Ross et al v. Quality Homes of McComb, Inc. et al
Filing
40
ORDER granting in part 14 Motion to Dismiss or, Alternatively, Compel Arbitration Signed by Honorable David C. Bramlette, III on November 16, 2017 (JBR)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
EARL ROSS, et al.
PLAINTIFFS
V.
CAUSE NO. 5:17-cv-46-DCB-MTP
QUALITY HOMES OF MCCOMB, INC., et al.
DEFENDANTS
OPINION AND ORDER
This cause is before the Court on a Motion to Dismiss or,
Alternatively, Compel Arbitration [Doc. No. 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 follows:
I.
BACKGROUND
Buyers 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.
on
an
arbitration
The motion before the Court centers
provision
in
an
agreement
manufacturer, the retail-seller, and the buyers.
between
the
Plaintiffs 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, ¶VI]. Defendant U.S. Bank,
N.A. (“U.S. Bank”) financed the purchase [Doc. No. 1, ¶VI].
As a 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 arbitration provision.
[Doc. No. 14-1, p. 2].
In 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. 14-1, p. 2]. The
provision also incorporates “applicable rules” of the American
Arbitration Association (“AAA”) [Doc. No. 14-1, p. 1].
About two weeks after purchase, transportation company MissLou Mobile Home Movers, LLC (“Miss-Lou”) delivered the home to
Quality’s lot [Doc. No. 1, ¶VIII]. The Rosses inspected the home
and found it deficient in several respects:
2
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, ¶IX]. The Rosses also detected an unpleasant chemical
odor [Doc. No. 1, ¶VIII].
Hoping to convince Quality to fix the issues, the Rosses
visited Quality several times [Doc. No. 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,
¶XII]. Ultimately, Quality refused the Rosses’ request to exchange
their manufactured home for another [Doc. No. 1, ¶XIII] and U.S.
Bank refused their request to rescind the financing contract [Doc.
No. 1, ¶XIV].
Two-and-a-half years after inspecting the home, the Rosses
sued Quality, Miss Lou, Platinum, Harbin, and U.S. Bank alleging
(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, Counts I–X].
In 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. 12(b)(6). Quality moves,
in the alternative, to compel arbitration [Doc. No. 14]. Although
3
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. 13].
II.
DISCUSSION
Arbitration disputes present three questions: (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, 514 U.S.
938, 942 (1995).
The 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. 2014). 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.,
830 F.3d 199, 202 (5th Cir. 2016).
The delegation clause analysis consists of two steps. Reyna,
839 F.3d at 378. First, the Court examines state-law contractformation principles to determine whether the Limited Warranty
contains a valid agreement to arbitrate and, if so, as to which
4
parties. Id. Second, the Court determines whether the Limited
Warranty contains a valid delegation provision. Id.
Compelled arbitration turns upon the terms of the contract,
not upon an occurrence or a transaction. See Janvey v. Alguire,
847 F.3d 231, 240 (5th Cir. 2017). 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. 2016). In
so doing, the Court does not consider the merits of the Rosses
underlying claims. Tittle v. Enron Corp., 463 F.3d 410, 425n. 12
(5th Cir. 2006) (citing AT & T Techs., Inc. v. Commc’ns Workers of
Am., 475 U.S. 643, 649 (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.
A.
Existence of a Valid Agreement to Arbitrate
The Federal Arbitration Act (“FAA”), 9 U.S.C. § 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
(2011) (internal quotation marks omitted).
5
Under 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
for the revocation of any contract.” 9 U.S.C. § 2.
A
contract
“involves”
commerce
if
it
affects
interstate
commerce. Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 274
(1995). Contracts between citizens of different states “involve”
commerce under the FAA. See, e.g., Pedcor Mgmt. Co. Welfare Ben.
Plan v. Nationals Personnel of Texas, Inc., 343 F.3d 355, 361 n.
29 (5th Cir. 2003);
Mesa Operating Ltd. P’ship v. Louisiana
Intrastate Gas Corp., 797 F.2d 238, 243 (5th Cir. 1986).
