Caplin Enters., Inc. v. Arrington
| Decision Date | 20 August 2013 |
| Docket Number | Nos. 2011–CA–01332–COA, 2011–CA–01932–COA.,s. 2011–CA–01332–COA, 2011–CA–01932–COA. |
| Citation | 145 So.3d 675 |
| Parties | CAPLIN ENTERPRISES, INC. and Check Cashers & More, Inc. d/b/a Zippy Check Advance, Appellants 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, Appellees. Caplin Enterprises, Inc. and Check Cashers & More, Inc. d/b/a Zippy Check Advance, Appellants 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, Appellees. |
| Court | Mississippi Court of Appeals |
OPINION TEXT STARTS HERE
George Cayce Nicols, Madison, attorney for appellants.
Christopher Michael Falgout, attorney for appellees.
Before IRVING, P.J., CARLTON and MAXWELL, JJ.
MAXWELL, J., for the Court:
¶ 1. In this consolidated appeal, we consider the enforceability of two arbitration provisions entered into by customers of Zippy Check Advance, a delayed-deposit check-cashing business, who are suing Zippy Check for a variety of claims, including fraudulent misrepresentation and breach of the covenant of good faith and fair dealing. Each of the thirty-two plaintiffs' transactions with Zippy Check were governed by one of two delayed-deposit agreements containing similar information about the lending transaction but differing arbitration provisions. On appeal, Zippy Check insists the circuit judges incorrectly found the arbitration provisions were procedurally and substantively unconscionable, and argues the judges erred by denying its motions to compel arbitration.
¶ 2. After review, we agree that the first agreement—a one page, front and back, delayed-deposit agreement, containing an arbitration provision, which was intermingled with other non-distinguishable provisions and was typed in finer print than the terms on the front page—was procedurally unconscionable. Thus, we affirm the denial of arbitration on the claims of the eight plaintiffs who entered into this agreement and remand their cases for trial.
¶ 3. However, we find the second agreement's arbitration clause—which was signed by the remaining twenty-four plaintiffs, consisted of the front side of one page, specifically highlighting the arbitration provision in capital letters and bolded text, and provided a more detailed statement about arbitration than the first agreement—was neither procedurally nor substantively unconscionable. We therefore reverse the denial of arbitration on the claims stemming from the second agreement and compel arbitration of these claims.
Facts and Procedural History
¶ 4. Caplin Enterprises, Inc. and Check Cashers & More, Inc. operate Zippy Check, a licensed check-cashing business in Quitman, Mississippi. Zippy Check engages in what is known as delayed-deposit check cashing, which is governed by the Mississippi Check Cashers Act. Miss.Code Ann. §§ 75–67–501–539 (Rev.2009 & Supp.2012). This practice encompasses accepting personal checks from its customers for up to $500 1 plus a fee, which may not exceed a certain percentage of the check's face value.2 Typically, when a customer writes a check to Zippy Check, Zippy Check gives the customer cash equal to the face value of the check, less the particular fee authorized by statute. Zippy Check then agrees to delay the deposit of the check until an agreed future date, usually the customer's next payday. SeeMiss.Code Ann. § 75–67–519(1) (Supp.2012). The customer contracts to repurchase the check for its face value by this date, or Zippy Check will present the check for deposit to the customer's bank.
¶ 5. The various check cashing transactions at issue took place in Clarke County and Newton County, Mississippi. In Clark County, Denise Arrington and nineteen other named plaintiffs contracted with Zippy Check for cash-advance services. And Jerald Ainsworth and eleven other named plaintiffs did the same in Newton County. Both sets of plaintiffs signed one of two specific delayed-deposit agreements with Zippy Check.
¶ 6. The first version of the agreement was signed by eight of the thirty-two plaintiffs. It is one page, front and back, with a variety of font sizes, and is the older of the two agreements, last revised on April 12, 2001. The remaining twenty-four plaintiffs signed the second agreement, which appears to have been created on May 31, 2005. The entire second agreement is contained on one side of a single page. And apart from the transactional terms listed at the top of the page and the eight bolded headings, the text of the agreement is essentially uniform in both size and style. Each agreement also contains an arbitration provision. But the wording and style of the provisions differ quite a bit.
