Sanderson Farms, Inc. v. Gatlin

Citation848 So.2d 828
Decision Date26 June 2003
Docket NumberNo. 2000-IA-00790-SCT.,2000-IA-00790-SCT.
PartiesSANDERSON FARMS, INC. v. Roy R. GATLIN and Nelda T. Gatlin.
CourtMississippi 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.

McRAE, Presiding Justice, for the Court.

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.

FACTS

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:

27. ARBITRATION. Any controversy or claim arising between the parties ..., including but not limited to, disputes relating to this Agreement, the arbitrability of any dispute relating to this Agreement, or of any breach of this Agreement, whether such controversy or claim arises before, during or after termination of this Agreement, will be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association by a panel of three arbitrators. The Agreement to arbitrate will continue in full force and effect despite expiration, recision, or termination of this Agreement. By entering into this Agreement, the parties waive the right to have any dispute arising between them tried and adjudicated by a court of law. Without inconsistency with this agreement to arbitrate, either party may seek from a court any provisional remedy that may be necessary to prevent irreparable harm, pending the establishment of the arbitral panel or its determination of the merits of the controversy. Risk of loss of all or part of the Flock will be deemed irreparable harm. The seeking of any provisional remedy by either party shall be supplemental to, and not in place of, Sanderson's contractual right to repossess a Flock pursuant to Section 24.
Upon objection by any party, multi-party arbitration shall not be utilized. The parties herein agree to resolve all disputes by such arbitration using the American Arbitration Association office with the closet geographic proximity to Sanderson's local complex. The arbitration will take place at a location mutually agreed to by the parties. In reaching their conclusions, the arbitrators will apply to this Agreement the law which a Mississippi court would apply. The arbitration will have the authority to award actual money damages as provided in Section 15 (with interest on unpaid amounts from the date due), specific performance, and temporary injunctive relief, but the arbitrators shall not have the authority to award exemplary or punitive damages, and the parties expressly waive any claimed right to such damages. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 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. Failure to arbitrate all such claims or controversies arising under or related to this Agreement shall be deemed a breach of the Agreement. Notwithstanding anything to the contrary, either party may terminate the Agreement prior to or without arbitration in accordance with Sections 22, 23, 24, 25.

(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...

To continue reading

Request your trial
52 cases
  • Vicksburg Partners, L.P. v. Stephens, No. 2004-CA-01345-SCT.
    • United States
    • Mississippi Supreme Court
    • September 22, 2005
    ...form. This Court applies a de novo standard of review to motions to dismiss and to denials of motions to compel. Sanderson Farms, Inc. v. Gatlin, 848 So.2d 828, 834 (Miss.2003) (citing Poindexter v. Southern United Fire Ins. Co., 838 So.2d 964, 966-67 (Miss.2003); East Ford, Inc. v. Taylor,......
  • New South Federal Sav. Bank v. Anding, No. CIV.A. 3:02-CV-954 W.
    • United States
    • U.S. District Court — Southern District of Mississippi
    • October 14, 2005
    ...opinion delivered by the Honorable Associate Justice Kay B. Cobb of the Mississippi Supreme Court in the case of Sanderson Farms, Inc. v. Gatlin, 848 So.2d 828, 854 (Miss.2003), which did not involve a determination of the exclusion of punitive damages issue, Justice Cobb noted in passing t......
  • Cain v. Midland Funding, LLC
    • United States
    • Court of Special Appeals of Maryland
    • March 24, 2017
    ...law to the question of whether arbitration agreement is unconscionable and therefore unenforceable); Sanderson Farms, Inc. v. Gatlin , 848 So.2d 828, 835, 837–38 (Miss. 2003) (applying state law to question of whether party waived a contractual right to arbitrate governed by the FAA because......
  • Covenant Health of Picayune v. Moulds
    • United States
    • Mississippi Supreme Court
    • August 6, 2009
    ...sales of goods. Miss.Code Ann. § 75-2-302 (Rev.2002). See Brown, 949 So.2d at 741; Stephens, 911 So.2d at 525; Sanderson Farms, Inc. v. Gatlin, 848 So.2d 828, 836 (Miss.2003) (raising livestock for owner). Corbin on Contracts states that the unconscionability "provision has entered the gene......
  • Request a trial to view additional results
1 books & journal articles
  • Lack of Meaningful Choice Defined: Your Job vs. Your Right to Sue in a Judicial Forum
    • United States
    • Seattle University School of Law Seattle University Law Review No. 28-03, March 2005
    • Invalid date
    ...of unconscionability but passing on the question of whether procedural unconscionability will suffice); Sanderson Farms, Inc. v. Gatlin, 848 So. 2d 828, 845 (Miss. 2003) (requiring only procedural unconscionability). 265. Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 893 (9th Cir. 2002)......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT