author: LYONS, Justice. MURDOCK, Justice

text:
    CITIFINANCIAL CORPORATION, L.L.C.; Citicorp Trust Bank, fsb; and First Family Financial Services, Inc. v. Veronica Hunt PEOPLES.
    1051519.
    Supreme Court of Alabama.
    May 18, 2007.

      John R. Chiles, Reid S. Manley, and Alan D. Leeth of Burr & Forman, LLP, Birmingham, for appellants.
    Philip G. Perkins, Jackson, for appellee.
   LYONS, Justice.

CitiFinancial Corporation, L.L.C.; Citi-corp Trust Bank, fsb; and First Family Financial Services, Inc. (hereinafter referred to collectively as “the lenders”), appeal from the trial court’s order denying their motion to compel arbitration. We reverse and remand.

I. Factual Background and Procedural History

On July 16, 1997, Veronica Hunt Peoples obtained a loan from Commercial Credit of Alabama, Inc,, now known as CitiFinancial Corporation, L.L.C.; the loan was secured by a mortgage on real estate. The lenders say that the mortgage conveyed to Commercial Credit an interest in what the parties believed to be the parcel of land on which Peoples’s house was located. Peoples contends that the land described in the mortgage is not the land on which her house is located, but is instead an adjacent unimproved parcel of land. The lenders contend that the parties intended to enter into a real-estate loan agreement that used as collateral the property on which Peoples’s house is located and that the loan documents evidence this intent. Peoples’s mortgage was assigned to Citicorp Trust Bank, fsb, on August 6, 2004. The lenders say that they are all either corporate parents, subsidiaries, affiliates, or assignees of Commercial Credit of Alabama, Inc.

Among the loan documents Peoples executed on July 16, 1997, was a document styled “Disclosure Statement, Note, and Security Agreement,” which included within it a separately executed arbitration provision. The arbitration provision states:

“ARBITRATION PROVISION:
“READ THE FOLLOWING ARBITRATION PROVISION CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO OBTAIN REDRESS THROUGH COURT ACTION.
“In consideration of Lender making the extension of credit described above and other good and valuable considerations, the receipt and sufficiency of which is acknowledged by both parties, it is further agreed as follows:
“Definitions for Arbitration Provision. As used in this Arbitration Provision (‘Provision’), the following definitions will apply:
“ ‘You’ or Tour’ means any or all of Borrower(s) who execute this Provision, and their heirs, survivors, assigns, and representatives.
“ ‘We’ or ‘Us’ means Lender, any as-signee, together with their respective corporate parents, subsidiaries, affiliates, predecessors, assignees, successors, employees, agents, directors, and officers (whether acting in their corporate or individual capacity).
“ ‘Credit Transaction’ means any one or more past, present, or future extension, application, or inquiry of credit or forbearance of payment such as a loan, retail credit agreement, or otherwise from any of Us to You.
“ ‘Claim’ means any case, controversy, dispute, tort, disagreement, lawsuit, or claim now or hereafter existing between You and Us. A Claim includes, without limitation, anything that concerns:
“• This Provision;
“• Any past, present, or future Credit Transaction;
“• Any past, present, or future insurance, service, or product that is offered in connection with a Credit Transaction;
“• Any documents or instruments that contain information about any Credit Transaction, insurance, service, or product; or
“• Any act or omission by any of Us regarding any Claim.
“Agreement to Arbitrate Claims. Upon written request by either party that is submitted according to the applicable rules for arbitration, any Claim, except those specified below in this Provision, shall be resolved by binding arbitration in accordance with (i) the Federal Arbitration Act; (ii) the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association (‘Administrator’); and (iii) this Provision, unless we both agree in writing to forgo arbitration....
“Examples of Claims that are governed by this Agreement include those involving:
“• The Truth in Lending Act and Regulation Z;
“• The Equal Credit Opportunity Act and Regulation B;
“• State insurance, usury, and lending laws; fraud or misrepresentation, including claims for failing to disclose materials facts;
“• Any other federal or state consumer protection statute or regulation;
“• Any party’s execution of this Provision and/or willingness to be bound by its terms and provisions; or
“• Any dispute about closing, servicing, collecting, or enforcing a Credit Transaction.
“Judgment. Judgment upon any arbitration award may be entered in any court having jurisdiction.
“Claims Excluded from Arbitration.
The following types of matters will not be arbitrated. This means that neither one of us can require the other to arbitrate:
“• Any action to effect a foreclosure to transfer title to the property being foreclosed; or
“• Any matter where all parties seek monetary damages in the aggregate of $15,000.00 or less in total damages (compensatory and punitive), costs, and fees.
“However, should either party initiate arbitration, the other party, at its option, may seek injunctive and monetary relief in arbitration. Participating in a lawsuit or seeking enforcement of this section by a court shall not waive the right to arbitrate any other Claim.
“Additional Terms.
“Costs. The cost of any arbitration proceeding shall be divided as follows:
“• The party making demand upon the Administrator for arbitration shall pay $125.00 to the Administrator when the demand is made.
“• We will pay to the Administrator all other costs for the arbitration proceeding up to a maximum of one day (eight hours) of hearings.
“• All costs of the arbitration proceeding that exceed one day of hearings will be paid by the non-prevailing party.
“• In the case of an appeal, the appealing party will pay any costs of initiating an appeal. The non-prevailing party shall pay all costs, fees, and expenses of the appeal proceeding and, if applicable, shall reimburse the prevailing party for the cost of filing an appeal.
“• Each party shall pay his/her own attorney, expert, and witness fees and expenses, unless otherwise required by law.
“Special Acknowledgments.
“You understand and acknowledge by signing Your name to this Provision that: (i) a court and/or jury will not hear or decide any Claim governed by this Provision, (ii) the funding for Your Credit Transaction will come in whole or in part from sources outside this state, which will constitute interstate commerce within the meaning of the United States Arbitration Act, 9 U.S.C. §§ 1-9, (iii) discovery in an arbitration proceeding can be much more limited than in a court proceeding, (iv) the arbitrator may not give written reasons for his/her award, (v) rights to appeal an arbitration award are very limited, and (vi) the rights of the parties hereunder may not be exactly mutual in all respects.
“READ THE ABOVE ARBITRATION PROVISION CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO OBTAIN REDRESS THROUGH COURT ACTION.”

(All boldface type in original.)

Peoples later defaulted on the loan, and the lenders proceeded with a nonjudicial foreclosure of the property described in the mortgage. Peoples was evicted from her house as a result of the foreclosure sale. She contends that that action was wrongful because, she asserts, the mortgage was secured by an unimproved lot, not the property on which her house is located.

Peoples sued the lenders, alleging in her complaint that before she filed it, they initiated “foreclosure proceedings and/or legal process to displace [Peoples] from her home ... having no legal right to do so.” Her complaint alleges wrongful foreclosure or collection and seeks injunctive relief in the form of declaring the foreclosure deed void.

The lenders filed a motion to compel arbitration and to stay the proceedings in the trial court pending arbitration, stating (1) that the Federal Arbitration Act, 9 U.S.C. § 1 et seq., requires enforcement of Peoples’s arbitration provision; (2) that the agreement to arbitrate is contained in a written document; (3) that the transaction between Peoples and the lenders involved and affected interstate commerce; and (4) that Peoples’s claims fall within the broad scope of the arbitration provision. In support of their motion, the lenders submitted a copy of the “Disclosure Statement, Note, and Security Agreement,” which contains the arbitration provision Peoples executed, and the affidavit of Teresa M. Baer, a manager for CitiFinan-cial dealing with licensing and corporate records. Baer testified that the parties’ transaction involved interstate commerce and that the copy of the “Disclosure Statement, Note, and Security Agreement” was authentic.

Peoples filed a one-page response to the lenders’ motion to compel arbitration, arguing that the arbitration provision should not be enforced because, she said, her action is not an action on contract, but an action for wrongful foreclosure upon a parcel of land that is not subject to the mortgage, and because, she said, she cannot afford to pay any of the costs of arbitration. She did not submit any supporting evidence with her response. The lenders answered Peoples’s complaint, including in their answer an affirmative defense alleging that Peoples is precluded from proceeding in a judicial forum because she agreed to arbitrate her claims.

The trial court denied the motion to compel arbitration on the separate bases (a) that the lenders had substantially invoked the litigation process when they instituted the foreclosure and eviction proceedings, a ground not argued by Peoples, and (b) that the litigation arises from a matter not covered by the arbitration provision. The lenders appealed from that order.

II. Standard of Review

“ ‘[T]he standard of review of a trial court’s ruling on a motion to compel arbitration at the instance of either party is a de novo determination of whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review.’ ” Vann v. First Cmty. Credit Corp., 834 So.2d 751, 752-53 (Ala. 2002) (quoting Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999)). Accord, General Motors Corp. v. Stokes Chevrolet, Inc., 885 So.2d 119,121 (Ala.2003).

III. Analysis

The lenders argue a multitude of reasons why we should reverse the trial court’s order denying their motion to compel arbitration. We will first address the bases upon which the trial court denied the motion. Peoples concedes that the arbitration provision is in writing, that she signed it, and that the transaction evidenced by the contract that contains the arbitration provision involved interstate commerce. We therefore need not address those issues argued by the lenders.

