Sawyers v. Herrin-Gear Chevrolet Co., Inc.

• Decision Date: 07 January 2010
• Docket Number: No. 2008-IA-01370-SCT.,2008-IA-01370-SCT.
• Citation: 26 So.3d 1026
• Parties: Andria SAWYERS v. HERRIN-GEAR CHEVROLET COMPANY, INC. and American Bankers Insurance Company of Florida.
• Court: Mississippi Supreme Court

26 So.3d 1026

Andria SAWYERS v. HERRIN-GEAR CHEVROLET COMPANY, INC. and American Bankers Insurance Company of Florida.

No. 2008-IA-01370-SCT.

Supreme Court of Mississippi.

January 7, 2010.

Rehearing Denied February 18, 2010.

Timothy J. Matusheski, attorney for appellant.

Brenda B. Bethany, C. Michael Ellingburg, Jackson, Rosemary Gwin Durfey, Walter D. Willson, Kevin Alan Rogers, Ridgeland, attorneys for appellees.

EN BANC.

CARLSON, Presiding Justice, for the Court.

¶ 1. Andria Sawyers filed suit against Herrin-Gear Chevrolet Company, Inc. (Herrin-Gear) and American Bankers Insurance Company of Florida (American) in the Circuit Court of Wayne County, alleging fraud, breach of contract, and bad faith. Herrin-Gear filed its Motion to Compel Arbitration, joined by American, which the trial court granted. Sawyers thereafter filed with us a petition for interlocutory appeal, which we granted. See M.R.A.P. 5. Although Herrin-Gear and American assert no error in the trial court's grant of arbitration, they do argue that, pursuant to the Federal Arbitration Act (FAA), this Court lacks jurisdiction to consider the merits of this appeal, because the trial court's order granting arbitration is interlocutory in nature and not a final, appealable order. Finding today that this Court has jurisdiction to consider the merits of this appeal, we find no error in the circuit court's order granting defendants' motion to compel arbitration, and we thus affirm.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶ 2. On August 18, 2003, Andria Sawyers purchased a 2002 Ford Explorer from Herrin-Gear, along with a "GAP Asset Protection Deficiency Waiver Addendum" (GAP waiver) administered by American at an additional cost of $495. Sawyers financed the Explorer through Nuvell Credit Corporation (Nuvell). Sawyers alleges that Herrin-Gear's sales agent represented that "American's GAP covers Plaintiff for the difference between the amount her primary insurer pays Nuvell for a total loss and the total amount Plaintiff owes Nuvell for the vehicle, with no exceptions." During the transaction, Sawyers also signed an arbitration agreement.

¶ 3. In her complaint, filed April 24, 2008, in the Circuit Court of Wayne County, Sawyers alleged that, after she was involved in an automobile accident on December 14, 2007, her primary automobile insurer determined that the Explorer was a total loss, and agreed to pay her $10,168.75 on her claim. Sawyers claimed that on February 28, 2008, American's adjuster, Assurant Solutions, sent Sawyers a check and a letter indicating that at the time of the accident, she owed Nuvell $14,234.55. Thus, the difference between the amount paid by Sawyers's primary automobile insurer and the remaining amount that Sawyers owed Nuvell was $4,065.80.¹ According to Sawyers, American did not pay the entire difference owed under the GAP waiver, but instead made deductions for interest as a result of missed principal payments, and late fees and other charges because of missed principal payments and extensions, resulting in a final payment by American of only $686.43. Sawyers alleged that American, having paid $686.43 to Nuvell, owed an additional $3,455.12 under the GAP waiver.²

¶ 4. Sawyers further alleged that she had purchased the GAP waiver in reasonable reliance on the sales agent's misrepresentation that the GAP waiver would pay the entire amount she owed to Nuvell. She asserted claims for fraud, breach of contract, and bad-faith refusal to pay an insurance claim. Sawyers demanded $3,455.12 in contractual damages, additional damages for emotional distress, punitive damages, prejudgment interest, and attorney's fees and costs. Sawyers demanded a judgment in the amount of $74,999 and waived any damages recovered in excess of this demand.

