Caplin Enterprises, Inc., et al. v. Arrington, et al.
| Docket Number: | 2011-CA-01332-COA Linked Case(s): 2011-CA-01332-COA ; 2011-CA-01332-COA ; 2011-CT-01332-SCT CONSOLIDATED WITH NO. 2011-CT-01932-SCT ; 2011-CT-01332-SCT ; 2011-CT-01332-SCT ; 2011-CT-01332-SCT |
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| Court of Appeals: |
Opinion Link Opinion Date: 05-07-2013 Opinion Author: Maxwell, J. Holding: Affirmed in Part, Reversed and Remanded in Part. |
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| Additional Case Information: |
Topic: Contract - Arbitration provision - Procedural unconscionability - Substantive unconscionability - Adhesion contracts Judge(s) Concurring: Lee, C.J., Irving and Griffis, P.JJ., Barnes, Ishee, Roberts, Fair and James, JJ. Concurs in Result Only: Carlton, J., Concurs in Result Only Without Separate Written Opinion Procedural History: Motion to Compel Arbitration Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 06-20-2011 Appealed from: Clarke County Circuit Court Judge: Lester F. Williamson Disposition: DENIED MOTION TO STAY PROCEEDINGS AND TO COMPEL ARBITRATION Case Number: 2010-200 W |
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| Consolidated: 2011-CA-01932-COA Caplin Enterprises, Inc. and Check Cashers & More, Inc. d/b/a Zippy Check Advance v. Jerald Ainsworth, Mary Battle, Wilma Carstarfhnur, Kimberly Gaines, Fred Jones, Shonda Love, Archie Moore, Tomecca Pickett, Tammy Pitts, Doris Turner, Boronica Williamson and Shirley Wilson; Newton Circuit Court; LC Case #: 10-cv-313-NWC; Ruling Date: 11/28/2011; Ruling Judge: Vernon Cotton | ||
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Caplin Enterprises, Inc. and Check Cashers & More, Inc. d/b/a Zippy Check Advance |
GEORGE CAYCE NICOLS |
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| Appellee: | Denise Arrington, Johnny Arrington, Margie Blackledge, Brenda Bonner, Juanita Davis, Kenneth Davis, Ker'Rita Evans, Larry Evans, Goldie Goodwin, Pansafae Gordon, Ray Charles Gray, Mamie Henry, Carolyn Hinton, Curtis Hinton, Tammy Howard, Kathy Jones, Viola Nash, Lanny Skinner, Kathleen Sterling and James Watts | CHRISTOPHER MICHAEL FALGOUT |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Arbitration provision - Procedural unconscionability - Substantive unconscionability - Adhesion contracts |
| Summary of the Facts: | Caplin Enterprises, Inc. and Check Cashers & More, Inc. operate Zippy Check, a licensed check-cashing business. Typically, when a customer writes a check to Zippy Check, Zippy Check gives the customer cash equal to the face value of the check, less the particular fee authorized by statute. Zippy Check then agrees to delay the deposit of the check until an agreed future date, usually the customer’s next payday. In Clark County, Denise Arrington and nineteen other named plaintiffs contracted with Zippy Check for cash-advance services. And Jerald Ainsworth and eleven other named plaintiffs did the same in Newton County. Both sets of plaintiffs signed one of two specific delayed-deposit agreements with Zippy Check. The first version of the agreement was signed by eight of the thirty-two plaintiffs. The remaining twenty-four plaintiffs signed a second agreement. Each agreement contains an arbitration provision. But the wording and style of the provisions differ quite a bit. The plaintiffs filed separate lawsuits claiming Zippy Check had fraudulently represented the terms of its service charges and fees and exhibited a pattern of “predatory lending,” trapping the plaintiffs in a never ending cycle of debt repayment. Zippy Check filed a motion to compel arbitration in each case. The Clarke County Circuit Court entered a written order denying Zippy Check’s motion to compel, finding the two arbitration provisions procedurally and substantively unconscionable. The Newton County Circuit Court followed suit and also denied arbitration. Zippy Check appeals. |
| Summary of Opinion Analysis: | It is clear that the general check-cashing services performed by Zippy Check affect interstate commerce. Thus, the circuit judges correctly held that the Federal Arbitration Act applied to both arbitration provisions. Here, the circuit judges found the two arbitration provisions were both procedurally and substantively unconscionable. Procedural unconscionability may be proved by showing a lack of knowledge, lack of voluntariness, inconspicuous print, the use of complex legalistic language, disparity in sophistication or bargaining power of the parties and/or a lack of opportunity to study the contract and inquire about the contract terms. Substantive unconscionability is present when there is a one-sided agreement whereby one party is deprived of all the benefits of the agreement or left without a remedy for another party’s nonperformance or breach. The first delayed-deposit agreement was signed by eight of the thirty-two plaintiffs. The front page lists the basic terms of the contract, including the annual percentage rate, finance charge, amount financed, and total amount owed. The front of the page also provides signature lines for the customer and Zippy Check employee to sign. The back of the page lists additional terms, including the arbitration provision. These additional terms are in paragraph form, but there are no separate headings, no bolded words, no capitalized words, and no distinguishable provisions. The circuit judge noted the arbitration clause was intermingled with other non-distinguishable provisions. The circuit judge labeled the agreement one of “adhesion” because Zippy Check had offered it to the plaintiffs on a “take-it-or-leave-it” basis with no real opportunity to bargain about its terms. The circuit judges were correct that the agreements’ terms (in both the first and second agreement) appear to be non-negotiable. However, contracts of adhesion are not automatically void. An arbitration provision within a contract of adhesion renders the agreement procedurally unconscionable only where the stronger party’s terms are unnegotiable and the weaker party is prevented by market factors, timing, or other pressures from being able to contract with another party on more favorable terms or to refrain from contracting at all. Though the terms appear non-negotiable, there is no record evidence that market factors, timing, or other pressures prevented the plaintiffs, in either county, from contracting with another party on more favorable terms or refraining from contracting at all. Thus, the fact that the agreements appear to be adhesion contracts may be considered in combination with other potential indicators of procedural unconscionability. The use of finer print in an arbitration provision has also been deemed an indicator of procedural unconscionability. Here, the arbitration provision appears in much smaller print than many of the agreement’s other terms. Furthermore, the first agreement’s arbitration provision, which contains no number or heading, is found wedged in the midst of other non-distinguishable, non-labeled provisions on the back page of the agreement, all of which are typed in much smaller font than the terms on the first page. Thus, the circuit judges correctly found that the first arbitration provision is procedurally unconscionable. The claims of the eight plaintiffs who signed this agreement are remanded for trial. However, the second agreement’s arbitration clause is neither procedurally unconscionable, nor oppressive or impermissibly one-sided. The terms “Lender and Borrower” are by no means complex. There is no evidence that any of the plaintiffs were confused by the differing terms. And, the arbitration clause clearly states that the parties agree to arbitrate any and all disputes arising out of, or in any way related to, their agreement. Also, the exception permitting Zippy Check to collect from a customer through the judicial process is insufficient to render the second arbitration clause substantively unconscionable. |
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