Doleac v. Real Estate Professionals, LLC
| Docket Number: | 2004-CA-00902-SCT Linked Case(s): 2004-CA-00902-SCT |
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| Supreme Court: |
Opinion Date: 06-16-2005 Opinion Author: Smith, C.J. Holding: Reversed and Remanded. Appellee taxed with costs o |
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| Additional Case Information: |
Topic: Arbitration - Condition precedent to judicial action - Separate agreements - Tort claims - Waiver Judge(s) Concurring: Waller and Cobb, P.JJ., Carlson and Dickinson, JJ., Non Participating Judge(s): Diaz, Graves and Randolph, JJ Dissenting Author : Easley, J., |
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| Trial Court: |
Date of Trial Judgment: 03-22-2004 Appealed from: Forrest County Chancery Court Judge: Sebe Dale, Jr. |
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| Note: | no link | |
| Party Name: | Attorney Name: | |||
| Appellant: | Barry Doleac, The Doleac Company and The Doleac Building, LLC |
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| Appellee: | Real Estate Professionals, LLC |
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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: | Arbitration - Condition precedent to judicial action - Separate agreements - Tort claims - Waiver |
| Summary of the Facts: | Real Estate Professionals, LLC sued Barry Doleac, The Doleac Company and The Doleac Building, LLC for breach of their Independent Contractor Agreement, tortious interference with business relations, breach of their Asset Purchase Agreement, trespass to chattels, conversion, and for punitive damages. REP also asked for an accounting, declaratory judgment and an injunction. Before trial, the court granted a temporary restraining order, permitting REP to remain in possession of the leased premises. Doleac’s motion to dismiss the complaint and compel arbitration was denied by the chancellor. The chancellor found for REP, and Doleac appeals. |
| Summary of Opinion Analysis: | The Doleac Company, Doleac Building and Barry Doleac executed three agreements with REP: an Asset Purchase Agreement for REP to buy The Doleac Company; a Lease Agreement by which REP was to rent office space from The Doleac Building; and an Independent Contractor Agreement for Barry Doleac to work for REP for a period of five years. Doleac now argues that the court erred in denying the motion to compel arbitration because the dispute arises out of contracts which contain an arbitration clause. In determining the validity of a motion to compel arbitration under the Federal Arbitration Act, courts conduct a two-pronged inquiry. The first prong has two considerations: whether there is a valid arbitration agreement and whether the parties’ dispute is within the scope of the arbitration agreement. The second prong considers whether legal constraints external to the parties’ agreement foreclosed arbitration of those claims. There is a dispute as to whether the arbitration agreement is valid because the language of the arbitration agreement does not foreclose or preclude litigation. The arbitration clause states that “[a]ny dispute under this agreement, prior to litigation, shall be submitted to arbitration in Hattiesburg, Mississippi, pursuant to the rules of the American Arbitration Association.” This type of arbitration clause presents an issue of first impression. Because the arbitration clause specifically makes arbitration a condition precedent to any judicial action, no judicial action can be maintained until arbitration has been pursued. Furthermore, the arbitration clause also states that the dispute shall be submitted to arbitration “pursuant to the rules of the American Arbitration Association.” Pursuant to cases in circuits which have considered this issue, including the Fifth Circuit, arbitration is binding and final since the arbitration clause in question references the American Arbitration Association rules. REP argues that because two of the three contracts entered into between the parties do not contain an arbitration clause, any claims under those agreements are not subject to arbitration. However, the contract containing the arbitration clause specifically incorporates the other two contracts. Under general principles of contract law, separate agreements executed contemporaneously by the same parties, for the same purposes, and as part of the same transaction, are to be construed together. Since the three separate agreements were executed at the same time, by the same parties, as part of the same transaction, they are to be construed as one instrument. REP also argues that the arbitration clause in question is narrow and does not include tort claims. However, when the scope of an arbitration clause is in question, the court should construe the clause in favor of arbitration. The arbitration clause specifically states any dispute under this agreement. REP argues that Barry Doleac, The Doleac Company and The Doleac Building waived their right to arbitrate. A waiver of arbitration is not a favored finding. The contract specifically gave Doleac Company and Building the right to use self-help when REP defaulted. In addition, taking possession of the collateral or other similar actions do not waive a party’s right to arbitration. Therefore, the chancery court erred in denying the motion to compel arbitration. |
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