from Mobile Circuit Court. (CV-13-902002).
Appellant: Joseph H. Driver, Vincent A. Noletto, Jr., and
Heather M. Houston of Carr Allison, Birmingham.
Appellees: David G. Wanhatalo, John Martin Lassiter, and E.
Travis Ramey of Burr & Forman LLP, Birmingham; and Ricardo A.
Woods and Kasee Sparks Heisterhagan of Burr & Forman, LLP,
Justice. Bolin, Parker, Main, Wise, and Bryan, JJ., concur.
Murdock and Shaw, JJ., concur in the result. Moore, C.J.,
Group, Michigan, LLC, f/k/a Giffels, LLC ("
Giffels" ), appeals the order of the Mobile Circuit
Court ordering it to arbitrate its claims against Outokumpu
Stainless USA, LLC, f/k/a ThyssenKrupp Stainless USA, LLC
(" OTK" ), and ThyssenKrupp Steel USA, LLC, f/k/a
ThyssenKrupp Steel and Stainless USA, LLC (" TK
Steel" ) (OTK and TK Steel are hereinafter referred to
collectively as " the steel companies" ), pursuant
to an arbitration provision in the contracts at the center of
this dispute. We affirm.
September 5, 2007, Giffels and TK Steel entered into a
contract pursuant to which Giffels agreed to provide
architectural and engineering services to TK Steel in
association with the construction of the cold rolling mill at
a steel-processing facility in Calvert. Approximately 10
months later, on June 27, 2008, Giffels entered into another
contract with OTK's predecessor to provide similar
services in association with the construction of a melt shop
at the same facility. Both contracts contained identical
provisions regarding the resolution of any disputes that
might arise from the contracts, which stated: " Any
dispute arising out of or related to the contract[s] shall be
subject to mediation, arbitration or the institution of legal
or equitable proceedings at the sole discretion of [the steel
companies]." The contracts contained further provisions
outlining certain guidelines that would apply to mediation,
arbitration, and legal proceedings, including the following
provision: " Unless otherwise agreed by the parties,
during the arbitration proceedings discovery shall be
available and shall be conducted in accordance with the rules
of discovery set forth in the U.S. Federal Rules of Civil
Procedure in effect at such time."
disputes arose between Giffels and the steel companies
regarding the work performed by Giffels under both contracts,
and, on March 14, 2012, the steel companies sued Giffels in
the United States District Court for the Southern District of
Alabama (" the federal district court" ) alleging
two counts of breach of contract and seeking compensatory
damages in excess of $7.5 million. On March 29, 2012, and
June 13, 2012, the steel companies filed amended complaints
asserting additional claims. Giffels subsequently filed its
answer to the steel companies' complaint and asserted its
own counterclaims alleging that the steel companies owed it
money for work performed under the two contracts. Giffels
also moved to strike the steel companies' jury demand on
the basis of a provision in the contracts expressly waiving
the right to a jury trial in any litigation stemming from the
contracts. Thereafter, the steel companies filed an answer to
Giffels's counterclaims and withdrew their jury demand.
August 24, 2012, the steel companies and Giffels held the
discovery-planning conference required by Rule 26(f),
Fed.R.Civ.P. On September 10, 2012, the federal district
court conducted a scheduling conference, and the parties then
commenced discovery, with each party serving discovery
requests upon the other. Giffels asserts that it incurred
over $80,000 in expenses just in preparing the initial
disclosures required by Rule 26(a)(1), Fed. R. Civ. P.
4, 2013, the federal district court, sua sponte, entered an
order questioning whether federal jurisdiction was proper in
this case. The steel companies responded by filing an amended
complaint in which they further described their basis for
claiming that federal jurisdiction was appropriate under 28
U.S.C. § 1332 based on the parties' alleged complete
diversity of citizenship; Giffels subsequently filed an
amended answer in which it asserted that both its sole member
and the sole member of OTK's predecessor were
incorporated in Delaware, which fact, if true, would defeat
diversity jurisdiction. See, e.g., Rolling Greens MHP,
L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022
(11th Cir. 2004) (" [A] limited liability company is a
citizen of any state of which a member of the company is a
citizen." ). The steel companies moved to strike
Giffels's amended answer, arguing that Giffels's
claim that its sole member was incorporated in Delaware was
contradicted by publicly available records maintained by the
Michigan Secretary of State; however, after Giffels filed a
response again indicating that, notwithstanding any other
records the steel companies might have, its sole member was a
Delaware corporation, the federal district court ordered
Giffels to file documentation of its jurisdictional claim.
Giffels filed the requested proof on July 29, 2013.
31, 2013, the steel companies moved the federal district
court to stay the litigation, noting that it had initiated
arbitration proceedings with the American Arbitration
Association that same day pursuant to the provisions in the
stating tat disputes regarding those contracts were subject
to arbitration at the sole discretion of the steel companies.
However, that same day, Giffels filed a complaint in the
Mobile Circuit Court (" the trial court" )
asserting as state-law claims the same counterclaims it had
asserted in the federal district court. On August 5, 2013,
the steel companies filed an answer and counterclaims in the
state-court action while simultaneously moving the state
court to stay the state-court proceedings and compel
arbitration. On August 7, 2013, the federal district court
formally dismissed the federal action for lack of
subject-matter jurisdiction without ruling on the steel
companies' request to stay the federal-court action
pending the completion of arbitration proceedings.
