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March 6, 2026 Get Citation Alerts Download PDF Add Note

In re: ARC Realty, LLC; Joy Dill; Stacey McKinley; Eric McKinley; The Closing Agency, LLC, d/b/a Lake Martin Closing; Martha Louise McKee-Blackham; and Big Fish Real Estate Group at Lake Martin, LLC v. Brian Smith; Baltic Holdings, LLC; Arrowhead LM, LLC; Bay Pine LMP, LLC; and Kowaliga Investment Zero, LLC

Supreme Court of Alabama

• Citations: None known
• Docket Number: SC-2025-0231

• Judges: Bryan, J.

• Opinion

• Authorities (16)

• Cited By (0)

• Summaries (0)

• Similar Cases (5K)

• PDF

Combined Opinion

Rel: March 6, 2026

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern
Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts,
300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other
errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

SUPREME COURT OF ALABAMA
OCTOBER TERM, 2025-2026

---

SC-2025-0231

---

Ex parte Brian Smith

PETITION FOR WRIT OF MANDAMUS

(In re: ARC Realty, LLC; Joy Dill; Stacey McKinley; Eric
McKinley; The Closing Agency, LLC, d/b/a Lake Martin Closing;
Martha Louise McKee-Blackham; and Big Fish Real Estate
Group at Lake Martin, LLC

v.

Brian Smith; Baltic Holdings, LLC; Arrowhead LM, LLC; Bay
Pine LMP, LLC; and Kowaliga Investment Zero, LLC)

(Tallapoosa Circuit Court: CV-25-900027)
SC-2025-0231 and SC-2025-0242

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SC-2025-0242

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Brian Smith; Baltic Holdings, LLC; Arrowhead LM, LLC; Bay
Pine LMP, LLC; and Kowaliga Investment Zero, LLC

v.

ARC Realty, LLC; Joy Dill; Stacey McKinley; Eric McKinley; The
Closing Agency, LLC, d/b/a Lake Martin Closing; Martha Louise
McKee-Blackham; and Big Fish Real Estate Group at Lake
Martin, LLC

Appeal from Tallapoosa Circuit Court
(CV-25-900027)

BRYAN, Justice.

Brian Smith formed Baltic Holdings, LLC, Arrowhead LM, LLC

("Arrowhead"), Bay Pine LMP, LLC ("Bay Pine"), and Kowaliga

Investment Zero, LLC; those companies purchase and develop property

around Lake Martin. In March 2025, Smith and those four companies

filed claims with the American Arbitration Association ("the AAA")

against individuals and entities involved with the purchase of certain

land along Lake Martin; those claims alleged fraud, breach of contract,

and conspiracy, among other things. Later that month, several of the

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SC-2025-0231 and SC-2025-0242

individuals and entities named as respondents in the arbitration

proceedings -- ARC Realty, LLC ("Arc Realty"); Joy Dill; Stacey

McKinley; Eric McKinley; The Closing Agency, LLC, d/b/a Lake Martin

Closing ("the Closing Agency"); Martha Louise McKee-Blackham; and

Big Fish Real Estate Group at Lake Martin, LLC ("Big Fish") ("the

plaintiffs") -- commenced a declaratory-judgment action against Smith

and his four companies ("the defendants") in the Tallapoosa Circuit

Court.1 The plaintiffs sought a judgment declaring that they did not

enter into a valid and enforceable agreement that requires them to

arbitrate disputes with the defendants. The plaintiffs also sought an

order staying the arbitration proceedings initiated by the defendants

with the AAA.

