Russell v. Performance Toyota, Inc.

• Decision Date: 19 September 2002
• Docket Number: No. 2001-CA-00832-SCT.,2001-CA-00832-SCT.
• Citation: 826 So.2d 719
• Parties: Charles RUSSELL v. PERFORMANCE TOYOTA, INC.
• Court: Mississippi Supreme Court

826 So.2d 719

Charles RUSSELL v. PERFORMANCE TOYOTA, INC.

No. 2001-CA-00832-SCT.

Supreme Court of Mississippi.

September 19, 2002.

Paul Nathan Jenkins, Jr., Michael Dale Cooke, Iuka, Roger M. Tubbs, Tupelo, attorneys for appellant.

Walter Alan Davis, John Ramsey, Saltillo, McCarroll, III, George E. Dent, Tupelo, attorneys for appellee.

EN BANC.

WALLER, Justice, for the Court.

¶ 1. After the Lee County Circuit Court referred this matter to arbitration pursuant to a contract between Charles Russell and Performance Toyota, Inc., Russell appeals to this Court contending that his claims were not subject to the arbitration clause, arbitration was improper, Performance Toyota waived its right to arbitration, the arbitration clause violates Miss. Code Ann. § 15-1-5 (1995), and the arbitration clause is unconscionable. We affirm the Lee County Circuit Court's decision to compel arbitration.

FACTS

¶ 2. Russell traded in a Toyota T-100 truck to and purchased a Toyota Tacoma truck from Performance Toyota. Russell alleges that First Tennessee Bank attempted to finance the purchase, but Performance Toyota notified Russell that it refused to assign the financing to First Tennessee. Performance Toyota took possession of the Tacoma and refused to return the T-100 to Russell.

¶ 3. Performance Toyota alleges that, after Russell expressly represented that the T-100 had not been wrecked, it credited Russell $10,000 toward the purchase of the Tacoma for the T-100 trade-in. Because the pay-off of the T-100 was $8,347.78, it issued a check to Russell in the amount of $1,652.22. Later, Performance Toyota discovered that the title noted that the T-100 had been "rebuilt." Performance Toyota took steps to cancel the sale and, after it successfully took possession of the Tacoma, informed Russell that he could reclaim the T-100 and demanded that Russell return the $1,652.22 which had been advanced.

¶ 4. Russell never took steps to reclaim the T-100 trade-in, but instead filed suit against Performance Toyota alleging wrongful repossession, conversion, fraud, and tortious interference in a business relationship. After appropriate motions were filed, the Circuit Court of Lee County compelled arbitration of the dispute.

DISCUSSION

¶ 5. We conduct a de novo review for determinations of legal questions. Gant v. Maness, 786 So.2d 401, 403 (Miss. 2001); Saliba v. Saliba, 753 So.2d 1095, 1098 (Miss.2000). Findings of fact are given deferential treatment and are subject to the "manifest error/substantial evidence" standard.

I. WHETHER THE FEDERAL ARBITRATION ACT APPLIES TO THIS CASE.

¶ 6. In IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96, 104, 106, 107, 108 (Miss.1998), we recognized the applicability of arbitration for resolving disputes by stating that we

will respect the right of an individual or an entity to agree in advance of a dispute to arbitration or other alternative dispute resolution.

* * *

Articles of agreement to arbitrate, and awards thereon are to be liberally construed so as to encourage the settlement of disputes and the presumption will be indulged in favor of the validity of arbitration proceedings.

* * *

"In enacting § 2 of the Arbitration 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. Congress has thus mandated the enforcement of arbitration agreements." The Arbitration Act, resting on Congress's authority under the Commerce Clause, creates a body of federal substantive law that is applicable in both state and federal courts. "The sine qua non of the FAA's applicability to a particular dispute is an agreement to arbitrate the dispute in a contract which evidences a transaction in interstate commerce."

Doubts as to the availability of arbitration must be resolved in favor of arbitration. "[U]nless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue, then a stay pending arbitration should be granted."

* * *

In addition to establishing a strong presumption in favor of arbitration, the Act also limits the role of the court to determining whether an issue is arbitrable. The court's sole function is to determine whether the claim is referable to arbitration. Once that determination is made, the court may not delve further into the dispute. "The courts ... have no business weighing the merits of a particular claim, or determining whether there is particular language in the written instrument which will support the claim."

(citations omitted).

