Protect Your Home v. Thomas

• Decision Date: 09 November 2021
• Docket Number: 2020-CA-00024-COA
• Citation: 331 So.3d 537
• Parties: PROTECT YOUR HOME d/b/a Defenders, Inc., ADT, LLC, James Johnson d/b/a Defenders and Toby Neal Moore, Appellants v. Lashia THOMAS, Appellee
• Court: Mississippi Court of Appeals

331 So.3d 537

PROTECT YOUR HOME d/b/a Defenders, Inc., ADT, LLC, James Johnson d/b/a Defenders and Toby Neal Moore, Appellants

v.Lashia THOMAS, Appellee

NO. 2020-CA-00024-COA

Court of Appeals of Mississippi.

November 9, 2021

ATTORNEYS FOR APPELLANTS: D. STERLING KIDD, Jackson, ROBERT P. THOMPSON, LOCKE HOUSTON WALDROP, LAURA WALSH GIVENS, Ridgeland

ATTORNEYS FOR APPELLEE: JAMES ASHLEY OGDEN, JAMES W. SMITH JR., Jackson

BEFORE BARNES, C.J., GREENLEE AND LAWRENCE, JJ.

GREENLEE, J., FOR THE COURT:

¶1.Lashia Thomas responded to an advertisement by ADT for a home alarm system.When AppellantToby Moore came to Thomas’ home, he proceeded to search the home and allegedly took some prescription drugs.Thomas instituted a civil action, and the circuit court declined to enforce an arbitration agreement contained in the alarm-service contract.

¶2.Protect Your Home d/b/a/ Defenders Inc.; ADT, LLC; James Johnson d/b/a/ Defenders; Toby Neal Moore, individually, and John Does 1-5 (collectively "Appellants") appeal from the judgment of the Hinds County Circuit Court, holding that the matter was not within the scope of the arbitration agreement and denying their motion to compel arbitration.Finding that the circuit court did not err by denying the motion to compel arbitration, we affirm and remand the case for proceedings consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

¶3.After receiving an ADT advertisement flyer in the mail, Lashia Thomas requested that an alarm system be installed in her home.On October 17, 2018, Protect Your Home d/b/a Defenders Inc., an affiliate of ADT, sent its employee Toby Moore to Thomas’ home to install the security system.Upon arrival, Moore gave Thomas an electronic work order to sign before beginning the installation process.After entering Thomas’ home, Moore proceeded through private areas of Thomas’ home.According to Thomas, she caught Moore taking her prescription medications from her bedside table.When Thomas confronted Moore, he threatened her before fleeing the premises.Thomas called the police and Moore's supervisor, James Johnson, to report the theft and threat.

¶4.Johnson arrived at Thomas’ home the same day.According to Thomas, Johnson apologized and agreed to void the work order that she had signed.According to Johnson, he inquired whether Thomas wanted to proceed with the alarm installation, and after speaking with her husband, Thomas agreed.Johnson completed the system installation, and then he presented Thomas with the alarm-service contract.The next day, Thomas called ADT several times in an attempt to cancel the contract and service.According to Thomas, the company refused to release her and informed her that she was bound to the contract.

¶5.In February 2019, Thomas filed her complaint against the Appellants for intentional and negligent acts and requested to be released from paying for the alarm-system services.On April 4, 2019, the Appellants filed a motion to compel arbitration seeking to enforce the arbitration clause in the alarm-service contract signed by Thomas and Johnson.The Appellants asserted that this arbitration agreement bound Thomas, was to be interpreted broadly and applied to "any and all disputes between [ADT, the Dealer, the Customer, and any Independent Contractor]."Moore joined in the motion to compel arbitration on the same day.

¶6.Thomas responded in opposition and later filed an amended response.Thomas contended that the Appellants waived their right to arbitration by filing a motion to compel instead of an answer asserting the defense of arbitration.Thomas further argued that their arbitration agreement was invalid and that there was no contract.

¶7.On June 24, 2019, the circuit court held a hearing on the motion to compel arbitration and ultimately entered an order denying the motion on July 17, 2019.The circuit court found that no contract had been established at the time of the incident and that the language in the service contract's arbitration clause did not enable the court to enforce the arbitration clause retroactively.The court also found that any claims against the Appellants for acts occurring after Thomas signed the service contract would be subject to arbitration.

¶8.On July 26, 2019, the Appellants filed a motion to reconsider the circuit court's order, claiming that the arbitration agreement applied retroactively.On August 2, 2019, Thomas filed her response to the motion to reconsider.The court held a hearing on the matter on September 25, 2019.On November 26, 2019, the court entered an order denying the motion, finding that Thomas’ dispute fell outside the scope of the arbitration agreement and was not the type of issue intended to be covered as part of the agreement between the parties.

