United States District Court, S.D. Mississippi, Western Division
EARL ROSS, et al. PLAINTIFFS
QUALITY HOMES OF MCCOMB, INC., et al. DEFENDANTS
OPINION AND ORDER
BRAMLETTE UNITED STATES DISTRICT JUDGE
cause is before the Court on a Motion to Dismiss or,
Alternatively, Compel Arbitration [Doc. No.
1');">14] filed by Defendant Quality Homes of McComb, Inc.
Having considered the motion, the Plaintiffs' response in
opposition, and applicable statutory and case law, and being
otherwise fully informed in the premises, the Court finds as
of a manufactured home sued the home's manufacturer,
installer, transporter, financier, and retail-seller after
inspecting the home and declaring it
“uninhabitable.” The buyers allege the defendants
misrepresented the nature and quality of the home, breached
fiduciary duties, slandered them with racial slurs, and
violated assorted federal and state consumer protection and
unfair trade practices laws. The motion before the Court
centers on an arbitration provision in an agreement between
the manufacturer, the retail-seller, and the buyers.
Earl and Maxcine Ross (the “Rosses”) bought a
manufactured home made by Defendant Platinum Homes, LLC
(“Platinum”) from Quality Homes of McComb, Inc.
(“Quality”), a McComb-based retail seller [Doc.
No. 1');">1, ¶VI]. Defendant U.S. Bank, N.A. (“U.S.
Bank”) financed the purchase [Doc. No. 1');">1, ¶VI].
part of the purchase, the Rosses signed a “Platinum
Homes, LLC. Limited Warranty” containing a provision
requiring the parties to mediate or arbitrate:
[A]ny controversy, claim, or dispute between or among the
Manufacturer, homeowner, independent retailer finance company
or any other person or entity arising from or relating to the
Manufactured home, its sale, transportation, setup, repair,
installation, use, design, manufacture, financing . . .
including any claim relating to the validity of this
[Doc. No. 1');">14-1');">1, p. 2].
conspicuous fashion, the provision notifies the parties that
by executing the Limited Warranty they “ARE
KNOWINGLY GIVING UP AND WAIVING CERTAIN RIGHT
[sic] TO LITIGATE DISPUTES IN COURT,
INCLUDING WAIVING OF A TRIAL BY JURY” [Doc.
No. 1');">14-1');">1, p. 2]. The provision also incorporates
“applicable rules” of the American Arbitration
Association (“AAA”) [Doc. No. 1');">14-1');">1, p. 1');">1].
two weeks after purchase, transportation company Miss-Lou
Mobile Home Movers, LLC (“Miss-Lou”) delivered
the home to Quality's lot [Doc. No. 1');">1, ¶VIII]. The
Rosses inspected the home and found it deficient in several
respects: it contained “a gap in the celling where the
roof did not come together, ” and “sheetrock
[that] had fallen from the wall in the living room”
[Doc. No. 1');">1, ¶IX]. The Rosses also detected an
unpleasant chemical odor [Doc. No. 1');">1, ¶VIII].
to convince Quality to fix the issues, the Rosses visited
Quality several times [Doc. No. 1');">1, ¶¶XI, XII]. On
the third visit, the Rosses overheard a phone conversation
during which Defendant Joey Harbin, a Platinum manager, said,
“I am not coming down there to change out nothing for
those niggers” [Doc. No. 1');">1, ¶XII]. Ultimately,
Quality refused the Rosses' request to exchange their
manufactured home for another [Doc. No. 1');">1, ¶XIII] and
U.S. Bank refused their request to rescind the financing
contract [Doc. No. 1');">1, ¶XIV].
years after inspecting the home, the Rosses sued Quality,
Miss Lou, Platinum, Harbin, and U.S. Bank alleging (1');">1) breach
of fiduciary duty; (2) breach of contract; (3) breach of the
implied covenants of good faith and fair dealing; (4)
fraudulent misrepresentations; (5)
“unconscionability”; (6) statutory violations and
unfair trade practices; and (7) slander [Doc. No. 1');">1, Counts
response, Quality, Platinum, Harbin, and U.S. Bank moved to
dismiss the Rosses' suit for failure to state a claim
upon which relief can be granted. See Fed.R.Civ.P. 1');">12(b)(6).
Quality moves, in the alternative, to compel arbitration
[Doc. No. 1');">14]. Although Platinum and Harbin appear to support
mediation or arbitration under the terms of the Limited
Warranty [Doc. No. 29], U.S. Bank takes no position on the
issue [Doc. No. 1');">13].
disputes present three questions: (1');">1) which party should
prevail on the merits; (2) who decides which party should
prevail on the merits -- the court or an arbitrator; and (3)
who decides arbitrability, i.e., whether the dispute is
subject to arbitration. First Options of Chicago, Inc. v.
Kaplan, 1');">14 U.S. 938');">51');">14 U.S. 938, 942 (1');">1995).
motion before the Court involves the third question. Although
no party raises the issue, the Limited Warranty contains a
delegation provision requiring the arbitrator -- rather than
the Court -- to determine the scope of the arbitration
provision. See Douglas v. Regions Bank, 757 F.3d 460, 462
(5th Cir. 201');">14). The Fifth Circuit has directed district
courts to compel arbitration “in almost all
cases” in which the arbitration provision at-issue
contains a delegation clause. Kubala v. Supreme Prod. Servs.,
Inc., 1');">199');">830 F.3d 1');">199, 202 (5th Cir. 201');">16).
delegation clause analysis consists of two steps. Reyna, 839
F.3d at 378. First, the Court examines state-law
contract-formation principles to determine whether the
Limited Warranty contains a valid agreement to arbitrate and,
if so, as to which parties. Id. Second, the Court
determines whether the Limited Warranty contains a valid
delegation provision. Id.
arbitration turns upon the terms of the contract, not upon an
occurrence or a transaction. See Janvey v. Alguire, 847 F.3d
231');">1, 240 (5th Cir. 201');">17). Consistent with arbitration's
contractual roots, “a party cannot be required to
submit to arbitration any dispute which he has not agreed so
to submit.” Id. at 240. Thus, the Court first
turns to the threshold issue of which, if any, parties have
agreed to arbitrate this dispute. Reyna v. Int'l Bank of
Commerce, 839 F.3d 373, 377 (5th Cir. 201');">16). In so doing, the
Court does not consider the merits of the Rosses underlying
claims. Tittle v. Enron Corp., 1');">10');">463 F.3d 41');">10, 425n. 1');">12 (5th
Cir. 2006) (citing AT & T Techs., Inc. v. Commc'ns
Workers of Am., 475 U.S. 643, 649 (1');">1986)). The Court applies
Mississippi contract law to determine whether the parties
entered into a valid agreement to arbitrate the dispute. See
Kubala, 830 F.3d at 203.
Existence of a Valid Agreement to Arbitrate
Federal Arbitration Act (“FAA”), 9 U.S.C. §
1');">1 et seq., reflects “both a liberal federal policy
favoring arbitration, and the fundamental principle that
arbitration is a matter of contract.” AT&T Mobility
LLC v. Concepcion, 563 U.S. 333, 339 (201');">11');">1) (internal
quotation marks omitted).
the FAA, an arbitration clause in a “contract
evidencing a transaction involving commerce” is
“valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity ...