Sanderson Farms, Inc. v. Gatlin
Citation | 848 So.2d 828 |
Decision Date | 26 June 2003 |
Docket Number | No. 2000-IA-00790-SCT.,2000-IA-00790-SCT. |
Parties | SANDERSON FARMS, INC. v. Roy R. GATLIN and Nelda T. Gatlin. |
Court | Mississippi Supreme Court |
Richard O. Burson, Laurel, Brooke Ferris, Richard A. Follis, Laurel, attorneys for appellant.
Lawrence E. Abernathy, III, Laurel, John Dudley Butler, Michael J. Quirk, attorneys for appellees.
EN BANC.
s 1. In this permissive interlocutory appeal, Sanderson Farms, Inc. (Sanderson Farms) seeks review of an order of the Circuit Court of Jones County, Mississippi denying its motion to dismiss and motion to reconsider. Sanderson Farms asserts that the circuit court erred in refusing to dismiss the complaint of Roy R. and Nelda T. Gatlin who by executed contract agreed to binding arbitration of any disputes or controversies relating to or arising out of a Broiler Production Agreement executed January 1, 1997. The circuit court found that Sanderson Farms had breached the arbitration provision and thereby waived its protections and that the arbitration provision was unconscionable and unenforceable. We find that the circuit court did not err, affirm the order denying the motion to dismiss and motion to reconsider, and remand this case for further proceedings.
s 2. Roy R. Gatlin (Roy) first contracted with Sanderson Farms to grow chickens for the company in November of 1980. Pursuant to contract, Sanderson Farms would deliver chickens to Roy's farm, and Roy would raise the chickens to maturity. Roy's original contract with Sanderson Farms contained no provision regarding arbitration. Roy was ranked in the top 50% of the company's growers and was authorized by Sanderson Farms to build two (2) additional broiler houses. Roy and Nelda Gatlin (Nelda) pledged their farm, which included their home and four (4) broiler houses, as security on a mortgage of over $250,000, to secure the necessary money to pay for the two (2) additional broiler houses.
s 3. In 1996, Roy joined the Mississippi Contract Poultry Growers Association (Mississippi Poultry Growers). During this time, the Mississippi Poultry Growers and Sanderson Farms were engaged in discussions and negotiations concerning proposed changes to the broiler contract, which was mandated for each grower who participated in Sanderson Farms broiler growing program. Correspondence between the Mississippi Poultry Growers and Sanderson Farms evidence the apprehension that poultry growers in Mississippi had with Sanderson Farms' proposed broiler contract which included an arbitration provision.
s 4. In January of 1997, Sanderson Farms presented a new fifteen (15) year contract to Roy. Only Roy signed the new contract. The new Broiler Production Agreement (broiler contract) contained a mandatory arbitration clause. The arbitration provision appeared on the sixth page of the eight-page contract buried in section twenty-seven and in no more than font size nine (9) as illustrated below.1 The bold face type was added by this Court to emphasize the phrases of the provision which are primarily at issue in this appeal. The arbitration provision provided that:
(emphasis added). "Cost" is not defined in the broiler contract. Additionally, on page eight (8) in no more than font ten (10) as illustrated below, above the signatures of the parties, the broiler contract states:
THE UNDERSIGNED DOES HEREBY DECLARE THAT THE TERMS OF THIS AGREEMENT HAVE BEEN COMPLETELY READ AND FULLY UNDERSTOOD. THIS AGREEMENT CONTAINS ARBITRATION LANGUAGE WHICH IS BINDING.
(emphasis in original). Sanderson Farms required Roy to accept the new contract containing the arbitration clause in order to keep doing business with the company. Roy, who was $250,000 in debt at the time, signed the contract. Everything ran smoothly for a year until December of 1997 when Roy heard rumors that Sanderson Farms was going to try to terminate his contract.
s 5. On Christmas Day, 1997, Sanderson Farms called Roy and told him to come into its office the next day. Sanderson Farms terminated its contract with Roy on December 26, 1997, to be effective January 1, 1998. There were still fourteen years remaining on the contract. Sanderson Farms' termination letter stated that termination came as the result of Roy's violation of section 23(c) of the contract which allowed termination if Roy "fails to comply with applicable federal, state or local laws or regulations." Sanderson Farms justified the termination by asserting that Roy had committed one violation of Mississippi Board of Animal Health, Regulation 13(V) which addresses disposal of dead poultry. This alleged violation later was found out to be untrue, and it was discovered that Roy had readily passed the Board of Animal Health's inspection. In fact, no complaint was ever filed and no adjudication of guilt was ever had against Roy for the alleged violation which Sanderson Farms argues supports the broiler contract termination.
s 6. Upon termination, Sanderson Farms took Roy's most recent shipment of chickens and sent them to another grower. Roy immediately contacted every poultry processing company in the area, but all refused to deliver chickens to him.
s 7. In February 1998, Roy filed a demand for arbitration against Sanderson Farms based on the company's termination of the contract. To initiate the arbitration, Roy paid the initial administrative fee of $2,000. Roy and Sanderson Farms then participated in mediation which led to no resolution of the matter but cost Roy an additional $750. In total, Roy paid $2,750. Pursuant to the arbitration provision in the contract, Roy called upon Sanderson Farms to split the expenses of the arbitration. The pertinent provision states:
The cost of such arbitration will be divided equally among the parties to the arbitration. Each party will bear the costs of their own expenses and attorney's fees.
Upon receiving the demand, Sanderson Farms claimed that the sentence reading "[e]ach party will bear the costs of their own expenses" means that Roy must bear the costs of the initial filing fees. Sanderson Farms claims that the sentence "[t]he cost of such arbitration will be divided equally among the parties" only means that the actual costs of arbitration will be divided equally among the parties.
s 8. Then in 1999, prior to any hearing, Roy was informed that he owed an additional $8,250 in arbitrator's compensation, expenses to be reimbursed to arbitrator, administrative fee for hearing, and miscellaneous expenses. The $8,250 charge was only an estimate. More fees could be charged once the arbitration proceeding began. Additionally, the $8,250 charge was to be paid up front before arbitration will even be initiated. However, the record does not indicate whether the $8,250 charge was Roy's half of the arbitration costs or whether that was the total of the arbitration costs. Since prior to the issuance of the bill for the additional $8,250 charge, the American Arbitration Association had been notified by Sanderson Farms and informed that it would be paying "one-half (?) of the cost of the arbitration itself, including arbitrator compensation and expenses, reporting service cost, hearing fees and, if necessary hearing room rental," it can only be assumed that the bill issued to Roy for the additional...
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