Here, the Limited Warranty “involves” commerce under the FAA
because it was entered into by Platinum (an Alabama corporation),
Quality
(a
Mississippi
citizen),
and
the
Rosses
(Mississippi
citizens) [Doc. No. 14-1, pp. 1-2]. Therefore, the FAA applies and
the arbitration provision in the Limited Warranty is “valid,
irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.” 9 U.S.C. §
2.
The Court will analyze contract-formation as to each party,
determining
which,
if
any,
have
agreed
to
arbitrate,
before
addressing the delegation issue. Reyna, 839 F.3d at 377; Kubala,
830 F.3d at 202.
6
a).
The Signatory Plaintiffs
The Rosses argue that no agreement to arbitrate exists because
the arbitration provision is unconscionable and violates federal
law [Doc. No. 22, pp. 3-4]. The Court addresses each contention in
turn.
i). Unconscionability
It is unclear whether the Rosses challenge the validity of
the Limited Warranty, the arbitration provision, or both. The
distinction is important in the context of a delegation provision
because,
if
valid,
it
empowers
the
arbitrator
to
adjudicate
challenges to the Limited Warranty itself. See Allen v. Regions
Bank, 389 Fed. App’x 441, 445 (5th Cir. 2010). Because the Rosses
fail to specify the object of their challenge – the Limited
Warranty versus the arbitration provision – the Court considers
all of the arguments which could conceivably relate to the validity
of the arbitration provision.
The Rosses admit signing the Limited Warranty containing the
arbitration provision but contest the latter’s validity on the
ground of unconscionability [Doc. No. 22, pp. 5-6]. Although they
do not so specify, it appears that the Rosses intend to argue that
the arbitration provision
is procedurally unconscionable.
See
Caplin Enter., Inc. v. Arrington, 145 So. 3d 608, 614 (Miss. 2014)
(distinguishing
procedural
unconscionability
7
from
substantive
unconscionability).
Specifically,
they
contend
the
Limited
Warranty “consisted of two pages of very small print” [Doc. No.
22, p. 3]. They complain that they “made no ‘decision’ to sign”
and
the
“alleged
‘agreements’
were
not
negotiated
nor
[sic]
bargained for” [Doc. No. 22, p. 3].
Procedural unconscionability connotes “a lack of knowledge,
lack of voluntariness, inconspicuous print, [or] the use of complex
legalistic language.” Smith v. Express Check Advance of Miss.,
LLC, 153 So. 3d 601, 609 (Miss. 2014).
Here, the Limited Warranty is a pre-printed form likely
offered to the Rosses on a take-it-or-leave-it basis [Doc. No. 141, pp. 1-2].
A
disparity in bargaining power
exists
between
consumers like the Rosses and major manufactured home companies
like Platinum and, to a lesser extent, retailers like Quality. But
“an
arbitration
agreement
may
not
be
labelled
unconscionable
simply because it carries with it aspects of adhesion.” Norwest
Fin. Miss. v. McDonald, 905 So. 2d 1187, 1194 (Miss. 2005). Indeed,
procedural unconscionability requires more. See Smith, 153 So. 3d
at 609-10.
For one, the Rosses do not contend that they did not know
what they were signing or that they signed the Limited Warranty
involuntarily. See Entergy Miss., Inc. v. Burdette Gin. Co., 726
So. 2d 1202, 1207-08 (Miss. 1998) (involuntariness a dispositive
factor in unconscionability analysis). The Rosses do not contend
8
that they lacked an opportunity to read the Limited Warranty. And
contrary
to
their
assertions,
the
terms
of
the
arbitration
provision in the Limited Warranty are neither set forth in “very
small print” nor in “exhaustive detail” [Doc. No. 22, p. 3].
This
is a two-page document with text set in an ordinary-sized font and
unsophisticated syntax susceptible to common understanding and
emphasized with boldface where relevant [Doc. No. 14-1, pp. 1-2].
