JP&G LLC v. Voss

• Decision Date: 16 November 2021
• Docket Number: 2020-CA-00577-COA
• Parties: JP&G LLC d/b/a Orkin f/k/a JRGT LLC, Appellant v. James VOSS and Candy Voss, Appellees
• Court: Mississippi Court of Appeals

331 So.3d 569

JP&G LLC d/b/a Orkin f/k/a JRGT LLC, Appellant

v.James VOSS and Candy Voss, Appellees

NO. 2020-CA-00577-COA

Court of Appeals of Mississippi.

November 16, 2021

ATTORNEYS FOR APPELLANT: PAUL PACIFIC BLAKE, ROBERT P. THOMPSON

ATTORNEYS FOR APPELLEES: PAUL MANION ANDERSON, Hattiesburg, SAMUEL STEVEN McHARD

BEFORE CARLTON, P.J., GREENLEE AND SMITH, JJ.

SMITH, J., FOR THE COURT:

¶1. JP&G LLC (JP&G) appeals from the circuit court's order denying JP&G's motion to compel arbitration and to stay proceedings. JP&G argues the circuit court erred by (1) finding the contract invalid in its entirety because it was not signed by a JP&G representative, and (2) finding the arbitration agreement nonexistent and unenforceable.

FACTS AND PROCEDURAL HISTORY

¶2. JP&G is a Mississippi pest-control company that conducts business as "Orkin." It is undisputed that on October 27, 2009, James and Candy Voss entered into an agreement with JP&G for pest-control treatment and damage repair. Thereafter, JP&G treated the Vosses' home for termites, and the Vosses provided payment to JP&G.

¶3. The agreement, titled "Mississippi 7-Year Subterranean and Formosan Termite Directed Liquid + Bait Treatment and Monitoring Service Repair Agreement" (the Agreement), includes fifteen provisions. Provisions one through fourteen are listed in numerical order on the front of the document, followed by a section at the bottom with a designated signature line for JP&G's branch manager and for the customer. The Vosses signed the Agreement on the customer's signature line, but the line designated for the JP&G's branch manager was never signed. The fifteenth provision is on the back of the document by itself, with a single line for initials below it, though the document does not specify which party's initials were required. Regardless, the line was left blank and had not been initialed by either party.

¶4. The Agreement provisions relevant for this appeal are as follows,¹ on the front:

4. LIMITATION OF LIABILITY: Customer expressly waives any claim for economic compensatory or consequential damages relating to the existence of Subterranean termites or Formosan termites or Subterranean termite or Formosan termite damage. The Customer acknowledges that Orkin is performing a service and except for termite damage repairs set forth above, and except for any damage to the structure caused by Orkin in the performance of its services, Customer waives any claims for property damage. Customer agrees that under no circumstances, with the sole exception of any claim for termite damage repairs, shall Orkin be liable for any amount greater than the amount paid by the Customer to Orkin for the termite service to be performed. Nothing in this Agreement shall be construed as depriving the Customer of remedies available under applicable state consumer protection laws.

....

9. ENTIRE AGREEMENT: This Agreement and the attached Treatment Report shall be the entire Agreement between Customer and Orkin.... Customer warrants and acknowledges that Customer has not relied on or been induced by any other agreements, understandings or representations, whether written or oral, in signing this Agreement.... If any provision or portion thereof of this Agreement is found to be invalid or unenforceable, it shall not affect the validity or enforceability of any other part of the Agreement[.] Provided, however, that as to paragraph 4, MEDIATION/ARBITRATION, if the sentence precluding the arbitrator from conducting an arbitration proceeding as a class, representative[,] or private attorney general is found to be invalid or unenforceable then the entirety of paragraph 4 shall be deemed deleted from this Agreement.

10. APPLICABLE LAW: This Agreement shall be governed by and construed under the laws of the State of Georgia, without regard to its conflicts of laws principles.

On the back, the sole provision read:

