MCKENZIE CHECK ADVANCE OF MS v. Hardy, No. 2002-IA-00952-SCT to 2002-IA-00954-SCT

• Decision Date: 26 February 2004
• Docket Number: No. 2002-IA-00956-SCT., No. 2002-IA-00952-SCT to 2002-IA-00954-SCT
• Parties: McKENZIE CHECK ADVANCE OF MISSISSIPPI, LLC d/b/a National Cash Advance, Cash Advance Centers, Inc., and Sharon Russell v. Cennie M. HARDY, Andrea James, Dorothy W. Harkless, John W. Buxton, Cinderella Robinson, Tracy Adams, Raymond E. Nelson, Stephen Moore, Gradie Colley, Tommeakka Colley, Anthony O. Davis and Debra A. Davis. Advance America, Cash Advance Centers of Mississippi, Inc. and Jerald Parrish v. Lillian D. Turner. Advance America, Cash Advance Centers of Mississippi, Inc. and Jerald Parrish v. Georgia Pierce, Jearlean Wilson and Janet Evans. Advance America, Cash Advance Center of Mississippi, Inc. and Jerald Parrish v. Andrea James, James E. Dixon, Edward Dixon, Kokeisha D. Johnson, Sherry Ann Bowie, Cennie M. Hardy, Darlean M. Milsap and Shemeka Lofton.
• Court: Mississippi Supreme Court

866 So.2d 446

McKENZIE CHECK ADVANCE OF MISSISSIPPI, LLC d/b/a National Cash Advance, Cash Advance Centers, Inc., and Sharon Russell v. Cennie M. HARDY, Andrea James, Dorothy W. Harkless, John W. Buxton, Cinderella Robinson, Tracy Adams, Raymond E. Nelson, Stephen Moore, Gradie Colley, Tommeakka Colley, Anthony O. Davis and Debra A. Davis.

Advance America, Cash Advance Centers of Mississippi, Inc. and Jerald Parrish v. Lillian D. Turner.

Advance America, Cash Advance Centers of Mississippi, Inc. and Jerald Parrish v. Georgia Pierce, Jearlean Wilson and Janet Evans.

Advance America, Cash Advance Center of Mississippi, Inc. and Jerald Parrish v. Andrea James, James E. Dixon, Edward Dixon, Kokeisha D. Johnson, Sherry Ann Bowie, Cennie M. Hardy, Darlean M. Milsap and Shemeka Lofton.

Nos. 2002-IA-00952-SCT to 2002-IA-00954-SCT, 2002-IA-00956-SCT.

Supreme Court of Mississippi.

February 26, 2004.

Richard O. Burson, Richard A. Follis, Laurel, Robert M. Buell, Charles K. Seyfarth, Richmond, VA, attorneys for appellants.

Eddie Jacob Abdeen, Laurel, Thomas Lewis Tullos, Bay Springs, Jeannene T. Pacific, Laurel, attorneys for appellees.

Before PITTMAN, C.J., WALLER, P.J., and CARLSON, J.

CARLSON, Justice, for the Court.

¶ 1. McKenzie Check Advance of Mississippi, LLC, d/b/a National Cash Advance ("NCA") and Advance America, Cash Advance Centers of Mississippi, LLC ("Advance America") were denied their motion to compel arbitration against current and former customers (hereinafter "Customer"). Pursuant to M.R.A.P. 5, we granted NCA and Advance America permission to seek interlocutory review in these four consolidated appeals of the rulings of the circuit court based on their assertions of abuse of discretion in the trial court's failure to apply the Federal Arbitration Act ("FAA") and refusal to enforce the arbitration agreements. Finding the trial court erred in denying the motions to compel arbitration, this Court reverses the judgments entered by the Circuit Court of Jasper County and remands this case for further proceedings consistent with this opinion.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶ 2. NCA and Advance America are licensed check cashers which engage in delayed deposit check cashing pursuant to the Mississippi Check Cashers Act, Miss. Code Ann. §§ 75-67-501 et seq. (Rev. 2000). NCA and Advance America accepted personal checks from their customers for amounts not greater than $400 plus a fee which may not exceed 18% of the face amount of the check. See Miss.Code Ann. § 75-67-519(2) & (4). This fee charged by a licensed check casher for cashing a check is deemed by law to be a service fee rather than interest. See id. § 75-67-515(4). The following scenario is indicative of a typical transaction between NCA or Advance America and its customer. On the day the check is written, NCA or Advance America gives the customer cash equal to the face value of the check less the fee authorized by statute. NCA and Advance America then agree to delay deposit of the check until an agreed future date which is usually the customer's next payday. See id. § 75-67-519(1). The customer then agrees to repurchase the check by paying the face amount of the check in cash on or before the deposit date; otherwise, NCA or Advance America will present the check for deposit to the customer's bank.