The Rosses had a duty to read it before signing, Bailey v. Estate
of Kemp, 955 So. 2d 777, 783 (Miss. 2007), and their failure to do
so
does
not
make
the
arbitration
provision
procedurally
unconscionable. Thus, the Rosses have not met their burden of
showing unconscionability, and the Court proceeds to analyze the
Rosses’ statutory challenges.
ii). Federal Statutes
The
Rosses
next
contend
the
arbitration
provision
runs
counter to the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. §
2301
et
seq.,
and
the
National
Manufactured
Housing
and
Construction and Safety Standards Act (“NMHCSA”), 42 U.S.C. § 5401
et seq., but fail to explain why either statute invalidates the
Limited Warranty’s arbitration provision.
The Rosses’ position is unsupported by either statute. The
MMWA does not prohibit the arbitration of MMWA written warranty
claims. Walton v. Rose Mobile Homes LLC, 298 F.3d 470, 479 (5th
9
Cir. 2002) (“We hold that the MMWA does not preclude binding
arbitration of claims pursuant to a valid binding arbitration
agreement.”).
As
to
the
NMHCSA,
the
Rosses
point
to
Section
5421
as
“supersed[ing] the Federal Arbitration Act” [Doc. No. 22, p. 5].
But Section 5421 does no such thing. Section 5421 merely prohibits
manufactured home purchasers from waiving the rights afforded them
“under this chapter.” 42 U.S.C. § 5421. Those rights include
receipt of a notification of any defect in a manufactured home, 42
U.S.C. § 5414(a), and replacement of a manufactured home that
“cannot be repaired within sixty days from the date on which a
defect is discovered,” 42 U.S.C. § 5414(i). Nothing in the relevant
chapter grants manufactured home purchasers a statutory right to
a jury trial to which Section 5421’s non-waiver provision would
attach. Therefore, nothing in the Limited Warranty’s arbitration
provision
impermissibly
“waives”
any
of
the
rights
afforded
manufactured home purchasers under the NMHCSA, and the Rosses’
NMHCSA-based challenge to the arbitration provision lacks merit.
b). The Signatory Defendants
Platinum and Quality are parties to the Limited Warranty [Doc.
No. 14-1, pp. 1-2]. The Rosses do not dispute that Quality is a
party to the Limited Warranty; instead, they contend that Platinum
cannot avail itself of the terms of the Limited Warranty, including
10
the arbitration clause, because it did not sign the agreement [Doc.
No. 22, pp. 3-4].
Under Mississippi law, a signature is not always required to
create a contract. Indeed, “[t]he object of a signature is to show
mutuality or assent, but these facts may be shown in other ways.”
Carpenter Props., Inc. v. JP Morgan Chase Bank Nat’l Ass’n, 647
Fed. App’x 444, 450 (5th Cir. 2016) (quoting Turney v. Marion Cty.
Bd. of Educ., 481 So. 2d 770, 774 (Miss. 1985)).
Several facts suggest that Platinum assented to the Limited
Warranty. First, the Limited Warranty was prepared by Platinum and
Platinum’s company logo is prominently displayed on its first page
[Doc. No. 14-1, p. 1]. Second, the very nature of the Limited
Warranty —— a contract under which Platinum warrants the integrity
of its product —— confirms that Platinum intended to be bound by
it.1 Finally, the Rosses would not have sued Platinum for breaching
the Limited Warranty if they thought Platinum was not bound by it
[Doc. No. 14-1, Count II]. Thus, the Limited Warranty contains a
valid agreement to arbitrate as to Platinum and Quality, Reyna,
839 F.3d at 378, and the Rosses’ rejoinder that lack of a signature
precludes enforcement of the arbitration clause as to Platinum is
unavailing.
1 The Court also recognizes that it would be inequitable to allow the
Rosses to “have it both ways” — suing Platinum for breaching the Limited Warranty
on the one hand and, on the other, avoiding arbitration by contending Platinum
is not bound by the Limited Warranty for lack of a signature. See Washington
Mut. Fin. Grp., LLC v. Bailey, 364 F.3d 260, 268 (5th Cir. 2004).
