STUART, Justice.
Bedii Okay appeals from the order of the Limestone Circuit Court appointing an arbitrator to preside over his dispute with Terrence Murray d/b/a Centennial Residential Developments, Inc. (hereinafter referred to as "CRDI"), arguing that the arbitrator was selected in a manner inconsistent with the method agreed to by the parties in their arbitration agreement. We reverse and remand.
On October 18, 2005, CRDI signed a contract to purchase property located at 29025 Highway 72 in Limestone County from Okay for $272,500. That contract contained the following arbitration provision:
(Emphasis added.) CRDI closed on its purchase of the property sometime in December 2005.
Some months thereafter, CRDI discovered that property adjacent to the property it had purchased from Okay had been used as an unauthorized dumping ground by unknown parties and contained large
Unsatisfied with the cleanup efforts, on May 22, 2008, CRDI sued Okay, the owners of two other parcels of property adjacent to CRDI's property, and various fictitiously named parties in the Limestone Circuit Court, alleging negligence and/or wantonness, nuisance, and trespass. CRDI also stated a fraudulent-suppression claim against Okay for failing to disclose that the property it had purchased from him was situated next to an unauthorized and illegal solid-waste dump. Okay filed a motion to dismiss the claims against him, which the trial court denied. After his motion to dismiss was denied, Okay moved the trial court to compel arbitration of the claims asserted against him pursuant to the arbitration provision in the real-estate contract CRDI and Okay had entered into on October 18, 2005. On November 25, 2008, the trial court granted the motion and stayed the case pending arbitration.
The record reflects that the attorney for CRDI thereafter sent letters to Okay's attorney on at least four occasions between January 30, 2009, and April 3, 2009, requesting that he contact her in order to discuss the selection of an arbitrator. Those letters also indicate that she was simultaneously trying to contact Okay's attorney by telephone. CRDI alleges that the attorneys did have a conversation in which they agreed to mutually select an arbitrator, and Okay alleges that they had multiple conversations discussing possible arbitrators. However, on April 13, 2009, CRDI unilaterally moved the trial court to appoint Richard Warren Bell, a Birmingham attorney on the panel of neutrals maintained by the United States District Court for the Northern District of Alabama, as the arbitrator, alleging that Okay had not cooperated in setting the case for arbitration. Three days later, the trial court granted that motion without a hearing and appointed Bell to arbitrate the dispute between CRDI and Okay.
On May 28, 2009, Okay moved the trial court to vacate its April 16 order appointing Bell as arbitrator because, he alleged, he and CRDI had agreed in the arbitration provision in the real-estate contract that any arbitration between them would be conducted according to the Commercial Arbitration Rules of the American Arbitration Association ("the AAA"). At the time this case was referred to arbitration, Rule R-ll of those rules set forth the following procedure for selecting an arbitrator:
Accordingly, Okay argued, the trial court erred by compelling him to arbitrate his dispute with CRDI before an arbitrator selected in a manner inconsistent with the manner agreed to by CRDI and Okay in the arbitration provision. Okay simultaneously filed a petition for the writ of mandamus in this Court seeking the same relief. On June 25, 2009, after a hearing on the matter, the trial court denied Okay's motion. However, on July 17, 2009, this Court entered an order staying further proceedings in the trial court and declaring that Okay's petition for the writ of mandamus would be treated as a notice of appeal. The parties thereafter filed appellate briefs, and the case was submitted for a decision.
Okay appeals the order of the trial court compelling him to arbitrate his dispute with CRDI before an arbitrator appointed by the trial court, in contravention, he says, of the manner agreed to by the parties for selecting an arbitrator. We review that order applying the same de novo standard of review we apply to any order granting or denying a motion to compel arbitration. We "must determine `whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review.'" BankAmerica Hous. Servs. v. Lee, 833 So.2d 609, 617 (Ala.2002) (quoting Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999)).
