Banks v. Cavalier Homes, Inc. et al

Filing 38

ORDER AND MEMORANDUM OPINION denying without prejudice 18 Motion to Compel Arbitration; denying 29 Motion to Compel Arbitration. Signed by District Judge Sharion Aycock on 3/27/24. (sko)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
YAMIKA BANKS

PLAINTIFF

v.

CIVIL ACTION NO. 3:23-CV-58-SA-RP

CAVALIER HOMES, INC. and
REGIONAL ENTERPRISES, LLC

DEFENDANTS

ORDER AND MEMORANDUM OPINION
On December 9, 2022, Banks initiated this lawsuit by filing her Complaint [2] against
Cavalier and Regional in the Circuit Court of Lafayette County. After removing the case to this
Court, the Defendants filed separate Motions to Compel Arbitration. See [18, 29]. The Motions
[18, 29] are now ripe for review. Having considered the parties’ filings, in addition to the
applicable authorities, the Court is prepared to rule.
Relevant Background
Cavalier is a company engaged in the business of manufacturing homes. Regional is a retail
seller of manufactured homes.
On August 24, 2019, Banks purchased a manufactured home from Regional at Regional’s
Tupelo, Mississippi location. The home was manufactured by Cavalier in Hamilton, Alabama. At
closing, Banks and Regional entered into a six-page purchase agreement which set forth various
terms regarding Banks’ purchase of the home. As articulated by Regional, the purchase agreement
included the following:
[T]he material terms of the transaction on page 1 of 6; a “Mold
Disclosure and Waiver” on page 2 of 6; the “Arbitration Agreement”
on page 3 of 6; the “Delivery Ticket/Buyer’s Responsibilities” on
page 4 of 6; the “Notice of Manufacturer’s Warranty” on page 5 of
6; and “Buyer(s) Power of Attorney” on page 6 of 6.
[28] at p. 1-2.

As Regional’s explanation indicates, the third page of the purchase agreement is labeled
“Arbitration Agreement” and in pertinent part provides:
ARBITRATION AGREEMENT
Customer acknowledges and agrees that the transaction between the
parties hereto is a matter involved in and pertaining to interstate
commerce. Customer thus acknowledges that all aspects of the
transaction are involved in, affect, or have a direct impact upon,
interstate commerce.
Customer and Regional Enterprises, LLC agree that any and all
claims, demands, disputes or controversies of every kind or nature
between them, including but not limited to, tort and contract claims;
claims based on federal, state or local statute, law, order, ordinance
or regulations; and claims arising from, concerning or relating to any
of the negotiations involved in the transaction, the terms and
provisions of agreements, the arrangements for financing, the
performance of the agreements of condition of the Home, or any
other aspect of the transaction shall be, at the request of either party,
settled by binding arbitration conducted pursuant to the provisions
of the Federal Arbitration Act, 9 U.S.C. Section 1, et seq. and
according to generally accepted arbitration procedures, such as
those promulgated by the American Arbitration Association. . .
[18], Ex. 1 at p. 3.
Also pertinent is the fifth page of the agreement, which is entitled “Notice of
Manufacturer’s Warranty” and advised Banks that she was “purchasing a new mobile home that
includes a one (1) year Manufacturer’s Warranty.” Id. at p. 5. According to Gerald Cummings,
Cavalier’s Customer Care Manager, “[t]hat Warranty was included in Banks’s Homeowner’s
Manual, which was shipped inside the kitchen drawer of the home when it left the Hamilton
facility.” [29], Ex. 1 at p. 1. The warranty contains a dispute resolution agreement, which provides
that disputes between the parties (Cavalier and Banks) are subject to mediation and then, if
necessary, binding arbitration.

2

On September 12, 2019, Banks, along with her family, moved into the manufactured home.
She contends that, almost immediately after moving in, she began to experience issues with the
home. More specifically, Banks alleges that “cracks appeared in the ceilings and walls” and “water
began coming into [the] home through light fixtures whenever it rained.” [23], Ex. 1 at p. 3. She
avers that she “tried to work with Regional for years to informally resolve the dispute and filed a
complaint with the Mississippi Fire Marshal to try to have her home fixed like Regional and
Cavalier promised to do prior to her purchasing the home[.]” [35] at p. 3.
Ultimately, according to Banks, the Defendants did not fulfill their obligations associated
with the home, necessitating that she institute this litigation. In her Complaint [2], Banks asserts
claims for breach of contract, breach of express warranties, breach of implied warranties,
negligence, gross negligence, and violations of the Magnuson-Moss Warranty Act. After removing
the case to this Court, the Defendants filed the present Motions [18, 29] seeking to compel
arbitration.
Analysis and Discussion
Prior to addressing the merits of the Defendants’ request, the Court will address a
preliminary matter concerning the applicable law.
I.