A. Whether the Lenders Waived Their Right to Arbitrate

The lenders contend that the trial court erred when it determined that the lenders had waived their right to arbitrate because they substantially invoked the litigation process when they foreclosed on the mortgage and instituted eviction proceedings. In Ocwen Loan Servicing, LLC v. Washington, 939 So.2d 6, 14 (Ala.2006), this Court discussed the burden a party opposing arbitration must bear when it attempts to show that the movant has waived its right to arbitration by substantially invoking the litigation process:

“In order to show waiver by litigation-related conduct, the party opposing arbitration must demonstrate that the mov-ant has substantially invoked the litigation process and thereby the opposing party would be substantially prejudiced if the case were submitted to arbitration. Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So.2d 897, 899 (Ala.1995). In Moses H. Cone Memorial Hospital [v. Mercury Constr. Corp., 460 U.S. 1 (1983) ], the United States Supreme Court recognized a strong federal policy favoring arbitration:
‘“The [Federal] Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability. ’
460 U.S. at 24-25, 103 S.Ct. 927 (emphasis added; footnote omitted). In order to establish waiver, the party opposing arbitration bears a heavy burden, and waiver is not lightly to be inferred. Thompson v. Skipper Real Estate Co., 729 So.2d 287, 292 (Ala.1999), and cases cited therein.”

Moreover, “the issue whether a party has waived the right to arbitration by its conduct during litigation is a question for the court and not the arbitrator.” Ocwen Loan Servicing, 989 So.2d at 14.

The lenders cannot be considered to have invoked litigation by foreclosing on the mortgage for two reasons. First, the arbitration provision specifically excludes foreclosure from matters that must be arbitrated. Second, the foreclosure was nonjudicial; it involved no litigation at all. Therefore, the only proceeding that involved any litigation before Peoples filed her complaint was the separate eviction proceeding instituted by the lenders after they had foreclosed on the mortgage.

We examined a similar situation in Con-seco Finance Corp.-Alabama v. Salter, 846 So.2d 1077 (Ala.2002). In Salter, the purchaser of a mobile home signed a contract containing an arbitration clause that gave the finance company the right to use judicial or nonjudicial relief to enforce a security agreement relating to the mobile home or to foreclose on the home. After the purchaser defaulted, the finance company sued, seeking possession of the mobile home or damages for the purchaser’s retention of the home. The purchaser counterclaimed, alleging negligence and the tort of outrage based upon the finance company’s efforts to collect delinquent payments. The finance company then filed a motion to compel the purchaser to arbitrate his counterclaim, but the trial court denied the motion on the basis that the finance company had substantially invoked the litigation process and had waived its right to arbitrate when it filed the action. In Companion Life Insurance Co. v. Whitesell Manufacturing, Inc., 670 So.2d 897, 899 (Ala.1995), this Court said:

“Whether a party’s participation in an action amounts to an enforceable waiver of its right to arbitrate depends on whether the participation bespeaks an intention to abandon the right in favor of the judicial process and, if so, whether the opposing party would be prejudiced by a subsequent order requiring it to submit to arbitration. No rigid rule exists for determining what constitutes a waiver of the right to arbitrate; the determination as to whether there has been a waiver must, instead, be based on the particular facts of each case.”

We reversed the trial court’s order denying the motion to compel, noting that the parties’ arbitration agreement specifically allowed the finance company to file the action to regain possession of the mobile home. We held in Salter that because “[t]he relief requested by [the finance company] in its complaint [fell] within the parameters of the judicial relief specifically agreed to by [the purchaser],” the company’s action did not “ ‘bespeak an intention to abandon the right [of arbitration] in favor of the judicial process.’ ” 846 So.2d at 1081 (quoting First Family Fin. Servs., Inc. v. Jackson, 786 So.2d 1121, 1128 (Ala. 2000)).

The arbitration provision signed by Peoples specifically excludes from arbitration “[a]ny action to effect a foreclosure to transfer title to the property being foreclosed.” (Emphasis added.) The verb “effect” means “to cause to come into being”; or “to bring about often by surmounting obstacles.” Merriam-Webster’s Collegiate Dictionary 397 (11th ed.2003). Once the lenders conducted the nonjudicial foreclosure and Peoples did not vacate the property, the unlawful-detainer action would have been necessary to allow the lenders to bring about the complete relief that should have been obtained by the nonjudicial foreclosure, that is, surmounting the obstacle of the mortgagor’s failure to surrender possession to the mortgagee. As was the ease in Salter, the relief sought by the lenders here fell “within the parameters of the judicial relief specifically agreed to by [Peoples].” 846 So.2d at 1081. Indeed, had Peoples considered the lenders’ commencement of the unlawful-detainer action as a waiver of their right to arbitrate, she could have counterclaimed, but we have no indication that she did so. Peoples has not presented any evidence concerning the eviction process; the record reflects only that it occurred. In fact, as previously noted, Peoples did not even assert this ground as a basis for the unen-forceability of the arbitration provision. In all events, Peoples did not bear her burden of proving that the lenders substantially invoked the litigation process by instituting the separate eviction proceeding; therefore, we conclude that the lenders did not waive their right to arbitration.

B. Who Is Authorized to Decide Arbitrability

The lenders argue that the trial court also erred when it determined that Peoples’s claims were not “covered by” arbitration. They contend that the arbitration provision clearly reflects the parties’ intention to arbitrate the question of arbitrability, and, therefore, that that question must be submitted to arbitration. In Smith v. Mark Dodge, Inc., 934 So.2d 375, 379 (Ala. 2006), we stated:

“A threshold issue is which forum should decide the question of the scope of the arbitration agreement. In First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), the United States Supreme Court stated:
“ ‘Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, see, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., [514 U.S. 52, 57 (1995) ]; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985), so the question “who has the primary power to decide arbitrability” turns upon what the parties agreed about that matter.’
“514 U.S. at 943, 115 S.Ct. 1920. However, the Court warned, ‘[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is “clea[r] and unmistakabl[e]” evidence that they did so.’ 514 U.S. at 944, 115 S.Ct. 1920 (quoting AT & T Techs, v. Communications Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)). This Court has similarly required that trial courts order arbitration of the issue of arbitrability when the plain language of the agreement unquestionably shows that the parties agreed to arbitrate the issue of arbitrability. Polaris Sales, Inc. v. Heritage Imports, Inc., 879 So.2d 1129, 1133-34 (Ala.2003); and Ex parte Perry, 744 So.2d 859, 866-67 (Ala.1999).”

The question presented by this case is whether the arbitration provision clearly and unmistakably provides that the arbitrator shall decide arbitrability. The lenders argue that incorporation into the arbitration provision of the Commercial Rules of the American Arbitration Association, conferring authority to decide such issues on the arbitrator, evidences such an intent. This Court has not decided whether the incorporation of such rules is sufficient to show the parties’ intent to delegate the issue of arbitrability to an arbitrator, but federal courts have so held. In Terminix International Co. v. Palmer Ranch Ltd. Partnership, 432 F.3d 1327, 1332 (11th Cir.2005), the United States Court of Appeals for the Eleventh Circuit stated:

“[T]he parties have agreed that the arbitrator will [decide the issue of arbitrability] by providing (in all three of the arbitration clauses at issue) that ‘arbitration shall be conducted in accordance with the Commercial Arbitration Rules then in force of the American Arbitration Association’ (AAA). AAA Rule 8(a),[] in turn, provides that ‘[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.’ Am. Arbitration Ass’n, Commercial Arbitration Rules, http://www.adr.org/sp.asp?id= 22173#Toc13029601.[] By incorporating the AAA Rules, including Rule 8,[] into their agreement, the parties clearly and unmistakably agreed that the arbitrator should decide whether the arbitration clause is valid. See, e.g., Contec Corp. v. Remote Solution, Co., 398 F.3d 205, 208 (2d Cir.2005) (‘when ... parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator’); Apollo Computer, Inc. v. Berg, 886 F.2d 469, 473 (1st Cir.1989) (‘By contracting to have all disputes resolved according to the Rules of the ICC ..., Apollo agreed to be bound by Articles 8.3 and 8.4. These provisions clearly and unmistakably allow the arbitrator to determine her own jurisdiction when, as here, there exists a prima facie agreement to arbitrate whose continued existence and validity is being questioned.’) .... ”

We find the reasoning of the Eleventh Circuit and other Circuit Courts of Appeal that have addressed this issue persuasive and hold that an arbitration provision that incorporates rules that provide for the arbitrator to decide issues of arbi-trability clearly and unmistakably evidences the parties’ intent to arbitrate the scope of the arbitration provision. We therefore conclude that under the arbitration provision Peoples executed, issues of arbitrability are to be decided by the arbitrator.

