Cleveland v. Mann

Decision Date31 August 2006
Docket NumberNo. 2005-CA-00924-SCT.,2005-CA-00924-SCT.
Citation942 So.2d 108
PartiesKenneth CLEVELAND, M.D., and Central Surgical Associates, PLLC v. John MANN and Mark Mann, his Sons, Beneficiaries of John D. Mann, Deceased.
CourtMississippi Supreme Court

Lorraine Walters Boykin, Whitman B. Johnson, Jackson, attorneys for appellants.

W.O. Dillard, Jackson, attorney for appellees.

EN BANC.

DICKINSON, Justice, for the Court.

¶ 1. This is an appeal of a trial court's order denying a motion to compel arbitration. For the reasons discussed herein, we reverse and remand for entry of an appropriate order consistent with this opinion, compelling arbitration.

BACKGROUND FACTS AND PROCEEDINGS

¶ 2. On September 17, 2002, John D. Mann underwent a total gastrectomy for stomach cancer. This surgery was performed by Dr. Kenneth Cleveland at Central Mississippi Medical Center ("CMMC"). Approximately nine months later, Mann again sought medical care from Dr. Cleveland for a hernia which developed in relation to Mann's gastrectomy.

¶ 3. During this appointment, Mann was presented with a Clinic-Physician-Patient Arbitration Agreement. The terms of the agreement are stated individually, with a space after each term for the patient to initial his understanding of that term. The agreement must be signed by both the patient and an authorized representative for Central Surgical Associates ("CSA") and initialed by the doctor. Mann signed the agreement on June 18, 2003, which was after his gastrectomy but prior to the surgery to repair his hernia. The surgery to repair his hernia was scheduled for and performed on July 7, 2003, nineteen days after Mann signed the agreement. The next day, Dr. Cleveland performed another surgery to repair Mann's bowel, which was punctured during the hernia repair. Following this third surgery, complications developed which required Mann to have a CT scan. This scan revealed Mann had liver cancer. On August 27, 2003, Mann died of metastic gastric cancer of the liver.1

¶ 4. On April 16, 2004, John and Mark Mann ("plaintiffs"), wrongful death beneficiaries of Mann, brought a medical malpractice action against Dr. Cleveland, CSA, and CMMC. The complaint alleged Dr. Cleveland was negligent in the care and treatment of Mann during the surgical procedure and post-operative care, which took place at CMMC.

¶ 5. On May 19, 2004, Dr. Cleveland and CSA filed a Motion to Compel Arbitration and Stay Proceedings or Dismiss. The basis for this motion was the arbitration agreement executed between Dr. Cleveland, CSA, and Mann prior to Mann's second surgery. Dr. Cleveland and CSA argued plaintiffs were bound by this agreement, as the agreement stated it was binding on Mann's "heirs-at-law or personal representatives."

¶ 6. In their Response to the Motion to Compel Arbitration, plaintiffs asserted that Mann did not enter into the agreement knowingly, voluntarily, and intelligently, and the agreement violated the Mississippi Arbitration Act. The response further claimed that if the agreement was not void, it nevertheless did not bind plaintiffs, as they were beneficiaries under the wrongful death statute, rather than "heirs" because "they did not inherit the cause of action because it did not exist until his wrongful death."

¶ 7. On February 24, 2005, Hinds County Circuit Court Judge Tomie T. Green

issued a Memorandum Opinion and Order Denying Motion to Compel Arbitration. Judge Green held that the agreement fell within the realm of adhesion and was unconscionable. Dr. Cleveland and CSA filed a timely notice of appeal pursuant to Tupelo Auto Sales, Ltd. v. Scott, 844 So.2d 1167, 1170 (Miss.2003) (holding an appeal may be taken from an order denying a motion to compel arbitration). The issues on appeal are as follows:

I. Whether the trial court erred in finding the arbitration agreement to be unenforceable.

II. Whether the arbitration agreement is binding on Mann's wrongful death beneficiaries.

STANDARD OF REVIEW

¶ 8. This appeal stems from the denial of a motion to compel arbitration. This Court engages in de novo review of motions to dismiss and motions to compel. Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507, 513 (Miss.2005). The Federal Arbitration Act provides that "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 (Miss.2005) (quoting 9 U.S.C. § 2). "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 (Miss.1998) (citing 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)). Further, this Court has held that "[a]rticles of agreement to arbitrate, and awards thereon are to be liberally construed so as to encourage the settlement of disputes and the presumption will be indulged in favor of the validity of arbitration proceedings." Russell v. Performance Toyota, Inc., 826 So.2d 719, 722 (Miss.2002).