Preliminary Matter

Banks takes the position that the Federal Arbitration Act (“FAA”) is inapplicable here. The
Defendants disagree.
Section 2 of the FAA provides:
A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract or transaction .
. . shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any
contract.
3

9 U.S.C. § 2 (emphasis added).
Thus, by its plain language, the FAA is applicable if the parties’ transaction “involv[es]
commerce.” Id. Furthermore, the Supreme Court applies an “expansive reading” to § 2. See
Mendez v. Wal-Mart Assoc., Inc., 2018 WL 7288583, at *4 (W.D. Tex. Nov. 28, 2018) (quoting
Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113, 121 S. Ct. 1302, 149 L. Ed. 2d 234 (2001)).
Banks contends that the transaction did not involve interstate commerce because she, a
Mississippi resident, “purchased her manufactured home in Mississippi, from a Mississippi
company” and “[t]here is no evidence in the record that the manufactured home was ever involved
in interstate commerce or that the purchase involved interstate commerce.” [24] at p. 9.
However, in his Declaration, Gerald Cummings—who, again, is Cavalier’s Customer Care
Manager—stated that Banks’ home was manufactured in Hamilton, Alabama “using component
materials and products from suppliers in multiple states.” [29], Ex. 1 at p. 1. The home was then
transported across state lines before being sold to Banks in Tupelo, Mississippi. Notably, Banks
has presented no evidence to contradict the assertions in Cummings’ Declaration.
Considering Cummings’ uncontradicted statement explaining that the transaction did
indeed involve interstate commerce, along with the Supreme Court’s directive to interpret § 2
expansively, the Court has no trouble concluding that the FAA governs this dispute. Stated
concisely, this transaction involved interstate commerce.1

1

The Court also notes that the parties stipulated in the agreement itself that the transaction involved
interstate commerce: “Customer acknowledges and agrees that the transaction between the parties hereto is
a matter involved in and pertaining to interstate commerce. Customer thus acknowledges that all aspects of
the transaction are involved in, affect, or have a direct impact upon, interstate commerce.” [18], Ex. 1 at p.
3.
4

II.

Standard under the FAA

“[T]he FAA expresses a strong national policy in favor of arbitration, and any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Long v. Allianz
Life Ins. Co. v. North America, 2008 WL 2910579, at *1 (N.D. Miss. July 25, 2008) (citing
Southland Corp. v. Keating, 465 U.S. 1, 10, 105 S. Ct. 852, 79 L. Ed. 2d 1 (1983); Mouton v.
Metro. Life Ins. Co., 147 F.3d 453, 456 (5th Cir. 1998)).
“Under the FAA, courts conduct a two-prong arbitration inquiry, determining first, whether
the parties intended to arbitrate the dispute, and second, if they did intend to arbitrate, whether
legal constraints external to the parties’ agreement foreclosed the arbitration of those claims.”
Begole v. North Miss. Med. Ctr., Inc., 2018 WL 1463355, at *1 (N.D. Miss. Mar. 23, 2018)
(citations and quotation marks omitted); see also Long, 2008 WL 2910579 at *1 (“The Fifth Circuit
has directed that courts are to perform a two-step inquiry to determine whether parties should be
compelled to arbitrate a dispute.”).
First, “the court must determine whether the parties agreed to arbitrate the dispute.” Long,
2008 WL 2910579 at *1 (citing OPE Int’l LP v. Chet Morrison Contractors, Inc., 258 F.3d 443,
445 (5th Cir. 2001)). Under this first prong, “the court must determine whether a valid agreement
to arbitrate exists, and whether the dispute in question falls within the scope of that arbitration
agreement.” Id. (citing OPE, 258 F.3d at 445; Pennzoil Exploration and Prod. Co. v. Ramco
Energy Ltd., 139 F.3d 1061, 1065 (5th Cir. 1998)); see also Reed v. Johnson, 2016 WL 913232,
at *2 (N.D. Miss. Mar. 9, 2016). Notably, “[t]hese issues are controlled by ‘ordinary state-law
principles that govern the formation of contracts.’” Reed, 2016 WL 913232 at *2 (quoting Graves
v. BP America Inc., 568 F.3d 221, 222 (5th Cir. 2009)).

5

Next, “[i]f the court finds that the parties agreed to arbitrate the claims, it must then
consider whether any federal statute or policy renders the claims nonarbitrable. In conjunction with
this inquiry, a party seeking to avoid arbitration must allege and prove that the arbitration provision
itself was a product of fraud or coercion; alternatively, that party can allege and prove that another
ground exists at law or in equity that would allow the parties’ contract or agreement to be revoked.”
Id. (citing OPE, 258 F.3d at 446; Sam Reisfeld & Son Import Co. v. S.A. Eteco, 530 F.2d 679, 68081 (5th Cir. 1976)).
III.

Application

Because the Defendants’ respective requests are based on two different agreements, the
Court will employ the two-step inquiry separately.
A.

Regional’s Motion [18]

The Court begins with Regional’s agreement with Banks.
i.

First Prong

Under the first prong, the Court must look to the following sub-prongs: (1) whether a valid
agreement to arbitrate exists; and (2) if so, whether the dispute falls within that agreement. See
Reed, 2016 WL 913232 at *2. Banks attacks the agreement on both sub-points.
a.

