Kisner v. Bud's Mobile Homes, Civil Action No. 1:05CV153LG-RHW.

Decision Date03 March 2007
Docket NumberCivil Action No. 1:05CV153LG-RHW.
Citation512 F.Supp.2d 549
CourtU.S. District Court — Southern District of Mississippi
PartiesJack & Olivia KISNER Plaintiffs v. BUD'S MOBILE HOMES, et al. Defendants

Stephen Wright Mullins, Law Offices of Alwyn H. Luckey, Ocean Springs, MS, for Plaintiffs.

James L. Farrior, III, Biloxi, MS, Fredrick B. Feeney, II, Franke, Rainey & Salloum, Gulfport, MS, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO STAY PROCEEDINGS AND COMPEL ARBITRATION

LOUIS GUIROLA, Jr., District Judge.

BEFORE THE COURT is the Motion to Stay Proceedings and Campel Arbitration filed on August 11, 2005, by Champion Home Builders a/k/a Gateway Homes/Redman Homes and Bud's Mobile Homes. The Plaintiffs filed a response and a supplemental response and the Defendants filed a collective rebuttal and a collective supplemental rebuttal. After consideration of the submissions, other pleadings on file, and the relevant legal authority, it is the opinion of the Court that the Motion to Compel Arbitration should be granted as to Bud's Mobile Homes and denied as to Champion Home Builders.

FACTS AND PROCEDURAL HISTORY

Gateway Homes and Redman Homes, a division of Champion Home Builders Company, ["Champion"] in Guin, Alabama, manufactured a mobile home and sold it to Bud's Mobile Homes in Biloxi, Mississippi. On June 23, 1994, that mobile home was sold to the Plaintiffs. At the time of purchase of the home in question, the Plaintiffs were provided with and signed a Retail Installment Contract and Security Agreement. The President of Bud's Mobile Homes also signed the security agreement. See Manufactured Home Retail Installment Contract and Security Agreement att. as Ex. "A" to Motion to Compel Arbitration.

Subsequent to discovering mold growth and infestation in their manufactured home, Plaintiffs filed a complaint in the Circuit Court of Jackson County, Mississippi, on August 31, 2004. In their complaint, Plaintiffs assert numerous allegations against the Defendants collectively. Plaintiffs contend that they are entitled to compensatory and punitive damages for: 1) breach of express warranty; 2) breach of implied warranty; 3) deceptive and misleading warranty; 4) bad faith; 5) negligent construction, inspection, repair and remediation; 6) breach of contract; 7) misrepresentation of material facts; 8) deceit; 9) suppression of material facts; 10) negligent failure to warn; and 11) violation of § 75-2-314, implied warranty of fitness for a particular purpose, all regarding the mobile home the Plaintiffs purchased on June 23, 1994. The Defendants removed the case to this Court on April 5, 2005. On August 11, 2005, Champion and Bud's Mobile Homes filed the instant motion seeking an order compelling arbitration based on ¶ 21 of the contract. The arbitration clause in the contract signed by the Plaintiffs provides that:

[a]ll disputes, claims or controversies arising from or relating to this Contract or the relationships which result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration by one arbitrator selected by Assignee with consent of Buyer(s). This arbitration Contract is made pursuant to a transaction in interstate commerce, and shall be governed by the Federal Arbitration Act at 9 U.S.C. § 1. Judgment upon the award rendered may be entered in any court having jurisdiction. The parties agree and understand that they choose arbitration instead of litigation to resolve disputes. The parties understand that they have a right or opportunity to litigate disputes through a court, but they prefer to resolve their disputes through arbitration, except as provided herein. THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY ASSIGNEE (AS PROVIDED HEREIN). The parties agree and understand that all disputes arising under case law, statutory law, and all other laws including, but not limited to, all contract, tort and property disputes, will be subject to binding arbitration in accord with this Contract. The parties agree and understand that the arbitrator shall have all powers provided by law and the Contract. These powers shall include all legal and equitable remedies, including, but not limited to, money damages, declaratory relief, and injunctive relief....

21, Arbitration Provision, att. as Exhibit "A", to the Defendants' Motion to Compel Arbitration.