1It appears that the plaintiffs were involved with the land
transactions as follows: Arc Realty is a real-estate company that worked
with the defendants in acquiring the properties; Dill, a real-estate agent
with Arc Realty, worked with the defendants in acquiring the properties;
Big Fish is a real-estate company that worked with the seller of the
properties; Stacey McKinley is a real-estate agent with Big Fish; the
Closing Agency is a company that assisted in the closing of the
transactions; Eric McKinley is a member of the company that sold the
properties and also a member of the Closing Agency; and McKee-
Blackham was a consultant to the defendants regarding the transactions.
3
SC-2025-0231 and SC-2025-0242

The defendants filed a motion asking the circuit court to compel

arbitration. In seeking to compel arbitration, the defendants relied on

arbitration provisions contained in two contracts for the sale of property

around Lake Martin. Each land-sale contract contains one arbitration

provision, and the two arbitration provisions are identical. In one

contract, defendant Arrowhead purchased property from SAAB Triple T

Investments, LLC; in the other contract, defendant Bay Pine purchased

property from the same seller. None of the plaintiffs signed the land-sale

contracts containing the arbitration provisions. However, the defendants

argued that the plaintiffs were subject to arbitration based on the theory

of equitable estoppel and because, the defendants said, the plaintiffs are

third-party beneficiaries of the contracts. More importantly for purposes

of our review, the defendants argued that the issue whether their dispute

with the plaintiffs is subject to arbitration is an issue of arbitrability that

must be determined by an arbitrator in the first place. As we will discuss

below, the defendants argued that certain clauses in the arbitration

provisions provide that arbitrability issues must be decided by an

arbitrator.

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SC-2025-0231 and SC-2025-0242

In response to the motion to compel arbitration, the plaintiffs filed

a motion in the circuit court to stay the arbitration proceedings before

the AAA. The plaintiffs asserted that they had never entered into a

contract with the defendants requiring them to arbitrate any dispute

with the defendants. The plaintiffs argued that the circuit court, not an

arbitrator, should make a threshold determination regarding "the

existence of a valid agreement requiring arbitration" among the parties

in this action. The circuit court agreed with the plaintiffs and entered an

order staying the arbitration proceedings before the AAA. The order

stayed the arbitration proceedings "in order for [the circuit court] to first

determine whether the parties have entered into a valid and enforceable

arbitration agreement." The defendants filed a notice of appeal, and

Smith filed a petition for a writ of mandamus challenging the circuit

court's order. This Court consolidated the appeal and the petition for a

writ of mandamus.

We first address whether the order staying the arbitration

proceedings is appealable. Rule 4(d), Ala. R. App. P., provides that "[a]n

order granting or denying a motion to compel arbitration is appealable

as a matter of right." Although the circuit court's order did not explicitly

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SC-2025-0231 and SC-2025-0242

deny the defendants' motion to compel arbitration, we conclude that the

order did in fact deny that motion and, thus, that the order is appealable.

As noted, the plaintiffs are nonsignatories to the land-sale contracts

containing the arbitration provisions on which the defendants rely. This

case concerns whether the defendants' claims against the plaintiffs, as

nonsignatories, are subject to the arbitration provisions. In their motion

to compel arbitration, the defendants argued that the issue whether their

disputes with the plaintiffs are arbitrable is an issue of arbitrability that

must be decided by an arbitrator. In its order, the circuit court framed

the threshold issue differently, stating that the issue here is "whether the

parties have entered into a valid and enforceable arbitration agreement";

that order stayed the arbitration proceedings "pending [the circuit

court's] determination of whether an arbitration agreement exists

between the Plaintiffs and the Defendants." However it is framed, the

threshold issue is essentially this: Who decides -- the circuit court or an

arbitrator -- whether the claims against the plaintiffs must be arbitrated?

The defendants argued that an arbitrator, not a court, should decide that

issue; however, the circuit court concluded that it, not an arbitrator,

would determine that issue. Thus, the circuit court effectively denied

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SC-2025-0231 and SC-2025-0242

the defendants' motion to compel arbitration. Further, as explained

below, this Court has consistently viewed this threshold issue as the

defendants have framed it, and we have consistently said that an

arbitrator must make the threshold determination in similar cases; we

view the circuit court's refusal to allow the arbitrator to make this

threshold determination as a denial of the motion to compel. As noted,

the denial of a motion to compel arbitration is appealable under Rule 4(d).

Accordingly, we conclude that the defendants' appeal is the proper

vehicle to challenge the circuit court's order. Thus, we will decide the

defendants' appeal, and we dismiss Smith's petition for a writ of

mandamus, which he filed out of an abundance of caution based on the

possibility that this Court might conclude that the order is not

appealable.