Whether a valid agreement to arbitrate exists

First, Banks contends that no valid agreement to arbitrate exists because “(1) no
consideration was given by Regional for Banks’s alleged agreement to arbitrate, (2) the Agreement
does not expressly preclude litigation in favor of binding arbitration, making it indefinite and
ambiguous, and (3) the parties did not mutually assent to be bound by the terms of the agreement.”
[24] at p. 11. These arguments go to three of the essential elements of a contract under Mississippi
law: “[t]he elements of a contract are ‘(1) two or more contracting parties, (2) consideration, (3)

6

an agreement that is sufficiently definite, (4) parties with legal capacity to make a contract, (5)
mutual assent, and (6) no legal prohibition precluding contract formation.’” LAGB, LLC v. Total
Merchant Servs., Inc., 284 So. 3d 720, 724 (Miss. 2019) (quoting Adams Cmty. Care Ctr., LLC v.
Reed, 37 So. 3d 1155, 1158 (Miss. 2010)) (additional citations omitted).
As to the purported lack of consideration, Banks contends that Regional “only offers a
conclusory statement alleging that consideration for the alleged arbitration agreement was Banks’
receipt of a manufactured home itself when, in fact, the consideration for the delivery and
installation of the agreed upon manufactured home was Banks’s payment of $126,731.75, not her
alleged agreement to arbitrate disputes arising from the transaction.” [24] at p. 11.
The Court finds this argument disingenuous. The purchase agreement is a six-page
document that both parties signed. There were multiple aspects to it—a purchase price, obligations
for delivery and installation, and, notably (among other things), an arbitration agreement. This is,
in the Court’s view, simply one aspect of the parties’ entire agreement. Despite asking the Court
to sever the arbitration portion of the purchase agreement from every other aspect of it, Banks cites
no authority to support that position. Rather, the applicable law supports the contrary conclusion,
as “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.” Swindle v. Harvey, 23 So. 3d 562, 568 (Miss. Ct. App. 2009) (quoting Doleac v. Real
Estate Professionals, LLC, 911 So. 2d 496, 504 (Miss. 2005)). The arbitration agreement was
contained within the parties’ purchase agreement wherein each party agreed to “give up” certain
things. Banks’ lack of consideration argument is easily rejected.2

2

It is also noteworthy that separate consideration existed as to the arbitration agreement itself as the parties
made mutual promises to each other to arbitrate their claims against each other. In other words, Banks
agreed to arbitrate her potential claims against Regional, but Regional also agreed to arbitrate its potential
claims against her.
7

Next, Banks argues that the arbitration agreement “does not expressly preclude litigation
in favor of binding arbitration, making it indefinite and ambiguous.” Id. In pertinent part, the
agreement provides:
Customer and Regional Enterprises, LLC agree that any and all
claims, demands, disputes or controversies of every kind or nature
between them, including but not limited to, tort and contract claims;
claims based on federal, state or local statute, law, order, ordinance
or regulations; and claims arising from, concerning or relating to any
of the negotiations involved in the transaction, the terms and
provisions of agreements, the arrangements for financing, the
performance of the agreements of condition of the Home, or any
other aspect of the transaction shall be, at the request of either party,
settled by binding arbitration conducted pursuant to the provisions
of the Federal Arbitration Act, 9 U.S.C. Section 1, et seq. and
according to generally accepted arbitration procedures, such as
those promulgated by the American Arbitration Association. . .
[18], Ex. 1 at p. 3 (emphasis added).
It is difficult to imagine a way in which the agreement could have more clearly indicated
to Banks that she was agreeing to arbitrate any claims that may arise against Regional. It is also
noteworthy that this provision is on its own page of the purchase agreement with
“ARBITRATION AGREEMENT” on the top of the page. The Court struggles to see any way
in which the agreement was indefinite as to arbitration being the manner in which any disputes
would be resolved. Banks’ argument on this point is rejected.
Third, Banks contends that the parties did not mutually assent to be bound by the terms of
the agreement. On this point of contention, Banks argues:
In this case, Regional told Banks that the Arbitration Agreement
meant that she could not sue Regional for any reason if her home
was damaged or installed improperly. Banks was not offered an
opportunity to read the Arbitration Agreement or to obtain legal
advice regarding its terms before it was presented to her to sign. She
was pressured to sign the Arbitration Agreement in order to
complete the lengthy closing process for the purchase of her home.
Banks did not believe Regional’s employee when they told her that
8