C. Unconscionability

In her response to the lenders’ motion to compel arbitration, Peoples makes the bare assertion that she “cannot pay any cost of arbitration.” Although the trial court did not deny the motion to compel arbitration on this basis, we address it because

“this Court will affirm a judgment for any reason supported by the record that satisfies the requirements of due process, Taylor v. Stevenson, 820 So.2d 810, 814 (Ala.2001), even where the ground upon which we affirm was not argued before the trial court or this Court. Ex parte CTB, Inc., 782 So.2d 188, 191 (Ala. 2000).”

Smith v. Mark Dodge, Inc., 934 So.2d at 380. Here, Peoples argued to the trial court during the hearing on the motion to compel arbitration that she could not pay the costs of arbitration, and the lenders argued to this Court that Peoples’s alleged inability to pay such costs does not render the arbitration provision unconscionable.

Here, the arbitration provision provides that the cost to initiate arbitration— to be paid by Peoples—is $125. The provision assigns to the lenders the responsibility for the costs of a hearing up to a maximum of eight hours, then to the non-prevailing party any costs exceeding one day of hearings. We examined a similar provision in Commercial Credit Corp. v. Leggett, 744 So.2d 890, 898 (Ala.1999), in which we stated:

“It is difficult to see how a party who truly believes she has a meritorious cause of action can view these provisions as particularly onerous. Leggett would initially have to pay only $125.00 to commence the process. Subsequently, the defendants would pay for the first day of proceedings, regardless of the outcome. The losing party would then pay for the remainder of the proceedings. In fact, the only parties disadvantaged by these cost provisions are the losing parties— whoever they might be.”

Moreover, we have stated that “uncon-scionability is an affirmative defense, and the party asserting the defense bears the burden of proving unconscionability.” Blue Cross Blue Shield of Alabama v. Rigas, 923 So.2d 1077, 1086 (Ala.2005). Peoples presented no evidence that would support her claim that she could not pay the $125 filing fee to initiate arbitration.

IV. Conclusion

The trial court erred in denying the lenders’ motion to compel arbitration. We therefore reverse the order and remand the case. On remand, the trial court shall grant the motion to compel arbitration and either issue a stay of these proceedings pending arbitration or dismiss the case.

REVERSED AND REMANDED WITH DIRECTIONS.

COBB, C.J., and SEE, WOODALL, STUART, SMITH, BOLIN, and PARKER, JJ., concur.

MURDOCK, J., concurs in the result.

MURDOCK, Justice

(concurring in the result).

I concur in the result reached by the main opinion. I cannot, however, agree with the analysis by which that result is reached, and I write separately to address two sections of that analysis.

A. Did the lenders waive their right to arbitrate?

The main opinion reasons that the lenders did not waive their right to arbitration by pursuing a judicial eviction of the borrower because the parties’ arbitration agreement contains an express exclusionary clause applicable to “any action to effect a foreclosure to transfer title to the property being foreclosed.” If this exclusion were worded so as to apply to actions to “give effect” to a foreclosure, then I could come closer to agreeing with the main opinion that this exclusion specifically encompassed the lenders’ eviction action.

The exclusion does not apply, however, to actions to “give effect” to a foreclosure; rather, it applies to actions to “effect” a foreclosure. The object of the word “ef-feet” is “foreclosure,” not “eviction.” A foreclosure, of course, is a process by which title to property is transferred; it does not accomplish a physical eviction of the borrower (indeed, the arbitration agreement itself explains that the exclusion at issue applies to “a foreclosure to transfer title”). In light of the meaning of the word “effect” as explained in the main opinion, and the fact that the object of that word in the arbitration agreement is “a foreclosure to transfer title,” I am not persuaded that the eviction proceedings pursued by the lenders fell “ ‘within the parameters of the judicial relief specifically agreed to by [Peoples].’ ” 973 So.2d at 338 (quoting Conseco Fin. Corp.-Alabama v. Salter, 846 So.2d 1077, 1081 (Ala.2002)).

Notwithstanding the fact that the eviction action may not have fallen within the express exception relied upon by the main opinion, I believe the main opinion’s conclusion that the lenders did not waive their right to arbitrate nonetheless is correct. I come to this conclusion because, exclusions aside, the eviction action did not fall within the affirmative reach of the arbitration agreement in the first place.

By the time an eviction action is initiated by a mortgagee, the mortgagee already has achieved the transfer of title to itself, along with the corresponding right to possession of the property. Having an arbitrator reaffirm that right to possession would add nothing. In order to “give effect” to that right — i.e., to forcibly, physically remove the mortgagor from the property — it is necessary in any event for the mortgagee to invoke the assistance of the courts and law enforcement. I do not believe the arbitration agreement in the present case reasonably can be construed as intending to require the parties to seek through arbitration something that cannot be provided through arbitration, i.e., the forcible, physical removal of the plaintiff from the property. Since the mortgagee could obtain that removal outside the provisions of the arbitration agreement (indeed, only outside those provisions), the fact that the mortgagee did so cannot logically be considered a waiver of any rights under those provisions.

B. Who decides the issue of arbitrability?

Upon my initial review of this case, I questioned on what basis this Court could turn over to an arbitrator the question of the arbitrability of a dispute involving the alleged wrongful eviction of a plaintiff from property where there is not substantial evidence that the property from which she was removed is covered by the mortgage to which the controlling arbitration agreement applies. Without such evidence, on what basis could any tribunal reasonably conclude that the arbitration agreement pertaining to the mortgage and the mortgaged property governs the lenders’ eviction of the plaintiff from that property? In other words, whether the issue is the arbitrability of a dispute or the issue is who will decide the arbitrability of a dispute, on what basis are we to distinguish this case from any case in which a lender simply takes it upon itself to “foreclose” upon some parcel of land (or for that matter, some automobile or other personal property) that is not covered by the arbitration agreement?

At least for purposes of the present case, the answer lies in the particular provisions of the arbitration agreement at issue. Those provisions are such that they satisfy each step of what logically must be a two-step inquiry, namely: (1) whether the arbitration agreement reasonably may be construed — that is, is it reasonably susceptible of being construed — as requiring arbitration of the dispute at issue, and (2) if so, whether the arbitration agreement also provides that it is to be the arbitrator who shall decide whether in fact the arbitration agreement shall be construed as requiring the parties to arbitrate the dispute.

As to the first step, the contractual provisions in this particular case are in fact worded broadly enough reasonably to be susceptible of a construction that covers the dispute at issue. To begin, the contract provides that, with certain exceptions, “any Claim ... shall be resolved by binding arbitration.” A “Claim” is defined in the arbitration agreement very broadly to include “any case, controversy, dispute, tort, disagreement, lawsuit, or claim now or hereafter existing between [the lenders] and [the plaintiff].” Further, the definition of “Claim” in the contract states that “[a] claim includes, without limitation, anything that concerns: ... Any documents or instruments that contain information about any Credit Transaction.... ” “Credit Transaction” is itself broadly defined as any “past, present, or future extension, application, or inquiry of credit ... such as a loan.” Moreover, the agreement provides the following “example” of a “Claim”: “Any dispute about closing, servicing, collecting, or enforcing a Credit Transaction.” I conclude that these contractual provisions reasonably are susceptible of being construed as requiring the parties to arbitrate the dispute at issue. See Ex parte Discount Foods, Inc., 789 So.2d 842, 844 (Ala.2001) (“Whether an arbitration provision encompasses a party’s claim is a matter of contract interpretation.... That interpretation is guided by the intent of the parties.... ”); Koullas v. Ramsey, 683 So.2d 415, 417 (Ala.1996) (explaining that the court will not apply arbitration provisions to matters not “contemplated by the parties when they entered their contract”). See also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (holding that “any doubts” as to the intent of the parties to subject a matter to arbitration “should be resolved in favor of arbitration”); Jones v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 604 So.2d 332, 340 (Ala.1991).

I turn then to the second step of the analysis: whether the parties’ contract does in fact provide that it is to be the arbitrator, rather than a court, who is to actually construe the arbitration agreement and determine whether it requires the parties to arbitrate their dispute. As to this step, it is not enough that the parties “objectively revealed an intent to subject the arbitrability issue to arbitration.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). As the main opinion notes, the question that must be answered in this regard is whether the “ ‘the plain language of the [arbitration] agreement unquestionably shows,’ ” or “ ‘ “ ‘clea[rly] and unmistakably]’ evidence[s],” ’ ” “ ‘ “that the parties agreed to arbitrate arbitrability.” ’ ” 973 So.2d at 339 (quoting Smith v. Mark Dodge, Inc., 934 So.2d 375, 379 (Ala.2006), in turn quoting First Options of Chicago v. Kaplan, 514 U.S. at 944,115 S.Ct. 1920).

The main opinion addresses the foregoing question by relying upon the fact that the arbitration agreement contains a general incorporation by reference of the “Commercial Rules of the American Arbitration Association,” without setting forth any of the specific provisions of those Rules. In this case, however, it is not necessary to depend upon this incorporation by reference to determine that the parties’ contract “unquestionably show[s]” their agreement to arbitrate the issue of arbitrability. Instead, we may proceed on the more direct basis provided by the explicit terms of the contract before us requiring “Claims” to be arbitrated and defining a “Claim” to include “anything that concerns: This Provision,” where “This Provision” is in fact the provision that undertakes to define what is and is not to be arbitrated.