11
Having
determined
that
the
Limited
Warranty
is
a
valid
agreement between Platinum, the Rosses, and Quality, the Court
turns to the non-signatory defendants —— Harbin, Miss-Lou, and
U.S. Bank.
c). The Non-Signatory-Defendants
Neither Harbin, Miss-Lou, nor U.S. Bank is a party to the
Limited Warranty containing the arbitration provision [Doc. No.
14-1, pp. 1-2]. Although the parties have not briefed the issue,
the Court considers whether these non-signatory-defendants can
compel the signatory-plaintiffs to arbitrate the claims against
them. See, e.g., Grigson v. Creative Artists Agency, LLC, 210 F.3d
524, 528-29 (5th Cir. 2000).
As non-signatory-defendants, Harbin, Miss-Lou, and U.S. Bank
can compel the Rosses, as signatory plaintiffs, to arbitrate their
claims under the doctrine of equitable estoppel if (1) the Rosses
must rely on the terms of the Limited Warranty containing the
arbitration provision in their suit against the non-signatorydefendants; or (2) the Rosses allege that the non-signatory and
signatory-defendants have committed “substantially interdependent
and concerted misconduct.” Grigson, 210 F.3d at 527 (internal
citations omitted).
The
first
factor
cuts
against
compelling
the
Rosses
to
arbitrate their claims against the non-signatory-defendants. The
12
Rosses cannot rely on the terms of the Limited Warranty to assert
claims against Harbin, Miss-Lou, and U.S. Bank – none of whom
warranted
anything
to
the
Rosses
under
the
Limited
Warranty
containing the arbitration provision.
Declining to apply equitable estoppel under the first factor
coheres with the policy underlying the doctrine. In this context,
equitable estoppel exists to prevent a plaintiff-signatory from
suing under a contract and then disclaiming the portions of it
that he dislikes. See Washington Mut. Fin. Grp., LLC, 364 F.3d at
268. No such danger exists here as to the non-signatory-defendants
because the Rosses cannot sue them under a warranty to which they
are non-parties.
The second factor also weighs against compelling the Rosses
to arbitrate their claims against the non-signatory-defendants.
Although the Complaint fails to state which claims the Rosses
purport to assert against which defendants, certain claims cannot
logically be linked to more than one or two defendants.
In fact, the claims which must apply only to the signatory
defendants — breach of warranty, violations of the NMHCA, and
misrepresentation — are unrelated to the claims which cannot
possibly
be
directed
at
any
defendants
other
than
the
non-
signatories – claims such as slander and violations of the Truth
in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq. Looking beyond
the Complaint’s indiscriminate assertion of all claims against all
13
defendants, the Court finds no “substantially interdependent and
concerted
misconduct.”
Grigson,
210
F.3d
at
527
(internal
citations omitted). A party cannot be sued for breaching a warranty
he did not make (the non-signatories made no warranties), a natural
person or business that does not sell or manufacture homes cannot
be
sued
under
the
NMHCA
(no
non-signatory
is
a
seller
or
manufacturer of manufactured homes), and an entity not involved in
consumer
signatory
credit
is
transactions
a
financial
cannot
be
sued
institution).
under
TILA
Although
(no
jumbled
stylistically, the claims asserted against the signatory and nonsignatory defendants are distinct practically and analytically.
Because
the
Rosses’
claims
against
the
non-signatory-
defendants are not based upon the Limited Warranty containing the
arbitration provision, and the Rosses have not alleged that the
non-signatory-defendants
and
signatory-defendants
engaged
in
“substantially interdependent and concerted misconduct,” the Court
declines
to
permit
the
non-signatory-defendants
to
compel
arbitration under Grigson.
Having concluded that (1) a valid agreement to arbitrate
exists between Quality, Platinum, and the Rosses; and (2) the nonsignatory-defendants
are
not
entitled
to
equitably
estop
the
Rosses from litigating, rather than arbitrating or mediating, the
claims asserted against them, the Court proceeds to the second
step of the Reyna inquiry, determining whether the Limited Warranty
14
contains a valid delegation provision empowering the arbitrator to
determine arbitrability. See Reyna, 839 F.3d at 378.
B.
