Banks v. City Finance Co., 2001-CA-00862-SCT.

• Citation: 825 So.2d 642
• Decision Date: 05 September 2002
• Docket Number: No. 2001-CA-00862-SCT.,2001-CA-00862-SCT.
• Parties: Philisia BANKS; Rosie Bates; Glenda Collins; King Fountain; Otha Frazier; Melvasteen Frazier; Alberta Hudson; Diane Rogers; Laura A. Williams; Jerry Williams; Paulean Young; Prentiss Young; Wilma Young; Henry Dixon; and Vanessa Jones v. CITY FINANCE COMPANY d/b/a Washington Mutual Finance; Washington Mutual Finance Group, LLC f/k/a City Finance Company; Washington Mutual, Inc.; Union Security Life Insurance Company; American Security Insurance Company; American Bankers Insurance Company of Florida; American Bankers Life Assurance Company of Florida; Martha Frazier; Christyne Hammond; Elaine McWilliams; Dolly Andrews; and Richard Cherry.
• Court: United States State Supreme Court of Mississippi

825 So.2d 642

Philisia BANKS; Rosie Bates; Glenda Collins; King Fountain; Otha Frazier; Melvasteen Frazier; Alberta Hudson; Diane Rogers; Laura A. Williams; Jerry Williams; Paulean Young; Prentiss Young; Wilma Young; Henry Dixon; and Vanessa Jones v. CITY FINANCE COMPANY d/b/a Washington Mutual Finance; Washington Mutual Finance Group, LLC f/k/a City Finance Company; Washington Mutual, Inc.; Union Security Life Insurance Company; American Security Insurance Company; American Bankers Insurance Company of Florida; American Bankers Life Assurance Company of Florida; Martha Frazier; Christyne Hammond; Elaine McWilliams; Dolly Andrews; and Richard Cherry.

No. 2001-CA-00862-SCT.

Supreme Court of Mississippi.

September 5, 2002.

Robert B. Ogletree, Christopher Wayne Cofer, Jackson, attorneys for appellants. Jess H. Dickinson, Johnny L. Nelms, Katharine Malley Samson, Gulfport, Roy H. Liddell, Walter D. Willson, Jackson, attorneys for appellees.

Before SMITH, P.J., CARLSON and GRAVES, JJ.

CARLSON, J., for the Court.

¶ 1. Plaintiffs in this case appeal from the circuit court's order compelling arbitration of all claims asserted in their action pursuant to the terms of the arbitration agreements and the FAA. Finding that the circuit court's order is not an appealable final judgment, we dismiss this appeal for lack of appellate jurisdiction.

FACTS AND PROCEEDINGS BELOW

¶ 2. On September 19, 2000, Philisia Banks, Rosie Bates, Glenda Collins, Henry Dixon, King Fountain, Otha Frazier, Melvasteen Frazier, Alberta Houston, Vanessa Jones, Diane Rogers, Laura A. Williams, Jerry Williams, Paulean Young, Prentiss Young and Wilma Young ("Plaintiffs") filed an action in the Circuit Court of Holmes County against several finance and insurance companies and their employees alleging, among numerous other claims, that arbitration agreements were included in the loan packages sold to the Plaintiffs in order to deprive the Plaintiffs of their right to their day in court.

¶ 3. The Alternative Dispute Resolution Agreements, signed by each plaintiff, were standard documents presented in one of three forms. Each form was set in large type on a separate sheet of paper and was titled "Alternative Dispute Resolution Agreement." Directly above the signature line, the borrower was cautioned not to sign the agreement and to seek legal advice if they did not understand the document. Each agreement stated the arbitration process would be governed by the Federal Arbitration Act ("FAA") and the lender would be responsible for most of the costs of arbitration.

¶ 4. The Plaintiffs' complaint alleged eleven different counts for which compensatory and punitive damages were sought for each plaintiff: (1) fraudulent misrepresentations and/or omissions, (2) fraud, (3) constructive fraud, (4) civil conspiracy, (5) unconscionability, (6) violation of the Unfair or Deceptive Acts and Practices Act, (7) fraudulent concealment and deceit, (8) breach of fiduciary duty, (9) breach of implied covenants of good faith and fair dealing, (10) continuing fraud and (11) tortious interference with the right to trial by jury under the Mississippi Constitution.

¶ 5. According to the order, the trial judge found the Plaintiffs voluntarily entered into the arbitration agreements, the arbitration agreements were enforceable under Mississippi and Federal law, the arbitration agreements were not procedurally or substantively unconscionable and there was no fraud in securing the arbitration agreements. Upon her findings, the trial judge ordered all matters to be arbitrated pursuant to the terms of the arbitration agreement. The order did not state that the case was dismissed on the merits, nor did it grant a stay pending the arbitration of the claims. The trial court did make findings as to the voluntariness of the parties, the applicable law and the conscionability of the agreements, but the trial court did not address all counts raised in the complaint such as the duty owed to the Plaintiffs by the City Finance, Union Security or their employees.

¶ 6. On February 16, 2001, the City Finance Company d/b/a Washington Mutual Finance Group, LLC ("City Finance") filed a Motion to Compel Arbitration. Union Security Life Insurance Company, American Security Insurance Company, American Bankers Insurance Company of Florida and American Bankers Assurance Company of Florida ("Union Security") filed a separate answer also asking the circuit court to dismiss the action so that the claims could be submitted to arbitration. Plaintiffs opposed these motions by affidavits stating the affiants were rushed through the loan process, the affiants could not afford arbitration costs, the affiants did not know what arbitration meant and the affiants did not voluntarily waive their right to a jury trial. Along with their affidavits, the Plaintiffs filed their Demand for Jury Trial, Response to Motion to Compel Arbitration and Motion for Discovery.