      . On the date this opinion was released, the quoted language appeared in Rule 7, not Rule 8.

      . On the date this opinion was released, the Commercial Arbitration Rules could be found, not at this Web address, but at http://www. adr.org/sp.asp?id=22440.

      .See note 1 above.

      . See, e.g., Capitol Chevrolet & Imports, Inc. v. Payne, 876 So.2d 1106, 1110-11 (Ala.2003) (See, J., dissenting) (noting that, although it was possible to construe contract language so as to limit arbitration to the initial sale of a vehicle, it was "also reasonable to construe the language in the arbitration agreement” (emphasis added) as applying to the particular dispute at issue in that case and, with that premise stated, concluding that the court should enforce the further provisions in the arbitration agreement that " ‘any question regarding whether a particular controversy is subject to arbitration shall be decided by the Arbitrator’ ”).

      . Although the definition of a "Claim” is indeed very broad, covering by its terms any dispute now or at any time in the future between the parties, the only question presented in this appeal concerns the application of the arbitration agreement to the particular dispute at issue. That dispute concerns the manner in which the lenders chose to protect themselves from default under the loan agreement. As to whether such a dispute was intended by the parties to be covered by their arbitration agreement, I note that there is no evidence that the lenders’ effort to foreclose upon and evict Peoples from her home was a result of anything other than a good-faith error on its part as to which parcel of real property had been given as security for the loan agreement. Further, Peoples does not contend that this dispute is not a “controversy ... arising out of [the] contract” containing the arbitration clause, or out of the "transaction” evidenced by that contract. See 9 U.S.C. § 2 (Federal Arbitration Act). Nor is this a case in which the evidence indicates that application of the arbitration agreement to the disputed issue would be unconscionable.

      . Unlike the presumption in favor of arbitration of the underlying dispute, see Moses H. Cone Mem’l Hosp., supra, there is no presumption in favor of the arbitrator when the question is who should decide whether that dispute is arbitrable. First Options of Chicago, Inc. v. Kaplan, 514 U.S. at 944-45, 115 S.Ct. 1920. Indeed, the question of "who decides” is governed by the opposite presumption, i.e., a presumption that the court should decide. Id. at 945, 115 S.Ct. 1920.


source: Caselaw Access Project

author: LYONS, Justice. BOLIN, Justice

license: Public Domain

text:
    PAW PAW’S CAMPER CITY, INC., et al. v. Leroy HAYMAN and Diana Hayman.
    1050873.
    Supreme Court of Alabama.
    May 18, 2007.

      Larry Canada of Galloway, Johnson, Tompkins, Burr & Smith, New Orleans, Louisiana; and Jeremiah J. Talbot of Galloway, Johnson, Tompkins, Burr & Smith, Gulf Breeze, Florida, for appellants.
    Edward J. Noojin, Jr., and Bert P. Noo-jin of Noojin & Noojin, P.C., Fairhope, for appellees.
   LYONS, Justice.

Paw Paw’s Camper City, Inc., and its employees, Terri Myers and Randy Black-mon (collectively referred to as “the sellers”), appeal from the trial court’s order denying their motion to compel arbitration. We affirm.

I. Factual Background and Procedural History

Paw Paw’s Camper City, Inc., is a Mississippi corporation engaged in the business of selling motor homes. It maintains a dealership in Mobile County. During the events made the basis of this case, Myers was employed by Paw Paw’s Camper City as a salesperson and Blackmon was employed as a sales manager.

In January 2005, Paw Paw’s Camper City was holding an off-site sale of its motor homes in Mobile. Diana Hayman visited the off-site sale and expressed to Myers an interest in purchasing a 2005 Holiday Rambler Scepter motor home. Several days after Diana Hayman had viewed the motor home, her husband, Leroy Hayman, visited the off-site sale to view the motor home. Leroy Hayman expressed an interest in purchasing the motor home and began negotiating the terms of the purchase price with Myers.

After the Haymans had completed a consumer credit application, the lender approved the Haymans’ purchase of the Holiday Rambler Scepter; the payments were to be $1,900 per month for a term of 240 months. The Haymans state that they rejected those terms and informed the sellers that they would not pay more than $1,500 per month for a term of 240 months to purchase the motor home.

The sellers say that on January 31, 2005, they informed the Haymans that they could sell the Holiday Rambler Scepter to them for approximately $1,300 per month, but that in order “to make the deal work,” the sale documents had to be completed that day. Leroy Hayman testified that he had estimated the monthly payments on the motor home to be approximately $1,500 and that the sellers’ offer of approximately $1,300 per month was “cheaper than [he] thought it was going to be.” The Haymans agreed to purchase the Holiday Rambler Scepter, and, on January 31, 2005, they executed several documents, including a retail buyer’s order. The retail buyer’s order is a preprinted form that contains a section in which the terms of the sale are to be inserted, including the amount of the monthly payment and the length of the financing term. The retail buyer’s order also contains the following arbitration provision:

“Any claim, dispute, or other matter in question, arising out of or related to this agreement or the vehicle which is the subject of this agreement, or any defect, complaint or problem arising out of said vehicle, shall be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party. In the event that the claim, dispute or the other matter in question between the parties is not resolved by mediation, [it] shall be decided by arbitration which, unless the parties mutually agree otherwise, shall be in accordance with the rules of the American Arbitration Association currently in effect at the time the claim, dispute or other matter arises. The demand for arbitration shall be filed in writing with the other party to this agreement and with the American Arbitration Association. The parties shall share the mediator’s fee and any filing fees for mediation and/or arbitration equally. Mediation and/or arbitration shall be held in Mobile County. The order rendered by the arbitrator shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.”

The Haymans allege that at the time they signed the retail buyer’s order, the section containing the amount of the monthly payments and the length of the financing term was blank. Leroy Hayman testified that Blackmon represented to them that the secretary who would insert the amounts in those blanks was unavailable and that the section containing the terms of the sale would be completed later.

The Haymans returned to Paw Paw’s Camper City on February 5, 2005, and were given a copy of the sale documents, including a copy of the retail buyer’s order. The Haymans say that at that point they discovered that the section of the retail buyer’s order relating to the financing terms had been completed to indicate that their monthly payments on the Holiday Rambler Scepter were $1,341.77 for a term of 300 months. The Haymans informed the sellers that they had not agreed to a financing term of 300 months but had agreed to a financing term of only 240 months. The Haymans refused to accept delivery of the motor home because of the 300-month financing term. The Haymans contend that the sellers have retained their down payment of $70,166.81.

The Haymans allege that an agreement to purchase the motor home with a financing term of 240 months was reached between them and the sellers; that at the time they signed the retail buyer’s order, the section specifying the financing terms had not been completed; and that the financing term of 300 months was added by the sellers after the Haymans had signed the document. The sellers contend that the parties agreed to a financing term of 300 months and that that term was listed in the retail buyer’s order at the time the Haymans signed the document.

The Haymans filed this action on March 25, 2005; their complaint alleged breach of contract, fraud in the inducement of a contract, and fraud in the procurement of an arbitration agreement. Soon thereafter, the Haymans served interrogatories and requests for production upon the sellers. The sellers answered the complaint on May 10, 2005, asserting as an affirmative defense the arbitration provision and reserving their right to seek a dismissal based on the arbitration provision. Nevertheless, the sellers also asserted a counterclaim and demanded a trial by jury.

When the sellers failed to respond to their discovery requests, the Haymans in July 2005 moved the trial court for sanctions and to hold the sellers in contempt; they again moved for sanctions and contempt in January 2006. At no time during these discovery disputes did the sellers suggest that any of the claims made the basis of the Haymans’ discovery requests were subject to resolution by arbitration. The sellers served their own interrogatories and requests for production in July 2005. In response to a motion for a trial setting filed by the Haymans on December 28, 2005, the trial court imposed a 60-day deadline for completing discovery and set the matter for trial on April 3, 2006. Again, the sellers interposed no objection that any of the claims made the basis of discovery was subject to arbitration. On December 28, 2005, the Haymans took the depositions of two employees of Paw Paw’s Camper City, Inc. On February 1, 2006, the sellers deposed the Haymans. Both the sellers and the Haymans called upon the trial court on numerous occasions to intercede during these depositions in order to settle disputes that arose between the parties. Again, the sellers interposed no objection that any of the claims made the basis of the discovery was subject to arbitration. On February 6, 2006, the sellers filed a motion to compel arbitration and to stay further discovery.

II. Standard of Review

Where, as here, no ore tenus testimony is taken before the trial court, we review de novo a determination that a party has waived its right to arbitration. Hales v. ProEquities, Inc., 885 So.2d 100, 105 (Ala.2003).