the Arbitration Agreement precluded her from enforcing her rights
under the contract, but signed the document because she was under
pressure to do so. These facts do not show intent by Banks to be
bound by the terms of the Arbitration Agreement as it was explained
to her.
[24] at p. 13.
“The mutual assent of each of the contracting parties to the terms of the contract is essential
to the formation of a valid contract and is determined by considering whether the parties mutually
agreed to the terms offered and accepted.” JP&G LLC v. Voss, 331 So.3d 569, 579 (Miss. Ct. App.
2021) (quoting Blake v. Murphy Oil USA Inc., 2010 WL 3717245, at *3 (N.D. Miss. Sept. 14,
2010)) (quotation marks and additional citations omitted). Here, both parties signed the purchase
agreement, which the Court views as evidence favoring mutual assent. See, e.g., 3A MS Prac.
Encyclopedia MS Law § 21:9 (3d ed.) (“Mutual assent is often evidenced by a written contract
signed by all parties.”).
Importantly, “[c]ourts are obligated to enforce a contract that is executed by legally
competent parties containing clear and unambiguous terms, and parties are bound by its
provisions.” Williams v. Williams, 37 So. 3d 1196, 1200 (Miss. Ct. App. 2009) (citing Ivison v.
Ivison, 762 So. 2d 329, 335 (Miss. 2000)). “The meaning of a contract is determined using an
objective standard, rather than taking into consideration a subjective intent or party’s belief that
may conflict therewithin.” Id. (citing Palmere v. Curtis, 789 So. 2d 126, 131 (Miss. Ct. App.
2001)). Applying this standard, Banks’ alleged subjective belief that the arbitration agreement was
not enforceable does not preclude its enforcement.
Her contention regarding the failure to read the agreement likewise fails. “Under
Mississippi law, [] parties to a contract have an inherent duty to read the terms of a contract prior
to signing; that is, a party may neither neglect to become familiar with the terms and conditions

9

and then later complain of lack of knowledge, nor avoid a written contract merely because he or
she failed to read it or have someone else read and explain it.” MS Credit Ctr., Inc. v. Horton, 927
So. 2d 167, 177 (Miss. 2006) (citing Titan Indem. Co. v. City of Brandon, Miss., 27 F. Supp. 2d
693, 697 (S.D. Miss. 1997)). Thus, Banks cannot preclude enforcement of an otherwise binding
agreement by simply stating that she failed to read its terms. The Court rejects Banks’ attempt to
prevent enforcement of the agreement based on lack of mutual assent.
b.

Whether the parties’ dispute falls within the arbitration agreement

Having rejected all of Banks’ arguments opposing the formation of a valid arbitration
agreement, the Court turns to the second sub-point under the first prong—that is, whether the
present dispute falls within the agreement.
The language of the arbitration provision itself is extremely broad, covering “any and all
claims, demands, disputes or controversies of every kind or nature between them, including but
not limited to, tort and contract claims; claims based on federal, state or local statute, law, order,
ordinance or regulations; and claims arising from, concerning or relating to any of the negotiations
involved in the transaction, the terms and provisions of agreements, the arrangements for
financing, the performance of the agreements of condition of the Home, or any other aspect of the
transaction[.]” [18], Ex. 1 at p. 3.
Arguing that the present dispute falls outside the scope of the arbitration agreement, Banks
relies heavily on the language of the fourth page of the purchase agreement which, as noted above,
is entitled “Delivery Ticket/Buyer’s Responsibilities.” Banks notes that that page lists nine
contractual obligations with which Regional was required to comply, such as “preparing the Dirt
Pad according to State regulations” and “delivering and setting up the Home at the delivery
address,” among others. [24] at p. 6-7. Banks contends that the substance of this lawsuit concerns

10

Regional’s failure to comply with the nine contractual obligations set forth within the “Delivery
Ticket/Buyer’s Responsibilities” document. Then, Banks points out that “[t]he Delivery Ticket
references the Notice of Manufacturer’s Warranty (on the next page in the sequence) but does not
refer to nor reference the Arbitration Agreement itself, nor does the Delivery Ticker refer to or
include any attachments. The Arbitration Agreement itself does not refer to the Delivery Ticket.”
[24] at p. 7. Banks then jumps to the conclusion that “[c]laims resulting from performance of
Contract or warranting regarding the Delivery Ticket, are simply not subject to the Arbitration
Agreement by the Delivery Ticket’s own terms[.]” Id.
In essence, Banks’ argument is that the Delivery Ticket/Buyer’s Responsibilities page of
the purchase agreement constitutes a separate and distinct agreement, not subject to the terms of
the arbitration agreement. The Court has already addressed this argument in connection with
Banks’ lack of consideration argument, noting that the position is inconsistent with Mississippi
law. As provided above, “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.” Swindle, 23 So. 3d at 568 (citations omitted). The Court reaches the
same conclusion here. To adopt Banks’ argument, the Court would have to ignore the broad
language of the Arbitration Agreement.
The parties dispute clearly falls within the scope of the arbitration agreement.
ii.

