HOOPER, Chief Justice.
Melvin Holt ("Melvin") sued Johnnie's Homes, Inc., d/b/a Steel City Mobile Homes, alleging breach of contract, breach of warranty, and fraud, all in connection with Melvin's purchase of a mobile home. He later amended his complaint to dismiss the claim of breach of contract and to include a claim of damages for mental anguish and to assert a claim alleging fraud in the procurement of an arbitration provision that was contained in the purchase contract. Melvin also, in the same action, sued Destiny Industries, Inc., the manufacturer of the mobile home; the trial court dismissed the claims against Destiny Industries. Johnnie's Homes moved to compel arbitration of the plaintiff's claims, pursuant to the arbitration agreement contained in the purchase contract and signed by Melvin, but the trial court denied the motion. Johnnie's Homes appeals from the order denying the motion to compel arbitration. We reverse and remand.
Melvin, who has a sixth-grade education, contracted to purchase from Johnnie's Homes, located in Alabama, a mobile home that had been manufactured in Georgia. When he entered the contract, he was accompanied by his wife, Patricia, who has a seventh- or eighth-grade education. Although Melvin had six years of education, he is illiterate. His wife Patricia can read. Patricia "did the paperwork" for Melvin regarding the contract. He testified in his deposition that Patricia read the contract before he signed it and that he assumed she had read the entire contract. Melvin said he relied on Patricia to "check the figures and everything" listed in the contract, but that only he signed the document as a purchaser because Johnnie's Homes, in financing the sale, was relying on his credit. In the negotiations for the sale, Johnnie's Homes was represented by one of its employees, Jack Smith. Melvin never asked anyone to read the contract to him, and he admitted in his deposition that he would have been embarrassed to admit to Smith that he could not read or understand what was contained in the contract; therefore, he said, he and Patricia believed Smith's representations about the contract. Melvin testified that his wife never expressed any concern about the terms of the contract, including the arbitration provision. However, Patricia stated that she merely looked at the contract, that she did not read it. She testified in her deposition that Smith explained to her and Melvin that it was a standard contract, and she said that she could not recall that she or Melvin asked Smith any questions. She also stated that she recalled that Smith showed them only one page of the contract —the page detailing the price—and
At some point after the contract had been signed and the mobile home delivered and set up, various problems with the mobile home surfaced. Melvin claims that Smith and Johnnie's Homes virtually ignored his complaints and that, as for the few complaints they did acknowledge, they performed substandard repairs. Patricia took out the contract, reread it, and noticed for the first time the following arbitration provisions:
(C.R. 321-22.) Patricia asked Melvin what arbitration was, but he told her he did not know. Melvin later asked a friend about it. He says that arbitration was never explained to him and Patricia until after they had begun having problems with the mobile home. Melvin testified that had he and Patricia known about the arbitration provision, he would not have signed the contract.
Melvin sued Johnnie's Homes, alleging breach of contract, breach of warranty, and fraud. Johnnie's Homes moved the trial court to stay the proceedings and compel arbitration, but the trial court denied its motion. Johnnie's Homes appeals from the order denying its motion to compel arbitration.
Johnnie's Homes argues that the trial court erred in refusing to compel arbitration because, it says, Melvin knowingly and willingly agreed to arbitrate, by signing the mobile-home purchase contract, which contains an arbitration provision Johnnie's Homes says is enforceable. Specifically, Johnnie's Homes argues:
Melvin responds by contending:
For purposes of clarity, we will address these issues:
1. Interstate Commerce
This Court stated in Sisters of the Visitation v. Cochran Plastering Co., 775 So.2d 759 (Ala.2000):
775 So.2d at 760.
In Sisters, this Court concluded that the party seeking to enforce an arbitration agreement had not shown that the transaction between the parties substantially affected interstate commerce. The transaction involved a contract by which an out-of-state contractor was to perform renovation work on a chapel in Alabama owned by an order of Catholic nuns. The nuns sued the contractor. The record did not affirmatively indicate that the contractor had leased or purchased tools and equipment from out-of-state; it also did not show that the contractor had entered other agreements with out-of-state vendors specifically for the project it had contracted to perform for the plaintiff. Nor did the record affirmatively indicate the ratio of out-of-state materials and employees the defendant used to in-state materials and employees the defendant used. Furthermore, the subject of the renovation project was, by its very nature, incapable of being transported across state lines. See Sisters, 775 So.2d at 765.