III. Analysis

A. Waiver of Arbitration by Substantial Invocation of the Litigation Process

Our review of the issue whether a party has waived its right to arbitration by substantially invoking the litigation process is governed by the standard enunciated in Companion Life Insurance Co. v. Whitesell Manufacturing, Inc., 670 So.2d 897, 899 (Ala.1995):

“It is well settled under Alabama law that a party may waive its right to arbitrate a dispute if it substantially invokes the litigation process and thereby substantially prejudices the party opposing arbitration. Whether a party’s participation in an action amounts to an enforceable waiver of its right to arbitrate depends on whether the participation bespeaks of an intention to abandon the right in favor of the judicial process and, if so, whether the opposing party would be prejudiced by a subsequent order requiring it to submit to arbitration. No rigid rule exists for determining what constitutes a waiver of the right to arbitrate; the determination as to whether there has been a waiver must, instead, be based on the particular facts of each case.”

Both substantial invocation of the litigation process and prejudice must be present to establish waiver. Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So.2d 1 (Ala.1986). Because of the strong federal policy applicable to arbitration proceedings set forth in the Federal Arbitration Act, 9 U.S.C. § 1 et seq., one seeking to establish a waiver of arbitration bears a heavy burden. SouthTrust Bank v. Bowen, 959 So.2d 624 (Ala.2006); Mutual Assurance, Inc. v. Wilson, 716 So.2d 1160 (Ala.1998).

B. Substantial Invocation of the Litigation Process

The sellers rely on Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, for the proposition that a delay of over one year from the filing of the complaint is insufficient evidence of waiver of arbitration. As we noted in Companion Life Insurance Co., “waiver must ... be based on the particular facts of each case.” 670 So.2d at 899. We explained in Ex parte Merrill Lynch why the one-year period in that case was deemed reasonable:

“Plaintiff, however, waited nearly ten months before she filed notice with the court that she was opting out of the class in the pending federal multidistrict litigation in New York. Defendants had no reason to seek arbitration before plaintiff’s opt-out, as they could have reasonably believed that plaintiff would obtain her relief in the federal suit, and, consequently, that the action in Jefferson County would then be dismissed.”

494 So.2d at 3. The circumstances here — a lapse of approximately 10 months between commencing the action and filing a motion to compel arbitration, during which both sides conducted extensive discovery and the case was set for trial without objection from the sellers — are simply not remotely comparable to the circumstances in Ex parte Merrill Lynch.

The sellers note that in Ex parte Merrill Lynch, the Court held that “ ‘ “[mjerely answering on the merits, asserting a counterclaim (or cross-claim) or participating in discovery, without more, will not constitute a waiver.” ’ ” 494 So.2d at 3 (quoting Ciar Prods., Ltd. v. Isram Motion Pictures Prod. Sens., Inc., 529 F.Supp. 381, 383 (S.D.N.Y.1982), quoting in turn Demsey & Assocs., Inc. v. S.S. Sea Star, 461 F.2d 1009, 1018 (2d Cir.1972)). But, as we stated in Voyager Life Ins. Co. v. Hughes, 841 So.2d 1216, 1219-20 (Ala. 2001), waiver may be found as early as filing an answer on the merits. In Termi-nix International Co. v. Jackson, 669 So.2d 893, 896 (Ala.1995), we noted that we had previously stated in Ex parte Costa & Head (Atrium), Ltd., 486 So.2d 1272, 1277 (Ala.1986) (citing Demsey & Assocs., Inc., supra, and Gavlik Constr. Co. v. H.F. Campbell Co., 526 F.2d 777 (3d Cir.1975)), that “ ‘[tjhe joining of issue on the merits, assertion of a counterclaim or cross-claim, or engaging in discovery, alone, is not sufficient to create a waiver.’ ” Yet, in Ter-minix, the plaintiffs complaint set forth claims of breach of contract and fraud, and the motion to compel arbitration was directed only to the breach-of-contract claim. Here, the motion to compel arbitration is directed to both the breach-of-contract claim and the claim of fraud in the inducement of the entire contract and was filed after all the pretrial activity described in Terminix, plus, a factor not found in Terminix, after the case had been set for trial without objection from the party moving to compel arbitration. Again, “waiver must ... be based on the particular facts of each case.” Companion Life Ins. Co., 670 So.2d at 899.

The sellers contend that their extensive involvement in the litigation process is justifiable based upon our precedent relegating to the court, and not the arbitrator, a claim of fraud in the procurement of the arbitration clause, separate from the issue of fraud in the inducement of the entire agreement. See, e.g., Investment Mgmt. & Research, Inc. v. Hamilton, 727 So.2d 71 (Ala.1999). The sellers further contend that the motion to compel arbitration was filed just two days after the depositions of the Haymans in which, they say, they discovered for the first time that the claim of fraud in the procurement of the arbitration clause had no basis in fact.

Hamilton differs from this proceeding in that in that case no claim was presented as to fraud in the inducement of the entire contract. Further, it does not deal with a waiver of the right to arbitration by substantial invocation of the litigation process. Although the issue of fraud in the procurement of the arbitration agreement is a question for the court to resolve, the sellers offer no explanation for their failure to obtain an early resolution of this issue by immediately moving to compel arbitration and attaching affidavits of their representatives establishing an agreement to arbitrate. At that juncture it would have been incumbent upon the Haymans to bring forth evidence of fraud in the procurement of the arbitration agreement. If the Hay-mans failed to do so, the motion would have been due to be granted. If the Hay-mans submitted affidavits in opposition to the sellers’ motion to compel arbitration, the sellers could have sought discovery limited to that necessary to resolve the dispute as to arbitrability falling within the province of the trial court. See Ex parte Bill Heard Chevrolet, Inc., 927 So.2d 792, 798 (Ala.2005), for a thorough analysis of the proper course of conduct for a party exposed to discovery on all issues in an action when that party has the contractual right to resolution of disputes by arbitration. Yet the sellers offer no justification for their acquiescence in, and indeed participation in, preparation for trial of all issues and for their agreement to defer the deposition of the key witnesses on the issue of fraud in the procurement of the arbitration agreement until shortly before trial.

C. Prejudice

Having found that there has been a substantial invocation of the litigation process, we now address the issue of prejudice. The Haymans point out that “[t]he pure cost to the plaintiffs, just for the [four] depositions, has been more than $1650.” The sellers criticize the Haymans’ statement that they have expended $9,400 in this litigation for its lack of specificity in identifying additional costs that would not have been incurred in arbitration. The sellers hypothesize in their brief to this Court that “the minimal discovery which was conducted prior to [the sellers’] seeking to compel arbitration would also have been conducted in arbitration.” The sellers offer no authority for the proposition that we may take judicial notice of their speculation that an arbitrator in this proceeding would have allowed the same degree of discovery that took place in the Mobile Circuit Court before the sellers filed their motion to compel arbitration, and we decline to do so. For all that appears, the arbitrator would have exercised its discretion in favor of allowing no discovery.

Moreover, the difficulty in quantifying the degree of preparation for a jury trial, as opposed to a trial before an arbitrator, was discussed in a special writing in Hales v. ProEquities, Inc., supra, as follows:

“The Haleses’ assertions that they were substantially prejudiced in preparing for a jury trial, as opposed to arbitration, are not accompanied by any specific details. However, it is difficult to quantify such activity. I have not been away from the practice of law so long as to forget that the details essential to adequate preparation for trial before a jury are more elaborate than when the trial is before the court or the case is presented to an arbitrator.”

885 So.2d at 107-08 (Lyons, J., concurring specially). As the Court stated in Hales, “ ‘[prejudice has been found in situations where the party seeking arbitration allows the opposing party to undergo the types of litigation expenses that arbitration was designed to alleviate.’ ” 885 So.2d at 105-06 (quoting Morewitz v. West of England Ship Owners Mut. Protection & Indent. Ass’n, 62 F.3d 1356, 1366 (11th Cir.1995)). The Haymans have amply shown prejudice from participating in full-blown pretrial discovery addressing all the issues in the case.

Although a party asserting that the other party has waived the right of arbitration by participating in pretrial preparation bears a heavy burden and operates in face of a presumption against a waiver of the right to arbitrate, SouthTrust Bank v. Bowen, supra, a line must be drawn somewhere, and, if it is not drawn here, we should revise our standard to state that a party asserting pretrial waiver bears a virtually impossible burden and faces an irrebuttable presumption.

IV. Conclusion

Because the Haymans have shown both substantial invocation of the litigation process by the sellers and prejudice, we conclude that the sellers have waived their right to arbitration. The order of the trial court denying the sellers’ motion to compel arbitration is due to be affirmed.

AFFIRMED.

COBB, C.J., and WOODALL, PARKER, and MURDOCK, JJ., concur.

SMITH, J., concurs in the result.

SEE, STUART, and BOLIN, JJ., dissent.

BOLIN, Justice

(dissenting).

Because I believe that the sellers have not waived their right to compel arbitration, I must respectfully dissent.

This Court has stated: '

“It is well settled under Alabama law that a party may waive its right to arbitrate a dispute if it substantially invokes the litigation process and thereby substantially prejudices the party opposing arbitration. Whether a party’s participation in an action amounts to an enforceable waiver of its right to arbitrate depends on whether the participation bespeaks an intention to abandon the right in favor" of the judicial process, and, if so, whether the opposing party would be prejudiced by a subsequent order requiring it to submit to arbitration. No rigid rule exists for determining what constitutes a waiver of the right to arbitrate; the determination as to whether there has been a waiver must, instead, be based on the particular facts of each case.”

Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So.2d 897, 899 (Ala.1995). Thus, in order to establish a waiver of the right to arbitrate a dispute, the party opposing arbitration must demonstrate both (1) that the party seeking to compel arbitration has substantially invoked the litigation process and (2) that the party opposing arbitration would be substantially prejudiced by an order compelling arbitration. SouthTrust Bank v. Bowen, 959 So.2d 624 (Ala.2006). Because there is no rigid rule for determining what constitutes a waiver of the right to arbitrate, the determination as to whether there has been a waiver must be based on the particular facts of each case. Voyager Life Ins. Co. v. Hughes, 841 So.2d 1216 (Ala.2001). Thus, the trial judge’s determinations should be given substantial weight on appeal. Id. However, a presumption exists against a finding that a party has waived its right to compel arbitration. Bowen. Further, “[o]ur cases continue to make it clear that, because of the strong federal policy favoring arbitration, a waiver of the right to compel arbitration will not be lightly inferred, and, therefore, that one seeking to prove waiver has a heavy burden.” Mutu al Assurance, Inc. v. Wilson, 716 So.2d 1160,1164 (Ala.1998).

The Haymans argue on appeal that the sellers have waived their right to arbitrate because, they say, the sellers have substantially invoked the litigation process by filing a counterclaim and requesting a jury trial; by participating extensively in the discovery process, including filing, and responding to, a number of motions relating to discovery; by participating in the taking of four depositions; and by waiting approximately 10 months from the date the complaint was filed and 56 days before the case was to be tried before moving to compel arbitration. “ ‘ “Merely answering on the merits, asserting a counterclaim (or cross-claim) or participating in discovery, without more, will not constitute a waiver.” ’ ” Ex parte Merrill Lynch, Pierce, Fenner & Smith, 494 So.2d 1, 3 (Ala.1986) (quoting Ciar Prods., Ltd. v. Isram Motion Pictures Prod. Servs., Inc., 529 F.Supp. 381 (S.D.N.Y.1982)). “But ... “‘ ‘the earliest point at which waiver of the right to arbitration may be found “is when the other party files an answer on the merits.” ”” ” Hughes, 841 So.2d at 1219-20 (quoting Wilson, 716 So.2d at 1164, quoting other cases).

In Terminix International Co. v. Jackson, 669 So.2d 893 (Ala.1995), the plaintiffs agreed to purchase a house from a third party. At the closing, the third party showed the plaintiffs a document that had been prepared by Terminix indicating that Terminix had inspected the house and had observed existing termite damage; a graph attached to the document specifically described the nature and extent of the damage. The third party assigned to the plaintiffs his rights in a termite bond he had previously acquired from Terminix. This bond contained an arbitration clause, which provided that any dispute arising out of or relating to the termite bond would be settled by arbitration.

Subsequently, the plaintiffs discovered substantial termite damage to the house and sued Terminix, alleging fraud and breach of contract. The plaintiffs alleged that Terminix had misrepresented the nature of the termite damage and had breached the termite bond by failing to repair their house in accordance with the terms of the bond. Terminix moved to compel arbitration of the plaintiffs’ breach-of-contract claim pursuant to the arbitration clause in the termite bond. The plaintiffs argued in response to the motion to compel arbitration that Terminix had waived its right to arbitration because Ter-minix did not move to compel arbitration until seven months after the action against it was filed, because Terminix filed requests for admissions, interrogatories, and requests for production of documents, because five depositions had been taken by the parties, and because the plaintiffs had spent over $900 in deposition expenses.

In concluding that the plaintiffs had failed to establish that Terminix had waived its right to compel arbitration, this Court determined that the plaintiffs were placed on notice of Terminix’s arbitration rights when Terminix answered the plaintiffs’ complaint and pleaded the arbitration clause as a defense, thereby not evincing “ ‘an intent to abandon the right to seek arbitration.’ ” Jackson, 669 So.2d at 896 (quoting Ex parte Merrill Lynch, 494 So.2d at 3). Here, the sellers, like the defendant in Jackson, supra, answered the complaint asserting as an affirmative defense the arbitration provision contained in the “Retail Buyer’s Order.” The sellers specifically stated that they reserved their right to seek a dismissal of the Haymans’ claims based on the arbitration provision and that they were not waiving that right by answering the complaint.

In Investment Management & Research, Inc. v. Hamilton, 727 So.2d 71 (Ala.1999), Charles Brashier, a representative of Investment Management & Research, Inc. (“IMR”), approached Douglas Hamilton about opening a securities-investment account with IMR. Hamilton agreed and opened the account with IMR; the account was managed by Brashier. Subsequently, Hamilton alleged that Bra-shier stole $200,000 Hamilton had given Brashier for the securities-investment account.

Hamilton sued IMR and Brashier, alleging various theories of recovery, including a claim that he was fraudulently induced to open and maintain his IMR investment account and to continue to invest moneys with IMR through Brashier. A customer agreement Hamilton signed contained an arbitration agreement. IMR moved to compel arbitration. Hamilton opposed the motion by arguing that he had been fraudulently induced to sign the customer agreement; therefore, he argued, he was not bound by an arbitration clause in a contract that, as a result of fraud, was due to be rescinded, revoked, or declared void. The trial court denied IMR’s motion to compel arbitration and to stay the action pending arbitration.

In reversing the trial court’s denial of the motion to compel arbitration, this Court stated:

“Citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and the Alabama decisions that have applied the holding in Prima Paint, IMR argues that whether the customer agreement, including the arbitration provision contained therein, is a valid, enforceable contract must be resolved by arbitration.
“In Prima Paint, the Court considered the question ‘whether the federal court or an arbitrator is to resolve a claim of “fraud in the inducement,” under a contract governed by [the Federal Arbitration Act] where there is no evidence that the contracting parties intended to withhold that issue from arbitration.’ 388 U.S. at 396-97, 87 S.Ct. 1801.
“ ‘Having determined that the contract in question is within the coverage of the [Federal] Arbitration Act, we turn to the central issue in this case: whether a claim of fraud in the inducement of the entire contract is to be resolved by the federal court, or whether the matter is to be referred to the arbitrators. The courts of appeals have differed in their approach to this question. The view of the Court of Appeals for the Second Circuit ... is that — except where the parties otherwise intend — arbitration clauses as a matter of federal law are “separable” from the contracts in which they are embedded, and that where no claim is made that fraud was directed to the arbitration clause itself, a broad arbitration clause will be held to encompass arbitration of the claim that the contract itself was induced by fraud. The Court of Appeals for the First Circuit, on the other hand, has taken the view that the question of “severability” is one of state law, and that where a State regards such a clause as inseparable a claim of fraud in the inducement must be decided by the court. [Citations omitted.]
“ ‘With respect to cases brought in federal court involving [contracts] evi-denting transactions in “commerce,” we think that Congress has provided an explicit answer. That answer is to be found in § 4 of the [Federal Arbitration] Act, which provides a remedy to a party seeking to compel compliance with an arbitration agreement. Under § 4, with respect to a matter within the jurisdiction of the federal courts save for the existence of an arbitration clause, the federal court is instructed to order arbitration to proceed once it is satisfied that “the making of the agreement for arbitration or the failure to comply [with the arbitration agreement] is not in issue.” Accordingly, if the claim is fraud in the inducement of the arbitration clause itself — an issue which goes to the “making" of the agreement to arbitrate — the federal court may proceed to adjudicate it. But the statutory language does not permit the federal court to consider claims of fraud in the inducement of the contract generally.’

“Prima Paint, 888 U.S. at 402-04, 87 S.Ct. 1801 (first and third emphasis added [in Hamilton]; second emphasis original).

“In Jones v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 604 So.2d 382, 337 (Ala.1991), we held:

“ ‘Since Prima Paint, it has become clear that in cases involving claims of fraud in the inducement of a contract affecting interstate commerce, the court must first determine whether the fraud claim is directed solely at the arbitration clause itself. Coleman v. Prudential Bache Securities, Inc., 802 F.2d 1350, 1352 (11th Cir. 1986).... If so, the party opposing arbitration is entitled to a trial involving state law issues relating to the making of the arbitration clause. “ ‘If, however, ... the court concludes that the claim of fraud actually bears upon the entire agreement and upon the activities of the parties in general, the provision in § 2 [of the Federal Arbitration Act] regarding the revocation of contracts does not preclude the federally created right to specific performance of the arbitration clause. Were it otherwise, a skillfully crafted complaint would, in every case, necessitate a trial thus effectively eviscerating the [Federal Arbitration Act] and circumventing the strong policy favoring arbitration.’

“(Citations omitted.)

“Relying on Prima Paint and Merrill Lynch, this Court, in Old Republic Ins. Co. v. Lanier, 644 So.2d 1258 (Ala.1994), reversed the trial court’s denial of the motion to compel arbitration as to the claim of fraud in the inducement of the contract, because that claim did not ‘place in issue the making of the arbitration clauses themselves.’ 644 So.2d at 1263.