Second Prong

Having determined that the parties agreed to arbitrate the present dispute, the Court must
“assess whether legal constraints external to the parties’ agreement foreclosed the arbitration of
those claims.” OPE, 258 F.3d at 446 (quoting Webb v. Investacorp, Inc., 89 F.3d 252, 257-58 (5th

11

Cir. 1996)) (additional citations and quotation marks omitted). Banks contends that the arbitration
provision “is unconscionable and cannot be enforced as a matter of State law.” [24] at p. 14.
“Mississippi recognizes that ‘unconscionability can be procedural or substantive.’” Begole
v. North Miss. Med. Ctr., Inc., 761 F. App’x 248, 251 (5th Cir. 2019) (quoting Covenant Health
& Rehab of Picayune, LP v. Estate of Moulds ex rel. Braddock, 14 So. 3d 695, 699 (Miss. 2009)).
“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 a lack of opportunity to study the contract
and inquire about the contract terms.” Id. (quoting E. Ford, Inc. v. Taylor, 826 So. 2d 709, 714
(Miss. 2002)). “Substantive unconscionability may be proved by showing the terms of the
arbitration agreement to be oppressive.” Caplin v. Enterprises, Inc. v. Arrington, 145 So.3d 608,
614 (Miss. 2014) (quoting Taylor, 826 So. 2d at 714).
Banks argues that the arbitration agreement is both procedurally and substantively
unconscionable. As to procedural unconscionability, Banks argues:
First, Banks was unaware prior to being presented the pre-printed
Arbitration Agreement at closing that she would be expected to
agree to binding arbitration of any dispute that may arise between
herself and Regional in order to purchase her home. She stated
during closing when confronted with the Arbitration Agreement that
she did not want to sign it — showing involuntariness. The language
of the Arbitration Agreement does not include explicit language
stating that by signing it Banks would waive her right to judicial
determination of her potential claims. The Arbitration Agreement is
not written in simple easily understandable terms and is often
contradictory. Banks is an unsophisticated home purchaser who did
not have experience with contracts or arbitration clauses and was in
the weaker negotiating position at the closing. When Banks
attempted to oppose signing the Arbitration Agreement, Regional
stated that she could not purchase the home she worked so hard to
get — that the contract was on a “take it or leave it” basis. Banks
was unable to study the terms of the Arbitration Agreement or
postpone closing so that she might seek legal counsel. Finally,
12

Banks was eight months pregnant at the time she was presented with
the contract of adhesion containing the Arbitration Agreement and
needed to complete the purchase of her home so that she and her
newborn would have somewhere to live.
[24] at p. 15 (internal citations omitted).
Banks attached to her Response [23] an Affidavit, wherein she stated that she was under
stress at the closing, that she was not given advanced notice that the purchase agreement contained
an arbitration agreement, and that she was advised that the deal on her home would fall through if
she did not sign the agreement. She also stated in the Affidavit that she was eight months pregnant
at the time and was concerned about not having a place for her child to live if she did not sign the
agreement.
Regional disputes these allegations. Attached to its Reply [27] is an Affidavit of Lane
Derrick, who describes himself as an “agent of Regional Enterprises, LLC.” [27], Ex. 1 at p. 1. In
his Affidavit, Derrick states that he was present at the closing and that the closing itself was
recorded pursuant to Regional’s customary business practices. He then provides a further
explanation:
4.

Pursuant to the transaction, Banks executed a Purchase
Agreement consisting of 6 pages which is attached as
Exhibit “A” hereto. The signing of these documents is
referred to as “the closing”. The audio of the closing was
recorded, per customary business practices. The recording is
kept as a business record with the customer file and Banks
consented to the recording of the closing.

5.

At the closing Mrs. Banks was observed as being positive
about her home purchase and overall experience, and
seemed to be comfortable in the setting. As can be heard on
the recording of the closing, I talk to Banks and present the
Purchase Agreement, including the arbitration agreement to
her. Banks does not oppose the arbitration agreement
verbally during the closing. There is never any mention
made that she had to sign the documents or could not take
the documents with her for review. Banks did not ask about
13

her right to sue or that she did not agree to the arbitration
agreement. Banks did not ask “what would happen if I did
not sign the document?” I never told her that “if [she] did not
sign the agreement that the deal on [her] home would fall
through and that [she] would not be able to complete the
purchase of [her] home.” During the closing, the documents
were identified by me and handed to Banks for her review
and signature.
6.

As for the presentation of the arbitration agreement, I state
on the recording “This is our Arbitration Agreement which
y’all already done one of these it’s just for us. It’s just saying
if there is a dispute between y’all and us about the home
we’ll hire a third party to come in as a settlement agent to
resolve the issue.” The Arbitration Agreement is handed to
Banks and signed by her. There is no question asked by
Banks or any statement made by Banks questioning the
document in any way.

7.

The recording continues through the closing wherein Banks
and the Regional representatives have friendly conversations
about the home and all disclosures made and signed at the
closing.