This case is factually different from Sisters, because the evidence indicates that the transaction involved in this case had a "substantial effect" on interstate commerce. The mobile home was manufactured in Georgia and was subsequently
Melvin argues that if any interstate commerce occurred at all in connection with this case, it occurred in the transaction between the Georgia manufacturer and the Alabama dealer, not between the Alabama dealer and the Alabama buyer. As Johnnie's Homes points out, Melvin makes this argument for the first time on appeal; thus, we cannot consider it. Andrews v. Merritt Oil Co., 612 So.2d 409 (Ala.1992). Therefore, we conclude that the purchase of the mobile home had a substantial effect on interstate commerce and, thus, that the motion to compel arbitration is governed by the Federal Arbitration Act, not § 8-1-41(3), Ala.Code 1975.
2. Whether Melvin Knowingly, Voluntarily, and Willingly Waived His Right to a Jury Trial
Melvin does not deny that he signed the contract containing the arbitration provision; he argues that he was not notified that the contract included the arbitration provision and that he was not given the provision. Johnnie's Homes contends that it had no duty to inform Melvin that the contract included the arbitration provision and that it did not owe him an explanation of its terms; Johnnie's Homes says that neither it nor Smith knew Melvin was illiterate.
A dealer is under no duty to disclose, or explain, an arbitration clause to a buyer. Green Tree Fin. Corp. of Alabama v. Vintson, 753 So.2d 497 (Ala. 1999) (citing Patrick Home Ctr., Inc. v. Karr, 730 So.2d 1171, 1174 (Ala.1999), and Jim Burke Auto., Inc. v. Murphy, 739 So.2d 1084, 1087 (Ala.1999)). Thus, Johnnie's Homes and Smith owed no special duty to notify Melvin that the agreement contained an arbitration provision or to explain to him the substance of that provision.
Melvin argues that his illiteracy and his wife's semiliteracy should render the arbitration agreement invalid; this argument is without merit. In Mitchell Nissan, Inc. v. Foster, 775 So.2d 138 (Ala.2000), this Court addressed a similar argument:
775 So.2d at 140.
Similarly, Melvin cannot avoid enforcement of the arbitration provision merely on the basis that he could not read what he was signing. He admits in his deposition that he would have been embarrassed to tell Smith that he was illiterate, and his wife admits in her deposition that she did not tell Smith that Melvin was illiterate because her doing so would have embarrassed Melvin. Thus, neither Melvin nor Patricia informed Smith nor Johnnie's Homes that their reading ability was limited, and neither Smith nor Johnnie's Homes had independent knowledge that would have led them to believe they needed to point out the arbitration provision or to explain it. Moreover, Patricia freely admits that she merely looked at the contract —that she did not read it—and Melvin admits that he relied on his wife to "do all of the paperwork" in regard to looking over the agreements and checking all of the numbers. In short, Johnnie's Homes and Smith did all they were obligated to do under the law to facilitate Melvin's purchase of the mobile home. Melvin cannot now avoid one particular provision of the contract simply because he and his wife had a limited ability to read and comprehend.
3. Who Should Decide Whether Melvin Entered a Valid and Enforceable Arbitration Agreement?
Johnnie's Homes contends that an arbitrator should decide whether Melvin agreed to arbitrate his claims, because, it contends, it treated the arbitration provision the same way it treated all other provisions of the contract and, it says, Melvin's illiteracy bears upon his comprehension of the entire contract, not just the arbitration agreement. Melvin contends that § 4 of the Federal Arbitration Act mandates that the court, not an arbitrator, should decide such controversies; that section provides:
(Emphasis suggested by Melvin Holt.)
Anniston Lincoln Mercury Dodge v. Conner, 720 So.2d 898 (Ala.1998), involved a defendant, Conner, who had been born in South Korea. Although by 1995 she had lived in this country for more than 20 years, she alleged that when she purchased her truck from Anniston Lincoln Mercury Dodge ("ALMD"), she did not have a full understanding of the English language. When she visited ALMD, Conner was accompanied by a friend who was fluent in English. The purchase contract for the truck contained an arbitration provision. Conner sued. The trial court denied ALMD's motion to compel arbitration because it concluded that Conner's inability to understand the English language had caused the parties not to reach a meeting of the minds as to the agreement to arbitrate. This Court stated:
720 So.2d at 900-02 (emphasis added) (footnotes omitted.)
Other than the fact that Conner's first language was not English and that Melvin is illiterate, the facts of Conner's case and the facts of this case are virtually the same: neither Conner nor Melvin Holt has a working command of the written English language; this fact, each of them alleged, hindered their ability to read, understand, and comprehend the terms of their respective contracts. Given these similarities, the result should also be the same: Because Melvin's claim goes to the making of the entire contract, not just the arbitration provision, and because he does not allege that Smith and Johnnie's Homes treated the arbitration provision any differently from the way Johnnie's Homes treated any other provision of the contract, the question whether Melvin, in signing the contract, agreed to arbitrate his claims should be decided by an arbitrator, not a court. Thus, the trial court improperly denied the motion to compel arbitration. Johnnie's Homes also argues that Melvin should be compelled to submit all of his claims to arbitration. Because we have decided that, given the specific nature of Melvin's claim, it is not the proper role of the courts to determine whether a valid and enforceable contract exists, by necessity we do not reach this particular issue, which is, instead, dependent on the arbitrator's ultimate determination of the question whether the contract is valid and enforceable.
4. Whether General Contract Defenses Prohibit Enforcement of the Arbitration Agreement
Melvin contends that the arbitration agreement is unenforceable because, he argues, it is unconscionable, it is a contract of adhesion, and there is no mutuality of remedies. Johnnie's Homes argues that none of those defenses applies.
First, Johnnie's Homes contends our caselaw has held that arbitration agreements are not unconscionable. In Southern Energy Homes, Inc. v. Gary, 774 So.2d 521 (Ala.2000), this Court addressed this very issue in terms of the burden of proof:
774 So.2d at 529 (footnote omitted.) Melvin provided essentially only the same quantum of proof that Gary provided: Evidence that he had a sixth-grade education; that he did not know the arbitration clause existed until after Patricia read the contract again at home; that no one at Johnnie's Homes informed him of the existence, or the substance, of the arbitration provision; and that he was not aware that he was given anything in return for signing the arbitration agreement. Presenting only this evidence, Melvin, like Gary, has failed to carry his burden of producing substantial evidence of unconscionability. Thus, we conclude that the arbitration provision is enforceable against him.
Second, Johnnie's Homes states that "[i]n Gary, this Court did not even address the plaintiffs argument regarding adhesion because it had rejected such an argument on numerous [previous] occasions." In Gary, this Court reiterated that in regard to arbitration agreements, certain defenses—including the defense that an arbitration agreement is a contract of adhesion—are without merit. See Gary, citing Ex parte McNaughton, 728 So.2d 592 (Ala.1998), cert. denied, 528 U.S. 818, 120 S.Ct. 59, 145 L.Ed.2d 52 (1999); Ex parte Napier, 723 So.2d 49 (Ala.1998); Ex parte Parker, 730 So.2d 168 (Ala.1999); and Green Tree Fin. Corp. of Alabama v. Wampler, 749 So.2d 409 (Ala.1999).