" 'This Court's review of an order granting or
denying a motion to compel arbitration is de novo.
...'

"United Wisconsin Life Ins. Co. v. Tankersley, 880 So. 2d 385,
389 (Ala. 2003). Furthermore:

" ' "A motion to compel arbitration is
analogous to a motion for summary
judgment. TranSouth Fin. Corp. v.
Bell, 739 So. 2d 1110, 1114 (Ala. 1999).
The party seeking to compel
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SC-2025-0231 and SC-2025-0242

arbitration has the burden of proving
the existence of a contract calling for
arbitration and proving that that
contract evidences a transaction
affecting interstate commerce. Id.
'After a motion to compel arbitration
has been made and supported, the
burden is on the non-movant to present
evidence that the supposed arbitration
agreement is not valid or does not apply
to the dispute in question.' "

" 'Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277,
280 (Ala. 2000) (quoting Jim Burke Auto., Inc. v.
Beavers, 674 So. 2d 1260, 1265 n.1 (Ala. 1995)
(emphasis omitted)).'

"Vann v. First Cmty. Credit Corp., 834 So. 2d 751, 753 (Ala.
2002)."

Cartwright v. Maitland, 30 So. 3d 405, 408-09 (Ala. 2009).

The defendants argue that the circuit court erred by staying the

arbitration proceedings and by failing to grant their motion to compel

arbitration. In seeking to compel arbitration, the defendants relied on

the arbitration provisions contained in the land-sale contracts. The

arbitration provisions provide, in pertinent part:

"All claims, disputes or other matters in question arising out
of or relating in any way to this Contract or the breach thereof,
including claims against any broker or sales associate, or
relating to the relationship involved with, created by or
concerning this Contract, including the involvement of any
broker or sales associate ('Claim'), shall be submitted to
8
SC-2025-0231 and SC-2025-0242

mediation with a mutually agreed upon mediator within
forty-five (45) days of notice of the Claim. In the event no
mediated resolution is reached within sixty (60) days of the
party's notice of the Claim, all Claims shall be resolved by
binding arbitration by a single arbitrator in Birmingham,
Alabama in accordance with the Commercial Arbitration
Rules of the [AAA] then in effect. … All disputes concerning
the arbitrability of any Claim or the enforceability or scope of
this provision shall be subject to the same binding
arbitration."

The dispute in this case stems from the fact that the plaintiffs are

nonsignatories to the land-sale contracts. The defendants filed claims

against the plaintiffs with the AAA, arguing that the arbitration

provisions in the land-sale contracts are broad enough to encompass

those claims. The plaintiffs responded by seeking a judgment in the

circuit court declaring that the plaintiffs are not required to arbitrate the

claims before the AAA because they are nonsignatories to the contracts

containing the arbitration provisions. In response, the defendants

argued, as they now argue to us, that an arbitrator must decide the

threshold issue whether their claims against the plaintiffs in the AAA

proceedings are arbitrable. In making that argument, the defendants

rely on two clauses in the arbitration provisions: the delegation clause

stating that "[a]ll disputes concerning the arbitrability of any Claim or

the enforceability or scope of this provision shall be subject to … binding
9
SC-2025-0231 and SC-2025-0242

arbitration" and the incorporation clause stating that "all Claims shall

be resolved … in accordance with the Commercial Arbitration Rules of

the [AAA]." The defendants observe that, under Rule 7(a) of the

Commercial Arbitration Rules of the AAA, "[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 or to the arbitrability of any claim or counterclaim." Thus,

the defendants argue that the arbitration provisions delegate questions

regarding the arbitrability of claims -- including claims involving

nonsignatories -- to an arbitrator both by expressly saying so in the

delegation clause and by incorporating the AAA's Commercial

Arbitration Rules in the incorporation clause. The defendants argue that

either the delegation clause or the incorporation clause is sufficient to

compel arbitration.