[27], Ex. 1 at p. 1-2.
As these quotations make clear, the parties present vastly different versions of events
regarding the closing.
Notably, although Regional heavily disputes Banks’ explanation as to the way in which the
closing unfolded and it apparently has in its possession an audio recording of the closing, Regional
did not attach the audio recording itself to its Reply [27]. The failure to attach that recording gives
this Court concern, as the recording would presumably be probative evidence as to the veracity of
each party’s contentions.
Although not synonymous, the Court finds noteworthy a relatively recent decision of the
District Court for the Southern District of Mississippi. See Byars v. Asbury Mgmt. Servs., LLC,
2020 WL 127989 (S.D. Miss. Jan. 10, 2020). There, the plaintiff, Byars, alleged that during her

14

term of employment with the defendants (collectively “Asbury”), she was subjected to sexual
harassment. Id. at *1. After Byars filed suit, Asbury argued that the claims were subject to binding
arbitration because Byars signed an arbitration agreement on the first day of her employment. Id.
Asbury produced an arbitration agreement bearing Byars’ digital signature. Id. Byars opposed
arbitration, arguing that she never signed the agreement. Id. at *2. As articulated by the district
court, “[t]here is a dispute as to whether the parties agreed to arbitrate. Byars states in her sworn
Affidavit that she did not receive/read (electronically or otherwise) or sign (digitally or otherwise)
the disputed arbitration agreement. However, Asbury states that Byars did acknowledge that she
read the Agreement and that she signed it with an electronic signature using a password that she
created and that was unique to her.” Id. (quotation marks omitted).
Recognizing this dispute regarding whether the parties agreed to arbitrate, the district court
ordered that the parties engage in limited arbitration-related discovery. In doing so, the court noted
that “courts in this district have generally denied arbitration-related discovery absent a compelling
showing that such discovery is required.” Id. at *3 (quoting American Gen. Life Ins. Co. v. Harper,
2016 WL 430609, at *2 (5th Cir. Feb. 3, 2016); Bell v. Koch Foods of Miss., LLC, 2009 WL
1259054, at *3 (S.D. Miss. May 5, 2009)) (quotation marks omitted). However, the court held that
Byars’ contention that she never signed the arbitration clause at issue went to the very existence
of an arbitration agreement and therefore ordered that the parties engage in limited arbitrationrelated discovery as to that issue. Id.
This Court is cognizant that neither party has requested arbitration-related discovery.
However, similar to the concerns regarding the existence of an arbitration agreement in Byars, the
Court harbors concerns as to the circumstances surrounding Banks’ execution of the purchase
agreement. The Court has before it competing contentions (in the form of Affidavits) as to the

15

closing, yet it does not have an audio recording that would presumably provide significant insight
as to the way in which the closing unfolded. In light of these discrepancies, the Court finds it
appropriate to order the parties engage in limited arbitration-related discovery. The discovery shall
be limited to facts related to Banks’ unconscionability arguments.
Notably, Banks shall not be permitted to engage in discovery pertaining to the issues that
the Court has previously resolved in this Order and Memorandum Opinion. Stated differently, the
discovery is very limited. The Magistrate Judge will hold a conference and enter a separate Order
regarding the parameters of this limited discovery.3
For these reasons, Regional’s Motion [18] is DENIED without prejudice. Following the
discovery period, Regional may refile its request to compel arbitration. If Regional chooses to do
so, it shall attach to that filing a copy of the audio recording for the Court’s review. Furthermore,
in briefing a re-filed motion, the parties shall focus only on the issues left open via today’s ruling.
In other words, the parties shall not attempt to relitigate the issues that the Court has already
resolved herein.
B.

Cavalier’s Motion [29]

Cavalier also seeks a declaration that Banks’ claims against it are subject to binding
arbitration.
As indicated above, Cavalier’s request is based on a different arbitration agreement than
Regional’s request. The fifth page of the purchase agreement between Banks and Regional is
entitled “Notice of Manufacturer’s Warranty.” [18] at p. 5. That Notice provides as follows:
1.

You are purchasing a new mobile home that includes a one
(1) year Manufacturer’s Warranty.

3

Banks also makes arguments concerning substantive unconscionability. In particular, she contends that
she cannot afford the arbitration costs, among other things. She has provided no evidence to support those
contentions. Limited discovery will provide an opportunity for Banks to develop that argument and for
Regional to be able to oppose it.
16

2.

Included with your mobile home is your Home Owner’s
Manual with a “30 Day Inspection Punch List” that should
be completed and mailed to the manufacturer.

3.

If your mobile home is found to be defective after this
transaction, the Buyer should contact the manufacturer if it
is within the one (1) year Manufacturer’s Warranty period.
After this period, Buyer assumes the entire cost of servicing
or repair to the home.

...
8.

Buyer should follow the instructions contained in the Home
Owner’s Manual to maintain the Manufacturer’s Warranty.

[18], Ex. 1 at p. 5.
The page also contains an acknowledgement section, which provides:
By signing below, the Buyer agrees to hold the seller harmless from
any loss and the Buyer acknowledges that he/she has read each and
every word in the above notice of Manufacture’s [sic] Warranty
Agreement and that the Buyer fully understands all of the language
in this agreement; furthermore, the Buyer also acknowledges that
he/she is fully aware that there will be absolutely no service,
warranty or improvements made by Regional to the home being sold
of any kind: limited, expressed or implied.
Id.
According to Cavalier, the homeowners manual was shipped inside the kitchen drawer of
the mobile home when it left Cavalier’s facility. In her Affidavit, Banks states that she “found a
Homeowners Manual from Cavalier which included its year warranty.” [34], Ex. 1 at p. 2. The
homeowners manual indeed included within it a warranty entitled “One Year Limited Warranty
and Binding Dispute Resolution Agreement.” [29], Ex. 3 at p. 1. The binding dispute resolution
agreement includes language mandating that claims against Cavalier be pursued via arbitration. It
is undisputed that Banks did not sign the homeowners manual nor did she sign the warranty
contained within it.
17

