IN THE SUPREME COURT OF MISSISSIPPI

NO. 2000-IA-00184-SCT

B. C. ROGERS POULTRY, INC. AND

BANK OF MORTON

v.

TOMMY WEDGEWORTH

ON MOTION FOR REHEARING

DATE OF JUDGMENT: 01/19/2000

TRIAL JUDGE: HON. ROBERT G. EVANS

COURT FROM WHICH APPEALED: SMITH COUNTY CIRCUIT COURT

ATTORNEYS FOR APPELLANTS: RONALD C. MORTON

GEORGE R. FAIR

LARRY SPENCER

LYNN P. LADNER RISLEY

ATTORNEYS FOR APPELLEE: JOHN W. CHRISTOPHER

EUGENE COURSEY TULLOS

NATURE OF THE CASE: CIVIL - CONTRACT

DISPOSITION: AFFIRMED AND REMANDED - 09/15/2005

MOTION FOR REHEARING FILED: 07/07/2005

MANDATE ISSUED:

EN BANC.

RANDOLPH, JUSTICE, FOR THE COURT:

¶1. The motion for rehearing is den ied. This Court’s previous opinions are withdrawn, and

these opinions are substituted therefor.

¶2. Tommy Wedgeworth sued B.C. Rogers Poultry, Inc. (“Rogers”) and the Bank of Morto n

(“Bank”) in the Circuit Court of Smith County, Mississippi. The Bank filed its answer with a

multicount counterclaim against Wedgeworth. Rogers pled the affirmative defense of2

arbitration in its answer. Subsequ ently, Rogers filed a motion to stay claim and compel

arbitration on March 5, 1999. On April 27, 1999, the Bank filed a Motion to Dismiss and

joined Rogers’s motion to compel arbitration. The circuit court denied the motion to compel

arbitration, and we granted Rogers and the Ban k permission to bring this interlocutory appeal,

see M.R. A.P. 5. Before briefing was complete on this appeal, Rogers filed for bankruptcy.

The bankruptcy proceeding has concluded, and all claims against Rogers have been discharged.

Therefore, the issue before this Court is whether the trial court erred in d enying the Bank’s

motion to compel arbitration. We affirm the trial court’s denial of the motion to compel

arbitration.

FACTS

¶3. Wedgewor

th was a contract poultry grower for Rogers. Since the 1960's, the

Wedgeworth family had contracted with Rogers to grow chickens owned and ultimately

processed by Rogers, for a fee. Rogers and Wedgeworth had entered into numerous Broiler

Growing Agreements which designated what each parties’ obligations were with respect to the

growing and processing of the chickens. The Broiler Growing Agreements generally provided

that Rogers would supply chickens, feed, and advice to Wedgeworth, and Wedgeworth would

provide housing and labor to care for Rogers’s chickens. Wedgeworth would then be paid by

Rogers b a sed upon the efficiency at which the flock of birds converted pounds of feed to

pounds of meat. The contract under which the Bank seeks to compel arbitration was between

Wedgeworth and Rogers and was executed on February 5, 1997. It was for a stated term of

three years and contained this arbitration clause:

ARBITRATION3

ALL DISPUTES OR CONTROVERSIES ARISING UNDER THIS

AGREEMENT, INCLUDING TERMI NATION THEREOF, SHALL BE

DETERMINED BY A THREE MEMBER ARBITRATION PANEL (THE

“PANEL”) SELECTED BY THE PARTIES TO THIS AGREE MENT, IN

ACCORDANCE WITH TH E PROVISIONS OF THIS AGREEMENT, AND

SUCH DISPUTE OR CONTROVERS Y SHALL BE JUDGED PURUSANT TO

THE RULES AN D PROCEDURES OF THE AMERICAN ARBITRATION

ASSOCIATION (AAA), AND THE FINDINGS OF SUCH PANE L SHALL BE

FINAL AND BINDING ON ALL THE PARTIES TO THIS AGREEMENT. Each

party to any dispute hereunder shall appoint an arbitrator, qualified by the AAA,

to serve on the panel, with the third panel member to be selected by the two

appointed members. Each party shall pay the fees, costs, and expenses

associated with the arbitrator selected by that party, and the fees, costs, and

expenses associated with the third arbitrator shall be shared equally by both

parties, as accrued. In the event of a final adjudication by the panel, all fees,

costs, and expenses incurred by the successful party as a result of the dispute,

including attorneys fee s and arbitrator fees, shallbe bourn by the unsuccessful

party.