DISCUSSION
I. Whether the trial court erred in finding the arbitration agreement to be unenforceable.

¶ 9. The Federal Arbitration Act provides a two-pronged inquiry for determining the validity of a motion to compel arbitration. East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002). The first prong requires a threshold finding that the agreement to be arbitrated has a nexus to interstate commerce, followed by a finding that the terms of the arbitration agreement require the parties to arbitrate the kind of dispute involved in the litigation. Id. The second prong addresses whether legal constraints external to the agreement, such as fraud, duress, or unconscionability, foreclose arbitration of the claims. Id. (citing Doctor's Assocs. v. Casarotto, 517 U.S. 681, 686, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)).

Interstate Commerce

¶ 10. In considering these two prongs, we turn to our decision in Vicksburg Partners, wherein this Court held, "[a] threshold determination which must be considered is whether the parties' ... agreement falls within the provisions of § 2 of the Federal Arbitration Act." 911 So.2d at 514. Section 2 of the Federal Arbitration Act states:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2.

¶ 11. The trial court stated the enforceability of an arbitration agreement between a medical provider and a patient was one of first impression for the court. Plaintiffs assert this agreement regarding a medical procedure cannot be construed as affecting interstate commerce.2 However, Dr. Cleveland and CSA argue the medical treatment provided to Mann affects interstate commerce under Vicksburg Partners, where this Court held, "singular agreements between care facilities and care patients, when taken in the aggregate, affect interstate commerce." 911 So.2d at 515. While the Vicksburg Partners opinion was handed down subsequent to the trial court's ruling in this case, we have held that all judicial decisions apply retroactively unless the Court has specifically stated the ruling is prospective. See Miss. Transp. Comm'n v. Ronald Adams Contractor, Inc., 753 So.2d 1077, 1093 (Miss.2000); Morgan v. State, 703 So.2d 832, 839 (Miss.1997). Therefore, following our opinion in Vicksburg Partners, we conclude the economic activities of Dr. Cleveland and CSA affect interstate commerce, and the Federal Arbitration Act is applicable.

Arbitrability of Dispute

¶ 12. Plaintiffs further argue this dispute is not within the scope of the agreement because it was executed subsequent to Mann's 2002 gastrectomy, and the 2003 hernia repair—the procedure for which the agreement was signed—was necessitated by the gastrectomy. Plaintiffs assert there was no agreement executed prior to the gastrectomy, so any injury arising therefrom is not subject to arbitration. Plaintiffs contend that if the agreement is found to be valid, this Court would be setting a "dangerous precedent," as it would "allow the appellant to get a signature nine months after the first surgery to remove the stomach and use it to defend against puncturing the intestines in the second operation."

¶ 13. However, the agreement at issue states, "[p]atient agrees that in the event of any dispute, claim, or controversy arising out of or relating to the performance of medical services ... such dispute or controversy shall be submitted to JAMS[3] ...." (Emphasis added). The theory of the plaintiffs' case is that the initial procedure led to the need for the hernia repair, and the hernia repair was negligently performed, leading to this lawsuit. Thus, the procedures are related by plaintiffs' own theory of the case, and they are covered by the arbitration agreement.

External Legal Constraints—Unconscionability

¶ 14. The FAA's second prong of analysis requires us to consider whether legal constraints external to the parties' agreement foreclose arbitration of the claims. Plaintiffs assert this agreement was not signed by Mann knowingly, voluntarily and intelligently, and it is procedurally and substantively unconscionable. The trial court held "the agreement falls well within the realm of adhesion and unconscionability."

¶ 15. This Court has defined unconscionability as "`an absence of meaningful choice on the part of one of the parties, together with contract terms which are unreasonably favorable to the...

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