United States District Court, S.D. Mississippi, Eastern Division
MEMORANDUM OPINION AND ORDER
KEITH
STARRETT, UNITED STATES DISTRICT JUDGE
For the
reasons below, the Court denies Defendants' Motion [65]
to determine the applicable law, grants Plaintiff's
Motion to Strike [61] Defendants' Notice of Jury Demand
[56], denies Defendants' Motion to Dismiss [51], and
grants Plaintiff's Motion [48] for an order directing the
Clerk to issues summons for a replevin hearing.
I.
Background
The
Court previously discussed the factual and procedural
background of this case. See Regions Commercial Equip.
Fin., LLC v. Performance Aviation, LLC, No.
2:16-CV-110-KS-JCG, 2016 U.S. Dist. LEXIS 96658 (S.D.Miss.
July 22, 2016); Regions Commercial Equip. Fin., LLC v.
Performance Aviation, LLC, No. 2:16-CV-110-KS-JCG, 2016
U.S. Dist. LEXIS 154782 (S.D.Miss. Nov. 8, 2016). On November
9, 2016, Plaintiff filed a Verified Second Amended Complaint
[47], which included a specific claim of replevin. Two days
later, Plaintiff filed a Motion [48] for the Court to direct
the Clerk to issue summons for a replevin hearing.
Defendants
objected [49] to the motion and filed a Motion to Dismiss
[51] the replevin claim. Later, Defendants filed a Notice of
Jury Demand [56] - despite the Court's prior Order [45]
granting Plaintiff's Motion to Strike [32] their initial
jury demand - and Plaintiff promptly filed a Motion to Strike
[61] it. Finally, Defendants filed a Motion to Determine [65]
the law applicable in this case. All pending motions are ripe
for the Court's review.
II.
Motion to Determine Applicable Law [65]
Defendants
filed a motion for the Court to determine that Mississippi
law applies to all issues in this case. In response,
Plaintiff argues that Alabama law applies, as provided in the
loan documents.
Indeed,
the Promissory Notes executed by Defendant Performance
Aviation, LLC provide: “THIS NOTE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE STATUTES AND LAWS OF
THE STATE OF ALABAMA . . . .” Exhibit 1 to Second
Amended Complaint at 4, Regions Commercial Equip. Fin.,
LLC v. Performance Aviation, LLC, No. 2:16-CV-110-KS-JCG
(S.D.Miss. Nov. 9, 2016), ECF No. 47-1; Exhibit 2 to Second
Amended Complaint at 4, Regions Commercial Equip. Fin.,
LLC v. Performance Aviation, LLC, No. 2:16-CV-110-KS-JCG
(S.D.Miss. Nov. 9, 2016), ECF No. 47-2.
Likewise,
the Aircraft Security Agreements executed by Performance
provide: “THIS AGREEMENT, THE NOTE AND ANY GUARANTY . .
. SHALL BE GOVERNED IN ALL RESPECTS BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ALABAMA
. . . .” Exhibit 3 to Second Amended Complaint at 10,
Regions Commercial Equip. Fin., LLC v. Performance
Aviation, LLC, No. 2:16-CV-110-KS-JCG (S.D.Miss. Nov. 9,
2016), ECF No. 47-3; Exhibit 4 to Second Amended Complaint at
10, Regions Commercial Equip. Fin., LLC v. Performance
Aviation, LLC, No. 2:16-CV-110-KS-JCG (S.D.Miss. Nov. 9,
2016), ECF No. 47-4.
Finally,
the Continuing Guaranty Agreements executed by Defendants
Wade Walters Consulting, Inc., Prime Care Revenue Management,
LLC, Prime Care Management Group, LLC, Wade Walters, and
Dorothy Walters provide: “This Guaranty shall be
governed by, and construed in accordance with, Alabama
law.” Exhibit 5 to Second Amended Complaint at 2,
Regions Commercial Equip. Fin., LLC v. Performance
Aviation, LLC, No. 2:16-CV-110-KS-JCG (S.D.Miss. Nov. 9,
2016), ECF No. 47-5.