Thus, the question before us may be stated this way: When a

contract contains an arbitration provision delegating threshold questions

of arbitrability to an arbitrator (either expressly in the contract or by

incorporating arbitration rules) who decides the arbitrability of claims

involving nonsignatories to the contract -- a court or an arbitrator? As

10
SC-2025-0231 and SC-2025-0242

the defendants argue, this Court has repeatedly concluded that an

arbitrator makes that decision.

In Wiggins v. Warren Averett, LLC, 307 So. 3d 519 (Ala. 2020), this

Court discussed the principles that are controlling here. In Wiggins, a

signatory to a contract containing an arbitration provision sought to

compel arbitration against a nonsignatory. Similar to this case, the

signatory asserted that the nonsignatory was a third-party beneficiary of

the contract. The Court in Wiggins discussed whether a court or an

arbitrator must decide whether the claims involving the nonsignatory

were arbitrable:

"Wiggins's argument involves an issue of 'substantive
arbitrability.' Substantive arbitrability, or simply
'arbitrability,' includes issues regarding the 'scope' of an
arbitration provision.[2] Regions Bank v. Rice, 209 So. 3d
1108, 1110 (Ala. 2016) ('[D]isputes regarding the ... scope of
an arbitration provision ... are issues of substantive
arbitrability ....'). The 'scope' of an arbitration provision
includes whether a particular claim or dispute falls within the
language of what the provision requires to be arbitrated. See,
e.g., Eickhoff Corp. v. Warrior Met Coal, LLC, 265 So. 3d 216,
225 (Ala. 2018) (holding that the issue whether a dispute over
defective mining equipment was included under the terms of
an arbitration provision was an issue of arbitrability), and

2This Court has sometimes used the term "substantive
arbitrability" to refer to what the United States Supreme Court has
referred to as "arbitrability." See Anderton v. The Practice-Monroeville,
P.C., 164 So. 3d 1094, 1101 (Ala. 2014).
11
SC-2025-0231 and SC-2025-0242

Regions Bank, 209 So. 3d at 1109 (holding that whether the
plaintiff's slip-and-fall claim was within the scope of an
arbitration provision was a question of arbitrability).
Additionally, our caselaw holds that whether the scope of an
arbitration provision applies to nonparties or nonsignatories
to an arbitration provision is also a question of arbitrability.
See, e.g., Anderton v. The Practice-Monroeville, P.C., 164 So.
3d 1094, 1101 (Ala. 2014) ('The question whether an
arbitration provision may be used to compel arbitration of a
dispute between a nonsignatory and a signatory is a question
of substantive arbitrability ....'), and MTA, Inc. v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 114 So. 3d 27, 32 (Ala.
2012) (describing whether the language of an arbitration
provision was limited to signatories as an issue of the 'scope'
of the provision). Thus, we have held, 'substantive
arbitrability addresses both whether the nonsignatories ...
can enforce the agreement to arbitrate and whether the
claims at issue are encompassed by the arbitration provision.'
Carroll v. Castellanos, 281 So. 3d 365, 370 (Ala. 2019).

"A court generally makes the 'threshold' or 'gateway'
determination of arbitrability; however, there is an exception
when the arbitration provision itself requires that the
arbitrator make the decision:

" '[D]isputes regarding the validity and scope of an
arbitration provision ... are issues of substantive
arbitrability, and generally such issues are
decided by a court. However, there is an important
exception to that general rule. Gateway questions
of substantive arbitrability may be delegated to
the arbitrator if the delegation is clear and
unmistakable.'

"Regions Bank, 209 So. 3d at 1110. Who decides issues of
substantive arbitrability -- the court or the arbitrator -- must
necessarily be decided before the actual issue of arbitrability,

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SC-2025-0231 and SC-2025-0242

such as a challenge to the scope of the arbitration provision,
is determined.

"When an arbitration provision indicates that the AAA
rules will apply to the arbitration proceedings, we have held
that it is 'clear and unmistakable' that substantive-
arbitrability decisions are to be made by the arbitrator; this
includes the decision whether the arbitration provision may
be enforced against a nonsignatory to the contract:

" '[T]he arbitration provision in this case provides
that any arbitration proceedings will be conducted
"pursuant to the then-prevailing commercial
arbitration rules of the American Arbitration
Association." The relevant commercial arbitration
rule, Rule 7(a), expressly provides, in its current
form, 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 or to the
arbitrability of any claim or counterclaim." See
Chris Myers Pontiac-GMC, Inc. v. Perot, 991 So.
2d 1281, 1284 (Ala. 2008) (noting that we may take
judicial notice of the commercial arbitration rules
of the American Arbitration Association even
when they do not appear in the record). Thus,
pursuant to Rule 7(a), ... the question of whether
the arbitration provision may be enforced against
a nonsignatory ... ha[s] been delegated to the
arbitrators, and the arbitrators, not the trial court,
must decide those threshold issues.'

"Federal Ins. Co. v. Reedstrom, 197 So. 3d 971, 976 (Ala.
2015). See also Eickhoff, 265 So. 3d at 222; Managed Health
Care Admin., Inc. v. Blue Cross & Blue Shield of Alabama,
249 So. 3d 486, 493 (Ala. 2017); Bugs 'R' Us, LLC v. McCants,
223 So. 3d 913, 919 (Ala. 2016); Anderton, 164 So. 3d at 1102;

13
SC-2025-0231 and SC-2025-0242

and CitiFinancial Corp., L.L.C. v. Peoples, 973 So. 2d 332, 340
(Ala. 2007).

"… It is true that the claims of a third-party beneficiary
might not be subject to an arbitration provision if the scope of
the provision is too narrow to encompass nonsignatories to the
agreement containing the provision. MTA, 114 So. 3d at 32 -
33. But, as noted above, that issue -- whether a nonsignatory
is included within the scope of an arbitration provision -- is an
issue of arbitrability that may be delegated to the arbitrator
to decide in the first place. See Reedstrom, 197 So. 3d at 976
('[T]he question of whether the arbitration provision may be
enforced against a nonsignatory ... ha[s] been delegated to the
arbitrators, and the arbitrators, not the trial court, must
decide those threshold issues.'), and Anderton, 164 So. 3d at
1102 ('[A]lthough the question whether an arbitration
provision may be used to compel arbitration between a
signatory and a nonsignatory is a threshold question of
arbitrability usually decided by the court, here that question
has been delegated to the arbitrator. The arbitrator, not the
court, must decide that threshold issue.').

"The arbitration clause in this case, like the one in
Reedstrom, specifically incorporates the AAA rules. Rule 7(a)
states: 'The 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
or to the arbitrability of any claim or counterclaim.'
(Emphasis added.) It is the language of the delegation
provision in an agreement to arbitrate, here, by incorporating
the AAA rule, that determines whether arbitrability is
delegated to the arbitrator, not the language defining the
scope of the arbitration provision itself.

"Warren Averett, citing Rule 7 of the AAA rules,
Reedstrom, Anderton, and numerous other cases, argues that
the arbitration clause, by incorporating the AAA rules, has
delegated Wiggins's challenge to the scope of the arbitration
14
SC-2025-0231 and SC-2025-0242

clause to the arbitrator to decide. Under our caselaw, as
discussed above, that argument is correct.

"….

"Wiggins also contends that our line of cases recognizing
the delegation to arbitrators of arbitrability determinations,
such as in Managed Health Care, Bugs 'R' Us, Reedstrom, and
Anderton, should be abandoned and urges the Court to adopt
the rationale of the dissenting opinion of Justice Murdock in
Anderton. As subsequent caselaw illustrates, we have
consistently rejected this position. See Eickhoff, 265 So. 3d at
224 ('Numerous parties on appeal -- as well as even dissenting
Justices on this Court -- have urged this Court to abandon this
standard and, instead, to make the arbitrability
determination in such cases itself; however, we have
continually declined to do so. See, e.g., Anderton, 164 So. 3d
at 1105 (Murdock, J., dissenting) ....').

"….

"The determination of whether Wiggins's claims are
covered under the terms of the arbitration clause has been
delegated to an arbitrator to decide. Based on the arguments
before us, the trial court's order compelling arbitration is due
to be affirmed."

