredges failed to acquire such certificates at the time of the purchases. However, the State fails to offer any argument that a certificate is required for exemption under § 40-23^(a)(10), Ala.Code 1975. While this argument was raised, neither party asserted that a certificate to the effect that the fuel and supplies were being purchased for use on a vessel engaged in interstate commerce was required for the exemption to apply. Therefore, we need not address this issue.

Conclusion

The judgment is reversed and the cause is remanded for proceedings consistent with this opinion.

REVERSED AND REMANDED.

HOUSTON, SEE, LYONS, BROWN, JOHNSTONE, HARWOOD, and WOODALL, JJ., concur.

MOORE, C.J., dissents.

      . Zewen was decided before the 1987 amendment to the exemption statute; that amendment substituted the language "ships and towing vessels plying the high seas or gulf intracoastal waterway either in intercoastal trade between ports in the state of Alabama and ports in other states of the United States" with the language "ships, vessels, towing vessels, or barges, or drilling ships, rigs or barges, or seismic or geophysical vessels, or other watercraft ... engaged in foreign or international commerce or in interstate commerce” and added the presumption that transportation of cargo between ports in Alabama and ports in other states or foreign countries constituted interstate commerce.

      . We need not—and do not—determine that there was no port-to-port activity in this case. The record indicates that Bean’s contract with the Corps allowed it to remove its dredges during the contract period and send them to other states. The record also indicates that Bean did in fact remove the Eagle I from Alabama on several occasions during the contract.

      . See § 40-23-4(2), cottonseed meal excluded from definition of "fertilizer"; § 40-23-4(A)(3), (4) and (7), specifically limiting exclusions; § 40-23-4(a)(10), providing specific requirements for seismic and geophysical vessels and passenger vessels.