First Family Financial Services, Inc. v. Gray, Civil Action No.: 1:01CV212-D-D (N.D. Miss. 2/26/2002)
| Decision Date | 26 February 2002 |
| Docket Number | Civil Action No.: 1:01CV212-D-D. |
| Parties | FIRST FAMILY FINANCIAL SERVICES, INC., AMERICAN SECURITY INSURANCE CO., and UNION SECURITY LIFE INSURANCE CO., PLAINTIFFS, v. LOUIS GRAY, DEFENDANT. |
| Court | U.S. District Court — Northern District of Mississippi |
Before the court is the Plaintiff First Family Financial Services, Inc.'s motion to compel arbitration pursuant to 9 U.S.C. § 4. Upon due consideration, the court finds the motion is well taken and shall be granted.
On or about January 3, 1996, the Defendant, Louis Gray (Gray), obtained a consumer loan from First Family Financial Service, Inc. (First Family) at its location in Columbus, Mississippi. In connection with this loan, he purchased disability and life insurance. He did not execute an arbitration provision with this loan.
On September 30, 1996, Gray obtained a consumer loan from Commercial Credit of Mississippi, Inc. (Commercial). In connection with this loan, Gray purchased credit life, credit disability and property insurance. At the time Gray obtained the consumer loan, he executed an Arbitration Provision which provides that all disputes arising from the loan transaction were to be submitted to binding arbitration.
On or about April 11, 1997, Gray refinanced his loan with Commercial. In connection with this refinancing, Gray purchased credit disability insurance and executed another identical Arbitration Provision.
On or about September 7, 1999, Commercial changed its name to Citifinancial, Inc (Citifinancial). On or about November 30, 2000, Associates First Capital Corporation (Associates) merged with Citigroup, Inc. Prior to and after the merger, First Family was a subsidiary of Associates. By virtue of the merger, First Family became an affiliate of Citifinancial.
On March 7, 2001, Gray filed a lawsuit against First Family and others styled Eugene McClenton, et al., v. First Family Financial Services, Inc., et al., Civil Action No. 14-CI-01-0020, in the Circuit Court of Coahoma County, Mississippi. He sued for breach of fiduciary duties, breach of implied covenants of good faith and fair dealing, fraudulent misrepresentation and/or omission, negligent misrepresentation and/or omission, civil conspiracy, and unconscionability all with regards to his January 3, 1996, loan and the insurance he purchased in connection with that loan.
On April 21, 2001, pursuant to the terms of the Arbitration Provisions signed by Gray in connection with his loans with Commercial on September 30, 1996 and April 11, 1997, First Family made a demand for arbitration. Subsequently, on or about May 29, 2001, First Family filed a complaint for an order compelling arbitration pursuant to 9 U.S.C. § 4 with this court and American Security Insurance Co. (American Security) and Union Security Life Insurance Co. (Union Security) were joined as party Plaintiffs.
Congress provided in the Federal Arbitration Act (FAA) that a written agreement to arbitrate in a contract involving interstate commerce "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 (1999). Section Four of the FAA specifically contemplates that parties, such as First Family, that are aggrieved by another party's failure to arbitrate under a written agreement, may file an original petition in a United States District Court to compel that party to arbitrate their claims. 9 U.S.C. § 4 (1999). In addition, the FAA expresses a strong national policy in favor of arbitration, and any doubts concerning the scope of arbitration issues should be resolved in favor of arbitration. Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 857, 79 L.Ed.2d 1 (1983); Mouton v. Metropolitan Life Ins. Co., 147 F.3d 453, 456 (5th Cir. 1998).
The Fifth Circuit has directed that courts are to perform a two-step inquiry to determine whether parties should be compelled to arbitrate a dispute. R.M. Perez & Assocs., Inc. v. Welch, et al., 960 F.2d 534, 538 (5th Cir. 1992). First, the court must determine whether the parties agreed to arbitrate the dispute in question. This determination involves two considerations: (1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement. Webb v. Investacorp, Inc., 89 F.3d 252, 257-58 (5th Cir. 1996). Once the court finds that the parties agreed to arbitrate, it must then consider whether any federal statute or policy renders the claims nonarbitrable. R.M. Perez, 960 F.2d at 538. In conjunction with this inquiry, a party seeking to avoid arbitration must allege and prove that the arbitration provision itself was a product of fraud or coercion; alternatively, that party can allege and prove that another ground exists at law or in equity that would allow the parties' contract or agreement to be revoked. Sam Reisfeld & Son Import Co. v. S.A. Eteco, et al., 530 F.2d 679, 680-81 (5th Cir. 1976).