“In Ex parte Lorance, 669 So.2d 890 (Ala.1995), this Court followed the rationale of Prima Paint and affirmed the trial court’s order compelling arbitration in a tort/breach-of-contract action:

“ ‘[The petitioner] argues that “even if the Court determines that the matter is subject to arbitration, the arbitration should be stayed until the Petitioner has had an opportunity to adjudicate his fraud-in-the-indueement claims which, if successful, would void the arbitration provision.” [The petitioner’s] argument, however, is contrary to applicable law. As long as an arbitration clause is broad enough to encompass claims of fraud in the inducement of the contract in which it is found, any claims as to fraud in the inducement of the contract generally, as opposed to the arbitration agreement specifically, are subject to arbitration. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Coleman v. Prudential Bache Securities, Inc., 802 F.2d 1350 (11th Cir.1986); Jones v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 604 So.2d 332 (Ala.1991). Here, the arbitration clause states: “Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration .... ” Clearly, [the petitioner’s] claims as to fraud in the inducement of the contract “relat[e] to” the contract, and the arbitration clause is therefore broad enough to encompass those claims. [The petitioner] did not allege any claims of fraud in the inducement specific to the arbitration provision itself. Thus, all claims attacking the contract on the basis of fraud, suppression, deceit, etc., are subject to arbitration.’
“669 So.2d at 892-93 (emphasis in original).
“The facts of this present case, however, place it within the application of the principles announced in Prima Paint. Hamilton did not assert a claim of fraud in the inducement as to the arbitration clause; rather, Hamilton challenged the IMR customer agreement as having been fraudulently induced. In other words, Hamilton did not contend that the execution of the arbitration provision itself (i.e., apart from the execution of the other provisions of the customer agreement) was induced by fraud.
“To reiterate, when a claim of fraud in the inducement is directed toward the arbitration clause itself, the issue is adjudicated by the court. On the other hand, when a claim of fraud in the inducement is directed toward the entire contract, as in this case, the issue is subject to arbitration. Because Hamilton claimed fraud in the inducement of the customer-agreement contract generally, as opposed to the arbitration clause specifically, Hamilton’s claims against IMR are subject to arbitration according to the terms of the customer agreement he signed.”

Hamilton, 727 So.2d at 74-78.

Here, the Haymans asserted a claim of fraud in the procurement of the arbitration clause, a claim they knew when they asserted it had no basis in fact. Once the sellers deposed the Haymans on February 1, 2006, and discovered for the first time that the Haymans’ claim asserting fraud in the procurement of the arbitration agreement specifically had no basis in fact, they immediately moved the trial court, on February 6, 2006, to compel arbitration pursuant to the arbitration agreement contained in the “Retail Buyer’s Guide.” Based on this Court’s decision in Hamilton, the sellers had no basis on which to compel arbitration before February 1, 2006, even as to the claims asserting fraud in the inducement of the contract and breach of contract. Therefore, because the sellers promptly moved to compel arbitration after learning that the Haymans’ claim of fraud in the procurement of the arbitration agreement had no basis in fact, I cannot conclude that they waived the right to compel arbitration.

Based on the foregoing, I conclude that the sellers did not waive their right to arbitration; therefore, I must respectfully dissent.

SEE and STUART, JJ., concur.

      . The terms of the purchase price were based in part on a down payment of $70,166.81 made by the Haymans. The down payment consisted of $60,166.81 in equity the Hay-mans received on a trade-in of a recreational vehicle they had purchased in 2003 from Paw Paw's Camper City and $10,000 in cash.

      . The dissenting opinion does not acknowledge that the case was set for trial without objection from the sellers.

      . This Court in Jackson also relied on the fact that the discovery expenses incurred by the plaintiffs would not be wasted because the discovery conducted between the parties would be necessary to adjudicate the plaintiffs’ nonarbitrable fraud claims.

      . The Haymans testified in their depositions that the sellers did not make any representations regarding the arbitration agreement and, more importantly, the Haymans stated that they did not read the "Retail Buyer's Order” containing the arbitration provision before they signed it. See Foremost Ins. Co. v. Parham, 693 So.2d 409 (Ala. 1997).


author: PER CURIAM.

text:
    Matthew GERTHOFFER v. ALABAMA DEPARTMENT OF CORRECTIONS.
    2051050.
    Court of Civil Appeals of Alabama.
    May 11, 2007.
    Matthew Gerthoffer, pro se.
    Kim Thomas, gen. counsel and deputy atty. gen., and Tara S. Knee, asst. gen. counsel and asst. atty. gen., Department of Corrections, for appellee.
   PER CURIAM.

On April 3, 2006, Matthew Gerthoffer, an inmate at the Ventress Correctional Facility, filed a petition for a writ of certio-rari with the Montgomery Circuit Court (“the trial court”) challenging the denial by the Alabama Department of Corrections (“the DOC”) of his request to receive incentive good time (“IGT”). On July 6, 2006, the DOC answered and moved to dismiss Gerthoffer’s complaint on the basis that he was not entitled to earn IGT based on his convictions for two class A felonies. The trial court subsequently entered an order on August 4, 2006, in which it granted the DOC’s motion to dismiss. Gerthof-fer filed a postjudgment motion that was denied by operation of law. See Rule 59.1, Ala. R. Civ. P. Gerthoffer timely appealed.

Gerthoffer argues on appeal that the trial court erred by denying his petition for a writ of certiorari without first conducting a hearing or considering evidence that the DOC allowed other similarly situated inmates to earn IGT pursuant to § 14r~9-41, Ala.Code 1975. Before we can address Gerthoffer’s argument, we must first determine whether this court has jurisdiction to hear this appeal.

In 1969, the Alabama Legislature created the Court of Civil Appeals and the Court of Criminal Appeals. See § 12-3-1, Ala.Code 1975. The jurisdiction of the Court of Criminal Appeals is set out in § 12-3-9, Ala.Code 1975, which provides:

“The Court of Criminal Appeals shall have exclusive appellate jurisdiction of all misdemeanors, including the violation of town and city ordinances, habeas corpus and all felonies, including all post conviction writs in criminal cases.”

Section 12-3-10, Ala.Code 1975, sets forth the appellate jurisdiction of the Court of Civil Appeals and, in pertinent part, provides:

“The Court of Civil Appeals shall have exclusive appellate jurisdiction of all civil cases where the amount involved, exclusive of interest and costs, does not exceed $50,000, all appeals from administrative agencies other than the Alabama Public Service Commission, all appeals in workers’ compensation cases, all appeals in domestic relations cases, including annulment, divorce, adoption, and child custody cases and all extraordinary writs arising from appeals in said cases.”

In addition, this court also has jurisdiction over certain cases deflected to it by the supreme court pursuant to § 12-2-7, Ala. Code 1975.

A dispute has recently arisen between this court and the Court of Criminal Appeals regarding jurisdiction of appeals such as Gerthoffer’s. In Ex parte Boy-kins, 862 So.2d 587 (Ala.2002), Boykins, an inmate at the Bullock County Correctional Facility, filed a petition for a writ of certio-rari in which he asserted that the DOC had improperly denied his request to receive IGT. The circuit court treated his petition as a petition for a writ of habeas corpus and dismissed the petition. Boy-kins appealed to the Alabama Court of Criminal Appeals, and that court affirmed the judgment of the circuit court in an unpublished memorandum. Boykins v. State (No. CR-01-0659, Feb. 22, 2002), 854 So.2d 1228 (Ala.Crim.App.2002) (table). Boykins petitioned the Alabama Supreme Court for a writ of certiorari, and that court granted the petition

“to address the question whether the Court of Criminal Appeals properly affirmed the trial court’s order of dismissal where the basis of the dismissal was the trial court’s treatment of Boykins’s petition for a writ of certiorari as a petition for a writ of habeas corpus.”