15. MEDIATION/ARBITRATION: ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE SERVICES PERFORMED BY ORKIN

UNDER THIS AGREEMENT OR ANY OTHER AGREEMENT, REGARDLESS OF WHETHER THE CONTROVERSY OR CLAIM AROSE BEFORE OR AFTER THE EXECUTION, TRANSFER[,] OR ACCEPTANCE OF THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY TORT OR STATUTORY CLAIMS, AND ANY CLAIMS FOR PERSONAL OR BODILY INJURY OR DAMAGE TO REAL OR PERSONAL PROPERTY, SHALL BE SETTLED BY BINDING ARBITRATION. UNLESS THE PARTIES AGREE OTHERWISE, THE ARBITRATION SHALL BE ADMINISTERED UNDER THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA") AND SHALL BE CONDUCTED BY AAA.... THE ARBITRATOR'S POWERS TO CONDUCT ANY ARBITRATION PROCEEDING UNDER THIS AGREEMENT SHALL BE LIMITED AS FOLLOWS: ANY ARBITRATION PROCEEDING UNDER THIS AGREEMENT ... WILL NOT PROCEED AS A CLASS ACTION, PRIVATE ATTORNEY GENERAL ACTION[,] OR SIMILAR REPRESENTATIVE ACTION.... CUSTOMER AND ORKIN ACKNOWLEDGE AND AGREE THAT THIS ARBITRATION PROVISION IS MADE PURSUANT TO A TRANSACTION INVOLVING INTERSTATE COMMERCE AND SHALL BE GOVERNED BY THE FEDERAL ARBITRATION ACT.

¶5. On January 22, 2020, the Vosses filed a civil action against JP&G, alleging JP&G failed to provide proper termite treatment that resulted in termite infestation and damage to the Vosses' home. JP&G responded by filing a motion to compel arbitration and to stay proceedings on March 9, 2020, and argued that the Vosses' claims were related to the services provided under the contract and within the scope of the Agreement's arbitration provision. The Vosses filed a motion in opposition on April 9, 2020, contending that the arbitration provision was not enforceable because it had not been initialed, and they had not agreed to it. On May 12, 2020, the circuit court entered an order denying JP&G's motion to compel arbitration upon finding that the arbitration provision was invalid and that the Agreement was nonexistent because it was never executed by JP&G's branch manager; there was no mutual assent or meeting of the minds between the parties;² and the arbitration clause was procedurally unconscionable. Aggrieved, JP&G appeals.

DISCUSSION

¶6. On appeal, JP&G argues that the Vosses should be compelled to arbitrate on the grounds that the parties' Agreement created a valid and binding contract to arbitrate and that the Vosses' claims are within the scope of the arbitration clause. JP&G contends that the Vosses' failure to initial the arbitration provision was irrelevant and suggests that assent to the arbitration provision can be inferred by the Vosses' receipt of services under the contract. JP&G further claims that the arbitration provision is neither procedurally nor substantively unconscionable and thus enforceable.

¶7. A review of the record shows that when the circuit court conducted its analysis, it examined not only whether there was a valid agreement to arbitrate specifically, but the court also made a determination as to the contractual validity of the Agreement overall. For example, the first ground the circuit court gave to support its holding was that the contract as a whole was invalid because the Agreement was never signed by JP&G's branch manager and thus was never executed. As stated by the United States Supreme Court,

attacks on the validity of the contract, as distinct from attacks on the validity of the arbitration clause itself, are to be resolved "by the arbitrator in the first instance, not by a federal or state court." (citation omitted). For these purposes, an "arbitration provision is severable from the remainder of the contract," (citation omitted), and its validity is subject to initial court determination; but the validity of the remainder of the contract (if the arbitration provision is valid) is for the arbitrator to decide.

Nitro-Lift Techs. L.L.C. v. Howard , 568 U.S. 17, 20-21, 133 S.Ct. 500, 184 L.Ed.2d 328 (2012) (quoting Preston v. Ferrer , 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008) ). In this case, the Vosses challenged the validity of the arbitration provision only, not the validity of the contract itself. Accordingly, it was beyond the circuit court's authority to determine whether the Agreement in its entirety was a valid contract, and it was improper to use such determination as a basis for denying the existence of an agreement to arbitrate. Because the circuit court should have only addressed whether the Vosses and JP&G agreed to arbitrate their claims, this Court will limit our review and decline to discuss JP&G's failure to sign the Agreement.³ We confine our review to determining whether provision fifteen on the back page was part of, or incorporated into, the alleged Agreement such that it created a valid agreement to arbitrate.

I. Applicable State Law

¶8. The United States Supreme Court has explicitly stated that "[w]hen deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally ... should apply ordinary state-law principles that govern the formation of contracts." First Options of Chicago Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). In Mississippi, when a contract includes an applicable law provision, "[t]he general rule is that courts will give effect to an express agreement that the laws of a specified jurisdiction shall govern." Cox v. Howard, Weil, Labouisse, Friedrichs Inc. , 619 So. 2d 908, 911 (Miss. 1993). We note that provision ten of the parties' Agreement specifies that the Agreement is governed by and to be construed under the laws of the State of Georgia. Thus, as an initial matter, this Court will first determine whether to apply Georgia or Mississippi law to the issue in this case. Regardless, existing law and precedent in both states leads us to the same result.

¶9. In Cox , our supreme court found that "the parties, a Mississippi resident and a corporation with offices in Mississippi, ... stated that their contract would be governed by the law of another state, New York[,]" and held that "New York law should govern any action based on...