Caplin Enters., Inc. v. Denise Arrington, Johnny Arrington, Margie Blackledge, Brenda Bonner, Juanita Davis, Kenneth Davis, Ker'Rita Evans, Larry Evans, Goldie Goodwin, Pansafae Gordon, Ray Charles Gray, Mamie Henry, Carolyn Hinton, Curtis Hinton, Tammy Howard, Kathy Jones, Viola Nash, Lanny Skinner, Kathleen Sterling & James Watts. Caplin Enters., Inc.

• Decision Date: 08 May 2014
• Docket Number: Nos. 2011–CT–01332–SCT, 2011–CT–01932–SCT.,s. 2011–CT–01332–SCT, 2011–CT–01932–SCT.
• Citation: 145 So.3d 608
• Court: Mississippi Supreme Court
• Parties: CAPLIN ENTERPRISES, INC. and Check Cashers & More, Inc. d/b/a Zippy Check Advance v. Denise ARRINGTON, Johnny Arrington, Margie Blackledge, Brenda Bonner, Juanita Davis, Kenneth Davis, Ker'Rita Evans, Larry Evans, Goldie Goodwin, Pansafae Gordon, Ray Charles Gray, Mamie Henry, Carolyn Hinton, Curtis Hinton, Tammy Howard, Kathy Jones, Viola Nash, Lanny Skinner, Kathleen Sterling and James Watts. Caplin Enterprises, Inc. and Check Cashers & More, Inc. d/b/a Zippy Check Advance v. Jerald Ainsworth, Mary Battle, Wilma Carstarfhnur, Kimberly Gaines, Fred Jones, Shonda Love, Archie Moore, Tomecca Pickett, Tammy Pitts, Doris Turner, Boronica Williamson and Shirley Wilson.

145 So.3d 608

CAPLIN ENTERPRISES, INC. and Check Cashers & More, Inc. d/b/a Zippy Check Advance

v.Denise ARRINGTON, Johnny Arrington, Margie Blackledge, Brenda Bonner, Juanita Davis, Kenneth Davis, Ker'Rita Evans, Larry Evans, Goldie Goodwin, Pansafae Gordon, Ray Charles Gray, Mamie Henry, Carolyn Hinton, Curtis Hinton, Tammy Howard, Kathy Jones, Viola Nash, Lanny Skinner, Kathleen Sterling and James Watts.

Caplin Enterprises, Inc. and Check Cashers & More, Inc. d/b/a Zippy Check Advance

v.Jerald Ainsworth, Mary Battle, Wilma Carstarfhnur, Kimberly Gaines, Fred Jones, Shonda Love, Archie Moore, Tomecca Pickett, Tammy Pitts, Doris Turner, Boronica Williamson and Shirley Wilson.

Nos. 2011–CT–01332–SCT, 2011–CT–01932–SCT.

Supreme Court of Mississippi.

May 8, 2014.

George C. Nicols, Madison, attorney for appellants.

Christopher Michael Falgout, Earl P. Jordan, Jr., attorneys for appellees.

EN BANC.

ON WRIT OF CERTIORARI.

CHANDLER, Justice, for the Court:

¶ 1. In these consolidated cases, thirty-two plaintiffs who signed delayed-deposit check agreements with Zippy Check Advance agreed that Zippy Check could pursue judicial remedies against them to collect the debt, while any and all of their claims would be relegated to arbitration. The circuit courts found the arbitration agreements to be unconscionable and denied Zippy Check's motions to compel arbitration. The Court of Appeals affirmed as to one version of the agreement and reversed as to the other. We find that both versions of the arbitration agreement were so one-sided that they were substantively unconscionable and unenforceable. Therefore, we affirm in part and reverse in part the judgment of the Court of Appeals and affirm the judgments of the Circuit Court of Clarke County and the Circuit Court of Newton County.

FACTS

¶ 2. In 2010, the plaintiffs initiated two lawsuits against Zippy Check, a check-cashing business, alleging fraudulent misrepresentation and predatory lending, inter alia. One suit was filed in the Circuit Court of Clarke County; the other was filed in the Circuit Court of Newton County. Each plaintiff had signed one of two versions of a delayed-deposit agreement with Zippy Check; each agreement contained different arbitration provisions. Zippy Check filed a motion to compel arbitration in each case.

¶ 3. Eight of the plaintiffs signed the older version of the delayed-deposit agreement. The front of this contract provided the amount financed, finance charge, annual percentage rate (described as “the cost of your fee as a yearly rate”), and the total owed. The reverse side of the contract consisted of several unnumbered paragraphs in fine print, including the following language:

Should you default under this Agreement, the Company may, at its option, exercise any one of the following remedies:

...

2. If payment is not made after a written demand, the Company may go to court and get a judgment against you for the then unpaid amount of your obligation to the Company. In the event judgment is entered in the Company's favor, the Company may seek to collect this judgment through all judicial means necessary including attaching your non-exempt property, or garnishing your wages;

...

4. If this matter is placed with an attorney for collection of any and all monies due and owing the Company, all reasonable and necessary costs and expenses of collection, specifically including, but not limited to reasonable attorney fees and other damages as set forth by the court, shall be paid by you.

...

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association (“AAA”) and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

The Company shall not be liable to you for any indirect, special or consequential damages arising out of or related to this contract, even if the Company has been advised of the possibility of such damages. In no event shall the Company's liability, if any, exceed [t]he price paid by you for the services rendered hereunder. Where disclaimer, exclusion or limitation of liability for consequential or incidental damages is limited by law, our liability is limited to the greatest extent permitted by law.