¶ 7. The trial court heard the motion to compel arbitration on April 23, 2001, and ruled the arbitration agreements were valid and enforceable. On May 1, 2001, the trial court ordered that the Plaintiffs proceed to arbitration of all claims asserted in their action. Following the court's order, the Plaintiffs timely filed their notice of appeal. They raise the following four issues before us:

I. WHETHER THE CIRCUIT COURT ERRED IN GRANTING DEFENDANTS' MOTION TO ENFORCE ARBITRATION AGREEMENTS WHICH WERE PROCURED BY FRAUD AND ARE UNCONSCIONABLE.

II. WHETHER THE CIRCUIT COURT ERRED IN DENYING PLAINTIFFS' RIGHTS TO A TRIAL BY JURY EVEN THOUGH THERE EXISTED NUMEROUS MATERIAL AND FACTUAL ISSUES IN DISPUTE.

III. WHETHER THE CIRCUIT COURT ERRED IN DENYING PLAINTIFFS THEIR RIGHT TO CONDUCT DISCOVERY IN THIS ACTION IN ORDER TO PRESENT EVIDENCE IN DEFENSE TO THE ARBITRATION AGREEMENT.

IV. WHETHER THE CIRCUIT COURT ERRED IN GRANTING THE DEFENDANTS' MOTION TO ENFORCE ARBITRATION SINCE THE ARBITRATION AGREEMENTS ARE INAPPLICABLE PURSUANT TO MISS. CODE ANN. § 83-53-15 AND FAA IS REVERSE PREEMPTED BY THE McCARRAN-FERGUSON ACT.

City Finance and Union Security also raise the following issue:

V. WHETHER PLAINTIFFS HAVE APPEALED FROM A NON APPEALABLE ORDER.

DISCUSSION

¶ 8. The Fifth Circuit has held a district court's grant of a motion to compel arbitration should be reviewed de novo. OPE Intern'l LP v. Chet Morrison Contractors, Inc., 258 F.3d 443, 445 (5th Cir.2001)(citing Local 1351 Int'l Longshoremens Ass'n v. Sea-Land Serv., Inc., 214 F.3d 566, 569 (5th Cir.2000)). See also PaineWebber Inc. v. Chase Manhattan Private Bank (Switzerland), 260 F.3d 453, 459 (5th Cir. 2001)

; Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1065 (5th Cir.1998).

V. WHETHER PLAINTIFFS HAVE APPEALED FROM A NON APPEALABLE ORDER.

¶ 9. Although Plaintiffs do not raise this issue, this Court must first address whether the May 1, 2001, order is a final judgment appealable under Miss. Code Ann. § 11-51-3 (Supp.2001). This Court's jurisdiction is expressly set forth in section 11-51-3 as proper only from a "final judgment." As noted in Bradley v. Holmes, 242 Miss. 247, 134 So.2d 494 (1961), an appeal is not a matter of right but is subject to the statutory provisions, and the basic requirement is that appeals are proper only if from a final judgment. See also Perkins v. Thompson, 127 Miss. 864, 90 So. 710 (1922). There can be no valid appeal until there has been a judgment disposing of the case.... A final judgment has been defined by this Court as a judgment adjudicating the merits of the controversy which settles all the issues as to all the parties. Hindman v. Bridges, 185 So.2d 922 (Miss.1966); Cotton v. Veterans Cab Co., Inc., 344 So.2d 730 (Miss.1977).

Sanford v. Board of Supervisors, 421 So.2d 488, 490-91 (Miss.1982). As defined by M.R.C.P. 54, a judgment includes a "final decree and any order from which an appeal lies."

¶ 10. Section 16 of the Federal Arbitration Act ("FAA"), enacted in 1988, governs appellate review of arbitration orders. 9 U.S.C. § 16 (1999). The section provides:

(a) An appeal may be taken from—

(1) an order—

(A) refusing a stay of any action under section 3 of this title,

(B) denying a petition under section 4 of this title to order arbitration to proceed,

(C) denying an application under section 206 of this title to compel arbitration,

(D) confirming or denying confirmation of an award or partial award, or

(E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.

(b) Except as otherwise provided in section 1292(b) of title 28, an appeal may not be taken from an interlocutory order —

(1) granting a stay of any action under section 3 of this title;

(2) directing arbitration to proceed under section 4 of this title;

(3) compelling arbitration under section 206 of this title; or

(4) refusing to enjoin an arbitration that is subject to this title.

"The Federal Arbitration Act prohibits appeals from interlocutory orders compelling arbitration, but permits appeals from final orders compelling arbitration." Sphere Drake Ins. PLC v. Marine Towing, Inc., 16 F.3d 666, 667-68 (5th Cir.1994) (emphasis added). See 9 U.S.C. § 16. An order is considered final if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945).

¶ 11. The trial court's order compelling arbitration, if interlocutory, clearly falls under § 16(b), which prohibits appeals from orders "compelling arbitration under section 206 of this title". 9 U.S.C. § 16(b)(3). But if the order is considered a final decision, § 16(a)(3) allows appeal. Therefore, at issue is whether the order is interlocutory or final.

¶ 12. The Plaintiffs argue the matter is...