Third, Johnnie's Homes contends that this Court has held that the doctrine of mutuality of remedies is not even applicable to disputes regarding the validity of arbitration agreements, but that that doctrine is "limited to the availability of the ultimate redress for a wrong suffered by a plaintiff, not the means by which the ultimate redress is sought," quoting McNaughton, 728 So.2d at 598. In McNaughton, we explained:
728 So.2d at 598. Thus, Melvin's contention that the lack of mutuality of remedies invalidates the arbitration agreement is without merit.
Finally, Johnnie's Homes contends that Melvin's argument of financial hardship is without merit. In Wampler, this Court stated:
749 So.2d at 416. Although the record contains evidence indicating Melvin would have to pay a $2,000 fee to have his claims arbitrated and evidence indicating he has a limited financial capacity, this evidence— standing alone—is not enough to persuade us to rule in Melvin's favor without some other showing that the arbitration provision is unconscionable. Some arbitration provisions permit the arbitrator to order the other party to pay all the fees or to pay a partial amount, depending on who wins and depending on the financial condition of the claimant. See generally Ex parte Dan Tucker Auto Sales, Inc., supra. Therefore, Melvin has failed to show that general contract defenses should prohibit enforcement of the arbitration provision against him.
In conclusion, this case does, indeed, present a transaction involving interstate commerce; thus, the Federal Arbitration Act applies to preempt Alabama law, which otherwise would bar the enforcement of the arbitration provision, see § 8-1-41(3), Ala.Code 1975. Smith and Johnnie's Homes did not have a duty to disclose to Melvin the existence, or the substance, of the arbitration provision, especially in light of the fact that neither Melvin nor Patricia put Smith or Johnnie's Homes on notice that Melvin, as the signer of the contract, was illiterate. Furthermore, according to the rule established in Conner, because Melvin's illiteracy goes to the question of the formation of the entire contract and not just the arbitration provision, it is properly the role of an arbitrator to determine the issue whether he, in signing the contract, agreed to arbitrate his claims. The determination of the question whether Melvin should be forced to submit all of his claims to arbitration will depend on the arbitrator's decision as to whether a valid and enforceable contract exists. Finally, general contract defenses do not prohibit enforcement of the arbitration agreement against Melvin. Therefore, the trial court erred in denying the motion of Johnnie's Homes to compel arbitration.
REVERSED AND REMANDED.
MADDOX, HOUSTON, SEE, and BROWN, JJ., concur.
JOHNSTONE, J., concurs in part and concurs in the result in part.
LYONS, J., recuses himself.
JOHNSTONE, Justice (concurring in part and concurring in the result in part).
I concur in the holding that, because the record contains substantial and uncontradicted evidence that this mobile home moved in interstate commerce from Georgia to Alabama, this transaction is governed by the Federal Arbitration Act.
On the issue of whether the court or the arbitrator should decide Holt's remaining challenges to the arbitration agreement, my analysis is that the court should decide the challenges and that, under the law and facts of this case, the court should reject the challenges and require arbitration. Specifically, my interpretation of Holt's argument in his brief to us is that he is challenging only the making of the arbitration agreement itself and not the making of the whole contract which contains the arbitration agreement. Thus, the Federal Arbitration Act, and specifically 9 U.S.C. § 4, and all of the controlling precedents require that the court decide the challenge. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986), Prima Paint Corp. v. Flood &
Holt challenges the making of the arbitration agreement itself, first, on the ground that he could not read it and the salesman did not tell him about it when he signed the contract. I concur in the analysis in the main opinion on the merits of this challenge. A court addressing this challenge would be obliged to reject it as a matter of law on the undisputed facts. I note that, while the main opinion recites that the salesman grabbed the papers from Holt when Holt took too long looking at them, none of the briefs argue this fact, and Holt's brief does not argue that the salesman prevented Holt from reading the contract.
Holt's last challenge to the arbitration agreement is that it is unconscionable. Holt does not demonstrate unconscionability in his argument. Thus the court deciding this challenge to the arbitration agreement would be obliged to reject it as a matter of law applied to undisputed facts.