Validity of Delegation Provision
A delegation provision in an arbitration contract transfers
the power to decide questions of arbitrability from a court to the
arbitrator. See Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
68-69
(2010).
unmistakably”
The
parties’
indicate
an
agreement
intent
to
must
arbitrate
“clearly
the
issue
and
of
arbitrability. AT & T Techs., 475 U.S. at 649.
An agreement that incorporates a body of rules under which an
arbitrator determines a dispute’s arbitrability is a “clear and
unmistakabl[e]” indication that the parties intended to delegate
adjudication of arbitrability to an arbitrator. Petrofac, Inc. v.
DynMcDermott Petro. Operations Co., 687 F.3d 671, 675 (5th Cir.
2012).
Here,
the
arbitration
provision
in
the
Limited
Warranty
expressly incorporates the AAA’s rules on arbitration [Doc. No.
14-1, p. 2].
The AAA Consumer Arbitration
Rules empower
the
arbitrator to “rule on his or her own jurisdiction, including any
objections with respect to the existence, scope, or validity of
the arbitration agreement or to the arbitrability of any claim or
counterclaim.”
See
American
Arbitration
Association,
Consumer
Arbitration Rules, Rule 14 – Jurisdiction, p. 17 (2014). Because
15
the Limited Warranty incorporates AAA Rules, which permit the
arbitrator
to
determine
arbitrability,
the
Limited
Warranty
reflects a “clear and unmistakable” intention to arbitrate the
issue of arbitrability. Petrofac, Inc., 687 F.3d at 675. Therefore,
the Limited Warranty contains a valid delegation provision, Reyna,
839
F.3d
at
378,
and
Quality,
the
Rosses,
and
Platinum
are
compelled to submit the dispute to arbitration or mediation, as
required by the Limited Warranty.
To be clear, the Court ventures no opinion as to whether the
Rosses purported claims against Quality and Platinum are within
the scope of the Limited Warranty’s arbitration provision. The
Court rules only that the Rosses, Quality, and Platinum are parties
to a contract —— the Limited Warranty —— containing a valid
delegation provision. The next step in the arbitrability analysis,
“decid[ing] in the first instance whether [the] dispute falls
within the scope of the arbitration provision,” Douglas, 757 F.3d
at 462, is for the arbitrator, not this Court. See Reyna, 839 F.3d
at 378-79.
C.
Stay of Litigation Pending Arbitration
Having found that Platinum, the Rosses, and Quality have
agreed
to
arbitrate
“delegation”
under
provision,
the
a
Limited
Court
16
now
Warranty
containing
considers
whether
a
this
litigation should proceed as to non-signatories Miss-Lou, Harbin,
and U.S. Bank.
If a court determines that an issue
is “referable to
arbitration” under § 2 of the FAA, then § 3 of the FAA directs the
court to stay the action pending arbitration. See 9 U.S.C. § 3.
Section 3, however, generally “only applies to parties to an
agreement containing an arbitration clause.” Hill v. GE Power Sys.,
Inc., 282 F.3d 343, 346 (5th Cir. 2002). Under the general rule
then, this suit should be stayed only as to the Rosses’ claims
against Platinum and Quality.
A Section 3 stay extends to a non-signatory only if three
conditions are met: “(1) the arbitrated and litigated disputes
involve the same operative facts; (2) the claims asserted in the
arbitration and litigation are ‘inherently inseparable’; and (3)
the litigation has a ‘critical impact’ on the arbitration.” Rainier
DSC 1, L.L.C. v. Rainier Capital Mgmt., L.P., 828 F.3d 356, 360
(5th Cir. 2016).
The first factor weighs against staying the litigation as to
non-signatories Miss-Lou, Harbin, and U.S. Bank. Although the
Rosses’ Complaint fails to specify which claims they purport to
assert
against
which
Defendants,
common
sense
dictates
that
certain factual allegations and legal conclusions can apply only
to specific defendants. For example, the operative facts with
regard to the Rosses’ slander claim against Harbin are limited to
17
the comments he is alleged to have made on the telephone on
November 15, 2014 [Doc. No. 1, ¶XII]. And as to U.S. Bank, the
only
operative
facts
are
those
concerning
the
Rosses’
communications with U.S. Bank regarding rescission of the contract
[Doc. No. 1, ¶XV]. Thus, the facts central to the litigation
against non-signatory-defendants Harbin, U.S. Bank, and Miss-Lou
differ markedly from the operative facts in the arbitration or
mediation proceedings against signatory-defendants Platinum and
Quality: the quality of the manufactured home, Quality’s related
representations
to
the
Rosses,
and
Quality
and
Platinum’s
compliance with applicable warranties.
