Smith ex rel. Smith v. Captain D's, LLC

• Decision Date: 14 June 2007
• Docket Number: No. 2006-CA-00024-SCT.,2006-CA-00024-SCT.
• Citation: 963 So.2d 1116
• Parties: Tammy SMITH by and through her Father & next friend, Alvin Christopher SMITH v. CAPTAIN D'S, LLC.
• Court: Mississippi Supreme Court

963 So.2d 1116

Tammy SMITH by and through her Father & next friend, Alvin Christopher SMITH v. CAPTAIN D'S, LLC.

No. 2006-CA-00024-SCT.

Supreme Court of Mississippi.

June 14, 2007.

Rehearing Denied September 13, 2007.

Duncan L. Lott, Booneville, attorney for appellant.

Bradley Farel Hathaway, Greenville, attorney for appellee.

EN BANC.

CARLSON, Justice, for the Court.

¶ 1. Tammy Smith, by and through her father and next friend, Alvin Christopher Smith, sued Captain D's, LLC, in the Alcorn County Circuit Court for negligent hiring, supervision, and retention based upon alleged rape by a supervisor. The trial judge granted Captain D's motion to compel arbitration and dismissed all of Tammy's claims against Captain D's. Tammy appeals, requesting that this Court reverse the trial court's grant of Captain D's motion to compel arbitration and dismissal of her lawsuit, and remand this case to the trial court for a full trial on the merits. Upon careful consideration of the issues presented, we agree with Tammy and thus reverse the trial court's grant of Captain D's motion to compel arbitration and dismissal of Tammy's claims, and we remand this case to the trial court for further proceedings consistent with this opinion.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶ 2. On February 3, 2004, Tammy Smith (Tammy), then seventeen years old, along with her grandparents¹ visited Captain D's restaurant² in Corinth. While they were eating, Tammy's grandmother, saw her friend, Peggy Jones (Jones), a manager of Captain D's. She approached Jones for an employment application for Tammy. Jones retrieved an employment application and delivered it to Tammy's grandmother. After eating, Tammy and her grandparents left the restaurant with the application.

¶ 3. At home, Tammy filled out the application for employment, which included a single-page arbitration agreement entitled "CAPTAIN D'S EMPLOYMENT DISPUTE RESOLUTION PLAN."³ The agreement required both Captain D's and Tammy to submit claims between them to binding arbitration. The agreement stated that if Tammy did file a lawsuit, Captain D's could use the agreement to dismiss the lawsuit and compel arbitration.

¶ 4. Jones would later testify that she told Tammy that her grandmother had to sign the agreement because Tammy was a minor. Tammy signed the arbitration agreement as the applicant and her grandmother signed on the line provided for a guardian.⁴

¶ 5. On August 17, 2004, Tammy filed suit in the Alcorn County Circuit Court against Captain D's and Christopher Lee Howell (Howell),⁵ alleging that Howell, a manager of Captain D's, assaulted and raped her during working hours. Tammy's complaint asserts that Captain D's was negligent in its hiring, supervising, and retention of Howell.

¶ 6. On September 16, 2004, Captain D's filed a Notice of Election of Binding Arbitration, Motion to Dismiss Complaint and to Compel Arbitration, and Alternative Motion to Dismiss Based on the Exclusive Remedy of the Mississippi Workers' Compensation Act and Separate Answer Subject to Motions to Compel Arbitration and to Dismiss. Tammy responded by, inter alia, objecting to arbitration.

¶ 7. The issues were joined and a hearing was held on May 3, 2005, Judge Sharion Aycock, presiding. Judge Aycock subsequently entered a Memorandum Opinion on December 14, 2005, granting Captain D's motion to compel arbitration and dismissing Tammy's claims against Captain D's in the circuit court. A final judgment consistent with the memorandum opinion was entered on December 28, 2005.

¶ 8. Tammy submitted her Petition for Interlocutory Appeal to this Court, requesting interlocutory review of the trial court's final judgment. On February 15, 2006, this Court found that final judgment had been entered as to Captain D's pursuant to Miss. R. Civ. P. 54(b), and further found that Tammy's petition for interlocutory appeal should be treated as a timely filed notice of appeal from a final judgment.

DISCUSSION

¶ 9. A trial court's grant or denial of a motion to compel arbitration is a question of law; therefore, we apply a de novo standard of review on appeal. Howard v. Estate of Harper, 947 So.2d 854, 856 (Miss.2006) (citing Sennett v. United States Fid. & Guar. Co., 757 So.2d 206, 209 (Miss.2000)); Pre-Paid Legal Servs. v. Battle, 873 So.2d 79, 82 (Miss.2004) (citing Russell v. Performance Toyota, Inc., 826 So.2d 719, 721(P 5) (Miss.2002)). See also East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002).

