Equifirst Corp. v. Jackson, 2005-CA-00621-SCT.

• Decision Date: 02 February 2006
• Docket Number: No. 2005-CA-00621-SCT.,2005-CA-00621-SCT.
• Citation: 920 So.2d 458
• Parties: EQUIFIRST CORPORATION v. Melvin JACKSON, Xavier Manning and Brenda Manning.
• Court: Mississippi Supreme Court

920 So.2d 458

EQUIFIRST CORPORATION v. Melvin JACKSON, Xavier Manning and Brenda Manning.

No. 2005-CA-00621-SCT.

Supreme Court of Mississippi.

February 2, 2006.

William Clinton Pentecost, Sheryl Bey, Jackson, attorneys for appellant.

Frank S. Thackston, Jr., Greenville, C.W. Walker, III, attorneys for appellees.

EN BANC.

EASLEY, Justice, for the Court.

PROCEDURAL HISTORY

¶ 1. Melvin Jackson (Jackson) and Xavier and Brenda Manning (the Mannings), collectively known as "the Borrowers," filed suit against EquiFirst Corporation (EquiFirst) and Mortgage Stop, Inc., (Mortgage Stop) in the Circuit Court of Leflore County, Mississippi. The Borrowers alleged various causes of actions associated with the contention that Mortgage Stop, with EquiFirst's knowledge, consent, and encouragement, targeted individuals to purchase homes at inflated values. EquiFirst removed the case to federal court where EquiFirst filed its first motion to compel arbitration. The case was remanded to the Circuit Court of Leflore County.

¶ 2. EquiFirst then filed another motion seeking to compel arbitration. After conducting a hearing, the trial court denied the motion to compel arbitration. The trial court's order provided that the motion to compel arbitration was "denied without prejudice to [the] Defendant's right to assert the arbitration issue after discovery is complete." EquiFirst sought permission for interlocutory appeal of the order denying the motion to compel arbitration from the trial court. The trial court certified its ruling for interlocutory appeal. EquiFirst filed its notice of appeal to this Court.

¶ 3. On appeal, EquiFirst raises the following issue: whether the trial court erred in denying EquiFirst's motion to compel arbitration.

FACTS

¶ 4. Jackson contacted Kenneth Ellis (Ellis) regarding a house for sale at 118 Sycamore Street, Greenwood, Mississippi. Jackson obtained Ellis's name from a Coldwell Banker's "for sale" sign in front of the house. Jackson contacted Mortgage Stop, a third-party, retail mortgage broker, in Jackson, Mississippi, about purchasing the home. Mortgage Stop submitted Jackson's application to various wholesale mortgage lenders, including EquiFirst. EquiFirst accepted the terms and conditions and entered into a mortgage with Jackson at the loan closing. Ellis arranged the loan closing at the Fisher Law Office. Bobby Fisher is a Greenwood attorney selected by EquiFirst to act as its closing attorney. Jackson was present at the loan closing along with Ellis, Fisher, and the home sellers.

¶ 5. Similarly, the Mannings contacted Ellis about helping them purchase a home. The Mannings decided they would purchase a home at 205 Fitzhugh in Itta Bena, Mississippi. The Mannings contend Ellis supplied the name of someone at Mortgage Stop in Jackson for financing. Mortgage Stop submitted the Mannings' application to various wholesale mortgage lenders, including EquiFirst. EquiFirst accepted the terms and conditions and entered into a mortgage with the Mannings at the loan closing. Ellis arranged the loan closing at the Fisher Law Office. The Mannings were present at the closing along with Ellis, Fisher, Lee Pruitt, and two unknown men.

DISCUSSION

¶ 6. EquiFirst contends the trial court erred in failing to compel arbitration because the parties agreed to arbitrate the disputes in question. EquiFirst maintains the signed arbitration provisions, arbitration riders, are not prohibited by a statute or policy or any external legal constraints. The Borrowers contend the trial court properly denied the motion to compel arbitration. The Borrowers do not contest that they signed the arbitration provisions. The Borrowers state they were told the "title/name" of each document and told that they had to sign each document and that one of the documents mentioned to them was an arbitration rider. The Borrowers do not contend anyone prevented them from reading the documents. However, they admit they did not read the provisions or any of the documents signed at the loan closing.

¶ 7. Each of the arbitration riders were on a separate document and contained the following language:

Any claim, dispute or controversy (whether in contract, tort or otherwise) arising from or related to the loan evidenced by the Note, including but not limited to all statutory claims, any claim dispute or controversy that may arise out of or is based on the relationships which result from the Borrower's application to the lender for the loan, the closing of the loan, or the servicing of the loan, or any dispute or controversy over the applicability or enforceability of this arbitration agreement or the entire agreement between Borrower and Lender (collectively "claims"), shall be resolved, upon the election of either Borrower or Lender, by binding arbitration, and not by court action.