During a status conference conducted on December 14, 2005, the parties requested and the Court agreed to withhold ruling on the arbitration issues until receipt of the decision of the Fifth Circuit Court of Appeals in Southern Energy Homes v. Godwin, 183 Fed.Appx. 441 (5th Cir.2006). Subsequent to this decision, the parties supplemented their pleadings filed in connection with the instant motion.

LAW AND ANALYSIS
THE FEDERAL ARBITRATION ACT

Congress provided in the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. ["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. The effect of this section is "to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Section 4 of the FAA provides for entry of an order compelling arbitration when one party has failed, neglected, or refused to comply with an arbitration agreement. Under § 4, "if a party to an agreement refuses to arbitrate, the opposing party may bring an action to compel arbitration, and after hearing the parties the court `being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, "shall direct the parties to arbitrate."' If, on the other hand, the making of the arbitration agreement or the failure ... to perform the same be in issue, the court shall proceed summarily to the trial thereof.'" Moses H. Cone, 460 U.S. at 24, 103 S.Ct. at 941 (quoting § 4).

The now familiar two-step inquiry applicable to motions to compel arbitration under § 4 requires that this Court first determine whether the parties agreed to arbitrate the dispute in question. This 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." Speetjens v. Larson, 401 F.Supp.2d 600, 605 (S.D.Miss. 2005); Webb v. Investacorp, Inc., 89 F.3d 252, 257-58 (5th Cir.1996). "The second step is to determine `whether legal constraints external to the parties' agreement foreclose[s] the arbitration of those claims.'" Webb, 89 F.3d at 258 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 3355, 87 L.Ed.2d 444 (1985)).

I. WHETHER PLAINTIFFS AND BUD'S MOBILE HOMES AGREED TO ARBITRATE?

(1) Is there a Valid Arbitration Agreement between Plaintiffs and Bud's Mobile Homes?

In determining the validity of an arbitration agreement, the "parties' intentions control." McKee v. Home Buyers Warranty Corp., 45 F.3d 981, 984 (5th Cir.1995)(quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444 (1985)). However, "`due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself [must be] resolved in favor of arbitration.'" McKee, 45 F.3d at 984, quoting Volt Information Sciences, Inc. v. Leland Stanford Junior University, 489 U.S. 468, 475-76, 109 S.Ct. 1248, 1254, 103 L.Ed.2d 488 (1989). In deciding whether the parties agreed to arbitration, courts utilize state-law contract principles that govern the formation of contracts. Webb v. Investacorp Inc., 89 F.3d 252 (5th Cir.1996)(quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)); Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.2002).

The Plaintiffs argue that they did not knowingly and voluntarily waive their right to a trial by jury. Under Mississippi law a person is charged with knowing the contents of any documents that he executes. United Credit Corp. v. Hubbard, 905 So.2d 1176, 1178 (Miss.2004); J.R. Watkins Co. v. Runnels, 252 Miss. 87, 96, 172 So.2d 567, 571 (1965)(holding that "[a] person cannot avoid a written contract which he has entered into on the ground that he did not read it or have it read.") The evidence in this case establishes that both Jack and. Olivia Kisner signed a two-page security agreement containing an arbitration provision as part of the purchase contract with Bud's Mobile Homes on June 23, 1994. The following language is contained in ¶ 21, the arbitration provision: "the parties voluntarily and knowingly waive any right they have to a jury trial either pursuant to arbitration under this clause or pursuant to a court action by assignee as provided herein." 21, Ex. "A" to the Motion to Compel Arbitration. This statement appears in capital letters and bold faced type such that it stands out from the remainder of the contract. Plaintiffs cannot now seek to avoid its terms. See MS Credit Center, Inc. v. Horton, 926 So.2d 167, 177 (Miss.2006); American General Financial Services, Inc. v. Griffin, 327 F.Supp.2d 678 (N.D.Miss.2004); American Heritage Life Ins. Co. v. Orr, 294 F.3d 702, 711 (5th Cir.2002)(right to jury trial was expressly waived by signing arbitration agreement containing "clear and unmistakable capitalized and boldfaced words.").

(2) Do Plaintiffs Claims' Against Bud's Mobile Homes Fall Within the Scope of the...

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