The parties agree and recognize that the business of raising, processing, and

producing poultry products is ex tensively involved in interstate commerce, and

that various loans and extensions of credit made to GROWER and COMPANY

are directly rel

ated thereto. The parties stipulate that the Federal Arbitration Act

is applicable to the ag r eement. THE PARTIES STIPULATE THAT THE

PROVISIONS OF THIS ARBITRATION CLAUSE SHALL BE A COMPLETE

DEFENSE TO ANY SUIT, ACTION, OR PROCEEDING INSTITUTED IN ANY

FEDERAL, STATE, OR LOCAL COURT OR BEFORE ANY

ADMINISTRATIVE TRIBUNAL WI T H RESPECT TO ANY CONTROVERSY

OR D ISPUTE ARISING DURING THE PERIOD OF THIS AGREEMENT AND

WHICH IS ARBITRABLE AS SET FORTH IN THIS AGREEMENT. The

arbitration provisions of this agreement shall, with res pect to such controversy

or dispute, survive the termination or expiration of this agreement.

None of the previo us contracts between Wedgeworth and Rogers contained an arbitration

clause. Further, this clause did not state that it was applicable to disputes which existed before

its execution.

¶4. Preceding and following the execution of the Broiler Growing Agr eement, the Bank and

Wedgeworth entered into a s eries of other contracts, none of which contained an arbitration1 The Bank and Wedgeworth entered into a series of promissory notes dated: March

14, 1995, August 17, 1995, December 21, 1995, January 22, 1997, October 7, 1997, and

April 29, 1998.

4 clause. 1 There was no evidence presented that any of the Bank/Wedgeworth contracts were

simultaneously executed or were part of a global transaction.

¶5. On December 1, 1998, Wedgeworth filed a su it in the Circuit Court of Smith County,

Mississippi. Wedgeworth asserts that beginning in 1982, Rogers and the Bank forced and

coerced him to assign co llateral and/or borrow money on Rogers’s behalf. Furthermore,

Wedgeworth alleged that the defendants violated the provisions of Miss. Code Ann. § 75-21-1

in their formation of trusts and combines in restraint and hindrance of trade. Wedgeworth also

alleges that in 1995-1996, R ogers interfered with a sale of Wedgeworth’s farm in retaliation

for th e grower legislation lobbying efforts of Wedgeworth’s sister. Wedgeworth further

alleges th at in April of 1996, Rogers forced and coerced him to make upgrades to his farm and

equipment which was also in retaliation for the lobbying efforts of his sister.

ANALYSIS

¶6. The Bank asserts that the trial court erred in denying the motion to compel arbitration

because the dispute arises out of the contract w hich contains the arbitration clause.

Wedgeworth alleges that his claims against the Bank originated before the contract and

therefore are outside the scope of the contract containing the arbitration clause.

¶7. We review de novo the grant or denial of a petition to compel arbitration. East Ford,

Inc. v. Taylor , 826 So. 2d 709, 713 (Miss. 2002).

I. Did the circuit court err in denyin g the Bank’s motion to compel

arbitration?2 The contract also would automatically renew for one successive three-year term

unless written notice was given.

5 A. The arbitration clause does not apply retroactively to conduct which occurred

prior to the execution of the February 5, 1997 Broiler Growing Agreement.

¶8. Our law requires this Court to accept the plain meaning of a contract as the intent of the

parties if no ambiguity exists. I.P. Timberlands Operating Co. v. Denmiss Corp. , 726 So. 2d

96, 108 (Miss. 1998). Furthermore, “[c]ontracts are solemn obligations and the Court must

give them effect as written.” I d. We agree with the U.S. Supreme Court that, “we do not

override the clear intent of the par ties, or reach a result inconsistent with the plain text of the

contract, simply because the pol icy favoring arbitration is implicated.” E EOC v. Waffle

House, Inc.

, 534 U.S. 279, 294, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002). Here, the language

of the Broiler Growing Agreement does not include a single word or phrase which expresses

an intent by the parties t hat the arbitration clause should be applied retroactively to conduct

occurring prior to its execution. Au contraire, the plain language states otherwise.

