McIntosh Transp., LLC v. Love's Travel Stops & Country Stores, Inc.

339 So.3d 141

MCINTOSH TRANSPORT, LLC, Appellant

v.LOVE'S TRAVEL STOPS & COUNTRY STORES, INC. and Empire Truck Sales, LLC, Appellees

NO. 2021-CA-00154-COA

Court of Appeals of Mississippi.

May 10, 2022

ATTORNEY FOR APPELLANT: JAMES BRANDON JUSTICE, Oxford

ATTORNEYS FOR APPELLEES: SHEA STEWART SCOTT, Oxford, MICHAEL JEFFREY WOLF, Jackson, JULIA BRYANT JIMENEZ, Oxford

BEFORE WILSON, P.J., WESTBROOKS AND LAWRENCE, JJ.

WESTBROOKS, J., FOR THE COURT:

¶1. Following an incident in which a truck owned by McIntosh Transport, LLC (McIntosh) was damaged by an employee of Love's Travel Stops and Country Stores, Inc. (Love's), the truck was taken to Empire Truck Sales, LLC (Empire) for repair. Issues arose surrounding the repair and payment for same, and McIntosh filed an action against Love's and Empire including claims for bailment, negligence, gross negligence, res ipsa loquitur, and breach of contract. Empire and Love's filed motions to compel arbitration. The Lowndes County Circuit Court granted the motions. McIntosh appeals. Upon review, we reverse the decision of the circuit court and render a decision in favor of McIntosh regarding the motion to compel arbitration. We hereby remand the case to the circuit court for further proceedings.

FACTS AND PROCEDURAL HISTORY

¶2. At the time of the events giving rise to this action, McIntosh was a transport trucking company.¹ On May 22, 2019, an employee of McIntosh was delivering freight in a 2014 Cascadia 125 Freightliner truck. During the delivery, the driver stopped at Love's for routine servicing of the truck. A Love's employee accidentally primed the vehicle's fuel system with diesel exhaust fluid (DEF), rendering the truck unusable. A Love's employee called McIntosh and informed Jessica McIntosh (part-owner and secretary for the company) of the problem and told her that Love's would have the truck towed to Empire for repair. McIntosh alleged that Love's agreed to pay for the truck to be towed, the repairs, and a rental truck for McIntosh to use while repairs were underway.

¶3. On June 20, 2019, Love's informed Jessica McIntosh that the truck was ready to be picked up. She sent her nineteen-year-old son, Tamarcus Hardy, and a driver to Empire to retrieve the truck. Before he was allowed to leave Empire with the truck, Hardy was required to sign an invoice and a service worksheet. Both documents included an arbitration provision as part of the "Terms and Conditions of Sale."

¶4. The same day Hardy picked up the truck from Empire, the check engine light came on. McIntosh alerted Love's to the problem. Love's informed McIntosh that the truck could be returned to Empire and if the second repair stemmed from the first repair then Love's would cover the cost. McIntosh took the truck to Clarke Power Services (Clarke) despite the fact that Love's told McIntosh that if it opted to take the truck to a repair shop other than Empire, Love's would not cover the towing and repair costs. Ultimately, Clarke determined that the second repair was necessitated by DEF remaining in the truck's fuel system. Issues arose regarding Love's alleged failure to pay for the repairs and related expenses.

¶5. McIntosh sued Love's and Empire for bailment, negligence, gross negligence, res ipsa loquitur, and breach of contract.² Empire and Love's filed motions to compel arbitration or transfer the case to the Rankin County Circuit Court. In response, McIntosh argued that the only contract with Love's was the oral contract that arose when Love's offered to pay for repairs to McIntosh's truck. McIntosh also argued that there was no valid contract between it and Empire and that the arbitration provision was unconscionable. McIntosh based its arguments, in part, on the fact that Hardy was a nineteen-year-old minor when he retrieved the truck and signed the documents currently at issue, thus rendering the contract (and the included arbitration provision) invalid and unenforceable.

¶6. A hearing was held on Empire's motion, which was joined by Love's. Hardy testified that he was nineteen years old when he signed his grandfather's name (Terry McIntosh) to the documents containing the arbitration agreement.³ These facts are not disputed by Empire or Love's. Whether Hardy was given the opportunity to review the documents prior to signing is disputed. An employee of Empire stated that Hardy was given a copy of the invoice. Hardy said that he was not given copies of any of the documents he signed. The circuit court granted the motion to compel arbitration, but did not set forth findings of fact or conclusions of law. McIntosh appeals arguing that there is no valid contract and that the arbitration agreement is unconscionable.