¶ 7. The plaintiffs filed separate lawsuits, one in Clarke County Circuit Court, the other in Newton County Circuit Court. They claimed Zippy Check had fraudulently represented the terms of its service charges and fees and exhibited a pattern of “predatory lending,” trapping the plaintiffs in a never ending cycle of debt repayment. While the individual plaintiffs differed in each case, both suits alleged Zippy Check had (1) breached the covenant of good faith and fair dealing; (2) negligently handled the plaintiffs' accounts; (3) caused the plaintiffs to suffer emotional distress and mental anguish, (4) negligently hired, trained, and supervised its employees; and (5) fraudulently misrepresented the terms of the service charges and fees.
¶ 8. Citing the arbitration provisions in the two delayed-deposit agreements, Zippy Check filed a motion to compel arbitration in each case. But the Clarke County Circuit Court entered a written order denying Zippy Check's motion to compel, finding the two arbitration provisions procedurally and substantively unconscionable. The Newton County Circuit Court followed suit and also denied arbitration. The Newton County Circuit Court opted not to issue separate written findings, but instead, as Judge Cotten put it, “piggy-back[ed],” the Clarke County Circuit Court's specific reasoning for denying arbitration. Zippy Check appealed the denial of arbitration in both cases, and we consolidated the two cases on appeal.
Standard of Review
¶ 9. An order granting or denying a motion to compel arbitration is treated as a final judgment for appellate purposes, and an appeal may be taken from it. Tupelo Auto Sales, Ltd. v. Scott, 844 So.2d 1167, 1170 (¶ 10) (Miss.2003). Because the grant or denial of a motion to compel arbitration raises an issue of law, our review is de novo. East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (¶ 9) (Miss.2002) (citing Webb v. Investacorp, Inc., 89 F.3d 252, 256 (5th Cir.1996)). According to the Federal Arbitration Act, “arbitration agreements ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” Norwest Fin. Miss., Inc. v. McDonald, 905 So.2d 1187, 1192 (¶ 7) (Miss.2005) (quoting 9 U.S.C. § 2 (2006)). “Doubts as to the availability of arbitration must be resolved in favor of arbitration.” IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96, 107 (¶ 46) (Miss.1998) (citations omitted).
Discussion
¶ 10. Because the plaintiffs challenge the applicability of the Federal Arbitration Act (“FAA”), we must first determine if the FAA applies to the arbitration provisions in the delayed-deposit agreements at issue.
¶ 11. The FAA governs the arbitrability of contracts “evidencing a transaction involving commerce[.]” 9 U.S.C. § 2. And Mississippi “has endorsed the undisputed province of the [FAA],” recognizing that it controls those “agreements formed in interstate commerce wherein a contractual provision provides for alternative dispute resolution.” EquiFirst Corp. v. Jackson, 920 So.2d 458, 462 (¶ 11) (Miss.2006) (citing IP Timberlands, 726 So.2d at 107 (¶ 45)). Concerning the applicability of the FAA to these particular contracts, our threshold determination is whether the delayed-deposit agreements between Zippy Check and the plaintiffs “involv[e] commerce” and thus fall within section 2 of the FAA. 9 U.S.C. § 2; IP Timberlands, 726 So.2d at 107 (¶ 45) .
¶ 12. Here, the plaintiffs argue the circuit court incorrectly found the FAA applied to what they deem are wholly intrastate contracts. As they see it, because all parties are Mississippi residents, the delayed-deposit agreements are not contracts “evidencing a transaction involving commerce.” We disagree.
¶ 13. While for the FAA to apply there must be some involvement with commerce, it need not be substantial in each particular transaction. The United States Supreme Court has interpreted the phrase “involving commerce” within section 2 as the “functional equivalent” of “affecting commerce.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003) (citing Allied–Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273–74, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995)). And the requisite nexus for FAA governance of a contract's arbitrability is met “if in the aggregate the economic activity in question would represent a general practice subject to federal control.” Id. at 56–57, 123 S.Ct. 2037 (citations omitted and internal quotation marks omitted); see also Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 38–39, 100 S.Ct. 2009, 64 L.Ed.2d 702 (1980) ( ...
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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.
...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......
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La. Extended Care Ctrs., LLC v. Bindon
...arbitration[.]" Id.¶ 20. On appeal, this Court found that both versions of the agreement were contracts of adhesion. Caplin Enters., Inc. v. Arrington, 145 So.3d 675, 683 (¶¶ 26–27) (Miss.Ct.App.2013). We also found that the arbitration clause in the older version of the agreement was proce......