¶ 8. Furthermore, directly above the Borrowers' signatures, all capital, bold-face typesetting, the additional language provided:

NOTICE: WHEN YOU SIGN THIS ARBITRATION RIDER, YOU ARE AGREEING THAT EVERY DISPUTE DESCRIBED ABOVE MAY BE DECIDED EXCLUSIVELY BY ARBITRATION. YOU ARE GIVING UP RIGHTS YOU MIGHT HAVE TO LITIGATE THOSE CLAIMS AND DISPUTES IN A COURT OR JURY TRIAL OR TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS IN CONNECTION WITH A CLAIM OR DISPUTE. DISCOVERY IN ARBITRATION PROCEEDINGS IS LIMITED IN THE MANNER PROVIDED BY THIS AGREEMENT AND THE RULES OF ARBITRATION. THE ARBITRATOR'S DECISION WILL GENERALLY BE FINAL AND BINDING. OTHER RIGHTS THAT YOU WOULD HAVE IF YOU WENT TO COURT MAY ALSO NOT BE AVAILABLE IN ARBITRATION. IT IS IMPORTANT THAT YOU READ THIS ENTIRE ARBITRATION AGREEMENT CAREFULLY BEFORE SIGNING THIS ARBITRATION RIDER.

BY SIGNING BELOW, Borrower accepts and agrees to the provisions contained in this Rider.

¶ 9. The decision to grant or deny a motion to compel arbitration is reviewed by this Court de novo. Doleac v. Real Estate Professionals, LLC., 911 So.2d 496, 501 (Miss.2005); East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002). "[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Pre-Paid Legal Services, Inc. v. Battle, 873 So.2d 79, 83 (Miss.2004) (quoting AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986)).

¶ 10. "This Court has consistently recognized the existence of `a liberal federal policy favoring arbitration agreements.'" Terminix International, Inc. v. Rice, 904 So.2d 1051, 1054-55 (Miss.2004) (quoting Russell v. Performance Toyota, Inc., 826 So.2d 719, 722 (Miss.2002)). Arbitration is firmly embedded in both our federal and state laws. Pass Termite & Pest Control, Inc. v. Walker, 904 So.2d 1030, 1032-33 (Miss.2004) (citing Russell, 826 So.2d 719 (Miss.2002); East Ford, 826 So.2d 709 (Miss.2002); IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96 (Miss.1998)).

I. WHETHER THE ARBITRATION RIDER IS PART OF A CONTRACT EVIDENCING INTERSTATE COMMERCE.

¶ 11. In Battle, 873 So.2d at 82, the Court stated:

The Federal Arbitration Act provides:

A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... 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. This Court "will respect the right of an individual or an entity to agree in advance of a dispute to arbitration or other alternative dispute resolution." Russell, 826 So.2d at 721-22(¶ 6) (citing IP Timberlands, 726 So.2d at 104 (¶ 29)). This Court has endorsed the undisputed province of the Federal Arbitration Act, 9 U.S.C. §§ 1-16(FAA), and recognized its clear authority to govern agreements formed in interstate commerce wherein a contractual provision provides for alternative dispute resolution. IP Timberlands, 726 So.2d at 107.

¶ 12. This Court has held:

"In determining the validity of a motion to compel arbitration under the Federal Arbitration Act, courts generally conduct a two-pronged inquiry. The first prong has two considerations: (1) whether there is a valid arbitration agreement and (2) whether the parties' dispute is within the scope of the arbitration agreement." ... The second prong considers "whether legal constraints external to the parties' agreement foreclosed arbitration of those claims."

Doleac, 911 So.2d at 501 (citing Sullivan v. Mounger, 882 So.2d 129, 132 (Miss.2004)).

¶ 13. In Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507, 514-15 (Miss. 2005), we stated:

A threshold determination which must be considered is whether the parties' admission agreement falls within the provisions of § 2 of the Federal Arbitration Act. The FAA requires "that `we rigorously enforce agreements to arbitrate.'" East Ford, 826 So.2d at 713 (citing Shearson/Am. Exp. Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987)). Specifically, § 2 of the Federal Arbitration Act, relates to the enforceability of arbitration provisions....

In Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), ... the Supreme Court concluded that the phrase "involving commerce" is to be interpreted broadly and was the functional equivalent of the phrase "affecting commerce", which signals Congress' intent to exercise its Commerce Clause powers to the fullest extent. Id. at 273-74, 115 S.Ct. 834.

In 2003, the U.S. Supreme Court once again sought to quantify the broad effect of the FAA as implemented through Congress' Commerce Clause power. In Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003), ... the U.S. Supreme Court held that "Congress' Commerce Clause power `may be exercised in individual cases without showing any specific effect upon interstate commerce' if in the...