Cavalier contends that the dispute resolution agreement contained within the warranty is
enforceable and that Banks is estopped from opposing its enforceability since she sought benefits
under the warranty. Banks asserts otherwise. She contends that she never agreed to arbitrate any
potential claims against Cavalier and that she was unaware of the dispute resolution agreement
contained within the homeowners manual at the time of closing. In other words, she takes the
position that she did not assent to arbitration in connection with any potential warranty claims. She
likewise disagrees with Cavalier’s estoppel defense, as well as raising an unconscionability
argument.
At the outset, the Court notes that the mere fact that Banks did not sign a document
containing an arbitration agreement with Cavalier is not dispositive, as a nonsignatory may be
bound by an arbitration provision pursuant to the direct benefits estoppel doctrine. See, e.g.,
Terminix Int’l, Inc. v. Rice, 904 So.2d 1051, 1058 (Miss. 2004). The Mississippi Supreme Court
has described the doctrine as follows: “direct-benefit estoppel involves non-signatories who,
during the life of the contract, have embraced the contract despite their non-signatory status but
then, during litigation, attempt to repudiate the arbitration clause in the contract.” Freese v.
Mitchell, 2014 WL 1946593, at *8 n. 8 (Miss. 2014) (citations omitted).
The Court also notes that each party points to persuasive authority to support their
respective positions.
On one hand, Banks urges this Court to consider the Tennessee Court of Appeals decision
in Capps v. Adams Wholesale Co., Inc., 2015 WL 2445970 (Tenn. Ct. App. 2015). There, the
plaintiffs purchased decking material “from Greeneville Builders Supply. The product was
manufactured by TAMKO Building Products, distributed through Dealer’s Warehouse
Corporation, and installed by Todd Brown. Plaintiffs were advised that the product came with a

18

lifetime warranty but were not given any documentation of the warranty prior to the purchase.” Id.
at *1. Each bundle of the product instead contained the following notice:
This product is covered by a TAMKO limited warranty. All other
warranties are expressly excluded. You may obtain a copy of the
limited warranty from your dealer, by calling 800-641-4691, or from
our web site: tamko.com.
Id.
The warranty itself contained an arbitration provision. Id. After becoming dissatisfied with
the product, the plaintiffs filed suit against the manufacturer for negligence and breach of warranty,
to which the manufacturer responded with a motion to compel arbitration. Id. The trial court denied
the motion, and the manufacturer appealed. Id. at *2. The Tennessee Court of Appeals affirmed,
providing the following reasoning:
In this case, Plaintiffs were not provided with a copy of the limited
warranty that contained the arbitration agreement prior to their
purchase or when the product was delivered for installation. The
notices provided on the product did not reference an arbitration
agreement or provide any indication that acceptance of the product
was tantamount to acceptance of an arbitration agreement. Plaintiffs,
like any ordinary consumer, did not consult their warranty to contact
the manufacturer of the product until after they experienced an issue,
approximately six months after the product was installed. Under
these specific circumstances, we hold that an arbitration agreement
was not formed because there was never an objective mutual assent
to the terms of the agreement when Plaintiffs were not notified that
such an agreement existed.
Id. at *3.
On the other hand, Cavalier asks the Court to give deference to the Alabama Supreme
Court’s decision in Southern Energy Homes, Inc. v. Ard, 772 So.2d 1131 (Ala. 2000). The facts of
Ard are similar to the case at bar—the plaintiffs (the Ards) purchased from a retailer (Southland)
a mobile home that had been manufactured by Southern Energy. Id. at 1132. A homeowner’s

19

manual contained a warranty issued by Southern Energy to the Ards. Id. Also included in the
homeowner’s manual was an arbitration agreement. Id.
The trial court declined to enforce the arbitration agreement against the Ards, but the
Alabama Supreme Court reversed. Id. at 1134. In doing so, the court noted: “[w]hile the Ards’
arguments dispute their assent to the arbitration language and attack the effectiveness of the
delivery of the arbitration language, no evidentiary materials of record support the Ards in this
regard except the absence of any signatures by the parties in the Home Owner’s Manual.” Id. at
1134 (emphasis in original). After noting that issue, the Alabama Supreme Court held that the Ards
were bound to the arbitration provision for they “accepted the benefits of the warranty containing
the arbitration provisions” and “cannot simultaneously claim the benefits of a contract and
repudiate its burdens and conditions.” Id. (citations omitted).
As these cases make clear, different courts have reached different conclusions on claims
regarding this issue. Of course, neither of those cases are binding on this Court.
As far as binding authority, Cavalier urges this Court to consider the Mississippi Supreme
Court’s decision in Terminix. There, David Rice signed a contract with Terminix, pursuant to
which Terminix would protect David and his wife, Cynthia’s, home against termite infestations in
exchange for an annual fee. Id. at 1053. The contract contained an arbitration provision. Id. The
Rices eventually discovered extensive termite damage to their home and, after unsuccessfully
attempting to resolve the matter with Terminix, filed suit in the Circuit Court of Jones County. Id.
The trial court denied Terminix’s motion to compel arbitration, holding (1) that the Rices did not
know they were submitting to arbitration when David signed the contract; (2) that the arbitration
clause was unconscionable; and (3) that the contract was one of adhesion. Id.