Giffels notified the trial court that it opposed the steel
companies' attempt to compel arbitration, arguing that
the contracts afforded the steel companies no right to select
arbitration once they had made an initial choice to attempt
to resolve their claims via litigation or, in the
alternative, that the steel companies had substantially
invoked the litigation process to the prejudice of Giffels,
thus waiving any right they may have had to arbitration under
the contracts. The parties subsequently filed multiple
additional briefs with the trial court regarding those
issues, and, on September 20, 2013, the trial court conducted
a hearing on the issues. The parties continued to file briefs
on the issues following the hearing, and it was not until
July 7, 2014, that the trial court entered an order granting
the steel companies' motion to compel arbitration and
ordering the parties to complete arbitration by May 1, 2015.
The parties then jointly moved the trial court to alter,
amend, or vacate its order only to the extent it set a
deadline for the completion of arbitration inasmuch as they
were continuing to negotiate regarding ongoing operational
difficulties at the Calvert facility and it was possible
those negotiations might eventually lead to the resolution of
some of the claims asserted in this action. On August 12,
2014, the trial court revised its order as the parties
requested, and, on September 16, 2014, Giffels filed its
notice of appeal to this Court.
trial court's order granting the steel companies'
motion to stay the state-court litigation pending the
completion of arbitration effectively compelled Giffels to
resolve its claims against the steel companies, and the steel
companies' counterclaims against it, in arbitration as
opposed to state court. The standard of review we apply to an
order granting a motion to compel arbitration is well
" We conduct a de novo review of a trial court's
order compelling arbitration. Smith v. Mark Dodge,
Inc., 934 So.2d 375, 378 (Ala. 2006).
" 'The party seeking to compel arbitration must
first prove both that a contract calling for arbitration
exists and that the contract evidences a transaction
involving interstate commerce.... Once this showing has
been made, the burden then shifts to the nonmovant to show
that the contract is either invalid or inapplicable to the
" Smith, 934 So.2d at 378."
Ritter v. Grady Auto. Grp., Inc., 973 So.2d 1058,
1060-61 (Ala. 2007). All parties
agree that the governing contracts involve interstate
commerce; the only issue before this Court is whether the
arbitration provisions in those contracts allowing the steel
companies to decide, at their " sole discretion,"
whether a dispute arising out of or related to those
contracts would be subject to mediation, arbitration, or
litigation were rendered " 'inapplicable to the
circumstances presented,'" Ritter, 973 So.2d at
1061, once the steel companies initially elected to resolve
the dispute in litigation and subsequently, Giffels alleges,
substantially invoked the litigation process, thereby
first argument is that, although its contracts with the steel
companies allowed the steel companies to unilaterally decide
whether any dispute between them and Giffels would be
resolved via arbitration or litigation, once the steel
companies made that decision, the decision was irrevocable.
We note that Giffels is not arguing that any time a party
initiates litigation that party is barred from thereafter
exercising a contractual right to arbitrate, as this Court
has previously indicated otherwise. See, e.g., Conseco
Fin. Corp.-Alabama v. Salter, 846 So.2d 1077, 1081 (Ala.
2002) (" Conseco initiated this action; however, the
mere filing of a pleading does not constitute a waiver of the
right to compel arbitration." ). Rather, Giffels is
arguing that the specific terms of the arbitration provisions
in this case prevent the steel companies from selecting
arbitration after initially selecting litigation as a means
of resolving a dispute. Giffels articulates this argument as
follows in its brief:
" [The steel companies] initiat[ed] a legal proceeding
in federal district court, thereby exercising [their] right
and selecting litigation as the chosen vehicle for dispute
resolution. Nothing in the contract allowed [the steel
companies] to later alter [their] selection. Once [the steel
companies] selected litigation, the express language of the
contract provided that litigation would be the method of
dispute resolution for the case. [The steel companies]
thereby waived any right to compel arbitration by exercising
[their] contractual discretion to initiate litigation."
Giffels's brief, p. 16. The steel companies
argue that the language of the arbitration provisions does
not limit their right to select how disputes will be resolved
and that, in fact, the clear language of the provisions
indicates that they might utilize more than one of the three
listed methods to resolve any dispute.
resolving a dispute regarding the meaning of an arbitration
provision, " this Court applies the ordinary state-law
principles governing contracts." Title Max of
Birmingham, Inc. v. Edwards, 973 So.2d 1050, 1054 (Ala.
2007). Accordingly, we must interpret the terms of the
provisions according to their clear and plain meaning.
Id. The arbitration provisions at issue in this case
provide that " [a]ny dispute arising out of or related
to the contract[s] shall be subject to mediation, arbitration
or the institution of legal or equitable proceedings at the
sole discretion of [the steel companies]." Giffels
argues that the use of the disjunctive " or" in the
provisions indicates that the steel companies' choice is
mutually exclusive, that is, the steel companies can choose
either arbitration or litigation and once they choose one the
other is no longer an option. The steel companies, however,
argue that " or" is not always used as a
disjunctive, but is sometimes used as a conjunctive as well,
and that Giffels is effectively reading the word "
either" into the arbitration provisions when that word
does not appear in those provisions. In Smith v.
Hutson, 262 Ala. 352, 78 So.2d 923 (1955),
this Court addressed the meaning of the word " or,"