¶ 10. Tammy presents three issues to be decided in today's case: (1) whether a minor may disaffirm an arbitration agreement based on the infancy doctrine; (2) whether the arbitration agreement is unconscionable; and (3) whether the right to arbitration is precluded by the assertion of an alternative affirmative defense. However, finding one issue to be dispositive, we restate the critical issue for clarity in discussion.

WHETHER THE PARTIES AGREED TO ARBITRATE

¶ 11. In the appellant's brief, Tammy's counsel unquestionably focuses the majority of his argument on Tammy's minority status; however, in discussing the various issues, Tammy acknowledges the basic law on arbitration as discussed by this Court in interpreting the Federal Arbitration Act (FAA) and in applying the decisions of the United States Supreme Court. In the course of this discussion, Tammy asserts, inter alia, that under Mississippi law, the courts, "when determining whether a dispute is subject to arbitration . . . must first ask (1) whether the parties had a valid agreement in arbitration and (2) whether the specific dispute falls within the substantive scope of that agreement." Tammy undergirds this statement by citing our decision in East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002). Tammy also cites Thomson-CSF, S.A. v. American Arbitration Association, 64 F.3d 773, 776 (2nd Cir.1995), which stated:

Arbitration is contractual by nature—"a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Thus, while there is a strong and "liberal federal policy favoring arbitration agreements," Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (quotations omitted), such agreements must not be so broadly construed as to encompass claims and parties that were not intended by the original contract.

Id. at 776.

¶ 12. Captain D's likewise states, "[w]hen evaluating a motion to compel arbitration it must be shown that a valid agreement to arbitrate exists and whether the dispute in question falls within the scope of that arbitration agreement. Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.2002)."

¶ 13. This Court's decision in today's case follows on the heels of our recently-decided opinion in Rogers-Dabbs Chevrolet-Hummer v. Blakeney, 950 So.2d 170 (Miss.2007). In Rogers-Dabbs, we once again set out the well-established responsibility of the courts when confronted with arbitration issues by stating that the courts must first determine whether the parties have agreed to arbitration of the dispute and if it is determined that they have, then a determination must be made as to "whether legal constraints external to the parties' agreement foreclosed arbitration of those claims." Id. at 173 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)). See also East Ford, 826 So.2d at 713.

¶ 14. Since our decision today turns on the first prong (whether the parties agreed to arbitrate the dispute), we focus only on this prong. As we have noted on prior occasions, this first prong has two sub-factors: "(1) whether there is a valid arbitration agreement and (2) whether the parties' dispute is within the scope of the arbitration agreement." Rogers-Dabbs, 950 So.2d at 173 (quoting East Ford, 826 So.2d at 713). In Rogers-Dabbs, the vehicle purchaser, Blakeney, executed various documents relating to the purchase, including an arbitration agreement wherein Blakeney agreed with the dealer, Rogers-Dabbs, to submit to arbitration "all claims, demands, disputes or controversies of every kind or nature between them arising from, concerning or relating to" the transaction, including negotiations, financing arrangements, extended warranties, performance of the vehicle, "or any other aspect of the vehicle and its sale, lease, or financing." Id. at 174. Blakeney eventually sued Rogers-Dabbs under several theories, asserting that the car dealer's employee(s) had engaged in a fraudulent scheme to use Blakeney's identity to obtain forged titles to stolen vehicles, resulting in Blakeney never receiving title to his vehicle. Rogers-Dabbs filed a motion to compel arbitration based on the arbitration clause in the consumer contract, and the trial court denied the motion to compel arbitration. On appeal, we affirmed the trial court's denial of the motion to compel arbitration. This Court found that the parties' dispute "was not within the scope of the arbitration agreement." Id. at 178. In reaching this conclusion, the Court stated that while the purchaser no doubt had agreed to arbitrate claims originating from (or relating to) the sale of the vehicle, "no reasonable person would agree to submit to arbitration any claims [taking the claims as alleged to be true for the sake of argument] concerning a Hummer to which he would never receive a title; a scheme of using his name to forge vehicle titles and bills of sale to sell stolen vehicles; and the commission of civil fraud against him by misappropriating his title to the Hummer he purchased and forging his name on fake titles and bills of sale on various stolen vehicles ..." Id. at 177. Although we found the existence of a valid arbitration agreement, we found, on the other hand, that the dispute...