Wells v. Moblie Co. BOR: Alabama Supreme Court Concludes Arbitration Requirement Is Againt Public Policy

In Wells v. Mobile Co. Board of REALTORS®, the Alabama Supreme Court considered whether agreements to arbitrate future disputes violate public policy. The case involved a commission dispute between sales associates.

Reeves and Powles, who both worked for Reeves Realty, Inc., filed a Request for Arbitration with the Mobile County Board of REALTORS® (Board). Reeves and Powles charged Nichols, of Bay Realty, Inc. (of which Henry Wells was the principal broker), with unethical conduct. Reeves and Powles alleged that Ms. Nichols sold a home upon which the Reeves firm had obtained an exclusive listing agreement. Additionally, a request was made to the Professional Standards Committee to determine that Reeves Realty was entitled to the listing side of a commission earned by Bay Realty.

Reeves and Powles executed agreements to arbitrate the controversy, but Wells refused to submit the matter to arbitration. Subsequently, the Board of Directors met to take disciplinary action regarding Wells's refusal to submit to arbitration. The directors determined that Wells should be expelled from membership in the Board. Rather than immediately expel Wells, the Board filed a Motion for Declaratory Judgment to have the court determine whether its expulsion of Wells was proper. The trial court found that the procedure employed by the Board to expel Wells was in compliance with all applicable bylaws, rules and standards.

Wells appealed from that judgment, contending that the reason for his expulsion was wrongful. The Supreme Court of Alabama agreed with Wells and reversed the trial court's decision, holding that agreements to arbitrate future disputes are inconsistent with the public policy of the state because they "oust or defeat the jurisdiction of all courts. . . ."

Wells v. Mobile Co. Board of REALTORS®, 387 So.2d 140 (Ala. 1980).