Okay argues that the trial court's order violates the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("the FAA"), inasmuch as the FAA requires that arbitration be conducted "in accordance with the terms of the [arbitration] agreement." 9 U.S.C. § 3. He further argues that this Court has enforced this provision on multiple occasions and has previously reversed the judgments of trial courts when the arbitrators were appointed in a manner inconsistent with the provisions of the arbitration agreement. Okay cites Bowater Inc. v. Zager, 901 So.2d 658 (Ala.2004), as
Bowater, 901 So.2d at 668-71.
CRDI does not contest the holding of Bowater; rather, it argues that Bowater does not apply in this case because, CRDI alleges, the trial court's order here is consistent with the parties' agreement as to the appointment of an arbitrator. Rule R-11 of the Commercial Arbitration Rules of the AAA states that the procedure set forth in that rule for selecting an arbitrator applies only "[i]f the parties have not appointed an arbitrator and have not provided any other method of appointment." In fact, CRDI argues, the parties did agree to a "method of appointment"—that they would voluntarily agree to the selection of an arbitrator. Thus, CRDI argues, Rule R-11 was preempted and, when the parties were thereafter unable to agree on the selection of an arbitrator, the trial court acted within its authority by appointing an arbitrator.
This argument fails, however, because Okay denies that he agreed that he and CRDI would voluntarily select an arbitrator outside the framework set forth in the Commercial Arbitration Rules of the AAA. CRDI steadfastly alleges that there was an oral agreement to voluntarily select an arbitrator; even if that is true, however, the Commercial Arbitration Rules require that changes to those rules be set forth in writing, and there is no evidence in the record indicating that such a written agreement existed. See Rule R-1(a), Commercial Arbitration Rules of the AAA ("The parties, by written agreement, may vary the procedures set forth in these rules."). The procedure for selecting an arbitrator set forth in Rule R-11 should accordingly have been followed.
CRDI also argues that Okay waived his right to rely on Rule R-11 because he failed to invoke it or to object in a timely manner before the trial court and because he commenced arbitration before the arbitrator selected by the trial court. Specifically, CRDI notes that Okay filed no objection or response to its motion seeking the appointment of Bell as the arbitrator and that he participated without objection in a telephone status conference that Bell conducted approximately one month after his appointment as arbitrator. Okay counters that he did not respond to CRDI's motion seeking the appointment of Bell as arbitrator because he did not have an opportunity to do so—the trial court granted the motion only three days after it was filed—and that he thereafter promptly moved the trial court to vacate the order appointing Bell and promptly filed the related petition for the writ of mandamus with this Court. Moreover, he argues that the transcript of the status conference conducted by Bell is not in the record and that there is accordingly no evidence as to whether he objected to Bell's appointment during that conference.
We agree that a finding of waiver would be inappropriate in this case. There is no evidence in the record indicating that Okay ever participated in the arbitration proceedings conducted by Bell to the extent we may conclude he abandoned his right to insist on an arbitrator selected by the method agreed to by the parties; moreover, there is no evidence indicating that CRDI would be substantially prejudiced by being forced to restart the proceedings so that the Commercial Arbitration Rules, which it also agreed to, are followed. Paw
The trial court appointed an arbitrator to preside over the proceedings resolving a dispute between Okay and CRDI in contravention of the method for selecting that arbitrator agreed to by the parties. Because a trial court is required to compel arbitration "in a manner consistent with the terms of the arbitration provision," the trial court's order appointing that arbitrator was entered in error. Ex parte Cappaert Manufactured Homes, 822 So.2d 385, 387 (Ala.2001). That order is hereby reversed and the cause remanded so that CRDI can pursue its claims against Okay in arbitration pursuant to the Commercial Arbitration Rules of the AAA, as agreed to by the parties, which rules specifically provide for the selection of arbitrators.
REVERSED AND REMANDED.
COBB, C.J., and LYONS, WOODALL, SMITH, BOLIN, PARKER, MURDOCK, and SHAW, JJ., concur.