¶ 3. Each of the Customers in this case contracted with either NCA or Advance America for delayed deposit check cashing services as described above. In conjunction with their transactions, each Customer also entered into an arbitration agreement with either NCA or Advance America. The arbitration agreement provided that all disputes between the Customer and NCA or Advance America would be resolved by binding arbitration under the Federal Arbitration Act, except those disputes that were within the jurisdiction of a small claims tribunal; however, both the Customer and NCA or Advance America were mutually obligated to arbitrate all other disputes between them, and all parties waived their rights to trial by jury in any dispute. Regardless of which party demanded or initiated arbitration, NCA and Advance America agreed to advance the Customer's portion of the expenses associated with initiating arbitration, including the filing and hearing fees. The Customer also had the right to select the arbitrator, and the arbitration was required to be held in a venue which was convenient to the Customer.

¶ 4. The arbitration agreement was conspicuously presented and was written in plain English. The rights that both parties agreed to waive by signing the arbitration agreement were printed in all capital letters and bold typeface to highlight them from the rest of the text. Both parties signed the Customer Agreement directly under a highlighted acknowledgment that drew attention to the fact that the Customer Agreement contained and included a "Waiver of Jury Trial and Arbitration Agreement."

¶ 5. On February 19, 2002, a complaint was filed collectively by former and current customers of both NCA and Advance America alleging that each subsequent transaction with NCA and Advance America was a renewal or extension of the first transaction allowing NCA and Advance America to charge an additional fee.¹ In conjunction with these transactions, each Customer entered into an arbitration agreement with either NCA or Advance America. NCA and Advance America filed a motion to compel arbitration which was denied by the circuit court, finding that "(1) the FAA does not apply to the arbitration agreements, (2) the arbitration agreements lack mutuality of obligation, (3) the rationale of the concurring opinion of Justice Diaz in Parkerson v. Smith, 817 So.2d 529 (Miss.2002), is applicable to the arbitration agreements, and (4) Customers did not knowingly and voluntarily waive the constitutional right to a jury trial." The trial judge also denied NCA and Advance America's ore tenus motion to certify the matter for interlocutory appeal. NCA and Advance America timely petitioned this Court for permission to appeal from the circuit court's interlocutory order pursuant to M.R.A.P. 5, and this Court granted the petition. In this appeal, NCA and Advance America raise the following issue before this Court: Whether the circuit court erred in declining to apply the Federal Arbitration Act and in refusing to enforce the arbitration agreements between the Customers and National Cash Advance and Advance America.

DISCUSSION

A. Applicability of the Federal Arbitration Act

¶ 6. The grant or denial of a motion to compel arbitration is reviewed de novo. East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002) (citing Webb v. Investacorp, Inc., 89 F.3d 252, 256 (5th Cir.1996)). The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., applies to all written agreements to arbitrate contained in any contract "evidencing a transaction involving commerce." 9 U.S.C. § 2. Whenever a valid arbitration agreement exists between parties to an action, a court must "stay trial of the action until arbitration has been had in accordance with the terms of the parties' agreement." 9 U.S.C. § 3.

¶ 7. Courts have long recognized the existence of "a liberal federal policy favoring arbitration agreements." Perry v. Thomas, 482 U.S. 483, 489, 107 S.Ct. 2520, 2525, 96 L.Ed.2d 426 (1987) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983)). "In enacting § 2 of the federal Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 858, 79 L.Ed.2d 1 (1984). Unless the agreement to arbitrate is not part of a contract evidencing interstate commerce or is revocable "upon such grounds as exist at law or in equity for the revocation of any contract," arbitration is required. 9 U.S.C. § 2. At the same time, "arbitration is a matter of contract between the relevant parties; no party can be required to arbitrate absent an agreement to do so." Rosenblum v. Travelbyus.com, Ltd., 299 F.3d 657, 662 (7th Cir.2002) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)).

¶ 8. The circuit court declined to apply the FAA to the arbitration agreements in this case because it found that the arbitration agreements were not contained in a written contract "evidencing a transaction involving commerce." NCA and Advance America contend the FAA applies to the arbitration agreement because their transactions involved interstate commerce as evidenced by the agreements which stated: "Our agreement to arbitrate is made pursuant to the FAA, because the transaction evidenced by this Agreement involves interstate commerce." The Customers argue NCA and Advance America failed to offer any evidence establishing the transactions involved interstate commerce. The Customers were residents of Mississippi and the offices in which the transactions took place were located in Mississippi. However, NCA and Advance America were both foreign corporations.

¶ 9. In Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), the Supreme Court held that Section 2 of the Federal Arbitration Act, which makes enforceable a written arbitration provision in "a contract evidencing a transaction involving commerce," 9 U.S.C. § 2, "should be read broadly to extend the Act's reach to the limits of Congress' Commerce Clause Power." Allied-Bruce, 513 U.S. at 265, 115 S.Ct. 834.

¶ 10. The pertinent facts in Allied-Bruce follow: In 1987 Steven Gwin purchased a "Termite Protection Plan" from a local office of Allied-Bruce Terminix Companies which promised to protect his home against termites and provide treatment if necessary. Id. at 268, 115 S.Ct. 834. The Plan contained a clause which stated any...