Terminix Int'l, Inc., et al. v. Rice
| Docket Number: | 2003-IA-02502-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 12-09-2004 Opinion Author: Dickinson, J. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Contract - Arbitration - Federal Arbitration Act - Procedural unconscionability - Waiver - M.R.C.P. 8(c) - Nonsignatory party - Encumbrance on homestead Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Easley and Carlson, JJ. Non Participating Judge(s): Diaz and Randolph, JJ. Dissenting Author : Graves, J. Procedural History: Motion to Compel Arbitration Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 11-12-2003 Appealed from: Jones County Circuit Court Judge: Billy Joe Landrum Disposition: Denied the motion to compel arbitration. Case Number: 2002-175-CV5 |
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| Consolidated: Consolidated with 2003-CA-02548-SCT Ray Stites, Anthony C. Fagan and Terminix International Company, Limited Partnership v. David Rice and Cynthia O. Rice; Jones Circuit Court 2nd District; LC Case #: 2002-175-CV5; Ruling Date: 08/27/2002; Ruling Judge: Billy Joe Landrum | ||
| Party Name: | Attorney Name: | |||
| Appellant: | Terminix International, Inc., Limited Partnership, Ray Stites and Anthony C. Fagan |
SAMUEL ERNEST LINTON ANDERSON
ARTHUR F. JERNIGAN, JR.
WILLIAM W. BUSCHING |
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| Appellee: | David Rice and Cynthia O. Rice | TERRY L. CAVES JERRY DEAN SHARP |
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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 - Federal Arbitration Act - Procedural unconscionability - Waiver - M.R.C.P. 8(c) - Nonsignatory party - Encumbrance on homestead |
| Summary of the Facts: | Dr. David Rice contracted with Terminix International, Inc. to provide protection from termites for his home. The contract contained an arbitration clause. When the Rices discovered extensive termite damage to their home, they attempted to reach a settlement with Terminix, but were unsuccessful. Rather than filing an arbitration proceeding as provided in the contract, the Rices filed suit in the circuit court. Terminix included in its Answer a Motion to Compel Arbitration and a request that the court stay the proceedings pending arbitration. The court denied the motion. Terminix filed a request for the trial court to certify the matter for interlocutory appeal which the court denied. The Supreme Court granted Terminix’s Petition for Interlocutory Appeal. |
| Summary of Opinion Analysis: | Terminix argues that the court’s refusal to enforce the arbitration agreement violates the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. In determining motions to compel arbitration under the FAA, a determination must be made as to whether the parties’ dispute is within the scope of a valid arbitration agreement. The arbitration agreement between Terminix and Rice is valid on its face. There is no evidence suggesting procedural or substantive unconscionability or fraudulent inducement. The Rices’ claims are within the scope of the arbitration provision, as they are claims and controversies that directly challenge Terminix’s performance of the contract. In addition, there is no evidence of legal constraints external to the parties’ agreement that would foreclose arbitration of the claims. Therefore, the court’s denial of the motion to compel arbitration was error under the Federal Arbitration Act. Dr. Rice argues that he did not know of the existence of the arbitration agreement and did not understand its meaning and that it is therefore 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 lack of opportunity to study the contract and inquire about the contract terms. The arbitration clause in this contract appears under its own subheading entitled “ARBITRATION,” which is printed in bold capital letters. The entire arbitration clause consists of four typed lines in the same font as the rest of the page. The clause is likely to be noticed by anyone reading the “General Conditions.” The law presumes that Dr. Rice read the agreement he signed with Terminix. Had he done so, he would have seen the arbitration clause in the contract. The Rices have provided us evidence of lack of voluntariness to enter the contract or a lack of opportunity to study the contract and inquire about its terms. The Rices also argue that Terminix waived its right to arbitration by submitting to the litigation and by agreeing to a Scheduling Order entered by the trial court. When its motion to compel arbitration was denied by the trial court, Terminix had no choice but to proceed with discovery. By including the motion to compel arbitration in its answer, Terminix complied with M.R.C.P. 8(c) and sufficiently preserved this issue for appeal. Dr. Rice’s wife did not sign the agreement with Terminix, and the Rices argue that she is not bound by the arbitration agreement. A nonsignatory party may be bound to an arbitration agreement if so dictated by the ordinary principles of contract and agency. In the arbitration context, the doctrine of estoppel recognizes that a party may be estopped from asserting that the lack of his signature on a written contract precludes enforcement of the contract’s arbitration clause when he has consistently maintained that other provisions of the same contract should be enforced to benefit him. Therefore, Mrs. Rice is bound by the arbitration clause in the contract signed by Dr. Rice. They also argue that the arbitration agreement is unenforceable against Mrs. Rice because it constitutes an impermissible encumbrance on her homestead. The Rices point to no legal authority supporting this theory. |
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