Simmons Housing, Inc. v. Shelton
| Docket Number: | 2009-CA-00568-SCT | |
| Oral Argument: | 04-12-2010 | |
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| Supreme Court: | Opinion Link Opinion Date: 06-17-2010 Opinion Author: Waller, C.J. Holding: Affirmed and remanded |
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| Additional Case Information: |
Topic: Contract - Arbitration agreement - Binding of non-signatory - Third-party beneficiaries - Equitable estoppel Judge(s) Concurring: Carlson and Graves, P.JJ., Dickinson, Randolph, Lamar, Kitchens, Chandler and Pierce, JJ. Procedural History: Motion to Compel Arbitration Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 03-16-2009 Appealed from: Copiah County Circuit Court Judge: Lamar Pickard Disposition: The circuit court compelled Roy’s and Kimberly’s claims to arbitration based on two agreements they had signed in purchasing the mobile home. The circuit court refused, however, to compel the minor, nonsignatory children’s claims to arbitration. Case Number: 2005-0393 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Simmons Housing, Inc. and Southern Energy Homes, Inc. |
MUNCELLE MITCHELL, JOE S. DEATON, III, ALAN GOODMAN, BARBARA MEEKS, JAMES L. QUINN |
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| Appellee: | Coleman Britt Shelton and Joshua Mason Shelton, by and through their mother and next friend, Kimberly Shelton | JEFFREY A. VARAS, DONNA HODGES | ||
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| Topic: | Contract - Arbitration agreement - Binding of non-signatory - Third-party beneficiaries - Equitable estoppel |
| Summary of the Facts: | Roy and Kimberly Shelton, individually and as next friends of their two minor children, filed suit against Simmons Housing, Inc., and Southern Energy Homes, Inc., in which they alleged several claims concerning an allegedly defective mobile home. The court compelled Roy’s and Kimberly’s claims to arbitration based on two agreements they had signed in purchasing the mobile home. The circuit court refused, however, to compel the minor, nonsignatory children’s claims to arbitration. Simmons Housing and Southern Energy appeal. |
| Summary of Opinion Analysis: | While a party generally is not required to arbitrate disputes unless that party previously has agreed to do so, a signatory may enforce an arbitration agreement against a non-signatory if the non-signatory is a third-party beneficiary or if the doctrine of equitable estoppel applies. A person or entity may be deemed a third-party beneficiary if the contract between the original parties was entered for that person’s or entity’s benefit, or the original parties at least contemplated such benefit as a direct result of performance; the promisee owed a legal obligation or duty to that person or entity; and the legal obligation or duty connects that person or entity with the contract. A third-party beneficiary also must benefit directly from the contract. Simmons Housing, Inc., and Southern Energy Homes, Inc., argue that the Shelton children are third-party beneficiaries of the agreements signed by their parents, because they directly benefitted from the contract by living in the mobile home, and that Roy and Kimberly had a legal duty to provide shelter for their children. The Shelton children were not referenced or alluded to in the contract. Additionally, their living in the mobile home did not make them direct beneficiaries. Therefore, they are not third-party beneficiaries. In the arbitration context, equitable estoppel prevents a party from embracing the benefits of a contract while simultaneously trying to avoid its burdens. Simmons Housing, Inc., and Southern Energy Homes, Inc., argue that the Shelton children’s claims arise from the contract. Having invoked rights under the contract by alleging a breach thereof, the Shelton children cannot now disclaim provisions they dislike. Equitable estoppel should not be applied to this case. There is nothing to show that Simmons Housing, Inc., or Southern Energy Homes, Inc., detrimentally relied on the Shelton children’s representations. Shelton children’s claims are not based solely on the retail installment contract. Their claims include strict liability, negligence, and breach of warranties under the Uniform Commercial Code. Such claims are not dependent on the terms of the contract. Thus, the Shelton children’s claims grounded in tort are remanded for further proceedings in the trial court, but their contract-related claims have been expressly relinquished. |
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