¶ 7. Because Performance Toyota is a Tennessee corporation with its principal place of business in Memphis, Tennessee, and Russell is an adult resident citizen of Lee County, Mississippi, we find that this matter "evidences a transaction in interstate commerce" and the FAA therefore applies to it.

II. WHETHER THE ARBITRATION AGREEMENT APPLIES TO RUSSELL'S CLAIMS.

¶ 8. Russell contends that his claims "arise from the actions and the wilful and wanton disregard of [his] property rights by [Performance Toyota]," and are not, therefore, subject to the arbitration agreement.

¶ 9. The following provisions were conspicuously included in the Purchase Agreement:

NOTICE TO CREDIT BUYER

If this order involves credit, this form shall constitute an agreement by Purchaser and Seller to arbitrate any disputes which arise between them and shall authorize the Seller to secure any and all information from any source to determine the credit worthiness of the purchase.

* * *

ARBITRATION AGREEMENT

Any controversy or claim arising out of or relating to the vehicle which is the subject of this contract or its acquisition by Purchaser shall be submitted to arbitration before one arbitrator in Memphis, Tennessee in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment on the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. Arbitration shall be the exclusive, final and binding method of resolution of any claim or controversy between the Purchaser and Performance Toyota, Inc. and must be initiated within 180 days after the claim or controversy first arises. Failure to timely initiate arbitration shall constitute waiver of the claim or controversy.

* * *

[T]he trade-in vehicle has not been rebuilt, reconditioned or salvaged, the vehicle has not suffered flood, hail or other substantial weather damage; and there is no indication of any of the foregoing or any other exception or condition noted on the vehicle's title.

¶ 10. In Smith Barney, Inc. v. Henry, 775 So.2d 722, 726 (Miss.2001), Justice Mills, writing for a 6-3 Court and discussing a similar argument, found that the broad phrase "[a]ny controversy arising out of or relating to" contained in an account management agreement encompassed a claim of breach of fiduciary duty because the funds which were the subject of the breach of fiduciary duty claim "were derived directly from ... accounts and transactions with Smith Barney." The subject Purchase Agreement contains the identical phrase "[a]ny controversy or claim arising out of or relating to the vehicle which is the subject of this contract or its acquisition by Purchaser ...." (emphasis added).

¶ 11. Russell argues that his claims that Performance Toyota fraudulently obtained the original title documents from the Lee County Tax Collector's office, wrongfully repossessed the Tacoma, illegally auctioned off the T-100 and intentionally converted Russell's property should not be subject to the arbitration agreement. Russell's claims do not differ in any way from those in Smith Barney. All of these claims pertain to the disputed ownership of the Tacoma and the T-100, the two vehicles which are the subject of the Purchase Agreement. Given the broad language of the clause contained in the Purchase Agreement, we find that the arbitration agreement does apply to Russell's claims.

III. WHETHER ARBITRATION WAS APPROPRIATE IN THIS MATTER.

¶ 12. Russell next argues that, because the "Purchaser's Agreement Concerning Trade In" does not contain an arbitration clause, any claims that involve the trade-in agreement are not subject to arbitration.

¶ 13. Russell fails to note, however, that the "Purchaser's Agreement Concerning Trade In" is specifically integrated into the "Retail Buyer's Order," which does contain an arbitration clause. The "Retail Buyer's Order" states, "The attached Purchaser's Agreement Concerning Trade In hereby is incorporated into this contract."

¶ 14. This claim is without merit.

IV. WHETHER PERFORMANCE TOYOTA WAIVED ITS RIGHT TO ARBITRATION.

¶ 15. Russell argues that, if the arbitration clause is valid, Performance Toyota "has waived its right to arbitration by its actions of seizing the Toyota Tacoma [Russell] purchased ... and selling the T-100 that Performance [Toyota] claims is a `trade-in.'" Performance Toyota "took actions on [its] own and did not arbitrate its claims...." In support of his argument, Russell cites Cox v. Howard, Weil, Labouisse, Friedrichs, Inc., 619 So.2d 908, 911 (Miss.1993), in which we held that a party waives arbitration if it substantially takes advantage of the judicial process, and Subway Equipment Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th Cir.1999), in which the United States Court of Appeals for the Fifth Circuit held that, to establish a waiver, the objector to arbitration must establish "that a party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party."

¶ 16. A "[w]aiver of arbitration is not a favored finding, and there is a presumption against it." Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497 (5th Cir.1986); see also Subway Equip., 169 F.3d at 326 ("[A] party alleging waiver of arbitration must...