A consumer purchases a manufactured home from a commercial vendor.' As part of the commercial transaction, the consumer and vendor execute a sales agreement containing the following arbitration clause: "All disputes, claims, or controversies arising from or relating to this Contract or the relationships which result from this Contract... shall be resolved by binding arbitration .... ,, The manufacturer of the home is not a party to the sales contract. Rather, the manufacturer issues a separate warranty agreement in connection with the consumer's purchase.
When the consumer discovers defects in the home, the consumer sues both the commercial vendor and the manufacturer. The consumer and vendor arbitrate their dispute according to the terms of the sales contract. The manufacturer, however, did not execute an arbitration agreement with the consumer and was not a party to the original sales contract. Nevertheless, the nonsignatory manufacturer of the home attempts to compel arbitration of the consumer's claims pursuant to the underlying sales agreement. Alabama courts have repeatedly confronted this fact pattern. On such facts, both Alabama and federal courts have struggled to determine whether the non-signatory may compel arbitration of the signatory's claims pursuant to an underlying agreement containing an arbitration clause.
Part II of this Note analyzes the federal courts' use of equitable estoppel to force signatories to arbitrate claims against nonsignatories despite the lack of a written arbitration agreement between the parties. Part III of this Note examines the Alabama Supreme Court's hostility towards arbitration. Alabama courts have resisted a full-scale adoption of federal arbitration policy. Indeed, Alabama courts have traditionally refused to apply the federal doctrine of equitable estoppel to compel arbitration with nonsignatories. Part III documents the clash between the federal doctrine of equitable estoppel and Alabama's inveterate hostility to arbitration agreements. After longstanding resistance to federal principles, the Alabama Supreme Court recently acknowledged the viability of equitable estoppel in the case of Ex parte Isbell. But in Isbell, the Alabama Supreme Court acknowledged a version of equitable estoppel which is potentially narrower than the scope of the federal doctrine. Part III also examines the Alabama Supreme Court's derivative version of equitable estoppel. The conclusion of this Note argues in favor of the Alabama court's estoppel analysis as an appropriate retrenchment of an expansive federal policy favoring arbitration.
David F. Sawrie,
Equitable Estoppel and the Outer Boundaries of Federal Arbitration Law: The Alabama Supreme Court's Retrenchment of an Expansive Federal Policy Favoring Arbitration,
51 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol51/iss3/5