A
federal court sitting in diversity is bound to follow the
substantive law of the forum state, including that
state's choice-of-law rules. Klaxon Co. v. Stentor
Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020,
1021, 85 L.Ed. 1477 (1941); see also Sorrels Steel Co.,
Inc. v. Great Sw. Corp., 906 F.2d 158, 167 (5th Cir.
1990). Under Mississippi law, Courts must “give effect
to an express agreement that the laws of a specified
jurisdiction shall govern, particularly where some material
element of the contract has a real relation to, or connection
with, such jurisdiction. The intention of the parties as to
the law governing [the transaction] will be respected in the
absence of anything violating the public policy of the forum
jurisdiction.” Miller v. Fannin, 481 So.2d
261, 262 (Miss. 1985); see also Herring Gas Co. v.
Magee, 22 F.3d 603, 607 (5th Cir. 1994) (“Under
Mississippi law, contracting parties can decide which
state's law will govern their agreement.”).
Therefore, barring some meritorious defense to enforcement of
the contracts, the Court will respect the parties'
agreement and apply Alabama law.
First,
Defendants contend that the loan documents are unenforceable
contracts of adhesion. “A contract of adhesion has been
described as one that is drafted unilaterally by the dominant
party and then presented on a ‘take-it-or-leave-it'
basis to the weaker party who has no real opportunity to
bargain about its terms.” East Ford, Inc. v.
Taylor, 826 So.2d 709, 716 (Miss. 2002). Such contracts
are not automatically void, though. Id. Contracts of
adhesion are “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.” Id.
Defendants
provided no evidence regarding the market factors, timing, or
other pressures surrounding the execution of the loan
documents. They have not demonstrated that they were unable
to contract with another party on more favorable terms, or
that they could not refrain from contracting altogether. In
fact, this Court previously noted that Defendants Wade and
Dorothy Walters, the principals of the corporate Defendants,
had substantial assets at the time of the transactions at
issue, which were later seized by the government. Defendants
could have sought alternative financing, or they could have
paid for the planes outright. Therefore, the loan documents
are not unenforceable contracts of adhesion.
Defendants
also argue that the loan documents are ambiguous and must be
construed against Plaintiff, the party who drafted them.
First, Defendants note that the Promissory Notes contain the
following language: “Borrower [Performance] hereby
expressly submits to the jurisdiction and venue of all
federal and state courts located in the State of Alabama,
Jefferson County . . . .” Exhibits 1 and 2 [47-1,
47-2], at 3. This language creates no ambiguity, as
jurisdiction and venue are a separate issue from choice of
law.
Next,
Defendants apparently argue that the Aircraft Security
Agreements' definition of the term “Applicable
Law” creates an ambiguity as to the parties' choice
of law. The Security Agreements provide:
“Applicable Law” shall mean all
statutes, laws, ordinances, rules, regulations and court or
administrative orders of any Government Authority applicable
to the person, party, conduct, question, covenant, or
Collateral in question, including all applicable common law
and equitable principles, state, and federal constitutions,
statutes, rules, regulations, and orders of governmental
bodies and all judicial orders, judgments and decrees and
including any of the foregoing applicable to the
registration, use, ownership, operation, maintenance,
overhauling, or condition of the Collateral, or any part
thereof.
Exhibits 3 and 4 [47-3, 47-4], at 1. This section creates no
ambiguity as to the parties' choice of law for the
construction and enforcement of the contract, as it merely
defines the term “Applicable Law, ” as used
within the contract. Defendants did not direct the Court to
any contract language providing that “Applicable Law,
” as defined above, governs the construction and
enforcement of the contract. Rather, the parties explicitly
chose Alabama law.
Finally,
Defendants argue that the Court must not enforce the
parties' choice of law because the State of Mississippi
has a strong interest in protecting the rights of debtors and
guarantors. Defendants apparently contend that applying
Alabama law would ...