STANDARD OF REVIEW

¶7. "The grant or denial of a motion to compel arbitration is reviewed de novo." Rogers-Dabbs Chevrolet-Hummer Inc. v. Blakeney , 950 So. 2d 170, 173 (¶11) (Miss. 2007) (quoting East Ford Inc. v. Taylor , 826 So. 2d 709, 713 (¶9) (Miss. 2002) ). Where factual findings exist, they are reviewed for abuse of discretion. Virgil v. Sw. Miss. Elec. Power Ass'n , 296 So. 3d 53, 59 (¶11) (Miss. 2020). The burden of proving a defense to arbitration is placed on the party resisting arbitration. Id. at (¶12) (citing Norwest Fin. Miss. Inc. v. McDonald , 905 So. 2d 1187, 1193 (¶11) (Miss. 2005) ).

DISCUSSION

I. The Contract

¶8. McIntosh sets forth multiple reasons that, if legally and factually sound, would invalidate the contract signed by Hardy when he retrieved the truck from Empire. Specifically, McIntosh asserts that the contract is not binding because there was no mutual assent or consideration, and Hardy was not old enough to sign the contract under Mississippi law. The circuit court did not provide detailed findings of fact and conclusions of law, so we do not know what weight (if any) was given to these arguments at the trial court level. But as this Court recently recognized in JP&G LLC v. Voss , 331 So. 3d 569, 575 (¶7) (Miss. Ct. App. 2021), "it [is] beyond the circuit court's authority to determine whether the Agreement in its entirety was a valid contract, and it [is] improper to use such determination as a basis for denying [or granting] the existence of an agreement to arbitrate." As held by the United States Supreme Court and quoted with approval by this Court,

attacks on the validity of the contract, as distinct from attacks on the validity of the arbitration clause itself, are to be resolved "by the arbitrator in the first instance, not by a federal or state court." For these purposes, an "arbitration provision is severable from the remainder of the contract," and its validity is subject to initial court determination; but the validity of the remainder of the contract (if the arbitration provision is valid) is for the arbitrator to decide.

Id. (quoting Nitro-Lift Techs. L.L.C. v. Howard , 568 U.S. 17, 20-21, 133 S.Ct. 500, 184 L.Ed.2d 328 (2012) ).

¶9. Based on the foregoing, the parties’ dispute regarding the validity of the contract is not properly before us. Accordingly, our review of the issues on appeal is limited to the validity of the arbitration agreement.

II. The Arbitration Agreement

¶10. "Courts have long recognized the existence of a liberal ... policy favoring arbitration agreements." McKenzie Check Advance of Miss. LLC v. Hardy , 866 So. 2d 446, 450 (¶7) (Miss. 2004) (internal quotation marks omitted). In determining the appropriateness of arbitration, we must apply a two-step analysis and consider (1) whether the parties agreed to arbitrate the dispute and (2) whether external legal constraints bar arbitration of the dispute. East Ford , 826 So. 2d at 713 (¶¶9-10). "[A]ll doubts concerning the scope of arbitrable issues, the construction of the contract language, and asserted defenses to arbitration must be resolved in favor of arbitration." MS Credit Ctr., Inc. v. Horton , 926 So. 2d 167, 175 (¶21) (Miss. 2006).

Step One: Whether the parties agreed to arbitrate.

¶11. McIntosh maintains that the arbitration agreement is unenforceable because it is unconscionable, but there are other issues that must be decided before we turn to McIntosh's contract defenses. First, we must determine whether the parties agreed to submit their dispute to arbitration. We arrive at the answer to this question by focusing on two factors: (1) whether a valid arbitration agreement exists and (2) "whether the parties’ dispute is within the scope of the arbitration agreement." East Ford , 826 So. 2d at 713 (¶9). In this instance, it is the validity of the arbitration agreement that is at issue rather than its scope.

¶12. "In applying traditional state-contract-law principles to make a determination on the question of arbitrability, the court presumes that parties intended courts to decide issues of substantive arbitrability, unless the parties clearly and unmistakably provide otherwise." Nethery v. CapitalSouth Partners Fund II L.P. , 257 So. 3d 270, 274 (¶19) (Miss. 2018) (internal quotation marks omitted). "The terms of the arbitration provision must be honored in a dispute over arbitrability. Therefore, arbitration of the issue of arbitrability is the mandatory result if those are the terms to which the parties have validly agreed." Greater Canton Ford Mercury Inc. v. Ables , 948 So. 2d 417, 422 (¶13) (Miss. 2007) ; see also Bank of Holly Springs v. Puryear ex rel. Est. of Brown , 309 So. 3d 598, 603 (¶15) (Miss. Ct. App. 2020) ("The parties’ agreement to arbitrate issues of arbitrability ... is controlling.").

¶13. The portion of the arbitration agreement that is relevant to this part of our analysis is set forth below:

a. CLAIMS AND DISPUTES COVERED. Except for those claims described below under the heading MATTERS NOT COVERED BY ARBITRATION, Empire and Customer agree that either party may elect to resolve by BINDING ARBITRATION all claims and disputes between us (Covered Claims). This includes, but is not limited to: all claims and disputes arising out of, in connection with, or relating

...