¶9.On December 20, 2019, the Appellants filed a joint notice of appeal seeking relief from the circuit court's July 17, 2019 order and opinion and its November 26, 2019 order.However, on December 27, 2019, the Appellants filed supplemental authority with the circuit court to support their motion to compel arbitration.They asserted that the circuit court lacked subject matter jurisdiction to decide the scope of the arbitration agreement.In response, Thomas filed a motion to strike asserting that the supplemental authority was untimely, improper, and barred by res judicata.On January 14, 2020, the Appellants filed a response to Thomas’ motion to strike and a motion to supplement the record.On January 28, 2020, the circuit court held a hearing on both motions.Finding that the Appellants’ request to supplement the record was an attempt to present new legal and factual arguments not presented to the circuit court, the circuit court denied the motion.

¶10.On February 4, 2020, the Appellants filed a motion pursuant to Mississippi Rule of Civil Procedure 60 asserting that the court lacked subject matter jurisdiction based on the plain language of the arbitration agreement and the incorporation of the rules from the American Arbitration Association(AAA) or the Judicial Arbitration and Mediation Services (JAMS).The circuit court denied the Rule 60 motion, finding that the Appellants’ subject-matter-jurisdiction argument was unsupported by case law and repetitive.

¶11.On appeal, the Appellants claim that the circuit court erred by not compelling Thomas to arbitrate her claims.Specifically, the Appellants claim that the circuit lacked subject matter jurisdiction to decide the scope of the arbitration agreement, the court erred by finding that the agreement did not apply retroactively, and the court erred by finding that the dispute was outside the scope of the agreement because the agreement includes intentional acts.

STANDARD OF REVIEW

¶12."In reviewing an appeal of an order compelling arbitration, we review the [circuit court's] factual findings under an abuse-of-discretion standard, and we conduct a de novo review of all legal conclusions."Virgil v. Sw. Miss. Elec. Power Ass'n , 296 So. 3d 53, 59 (¶11)(Miss. 2020).

DISCUSSION

¶13.When determining whether a party may compel arbitration, a court must determine (1)"whether the parties agreed to arbitrate the dispute" and (2)"whether legal constraints external to the parties’ agreement bar arbitration of the claims."Greater Canton Ford Mercury Inc. v. Ables , 948 So. 2d 417, 421 (¶8)(Miss. 2007).Mississippi acknowledges the strong federal policy favoring arbitration.Adams v. Greenpoint Credit LLC , 943 So. 2d 703, 708 (¶14)(Miss. 2006).Thus, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration."Nethery v. CapitalS. Partners Fund II L.P. , 257 So. 3d 270, 274 (¶18)(Miss. 2018)(citingMcLaughlin v. McCann , 942 A.2d 616, 621(Del. Ch.2008) ).

I.Whether the court lacked subject matter jurisdiction to determine the scope of the arbitration agreement.

¶14.The Appellants argue that the arbitration agreement references and incorporates the rules of the AAA and JAMS, which provide that an arbitrator is to decide the scope of arbitration clauses.The Appellants cite several cases that hold a court lacks jurisdiction to determine arbitrability when the parties incorporate arbitration rules into their agreement, which thereby provides an arbitrator with the authority to determine the arbitrability of a dispute.The Appellants frame the issue as one of subject matter jurisdiction, which may be brought up at any time.SeeEst. of Perry v. Perry , 61 So. 3d 193, 198 (¶23)(Miss. Ct. App. 2010)(holding that "questions of subject-matter jurisdiction may be raised for the first time on appeal");Ridgeway v. Hooker , 240 So. 3d 1202, 1208 (¶23)(Miss. 2018)(stating that "the defense of lack of subject matter jurisdiction cannot be waived").However, this is not a matter of subject matter jurisdiction.Rather, this is a matter of waiver.

¶15.Our supreme court has held that "[a]defendant's failure to timely and reasonably raise and pursue the enforcement of any affirmative defense or other affirmative matter or right which would serve to terminate or stay the litigation, coupled with active participation in the litigation process, will ordinarily serve as a waiver."Woodard v. Miller , No. 2020-IA-00031-SCT, 326 So.3d 439, 449–50 (¶41)(Miss. 2021)(citingMS Credit Ctr. Inc. v. Horton , 926 So. 2d 167, 180 (¶44)(Miss. 2006) ).The waiver principle established in Horton"is not limited to assertion of the right to compel arbitration."Id .The Mississippi Supreme Court has applied the waiver principle to various types of affirmative defenses.Id.;see, e.g., Hinton v. Sportsman's Guide Inc. , 285 So. 3d 142, 150 (¶15)(Miss. 2019)(applying waiver analysis to the affirmative defense of innocent-seller immunity);Meadows v. Blake , 36 So. 3d 1225, 1232-33 (¶15)(Miss. 2010)(ApplyingHorton , a medical-malpractice defendant waived the defense of the plaintiff's failure to comply with statutory pleadings requirements.);Spann v. Diaz , ...