Regions Bank v. Jerry Wayne Neighbors

Rel: 11/14/14

Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.

SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
____________________

1130219
____________________

Regions Bank

v.

Jerry Wayne Neighbors

Appeal from Montgomery Circuit Court
(CV-13-901459)

BRYAN, Justice.

Regions Bank ("Regions") appeals from an order denying

its motion to compel arbitration. We reverse and remand.
1130219

In 1999, Jerry Wayne Neighbors obtained from Union

Planters Bank a loan in the amount of $64,100, which was

secured by a mortgage on real property owned by Neighbors and

his then wife. Regions is the successor in interest to Union

Planters Bank. As part of the loan transaction, Neighbors

executed a dispute-resolution agreement ("the DRA"), which

provides, in pertinent part: "Borrower and Lender irrevocably

agree to settle all disputes between them ... by negotiation,

mediation, and arbitration ...." The DRA further provides

that "'disputes' means all past, present, and future

disagreements, controversies, claims, and counterclaims

between Borrower and Lender and includes without limitation

all matters relating to this Agreement, any extension of

credit, any tort, any insurance, any service, or any product."

The DRA also states: "Borrower and Lender intend for this

Agreement to cover the broadest range of disputes and legal

issues that may be arbitrated under federal law. Borrower and

Lender agree that any questions as to the scope of this

Agreement shall be determined by the arbitrator (including,

without limitation all issues of formation, consideration,

2
1130219

capacity, fairness, unconscionability, mutuality, duress,

fraud, adhesion, arbitrability, revocability, and waiver)."

In 2008, a loan-modification agreement was executed,

purportedly amending the mortgage. Neighbors denies that he

signed the loan-modification agreement; he claims that his

signature on that document was forged. The loan-modification

agreement also contains an arbitration provision.

In 2013, Neighbors sued Regions, alleging that Regions

had negligently and wantonly allowed an imposter to forge

Neighbors's signature on the loan-modification agreement.

Relying on the DRA, Regions moved to compel the arbitration of

Neighbors's claims. 1 Neighbors opposed the motion to compel

arbitration. Following a hearing, the trial court denied the

motion to compel, without stating a reason. Regions appealed

pursuant to Rule 4(d), Ala. R. App. P., which authorizes an

1
When the original loan documents were executed, they were
supplemented by a rider that included an arbitration agreement
separate from the DRA. However, the rider indicates that the
arbitration agreement therein would not apply if there is a
"separate Alternative Dispute Resolution Agreement," like the
DRA. However, the arbitration provision in the rider would
apply if the DRA were determined to be invalid or
unenforceable. Regions sought arbitration under the DRA, not
the arbitration provision in the rider or the arbitration
provision in the loan-modification agreement.

3
1130219

appeal from an order either granting or denying a motion to

compel arbitration.

"'This Court's review of an order
granting or denying a motion to compel
arbitration is de novo. ...'

"United Wisconsin Life Ins. Co. v. Tankersley, 880
So. 2d 385, 389 (Ala. 2003). Furthermore:

"'"A motion to compel arbitration
is analogous to a motion for
summary judgment. TranSouth Fin.
Corp. v. Bell, 739 So. 2d 1110,
1114 (Ala. 1999). The party
seeking to compel arbitration has
the burden of proving the
existence of a contract calling
for arbitration and proving that
that contract evidences a
transaction affecting interstate
commerce. Id. 'After a motion to
compel arbitration has been made
and supported, the burden is on
the non-movant to present
evidence that the supposed
arbitration agreement is not
valid or does not apply to the
dispute in question.'"

"'Fleetwood Enters., Inc. v. Bruno, 784 So.
2d 277, 280 (Ala. 2000) (quoting Jim Burke
Auto., Inc. v. Beavers, 674 So. 2d 1260,
1265 n. 1 (Ala. 1995) (emphasis omitted)).'

"Vann v. First Cmty. Credit Corp., 834 So. 2d 751,
753 (Ala. 2002)."

Cartwright v. Maitland, 30 So. 3d 405, 408–09 (Ala. 2009).

4
1130219

In this case, there is no dispute regarding the existence

of the DRA and the fact that it evidences a transaction

affecting interstate commerce. Rather, the parties disagree

about whether Neighbors's claims are covered by the DRA.

Regions argues that the scope of the DRA is broad enough to

include Neighbors's claims. Regions also argues that the

issue whether the scope of the DRA encompasses Neighbors's

claims is a threshold issue that, under the terms of the DRA,

should be decided by the arbitrator; this argument is

dispositive. Neighbors argues that, because the dispute in

this case involves an alleged forgery, the dispute cannot be

subject to the provisions of the DRA. Neighbors also suggests

that the DRA does not cover his claims because, he says,

pursuant to the terms of the judgment divorcing him and his

wife, he stopped making payments on the original mortgage in

2006 when his ex-wife remarried. Although Neighbors

characterizes the dispute otherwise, we conclude that the

dispute in this case concerns the scope of the DRA.

Whether a specific dispute falls within the scope of an

arbitration agreement is a threshold question of "substantive

arbitrability," a term sometimes used by this Court, or simply

5
1130219

"arbitrability" as the United States Supreme Court has called

it. Brasfield & Gorrie, L.L.C. v. Soho Partners, L.L.C., 35

So. 3d 601, 604 (Ala. 2009) (discussing the difference between

questions of "substantive arbitrability" and "procedural

arbitrability"); Howsam v. Dean Witter Reynolds, Inc., 537

U.S. 79, 83-85 (2002) (discussing the difference between

"questions of arbitrability," which this Court has sometimes

referred to as questions of "substantive arbitrability," and

"procedural questions," which this Court has sometimes

referred to as questions of "procedural arbitrability"). As

a threshold matter, a court decides issues of substantive

arbitrability "[u]nless the parties clearly and unmistakably

provide otherwise." AT&T Techs., Inc. v. Communications

Workers of America, 475 U.S. 643, 649 (1986). In this case,

the DRA shows that the parties clearly and unmistakably agreed

to have an arbitrator, not a court, decide substantive-

arbitrability issues concerning the scope of the DRA and,

indeed, all issues of "arbitrability." The DRA provides that

"Borrower and Lender agree that any questions as to the scope

of this Agreement shall be determined by the arbitrator

(including, without limitation all issues of ... arbitrability

6
1130219

...)." Thus, as an initial matter, the arbitrator must decide

whether Neighbors's claims fall within the scope of the DRA.

The trial court erred in denying the motion to compel

arbitration. We therefore reverse the order and remand the

case for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

Stuart, Bolin, Parker, Main, and Wise, JJ., concur.

Shaw, J., concurs in the result.

Moore, C.J., and Murdock, J., dissent.

7
1130219

MURDOCK, Justice (dissenting).

I respectfully dissent.

I do not agree that the issue of arbitrability was for

the arbitrator to decide in this case. Whether the dispute at

issue falls within the scope of the dispute-resolution

agreement was for the trial court to decide. See Anderton v.

The Practice-Monroeville, P.C. [Ms. 1121417, Sept. 26, 2014]

___ So. 3d ___, ___ (Ala. 2014) (Murdock, J., dissenting);

Auto Owners Ins., Inc. v. Blackmon Ins. Agency, Inc., 99 So.

3d 1193, 1199 (Ala. 2012) (Murdock, J., dissenting).

8