ALABAMA – Contracts – Arbitration and plain meaning

When a contract is unambiguous, Alabama courts will apply the plain meaning interpretation to determine contract terms.     The Alabama Supreme Court recently affirmed a trial court’s decision from Pike County Circuit Court denying the Defendant’s Motion to Stay Proceedings and Compel Arbitration.

The parties first entered into a Licensing Agreement containing a valid arbitration clause. Subsequently, the parties entered into a Business Associate Agreement (BAA), containing language stating: “This agreement… supersedes any prior or contemporaneous written or oral memoranda, negotiations, arrangement, contracts, or understandings…” Also, the BAA stated: “[i]f any controversy, dispute or claim arises between the Parties with respect to this Agreement, the Parties shall make good faith efforts to resolve such matters informally.”

After reviewing the language of the Licensing Agreement and the BAA, Alabama’s highest court ruled that based on the plain meaning of the BAA language, the claims arose out of the BAA.  Since there was no clear language in the BAA requiring arbitration of claims, the trial court’s decision to deny arbitration was affirmed.

Read full opinion here:  Greenway Health, LLC. and Greenway EHS, Inc. v. Southeast Alabama Rural Health Associates (Ala. 2019)

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