Ex parte Boykins, 862 So.2d at 588. After a lengthy analysis, our supreme court held that because Boykins had no due-process liberty interest in the DOC’s ruling on his request to qualify for IGT, the circuit court and the Court of Criminal Appeals had incorrectly treated Boykins’s petition as one for a writ of habeas corpus. Following its holding on the issue presented in Boykins’s petition, the court made the following observation:

“Moreover, we note that the DOC, as stated in Ala.Code 1975, § 14-1-1.2, is an ‘administrative department responsible for administering and exercising direct and effective control over penal and corrections institutions throughout this state.’ (Emphasis added.) Ala.Code 1975, § 41-22-3(1), defines ‘agency’ as ‘[ejvery board, bureau, commission, department, officer, or other administrative office or unit of the state.’ (Emphasis added.) Accordingly, the DOC is an administrative agency that is within the scope of the Alabama Administrative Procedure Act, Ala.Code 1975, § 41-22-1 et seq. (‘the Act’). The appropriate remedy to review the actions of administrative agencies is an appeal made in accordance with § 41-22-20(a) of the Act. However, pursuant to § 41-22-3(9)(g)(l), as noted in Cox [v. State, 628 So.2d 1075 (Ala.Crim.App.1993)], Boy-kins has no right to avail himself of such judicial review.
“Thus, we conclude that Sellers v. State, 586 So.2d 994 (Ala.Crim.App. 1991), cited in Cox, supra, is more analogous to this case. In Sellers, the petitioner appealed the trial court’s denial of his petition for a writ of habeas corpus, pursuant to which he sought review of the revocation of his parole by the Alabama Board of Pardons and Paroles (‘the Board’). The Court of Criminal Appeals held that the actions of the Board could not be reviewed under the Act because Ala.Code 1975, § 41-22-3(3) exempts the Board from review. Thus, the court determined that the appropriate means for the petitioner to seek review of the Board’s action was by petition for a writ of certiorari.
“Here, Boykins, an inmate in a public institution, has sought review of the action of an administrative department, i.e., the DOC, regarding its denial of his request to receive IGT. Like the petitioner in Sellers, Boykins does not enjoy the statutory right of judicial review provided by § 41-22-20(a), a part of the Act, because he is excluded under § 41-22-3(9)(g)(l).
“ ‘Alabama law is clear that, in the absence of a right of appeal, a party seeking review of a ruling by an administrative agency may petition the circuit court for a common law writ of certiora-ri.’ State Personnel Bd. v. State Dep’t of Mental Health & Retardation, 694 So.2d 1367, 1371 (Ala.Civ.App.1997), citing Ellard v. State, 474 So.2d 743 (Ala. Crim.App.1984), affirmed, 474 So.2d 758 (Ala.1985). See also Alabama Dep’t of Mental Health & Mental Retardation v. Kirby, 579 So.2d 675 (Ala.Civ.App.1991). ‘Certiorari will not issue, however, if a right of appeal is available.’ State Personnel Board, 694 So.2d at 1371. ‘[Wjhere an applicable statute provides no right of appeal and no statutory cer-tiorari review, the only means of review is the common law writ of certiorari.’ Hardy v. Birmingham Bd. of Edue., 634 So.2d 574, 576 (Ala.Civ.App.1994). Hence, Boykins’s only means to seek review of the actions of the DOC is by a petition for a writ of certiorari. Consequently, the Court of Criminal Appeals erred in affirming the trial court’s treatment of Boykins’s petition for a writ of certiorari as a petition for a writ of habeas corpus and its denial of that petition. Accordingly, the judgment of the Court of Criminal Appeals is reversed and the cause remanded for the Court of Criminal Appeals to reverse the judgment of the trial court and remand the cause for the trial court to review Boykins’s petition for a writ of certiorari reviewing the DOC’s denial of his request to be allowed to earn IGT.”

Ex parte Boykins, 862 So.2d at 593-94.

On remand from the supreme court, the Court of Criminal Appeals asserted that “should an appeal be taken from the Montgomery Circuit Court’s judgment, the appeal should be filed with the Court of Civil Appeals, because Boykins’s case would be an appeal from an administrative agency, see § 12-3-10, Ala.Code 1975, rather than an appeal from a postconviction writ in a criminal case.” Boykins v. State, 862 So.2d 594, 595 (Ala.Crim.App.2003).

After our supreme court’s decision in Ex parte Boykins, supra, the Court of Criminal Appeals released McConico v. Alabama Department of Corrections, 893 So.2d 577 (Ala.Crim.App.2004), in which it affirmed the circuit court’s dismissal of the inmate’s petition for a writ of certiorari challenging the upgrade of his custody classification and his resulting transfer to another prison facility. In so holding, the Court of Criminal Appeals, relying on Ex parte Boykins, made a distinction between the review of DOC decisions based on conduct that occurred while an inmate was in prison and the review of DOC decisions based on factors other than an inmate’s conduct in prison, stating as follows:

“Here, just as in Boykins, McConico is appealing a circuit court’s decision on a petition for a writ of certiorari challenging a decision of an administrative agency. However, unlike in Boykins McConico’s certiorari petition challenged a custody reclassification based on conduct that occurred while he was an inmate. Thus, while this Court did not have jurisdiction to review an appeal from the denial of Boykins’s certiorari petition, we do have jurisdiction to review McConico’s appeal because McCon-ico’s petition falls within the exception set out in § 41-22-3(9)g.l., Ala.Code 1975 (exempting from the definition of ‘rule’ any actions relating to ‘[t]he conduct of inmates of public institutions and prisoners on parole’).

893 So.2d at 580-81 (emphasis added).

In this case, Gerthoffer, like the inmate in Ex parte Boykins, supra, challenged the denial by the DOC of his request to receive IGT. In Ex parte Boykins, supra, our supreme court specifically held that Boy-kins did not enjoy the statutory right of judicial review provided by § 41-22-20(a) of the Alabama Administrative Procedure Act (“the AAPA”) because § 41-22-3(9)g.l. of the AAPA excluded from the definition of “rules” to which the AAPA applied any rules or actions relating to the conduct of inmates of public institutions. Ex parte Boykins, 862 So.2d at 593. The Court of Criminal Appeals based its decision to accept jurisdiction in McConico on its interpretation of the application of § 41-22-3(9)g.l. as only requiring it to review a circuit court’s ruling on a certio-rari petition challenging the DOC’s actions involving an inmate’s conduct in prison. McConico, 893 So.2d at 580-81. Section 41-22-3(9)g.l. excludes from the definition of the term “rule” any rule or action relating to “[t]he conduct of inmates of public institutions and prisoners on parole.” However, § 41-22-3(9)g.l. is the Code section cited by our supreme court in Ex parte Boykins to conclude that the AAPA did not apply to Boykins who, like Gerthof-fer, challenged the denial of his request to receive IGT. In reaching its holdings in McConico and in Boykins on remand, the Court of Criminal Appeals appears to have resolved the conflict in jurisdiction by relying on a portion of Ex parte Boykins in which our supreme court discussed the DOC’s status as an administrative agency within the scope of the AAPA. Notably, however, in its instructions on remand to the Court of Criminal Appeals in Ex parte Boykins, our supreme court made no mention of resolving on remand the purported jurisdictional problem between this court and the Court of Criminal Appeals.

We agree with and adopt the well-reasoned argument set forth by Judge Shaw in his dissent in Collins v. Alabama Department of Corrections, 911 So.2d 739 (Ala.Crim.App.2004):

“[Rjeview in a particular appellate court of the DOC’s decision to reclassify an inmate should not logically turn on the time line of the inmate’s conduct that forms the basis for that reclassification, i.e., whether it occurred before or after incarceration. In either case, the DOC is making an administrative decision that, under Boykins, appears to fall outside the scope of the AAPA, and is subject to judicial review by way of a petition for the common-law writ of cer-tiorari. [The Court of Criminal Appeals] is well suited to review such matters and has assumed jurisdiction over cases of this kind for years.”

911 So.2d at 746 (Shaw, J., dissenting, joined by Cobb, J.).

Our supreme court did not hold in Ex parte Boykins, supra, that this court had jurisdiction pursuant to the AAPA to review appeals in cases in which an inmate files a petition for a writ of certiorari to challenge decisions made by the DOC based on factors other than the inmate’s conduct. Instead, our supreme court specifically held in Ex parte Boykins that the AAPA did not apply because the DOC’s decision to deny IGT fell within the statutory exception found in § 41-22-3(9)g.l. Because review of the DOC’s decision in this case falls outside the AAPA, see Ex parte Boykins, supra, we conclude that the Court of Criminal Appeals has jurisdiction to review the trial court’s judgment and that this court lacks jurisdiction to consider the appeal. Therefore, we transfer the appeal to the Court of Criminal Appeals.

APPEAL TRANSFERRED.

All of the judges concur.

      . Gerthoffer was convicted for trafficking in cannabis, a violation of § 13A-12-231(l)a., Ala.Code 1975, and trafficking in cocaine, a violation of § 13A-12-231(2)a., Ala.Code 1975; the trial court sentenced him to concurrent terms of 15 years’ imprisonment on each conviction.

      “4 DOC’s denial of Boykins’s request to earn incentive good time was based on the severity of the crime for which he was convicted — murder.

      “5 Often, DOC’s decisions regarding an inmate’s right to earn incentive good time or a reclassification of custody are not based on an inmate’s conduct. Rather, such decisions are based on the particular crime of which the inmate was convicted. For example, § 14-9-41 prohibits inmates convicted of certain offenses from being eligible for correctional incentive time, regardless of the inmate’s conduct while incarcerated. The same is true with regard to an inmate’s custody classification. An inmate’s custody classification may be determined by the crime of which he was convicted. For example, inmates are classified as ‘heinous offenders’ based not on their conduct while in custody, but on the crime for which they were convicted. An inmate’s classification may also relate, at least in part, to DOC’s responsibility to keep the inmate safe from known ‘enemies.’ Those enemies may be inmates housed within the same prison — requiring a different custody classification. Thus, based on the Supreme Court’s holding in Ex parte Boykins, this Court would have jurisdiction to review certiorari petitions challenging DOC actions involving an inmate’s conduct, while the Court of Civil Appeals would have jurisdiction to review petitions challenging decisions based on factors other than the inmate’s conduct. ”