20

The Supreme Court reversed. Id. Among other issues, the Supreme Court addressed the
Rices’ contention that Cynthia should not be bound by the arbitration provision since she did not
sign the contract. Id. at 1057-58. The court easily rejected that argument, holding that Cynthia was
bound by the arbitration provision pursuant to ordinary principles of contract law, including
equitable estoppel. Id. at 1058.
This Court finds Terminix distinguishable. Unlike David Rice, at the time Banks signed
the purchase agreement, she had no knowledge whatsoever that the manufacturer’s warranty
contained a dispute resolution agreement. She had no way to know of its existence. The Notice of
Manufacturer’s Warranty contained various pieces of information related to the manufacturer’s
warranty, such as a thirty-day inspection punch list, but it contained no indication whatsoever that
the manufacturer’s warranty contained within it a dispute resolution agreement. It likewise did not
provide a copy of the manufacturer’s warranty nor was Banks offered an opportunity to request to
review the manufacturer’s warranty. This is quite different than Terminix, where David Rice
signed a contract that indisputably contained an arbitration provision.
The pertinent facts of this case are rather simple. Banks signed a purchase agreement with
Regional that placed her on notice of a one-year manufacturer’s warranty. However, despite
providing information as to several aspects of the warranty, the purchase agreement provided no
notice whatsoever that the warranty contained a dispute resolution agreement. Presumably, the
purchase agreement could have done so, but it undeniably did not.4 Under Cavalier’s theory, Banks
should nevertheless be subject to the dispute resolution agreement contained in the manufacturer’s
warranty because she has since sought benefits under the warranty. Stated differently, even though

4

In making this observation, the Court is of course cognizant that the purchase agreement was presumably
prepared by Regional—not Cavalier; however, the Court’s greatest concern at this stage is the lack of
knowledge provided to Banks.
21

Banks contracted for a warranty and was not made aware of the arbitration agreement contained
within the warranty at the time of contracting, she should still be forced to arbitrate her claims
because she actually sought to enforce the contractual rights to which she agreed. This is
inequitable, and the Court declines to sanction such a theory in the absence of binding authority
that it do so. Cavalier has pointed to no such authority.5
Ultimately, although the FAA established a strong policy favoring arbitration requiring
courts to “rigorously enforce agreements to arbitrate,” courts cannot enforce an arbitration
agreement against a party who did not agree to arbitrate. East Ford, Inc. v. Taylor, 826 So.2d 709,
713 (Miss. 2002) (quoting Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 226, 107 S. Ct.
2332, 2337, 96 L. Ed. 2d 185 (1987)). At closing, Banks was made aware of the existence of a
manufacturer’s warranty. This was part of her consideration and agreement to purchase the
manufactured home. But she was not provided a copy of the manufacturer’s warranty nor was she
provided notice that it contained a dispute resolution agreement. She did not agree to arbitrate her
claims against Cavalier, and the dispute resolution agreement is therefore not enforceable against
her. See JP&G, LLC v. Voss, 331 So. 3d 569, 579 (Miss. Ct. App. 2021) (quoting Pre-Paid Legal
Serv. Inc. v. Battle, 873 So. 2d 79, 83 (Miss. 2004)) (“A party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.”). Cavalier’s Motion [29] is DENIED.

5

Had Banks been placed on notice of the arbitration provision in the manufacturer’s warranty at the time
of closing, the outcome might very well be different. However, it is undisputed that she was not aware of it
at the time of contracting. This fact is critical to the Court’s conclusion.
22

Conclusion
For the reasons set forth above, Regional’s Motion to Compel Arbitration [18] is DENIED
without prejudice. The Magistrate Judge will hold a status conference and set deadlines associated
with the limited arbitration-related discovery ordered herein, as well as a deadline for Regional to
re-file a motion to compel arbitration if it desires to do so. As indicated above, should Regional
desire to re-urge a request for arbitration, it shall produce with such a request a copy of the audio
recording of the closing.
Cavalier’s Motion to Compel Arbitration [29] is DENIED. However, the Court will STAY
all proceedings associated with Banks’ claims against Cavalier until the arbitration issues
associated with Banks’ claims against Regional are resolved.6
SO ORDERED, this the 27th day of March, 2024.
/s/ Sharion Aycock
UNITED STATES DISTRICT JUDGE

6

Banks’ Motion for Leave to File Sur-Reply [31] and her Motion for Extension of Time [33] are DENIED
AS MOOT.
23