307 So. 3d at 522-24.

Thus, under Alabama caselaw, "whether a nonsignatory is included

within the scope of an arbitration provision … is an issue of arbitrability

that may be delegated to the arbitrator to decide in the first place."

Wiggins, 307 So. 3d at 523. See also Carroll v. Castellanos, 281 So. 3d

365 (Ala. 2019) (concluding that the issue whether claims involving
15
SC-2025-0231 and SC-2025-0242

nonsignatories are arbitrable was delegated to an arbitrator to decide);

Rainbow Cinemas, LLC v. Consolidated Constr. Co. of Alabama, 239 So.

3d 569 (Ala. 2017) (same); Federal Ins. Co. v. Reedstrom, 197 So. 3d 971

(Ala. 2015) (same); and Anderton v. The Practice-Monroe, P.C., 164 So.

3d 1094 (Ala. 2014) (same). This caselaw controls the current case. As

in Wiggins and the other cases cited above, the arbitration provisions in

this case delegate questions of arbitrability -- including whether claims

against nonsignatories like the plaintiffs are arbitrable -- to an arbitrator

to decide. As in Wiggins and the other cases cited above, the arbitration

provisions contain a clause incorporating AAA rules. Under Rule 7(a),

"[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 or to the arbitrability of any claim

or counterclaim." The arbitration provisions in this case also contain a

delegation clause expressly stating that "[a]ll disputes concerning the

arbitrability of any Claim or the enforceability or scope of this provision"

shall be decided by arbitration. Under either the incorporation clause (as

was the case in Wiggins, Carroll, Rainbow Cinemas, Reedstrom, and

Anderton) or the delegation clause, the arbitrability of the claims against

16
SC-2025-0231 and SC-2025-0242

the plaintiffs is a threshold issue to be decided by an arbitrator. Thus,

the circuit court erred by failing to grant the defendants' motion to

compel arbitration.

Wiggins, Carroll, Rainbow Cinemas, Reedstrom, and Anderton are

on point and demonstrate how this Court has viewed the nonsignatory

issue before us today. None of the plaintiffs have asked us to overrule

any of those cases. Only two of those cases are cited in the three briefs

submitted by various groupings of the plaintiffs; the brief submitted by

Eric McKinley and the Closing Agency and the brief submitted by Arc

Realty and Dill briefly attempt to distinguish Reedstrom and Carroll

from the current case. Those plaintiffs maintain that those two cases are

distinguishable from this one because, they say, there was no dispute in

those cases regarding the existence of a contract containing an

arbitration provision. However, in all the above-cited cases, as in this

case, there is no dispute about the existence of an arbitration provision

in a contract signed by a party to the dispute; the issue concerns who

must decide the arbitrability of disputes concerning nonsignatories. This

Court has decided the issue before us now in Wiggins, Carroll, Rainbow

Cinemas, Reedstrom, and Anderton. The plaintiffs essentially frame the

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SC-2025-0231 and SC-2025-0242

issue differently -- as one concerning the existence of an arbitration

agreement between the parties to the dispute, and they argue that a court

must decide that issue. However the issue is framed, the plaintiffs, to

prevail, must overcome the established caselaw controlling this case,

which they do not do.

We conclude that the circuit court's order denied the defendants'

motion to compel arbitration and, thus, is an appealable order under Rule

4(d); therefore, we dismiss Smith's petition for a writ of mandamus.

Whether the claims against the plaintiffs are arbitrable is an issue that

must be decided by an arbitrator. The circuit court erred in staying the

arbitration proceedings before the AAA and by failing to grant the

defendants' motion to compel arbitration. Therefore, we reverse that

order and remand the case for the circuit court to enter an order granting

the defendants' motion to compel arbitration.

SC-2025-0231 -- PETITION DISMISSED.

SC-2025-0242 -- REVERSED AND REMANDED.

Stewart, C.J., and Shaw, Wise, Sellers, Mendheim, Cook, McCool,

and Parker, JJ., concur.

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