Summary
The Alabama Supreme Court considered consolidated appeals involving motions to compel arbitration in identity-theft lawsuits against a vehicle dealership and its corporate parent. The court addressed the scope and enforceability of arbitration agreements signed in connection with vehicle purchases, including whether a nonsignatory corporate parent could enforce the agreements and whether an alleged alteration created a factual issue. The court affirmed the denial of arbitration in case no. 1160435 and reversed and remanded in the other appeals.
Topics
Practice areas
Questions Presented
- Whether Locklear Group, a nonsignatory, could compel arbitration of the plaintiffs' identity-theft claims under the doctrine of equitable estoppel.
- Whether the arbitration agreement's broad language covered claims against the nonsignatory Locklear Group.
- Whether Locklear Group preserved and established that the arbitrator, rather than the court, should decide arbitrability.
- Whether the Lollars' claims arising from a later, unrelated credit application fell within the arbitration agreement connected to their earlier vehicle purchase.
- Whether the alleged post-signing addition of Locklear Chrysler Jeep Dodge, LLC, to Hood's arbitration agreement materially altered or invalidated the agreement.
Holdings
- Locklear Group waived its argument that the arbitrator, rather than the courts, should decide whether its claims were arbitrable because its motions contained only a single unsupported and unexplained reference to that issue and primarily argued the merits of the agreement's scope.
- A nonsignatory may enforce an arbitration agreement when the claims against it are intimately founded in and intertwined with the underlying contract obligations, unless the arbitration provision is limited by party-specific language that excludes the nonsignatory.
- Hubbard, Averette, Fuller, Booth, and Williams were equitably estopped from resisting arbitration of their claims against Locklear Group because those claims were intimately founded in and intertwined with their claims against Locklear CJD and the underlying vehicle transactions.
- The Lollars' arbitration agreement did not cover their identity-theft claims because those claims arose from a 2015 credit application and dealership visit unrelated to the 2013 vehicle purchase to which the arbitration agreement referred.
- The alleged addition of the words 'Locklear Chrysler Jeep Dodge, LLC' to Hood's arbitration agreement did not materially alter the agreement or invalidate it.
- The arbitration agreement clearly and unmistakably delegated arbitrability issues to the arbitrator, and Hood's identity-theft claims were therefore to be submitted to arbitration for the arbitrator to decide their arbitrability.
Key quotations
“The undersigned agree that all disputes not barred by applicable statutes of limitations, resulting from, arising out of, relating to or concerning the transaction entered into or sought to be entered into” (88)
“Therefore, we conclude that the plaintiffs' claims against Locklear Group as a nonsignatory to the arbitration agreement are "intimately founded in and intertwined with" the underlying contract obligations and with the plaintiffs' contract-related claims against the signatory to the arbitration agreement, Locklear CJD, so that the doctrine of equitable estoppel is applicable.” (90)
“In this case, as in Payne, the plain language of the arbitration agreement, which relates to the 2013 transaction, does not lead one to understand that the 2015 identity-theft claims would be covered under the agreement.” (94)
Factual background
The plaintiffs purchased vehicles from Locklear Chrysler Jeep Dodge, LLC, signed materially identical arbitration agreements, and supplied personal information in connection with credit applications. Each plaintiff later alleged identity theft and asserted tort, statutory, and related claims against Locklear CJD, Locklear Automotive Group, Inc., and other defendants. Locklear Group was the sole member of Locklear CJD but was not a signatory to the arbitration agreements. The Lollars' disputed conduct arose from a later 2015 visit unrelated to their 2013 vehicle purchase, while the other plaintiffs' claims arose in connection with their vehicle transactions.
Procedural history
The plaintiffs sued Locklear Chrysler Jeep Dodge, LLC, Locklear Automotive Group, Inc., and other defendants, alleging that personal information supplied during vehicle purchases or attempted purchases was misused in identity theft. The trial courts compelled arbitration as to some claims against Locklear CJD but denied arbitration as to Locklear Group, and denied the joint motions in the Lollar and Hood cases. The Supreme Court of Alabama consolidated the appeals for decision, affirmed the denial of arbitration in the Lollars' case, and reversed and remanded the other appeals.
Remand instructions
In the Hubbard, Averette, Fuller, Booth, Williams, and Hood appeals, the trial courts were directed to enter orders granting the motions to compel arbitration. The denial of arbitration in the Lollars' appeal was affirmed. Motions to strike were granted where specified.