Franklin Structures v. Williams: Ratification by Warranty Service Binds Homebuyers to Mediation-First Arbitration; Trial Courts Must Compel Mediation Before Arbitration

Introduction

In Franklin Structures, LLC v. Karl Edmond Williams and Tonya Marie Williams, the Supreme Court of Alabama addressed whether homeowners who did not sign a manufacturer’s warranty could nevertheless be compelled to resolve all home-related disputes via a “mediation-first, then arbitration” clause embedded in the manufacturer’s Homeowner’s Manual. The case arises from the purchase of a custom two-story modular home manufactured by Franklin Structures and sold and assembled by Whitson Builders, LLC. After delivery and move-in, the homeowners alleged significant defects—from misaligned walls to the now-infamous “door to nowhere”—and sued the manufacturer, retailer, and others on multiple theories, including breach of contract, torts, Magnuson-Moss Warranty Act claims, and breach of express warranties.

The manufacturer moved to compel non-binding mediation followed by binding arbitration under the limited warranty in its manual. The trial court denied the motion “in part as to arbitration.” On appeal, the Supreme Court reversed, holding that the homeowners ratified and are bound by the warranty’s dispute-resolution clause because they accepted warranty service and pled an express-warranty claim premised on the very warranty containing the clause. The Court further clarified that trial courts must implement the remedy exactly as written—compelling mediation first and arbitration only if mediation fails.

Summary of the Judgment

The Supreme Court of Alabama reversed the Baldwin Circuit Court’s partial denial of Franklin’s motion to compel and remanded. The Court held:

The homeowners assented to the manufacturer’s “mediation-and-then-arbitration” agreement by ratification when they requested and accepted warranty service multiple times.
Independently, by pleading breach of express warranty, the homeowners cannot accept the warranty’s benefits while repudiating its arbitration burden; thus they are estopped from denying arbitration.
The clause is enforceable under the Federal Arbitration Act because the transaction affects interstate commerce (materials sourced across the U.S., Mexico, and Canada; manufactured in one Alabama city and transported across the state).
Trial courts must compel ADR in the manner the parties agreed: disputes must go to non-binding mediation administered by the AAA first; only if unresolved may they proceed to binding AAA arbitration. The trial court erred by not ordering mediation pursuant to the contract.

Analysis

Precedents Cited and Their Influence

Lee v. YES of Russellville, Inc., 784 So. 2d 1022 (Ala. 2000) and subsequent cases (including Digital Forensics Corp. v. King Mach., Inc. (Ala. 2025)): Confirm that orders denying enforcement of combined mediation-and-arbitration provisions are reviewable via direct appeal under Rule 4(d), Ala. R. App. P., because such clauses ultimately require binding arbitration if mediation fails.
Elizabeth Homes, L.L.C. v. Gantt, 882 So. 2d 313 (Ala. 2003); Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277 (Ala. 2000); Parkway Dodge, Inc. v. Yarbrough, 779 So. 2d 1205 (Ala. 2000); TranSouth Fin. Corp. v. Bell, 739 So. 2d 1110 (Ala. 1999); Jim Burke Automotive, Inc. v. Beavers, 674 So. 2d 1260 (Ala. 1995): Establish the de novo standard and burden-shifting framework on motions to compel arbitration: the proponent must prove a contract calling for arbitration and an interstate-commerce nexus; the opponent must present evidence that the agreement is invalid or inapplicable.
AT&T Technologies, Inc. v. CWA, 475 U.S. 643 (1986); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995): Arbitration is a matter of contract; ordinary state-law contract principles govern whether an agreement was formed and what it covers.
Ex parte Cain, 838 So. 2d 1020 (Ala. 2002); Southern Energy Homes, Inc. v. Harcus, 754 So. 2d 622 (Ala. 1999): Assent may be manifested by ratification; acceptance of warranty benefits can evidence assent to a warranty’s arbitration provision even absent a signature.
Southern Energy Homes, Inc. v. Ard, 772 So. 2d 1131 (Ala. 2000): Core authority: homeowners who accept warranty service and assert express-warranty claims are bound by the warranty’s arbitration clause. The Court follows Ard and treats Franklin’s case as “essentially identical.”
Southern Energy Homes, Inc. v. Hennis, 776 So. 2d 105 (Ala. 2000) and Southern Energy Homes, Inc. v. Kennedy, 774 So. 2d 540 (Ala. 2000): Counterpoints limited to their facts: where plaintiffs neither received the warranty nor accepted its services, arbitration could be denied—but plaintiffs who plead breach of that express warranty cannot proceed on the warranty while rejecting its arbitration clause.
Springhill Nursing Homes, Inc. v. McCurdy, 898 So. 2d 694 (Ala. 2004) (plurality): Summarizes Ard’s twofold rationale—acceptance of warranty benefits and reliance on the express warranty.
BankAmerica Housing Services v. Lee, 833 So. 2d 609 (Ala. 2002); Ex parte Cappaert Manufactured Homes, 822 So. 2d 385 (Ala. 2001); Southern Energy Homes Retail Corp. v. McCool, 814 So. 2d 845 (Ala. 2001); Ex parte Dan Tucker Auto Sales, Inc., 718 So. 2d 33 (Ala. 1998): A trial court compelling arbitration must do so in strict conformity with the agreed procedure. Deviations from the contract’s ADR mechanics warrant reversal. This principle is the basis for directing the trial court to compel mediation first.
White Sands Group, L.L.C. v. PRS II, LLC, 998 So. 2d 1042 (Ala. 2008) and Ex parte Secretary of Veterans Affairs, 92 So. 3d 771 (Ala. 2012): Arguments unsupported by authority are waived; defects in affidavits must be challenged by a motion to strike to preserve the issue. These authorities undercut the homeowners’ attempt to discredit Franklin’s affidavit and attached work orders based on a single factual inaccuracy.
First Family Financial Services, Inc. v. Jackson, 786 So. 2d 1121 (Ala. 2000) and Singleton v. State Farm Fire & Casualty Co., 928 So. 2d 280 (Ala. 2005): Unconscionability arguments require evidence and preservation in the trial court; new arguments raised for the first time on appeal will not be considered. The homeowners’ unconscionability attack failed on both fronts.
Ala. Code § 6-6-20(b) and Rule 2, Ala. Civil Court Mediation Rules: Provide express statutory and rule authority for trial courts to order mediation; here, the parties’ contract already requires mediation as a condition precedent to arbitration.
Karibu Home Builders, LLC v. Keenum (Ala. 2024) (Cook, J., concurring in the result): A recent reminder, cited by the Court, that trial courts must implement agreed ADR procedures as written.