The parties do not dispute that the Arbitration Provisions in question contain the following terms:
In consideration of Lender making the extension of credit described above and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, it is further agreed as follows:
Definitions for Arbitration Provision. As used in this Arbitration Provision ("Provision"), the following definitions will apply:
"You" or "Your means any or all Borrower(s) who execute this Provision, and their heirs, survivors, assigns, and representatives.
"We" or "Us" means Lender, any assignee, together with their respective corporate parents, subsidiaries, affiliates, predecessors, assignees, successors, employees, agents, directors, and officers (whether acting in their corporate or individual capacity).
"Credit Transaction" means any one or more past, present, or future extension, application, or inquiry of credit or forbearance of payment such as a loan, retail credit agreement, or otherwise from any of Us to You.
"Claim" means any case, controversy, dispute, tort, disagreement, lawsuit, or claim now or hereafter existing between You and Us. A Claim includes, without limitation, anything that concerns:
* This Provision;
* Any past, present, or future Credit Transaction;
* Any past, present, or future insurance, service or product that is offered in connection with a Credit Transaction;
* Any documents or instruments that contain information about any Credit Transaction, insurance service or product; or
* Any act or omission by any of Us regarding any Claim.
Agreement to Arbitrate Claims. Upon written request by either party that is submitted according to the applicable rules for arbitration, any Claim, except those specified below in this Provision, shall be resolved by binding arbitration in accordance with (i) the Federal Arbitration Act; (ii) the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association ("Administrator"); and (iii) this Provision, unless we both agree in writing to forgo arbitration. The terms of this Provision shall control any inconsistency between the rules of the Administrator and this Provision. You may obtain a copy of the arbitration rules by calling (800) 778-7879. Any party to this Provision may bring an action, including a summary or expedited proceeding, to compel arbitration of any Claim, and/or to stay the litigation of any Claims pending arbitration, in any court having jurisdiction. Such motion may be brought at any time, even if a Claim is part of a lawsuit, up until the entry of a final judgment.
As to the first step in the court's analysis, whether the parties agreed to arbitrate the dispute, the court finds that the parties agreed to arbitrate all of Gray's claims.
Gray argues that his claims arise under the first loan agreement with First Family which did not contain an arbitration provision. Further, he argues that he signed Arbitration Provisions with Commercial, not First Family and First Family should be prohibited from enforcing the Arbitration Provisions made with Commercial following his loan with First Family. Additionally, Gray was not informed in 1996 or 1997 that by obtaining a loan from Commercial he would be obligated to arbitrate a dispute with First Family arising out of a completely different loan transaction. The court is not persuaded.
The Arbitration Provisions clearly state that they encompass "any past, present, or future credit transactions" and "any past, present, or future insurance, service or product that is offered in connection with a credit transaction." Moreover, the Arbitration Provisions clearly state that the provisions apply to Commercial and "any assignee, together with their respective corporate parents, subsidiaries, affiliates, predecessors, assignees, successors, employees, agents, directors, and officers." First Family is an affiliate of Commercial; now Citifinancial.
The Arbitration Provisions were written in simple and plain English and were signed by Gray. Directly above where Gray signed was the statement, As a matter of Mississippi law, a contracting party is under a legal obligation to read a contract before signing it. Godfrey, Bassett & Kuykendall Architects, Ltd. v. Huntington Lumber & Supply Co., Inc., 584 So.2d 1254, 1257 (Miss. 1991); Koenig v. Calcote, 25 So.2d 763 (Miss. 1946); In re Cajun Electric Power Cooperative, Inc. v. Riley Stoker Corp. et al., 791 F.2d 353 (5th Cir. 1986); Pedersen v. Chrysler Life Ins. Co., 677 F. Supp. 472 (N.D.Miss. 1988).
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