Thus, the contract provided that Zippy Check could pursue “all” judicial remedies to collect on the debt, including attaching property and garnishing wages, as well as collecting “attorney fees and other damages as set forth by the court,” but the plaintiffs had to bring all of their claims to arbitration. Additionally, the contract limited Zippy Check's liability to the “price paid by [the plaintiffs] for the services rendered.”

¶ 4. Twenty-four of the plaintiffs signed the “new” version of the contract. That contract provided:

ARBITRATION PROVISION: Any and all disputes or agreements between the parties arising out of this Agreement or any prior agreement between them (except the Lender's rights to enforce the Borrower['s] payment obligations in the event of default by judicial or other process) shall be resolved, upon the election of you or us, by binding arbitration and in accordance with rules of the American Arbitration Association as presently published and existing. The parties agree to be bound by the decision of the arbitrator(s). The arbitration proceeding shall be a condition precedent to any court proceeding. Notwithstanding the applicability of any other law to any other provision of this Agreement, the Federal Arbitration Act, 9 U.S.C. Section 10 shall control the construction, interpretation, and application of the paragraph. Any issue as to whether the Agreement is subject to arbitration shall be determined by the arbitrator.

Like the old version of the contract, the new version allowed Zippy Check to pursue judicial remedies, while relegating any and all of the plaintiffs' claims to arbitration.

¶ 5. Finding both arbitration provisions unconscionable, the Clarke County Circuit Court denied Zippy Check's motion to compel arbitration. The Newton County Circuit Court adopted those findings and also denied arbitration. Zippy Check appealed the denial of arbitration in both cases, and the cases were consolidated on appeal. The Court of Appeals reversed as to the twenty-four plaintiffs who had signed the newer agreement. Caplin Enters., Inc. v. Arrington, 2011–CA–01332–COA, 145 So.3d 675, 684–86, 2013 WL 1878879, **8–9 (¶¶ 41–42) (Miss.Ct.App. May 7, 2013). However, the Court of Appeals affirmed the circuit courts' denial of arbitration as to the eight plaintiffs who had signed the older agreement, finding that the arbitration provision in the older agreement was procedurally unconscionable. Id. at 683–84, 686–87, 2013 WL 1878879, at **7, 10 (¶¶ 29, 42). The Court of Appeals also found that both versions of the agreement amounted to contracts of adhesion. Id. at 682–83, 683–84, 2013 WL 1878879, at **6, 7 (¶¶ 27, 32). We granted Zippy Check's petition for writ of certiorari.

DISCUSSION

¶ 6. We begin by addressing a procedural matter attendant to Zippy Check's petition for certiorari. Zippy Check sought certiorari review of the decision of the Court of Appeals on the older version of the contract. Nonetheless, having granted certiorari, this Court may review the Court of Appeals decision on the new version of the contract as well. Mississippi Rule of Appellate Procedure 17 states that, by granting a petition for writ of certiorari, this Court may “review any decision of the Court of Appeals.” M.R.A.P. 17(a); see alsoM.R.A.P. 17(h) (“The Supreme Court's review on the grant of certiorari shall be conducted on the record and briefs previously filed in the Court of Appeals....”); Guice v. State, 952 So.2d 129, 133 (Miss.2007) ( “[W]e have the authority to address all issues raised before the Court of Appeals and addressed by that court....”); Lester v. State, 744 So.2d 757, 758 (Miss.1999) (addressing as plain error a matter not raised in the certiorari petition). We proceed to review the entire decision of the Court of Appeals.

¶ 7. This Court applies de novo review to the grant or denial of a motion to compel arbitration. Sawyers v. Herrin–Gear Chevrolet Co., Inc., 26 So.3d 1026, 1034 (Miss.2010) (citing East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002)). We have adopted the federal policy favoring arbitration, under which “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Sawyers v. Herrin–Gear Chevrolet Co., Inc., 26 So.3d 1026, 1034 (Miss.2010) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)).

¶ 8. We apply a two-pronged test to determine whether arbitration should be enforced under the Federal Arbitration Act. Rogers–Dabbs Chevrolet–Hummer, Inc. v. Blakeney, 950 So.2d 170, 173 (Miss.2007) (citing Taylor, 826 So.2d at 713). Under the first prong, we determine “whether the parties have agreed to arbitrate the dispute.” Blakeney, 950 So.2d at 173 (citing Taylor, 826 So.2d at 713). This prong has two aspects: “(1) whether there is a valid arbitration agreement and (2) whether the parties' dispute is within the scope of the arbitration agreement.” Blakeney, 950 So.2d at 173 (citing Taylor, 826 So.2d at 713). If we determine that the parties did not agree to arbitrate the dispute at issue, the analysis is at an end. But if we conclude that the parties did agree to arbitrate, we will address the second prong, which is “whether legal constraints external to the parties' agreement foreclosed arbitration of those claims.” Blakeney, 950 So.2d at 173 (quoting Taylor, 826 So.2d at 713).

I. Whether the parties agreed to arbitrate the dispute.

¶ 9. To determine if the arbitration agreement is valid, we apply contract law to analyze whether a valid contract exists between the parties. Adams Cmty. Care Ctr., LLC v. Reed, 37 So.3d 1155, 1158 (M...