Legal Reasoning

The Court’s reasoning proceeds in three steps:

Formation/assent via ratification and estoppel. The homeowners did not sign the Homeowner’s Manual or the warranty. But assent “must be manifested by something,” and Alabama recognizes ratification by acceptance of benefits. The record contained multiple signed warranty work orders (February 13, 2022; August 8 and 17, 2022) that documented Franklin’s warranty service on the home. The sales contract itself put the homeowners on notice that Franklin—not Whitson—would provide and service any manufacturer’s warranty. Thus, when the homeowners sought repair work from Franklin, they accepted warranty benefits and, by doing so, ratified the warranty’s dispute-resolution terms.

Independently, by pleading breach of express warranty, the homeowners invoked the very warranty that contains the arbitration clause. A party cannot claim a contract’s benefits while repudiating its burdens; Alabama repeatedly applies this principle to compel arbitration where the only express warranty in evidence contains an arbitration clause.
Interstate commerce nexus and the FAA. Affidavit testimony established that materials came from multiple states and from Mexico and Canada, and the home was manufactured in one Alabama city and transported to another. This suffices to bring the warranty’s arbitration clause under the Federal Arbitration Act (FAA).
Remedy must match the contract. The clause is a combined ADR provision: non-binding AAA mediation administered under the AAA Commercial Mediation Rules first; if unresolved, binding AAA arbitration in the county of sale, on an individual (non-consolidated) basis, with a jury-trial waiver. Because the trial court denied the motion “in part as to arbitration” and did not compel mediation, its order failed to implement the parties’ bargain. Alabama precedent requires trial courts to compel ADR “in a manner consistent with the terms” of the agreement. The Supreme Court therefore reversed and remanded with instructions to enter an order compelling mediation and, if necessary, arbitration.

The Court also rejected collateral objections to Franklin’s affidavit and exhibits. The homeowners highlighted one factual inaccuracy (whether the home transited through Whitson’s facility before delivery), but the Court found the point immaterial to arbitration and noted the homeowners neither moved to strike the affidavit nor denied that warranty service occurred. Their unconscionability argument failed for lack of preservation and evidence.

