Alliance Investment Co., LLC v. Omni Construction Co., Inc.

         Appeal from Madison Circuit Court (CV-17-900803), David A. Mann, J.

         Christopher S. Hamer and Rebecca M. Wright of Hamer Law Group, LLC, Birmingham, for appellant.

         William R. Lunsford and Stephen C. Rogers of Maynard, Cooper & Gale, P.C., Huntsville, for appellee Omni Construction Company, Inc.

         L. Graves Stiff III and G. Matthew Keenan of Starnes Davis Florie LLP, Birmingham, for appellee KPS, LLC.

         OPINION

         BRYAN, Justice.

Page 312

          This appeal concerns who has the power to determine the location of an arbitration proceeding -- an arbitrator or the Madison Circuit Court. We conclude that, under the facts of this case, the arbitrator has that power; thus, we reverse and remand.

          In 2015, KPS, LLC, a/k/a KP Sourcing, LLC ("Kroger"), entered into a contract ("the prime contract") with Omni Construction Company, Inc., a/k/a OCC, Inc. ("Omni"), in which Omni agreed to build a grocery store for Kroger in Madison, Alabama. Omni then entered into a subcontract ("the subcontract") with Alliance Investment Company, LLC ("Alliance"), in which Alliance agreed to perform concrete work on the construction project. A dispute later arose regarding the payment owed Alliance for its work on the project, and Alliance subsequently sued both Kroger and Omni in the circuit court, alleging several claims. Kroger and Omni jointly filed a motion to stay the circuit-court proceedings and to compel arbitration of Alliance’s claims. The prime contract and the subcontract each contain an arbitration provision; in moving to compel arbitration, Kroger and Omni cited both arbitration provisions. Alliance did not oppose the motion to compel arbitration. On August 28, 2017, the circuit court stayed the circuit-court proceedings and ordered the parties to arbitrate the case "in accordance with the terms of their agreements."

          Alliance subsequently filed a demand for arbitration with the American Arbitration Association ("the AAA"). A dispute then arose regarding where the arbitration proceedings should he held. Alliance, an Alabama company, contended that the arbitration proceedings should be held in Alabama, while Kroger and Omni, which are both based in Ohio, contended that the arbitration proceedings should be held in Cuyahoga County, Ohio. Alliance argued that its claims are governed by a section of the arbitration provision in the subcontract regarding disputes that involve some aspect of the prime contract. That section requires such disputes to be resolved under the arbitration provision in the prime contract. The prime contract in turn requires disputes to be arbitrated in Alabama. However, Kroger and Omni argued that the claims are governed by a separate section of the arbitration provision in the subcontract that requires disputes to be arbitrated in Cuyahoga County, Ohio. On January 3, 2018, the AAA made an administrative determination that the arbitration would be held in Alabama and provided the parties with a list of potential arbitrators. Shortly thereafter, Kroger and Omni asked the AAA to reconsider its decision. On January 10, 2018, the AAA informed the parties that its administrative determination regarding the location of the arbitration proceedings would be subject to review by the arbitrator.

          However, on January 11, 2018, before the case could proceed to an arbitrator, Kroger and Omni filed in the circuit court a motion titled "Emergency Motion to Clarify Order Compelling Arbitration." In that motion, Kroger and Omni argued that the subcontract requires that the claims be arbitrated in Ohio. They further argued that the provision in the prime contract requiring arbitration to be held in Alabama is irrelevant. Accordingly, Kroger and Omni asked the circuit court to order the parties to arbitrate in Ohio. On January 22, 2018, the circuit court ordered that the arbitration proceedings be held in Ohio. In that order, the circuit court purported to amend its earlier order compelling arbitration. Alliance then appealed to this Court.

          This Court reviews de novo an order granting or denying a motion to compel arbitration.

Page 313

Cartwright v. Maitland, 30 So.3d 405, 408 (Ala. 2009). " ‘[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.’ " AT & T Techs., Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) ). "[A]rbitrators derive their authority to resolve disputes only because the parties have agreed in advance to submit such grievances to arbitration." AT & T, 475 U.S. at 648-49, 106 S.Ct. 1415.

          On appeal, Alliance argues that the circuit court lacked the authority to order, in its order of January 22, 2018, that the arbitration be held in Ohio. With respect to this argument, it is useful to discuss the procedural underpinnings of the circuit court’s orders. Rule 4(d), Ala. R. App. P., provides that an order granting or denying a motion to compel arbitration is "appealable as a matter of right." Thus, as this Court stated in Bowater, Inc. v. Zager, 901 So.2d 658, 667 (Ala. 2004), an order granting or denying a motion to compel arbitration is "due recognition as a ‘judgment’ under Rule 54(a), Ala. R. Civ. P." Therefore, the circuit court’s order of August 28, 2017, compelling arbitration is a judgment under the Alabama Rules of Civil Procedure. Of course, the finality of judgments is important, and a circuit court may revisit a final judgment only in accordance with the proper procedures for doing so; Alliance contends that those procedures were not followed here. Alliance argues that Kroger and Omni’s "Emergency Motion to Clarify Order Compelling Arbitration" is in substance an untimely Rule 59(e), Ala. R. Civ. P., motion seeking to amend the August 28, 2017, judgment compelling arbitration. A Rule 59(e) motion to alter, amend, or vacate a judgment must be filed no later than 30 days after the entry of the judgment; Kroger and Omni filed their motion 136 days after the entry of the judgment compelling arbitration. Kroger and Omni counter that their motion was not a Rule 59(e) motion; rather, they say, it was a motion seeking a "clarification" of the judgment compelling arbitration that would not be subject to the 30-day time limit found in Rule 59(e). Although Kroger and Omni argue that the circuit court had the authority simply to clarify the order compelling arbitration, Alliance argues that the circuit court impermissibly amended the order compelling arbitration in response to an untimely Rule 59(e) motion. See, e.g., George v. Sims, 888 So.2d 1224, 1227 (Ala. 2004) (discussing the limits of a trial court’s power to revisit a judgment and reversing a circuit court’s order purporting to modify a judgment when the order was not entered in response to a timely postjudgment motion).

          However, as Alliance further argues, regardless of how the order of January 22, 2018, is characterized, the circuit court lacked the authority to order the parties to arbitrate in Ohio for a separate reason. It is undisputed that the AAA’s Construction Industry Arbitration Rules govern the arbitration in this case. Both the prime contract and the subcontract provide that disputes must be decided under the Construction Industry Arbitration Rules. Rule 9(a) of the Construction Industry Arbitration Rules 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." At its core, the ...