¶ 5. On June 9, 2008, Herrin-Gear filed a motion to compel arbitration, a motion to dismiss for insufficiency of service of process, and an answer and defenses. Herrin-Gear invoked its contractual right to arbitration under the arbitration agreement signed by Sawyers and an agent of Herrin-Gear, which contained the following language:

Except for an action by Dealer to obtain possession and/or replevin of the Vehicle, any controversy or claim between Buyer(s)/Lessee(s) and Dealer arising out of or relating to: (1) the Offer to Purchase or Lease Vehicle executed by Buyer(s)/Lessee(s) in connection with the purchase or lease of the Vehicle, (2) the related contract for the purchase or lease of the Vehicle and/or (3) any and all related finance, insurance, extended warranty and/or service agreements (hereinafter collectively referred to as the "Agreements"), or any breach thereof, and/or the Vehicle, shall be resolved by binding arbitration administered by the Better Business Bureau ("BBB"), in accordance with (1) BBB's Commercial Arbitration Rules; (2) the Federal Arbitration Act, 9 U.S.C. § 1 et. seq. (1947, as amended); and (3) the terms and conditions set forth in this agreement, and, judgment on any award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

¶ 6. In Sawyers's response, she argued that the arbitration agreement was one-sided and thus substantively unconscionable.³ American filed an answer asserting all rights concerning the arbitrability of Sawyers's claims; later, it filed a joinder in Herrin-Gear's motion to compel arbitration. American argued that, although it was a nonsignatory to the arbitration agreement, Sawyers's claims against American were so intimately intertwined with her transaction with Herrin-Gear that Sawyers was equitably estopped from refusing to arbitrate her claims against American, or, alternatively, that American was in a position to compel arbitration as Herrin-Gear's agent for administering the GAP waiver.

¶ 7. In a supplemental response, Sawyers argued that the GAP waiver was an insurance policy subject to regulation by the Mississippi Department of Insurance. Sawyers argued that the arbitration agreement was unenforceable because it did not comply with the requirements of the Mississippi Department of Insurance for arbitration agreements in insurance policies. At a hearing on the motion to compel arbitration on July 22, 2008, American maintained that the GAP waiver was not insurance, and proffered an April 17, 2000, bulletin from the Mississippi Department of Insurance stating that the department had not determined that a GAP waiver product is insurance.

¶ 8. On July 30, 2008, the Wayne County Circuit Court entered its Memorandum Opinion and Order Granting Defendant's Motion to Compel Arbitration. The trial court determined that, since interstate wires were used in completing the transaction at issue, Sawyer's claims involved interstate commerce within the meaning of the FAA. The trial court also rejected Sawyers's argument that the arbitration agreement was substantively unconscionable, and it opined that the GAP waiver was not an insurance policy. The trial court further determined that American, although a nonsignatory, could compel arbitration because American was acting as Herrin-Gear's agent for administering GAP claims, and because each of Sawyers's claims against American presumed the existence of her contracts with Herrin-Gear. The trial court did not dismiss the complaint, nor did it grant a stay pending arbitration.

¶ 9. Aggrieved by the trial court's ruling, Sawyers filed a petition for interlocutory appeal, which this Court granted.

DISCUSSION

¶ 10. Sawyers presents five issues for this Court's consideration: (1) whether the arbitration agreement between Sawyers and Herrin-Gear is unenforceable because it is substantively unconscionable; (2) whether the arbitration agreement between Sawyers and Herrin-Gear cannot be enforced because its general purpose is to aid and protect Herrin-Gear and American's illegal enterprise of selling and administering unregistered insurance products; (3) whether the arbitration agreement between Sawyers and Herrin-Gear does not apply to Sawyers's claims against American because the arbitration agreement clearly limits the parties who can enforce the arbitration agreement to Sawyers and Herrin-Gear; (4) whether Sawyers is equitably estopped from pursuing her claims against American, notwithstanding the arbitration agreement Sawyers entered with Herrin-Gear; and (5) whether Sawyers is precluded from pursuing her claims against American based on American's allegation that it is Herrin-Gear's agent. Also, Herrin-Gear and American contend that this Court lacks jurisdiction over this appeal pursuant to Section 16(b) of the Federal Arbitration Act (FAA). See 9 U.S.C. § 16 (2006). We also find it necessary to discuss this Court's appellate jurisdiction over orders granting motions to compel arbitration and to resolve any ambiguity that may appear in prior decisions of this Court on this issue. We combine and restate the issues before us for the sake of today's discussion.

I. WHETHER THIS COURT HAS JURISDICTION TO CONSIDER THE MERITS OF THE TRIAL COURT'S ENTRY OF AN ORDER COMPELLING ARBITRATION.

¶ 11. Section 16 of the FAA states:

(a) An appeal may be taken from —

(1) an order —

(A) refusing a stay of any action under section 3 of this title,

(B) denying a petition under section 4 of this title to order arbitration to proceed,

(C) denying an application under section 206 of this title to compel arbitration,

(D) confirming or denying confirmation of an award or partial award, or

(E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.

(b) Except as otherwise provided in section 1292(b) of title 28, an appeal may not be taken from an interlocutory order —

(1) granting a stay of any action under section 3 of this title;

(2) directing arbitration to proceed under ...