The
second
factor
also
counsels
against
staying
this
litigation as to the non-signatories. Although the Rosses have
pleaded each purported claim against each defendant, and there is
some potential overlap, certain claims are inapplicable to certain
defendants. For example, the Rosses’ breach of warranty claim
cannot apply to non-signatory-defendants Harbin, Miss-Lou, and
U.S. Bank because they never warranted anything to the Rosses on
the condition or quality of the manufactured home. Similarly, the
Rosses’ TILA claim cannot apply to any signatory-defendant because
only U.S. Bank is a “creditor” with whom the Rosses consummated a
“consumer credit transaction.” See 15 U.S.C. § 1638.
The
third
factor
signatory-defendants,
also
supports
Platinum
and
18
proceeding
Quality.
This
without
the
litigation
between Miss-Lou, Harbin, U.S. Bank and the Rosses
“critically
impact”
the
arbitration
proceedings
will not
between
the
Rosses, Platinum, and Quality because the “operative facts” linked
to the plaintiffs’ dispute with the arbitration defendants — the
quality of the manufactured home and related representations —
differ from the facts relevant to the Rosses’ dispute with the
litigation defendants, i.e., the content of Harbin’s allegedly
slanderous statement and the nature of U.S. Bank’s representations
to the Rosses.
In sum, this Court’s adjudication of the merits of the Rosses’
claims against signatory-defendants Platinum and Quality should
not influence the arbitrator’s adjudication of the Rosses’ claims
against non-signatory-defendants Miss-Lou, Harbin, and U.S. Bank
because the arbitrator will confront different issues than this
Court. Therefore, the Court concludes that a Section 3 stay should
not extend to non-signatories Miss-Lou, Harbin, and U.S. Bank, and
proceeding with this litigation as to those defendants would not
“destroy the signatories’ right to a meaningful arbitration.”
Waste Mgmt. Inc. v. Residuous Industriales Multiquim, 372 F.3d
339, 343 (5th Cir. 2004).
III. CONCLUSION
The Rosses, Platinum, and Quality are parties to an agreement
containing a valid delegation provision transferring the power to
19
determine arbitrability from this Court to the arbitrator. The
Rosses, Platinum, and Quality, as signatories to the Limited
Warranty, shall proceed to mediation or arbitration, as required
by
the
Limited
Warranty’s
arbitration
provision.
A
stay
is
unwarranted, and the litigation will proceed in this Court as to
non-signatory-defendants Harbin, Miss-Lou, and U.S. Bank.
ACCORDINGLY,
IT IS HEREBY ORDERED AND ADJUDGED that the Motion to Dismiss
or, Alternatively, Compel Arbitration [Doc. No. 14] filed by
Defendant Quality Homes of McComb, Inc. is GRANTED IN PART as to
compelled arbitration, and Plaintiffs Earl and Maxcine Ross and
Defendants Quality Homes of McComb, Inc. and Platinum Homes, LLC
are ordered to submit the dispute to mediation and, if necessary,
binding arbitration, as required by the agreement between them;
IT IS FURTHER ORDERED AND ADJUDGED that all claims asserted
by Plaintiffs Earl and Maxcine Ross against Defendants Quality
Homes of McComb, Inc. and Platinum Homes, LLC are DISMISSED WITHOUT
PREJUDICE subject to a refiling of a future action to enforce any
arbitration award, and that any pending motions filed by Quality
Homes of McComb, Inc. or Platinum Homes, LLC are DENIED AS MOOT.
SO ORDERED this the 16th day of November, 2017.
/s/ David Bramlette_________
UNITED STATES DISTRICT JUDGE
20
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?