Impact and Practical Consequences

Mediation-first is not optional. Where contracts require non-binding mediation before arbitration, Alabama trial courts must order mediation as a condition precedent to arbitration. Parties seeking to compel arbitration should explicitly ask courts to compel mediation first, as Franklin did, and courts must honor the sequencing.
Ratification by service requests binds consumers. Homeowners who request or accept warranty work from a manufacturer strongly risk being deemed to have assented to the warranty’s arbitration clause—even if they never signed the warranty or recall receiving the manual. This applies with particular force where the retailer contract places warranties squarely with the manufacturer.
Pleading strategy matters. Plaintiffs who wish to avoid arbitration must consider the consequences of asserting express-warranty claims. Where the only express warranty in evidence contains an arbitration clause, pleading breach of that warranty will almost certainly result in compelled ADR.
Affidavit practice is outcome-determinative. To resist arbitration, parties must submit sworn evidence disputing receipt of the warranty, disputing warranty service, or establishing unconscionability and must move to strike any defective opposing affidavits. Unsupported briefing alone will not suffice.
Scope of clause is broad. The clause covers disputes “arising from or relating to” the home and includes tort claims. While the Court did not decide non-signatory enforcement against all other defendants, the breadth of the clause and the manufacturer’s arguments foreshadow motions to stay or compel as to non-manufacturer parties on remand.
Continued clarity on appellate review. Denials of motions to enforce mediation-plus-arbitration provisions are appealable under Rule 4(d) because such provisions culminate in binding arbitration if mediation fails.
Consumer-home cases in Alabama. The decision extends and reaffirms the “Southern Energy Homes” line of cases in the modular-home context: homeowner manuals and limited warranties—though unsigned—are enforceable when consumers accept warranty service or sue on the warranty.

Complex Concepts Simplified

Arbitration vs. mediation. Mediation is a non-binding, facilitated negotiation with a neutral; parties may settle or walk away. Arbitration is a binding, private adjudication by a neutral arbitrator whose award can be confirmed as a judgment. A “mediation-first” clause makes mediation a required step before arbitration.
Ratification. Even without a signature, a person can be bound to a contract term by conduct that accepts the contract’s benefits with knowledge of its existence. Here, requesting and receiving warranty repairs from the manufacturer ratified the warranty and its ADR clause.
Express warranty and estoppel. An express warranty is a written promise about a product. If a plaintiff sues for breach of that warranty, they cannot at the same time reject the warranty’s arbitration requirement. This is often called the “you can’t have it both ways” rule.
Interstate commerce and the FAA. The Federal Arbitration Act applies when a transaction affects interstate commerce, broadly construed. Cross-state sourcing of materials, multi-state shipping, or other interstate elements usually suffice.
Preserving evidentiary objections. If an opposing affidavit has defects, a party must file a motion to strike in the trial court to preserve the issue for appeal. Mere argument in a brief is not enough.
Unconscionability. A defense asserting a contract term is unfairly one-sided and should not be enforced. It requires evidence and must be raised in the trial court. Unsupported or late-raised unconscionability arguments will be rejected.
Rule 4(d), Ala. R. App. P. Allows direct appeals from orders denying motions to compel arbitration. The Court applies this route to combined mediation-and-arbitration clauses because they ultimately require binding arbitration if mediation fails.

Key Practical Pointers

For plaintiffs: If you intend to contest arbitration, avoid accepting warranty service unless necessary, and consider whether to plead an express-warranty claim if the only written warranty includes an arbitration clause. If you contest receipt of a manual or the warranty’s existence, say so in a sworn affidavit.
For defendants: Document warranty service meticulously and attach signed work orders. If the retail sales contract points warranty service to the manufacturer, highlight that to show notice and ratification.
For trial courts: When compelling ADR, implement the clause as written—order AAA mediation first (with cost allocation per the agreement) and direct arbitration only if mediation fails. Consider a stay rather than dismissal if issues remain to be supervised post-ADR.

Conclusion

Franklin Structures v. Williams fortifies Alabama’s arbitration jurisprudence in the consumer housing context along two axes. First, it reaffirms that homeowners who accept warranty service or sue on an express warranty are bound by the warranty’s arbitration provisions, even if those terms appear in an unsigned Homeowner’s Manual. Second, it underscores that trial courts must honor the exact ADR sequence the parties chose—compelling non-binding AAA mediation as the mandatory first step and ordering binding arbitration only if mediation fails.

By harmonizing the “Southern Energy Homes” ratification and estoppel doctrine with strict enforcement of ADR sequencing, the decision provides clear procedural guidance to litigants and trial courts alike. It is likely to influence pleadings and motion practice in modular- and manufactured-home disputes and more broadly in consumer warranty litigation, where acceptance of warranty benefits and reliance on express warranties are commonplace. The ruling also signals that perfunctory attacks on affidavits or late-stage unconscionability arguments will not derail enforcement where the record otherwise establishes assent and interstate commerce under the FAA.