¶9. The first paragraph of the Broiler Growing Agreement reads as follows: “Effective for

broiler flocks placed on GRO WER’S farm on or after 2-5-1997 or after execution of this

Agreement by GROWER and COMPANY whichever occurs later.” (emphasis added). The

Broiler Growing Agreement was executed by the grower, Wedg eworth, and the company,

Rogers, on February 5, 1997. The Bank was neither a party to the contract, nor a signatory to

the contract or any other related contract on th at date. Furthermore, the plain language of

section six clearly reads as follows: “for a term of three years.” 26

¶10. The three-year term Broiler Growing Agreement cont ains no language revealing an

intent by the parties to suggest, much less require, retro active application of the arbitration

clause to putative claims which arose prior to the date of the agreement. Of significance is the

uncontested fact that during the years proceeding an d following the execution of the Broiler

Growing Agreemen

t, the Bank and Wedgeworth entered into a series of other contracts, not

one of which contained an arbitration clause. This Court remains unconvinced, as the law

requires, that Wedgeworth knowingly, intelligently, and voluntarily waived his fundamental

right to a jury trial, when all contracts in effect at the time of the alleged tortious conduct,

regardless o f whether the contracts were between the Bank and Wedgeworth or Rogers and

Wedgeworth, failed to contain arbitration clauses. S ee D.H. Overmyer Co. v. Frick Co.

, 405

U.S. 174, 184, 92 S. Ct. 775, 31 L. Ed. 2d 124 (1972). The plain text of the contract between

Rogers and Wedgeworth, upon which the Bank relies, contains no language evid encing

Wedgeworth’s inten

t to waive his fundamental right to a jury trial in a dispute with the Bank or

Rogers for prior alleged wrongdoing.

¶11. Wedgeworth all

eges that Rogers and/or the Bank tortiously interfered with a proposed

sale of W edgeworth’s farm and forced and coerced Wedgeworth to make upgrades to his farm.

The events as alleged in the complaint o ccurred in 1995-1996 when the contractual

relationships between Rogers a nd Wedgeworth, and separately between Wedgeworth and the

B ank were governed by contracts that did not have arbitration clauses. The U.S. Supreme Court

has stated that, “arbitration is a matter of contract and a party cannot be required to submit to

arbitration any dispute which he has not a greed to submit.” A T&T Techs., Inc. v. Commun.

Workers of Am. , 475 U.S. 643, 648, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986). The Supreme7

Court has also said that, “§ 4 of the FAA does not confer a right to compel arbitration of any

dispute at any time; it confers only the right to obtain an or der directing that ‘ a rbitration

proceed in t he manner provided for in [the parties'] agreement

. ’ " Volt Info. Scis., Inc. v.

Bd. of Trustees of Leland Stanford Junior Univ. , 489 U.S. 468, 474-75, 109 S.Ct.

1248,1253, 103 L. Ed. 2d 488 (19 89) (quoting 9 U.S.C. § 4) (emphasis not in statute).

Neither the February 5, 1997, agreem ent, nor the other agreements, provide for the arbitration

of events which occurred before the contract sub judice was executed.

¶12. This appears to be the first time that this Court has considered the retroactive

application of an arbitration clause. Prudence requires this Court to consider the precedents

of other jurisdictions before undertaking such an invasive intrusion into the Bill of Rights and

the Mississippi Co nstitution, by denying a party their constitutional right to a jury trial, absent

the party voluntarily contracting away that right.

¶13. The text of the arbitration clause is narrow and limited in scope. The Fifth Circuit has

made a distinction between “narrow” and “broad” arbitration clauses, classifying a claus e as

narrow when it limits arbitration to claims which "arise under the contract. ” Pennzoil

Exploration & Prod. Co. v. Ramc o Energy Ltd., 1 39 F.3d 1061, 1067 (5th Cir. 1998). The

arbitration clause in the case sub judice is “narrow”, in that i t requires arbitration of “disputes

or controversies arising under this agreement .” (emphasis added). This arbitration clause

expressly states and is focused only o n those disputes arising under the February 5, 1997,

Broiler Growing Agreement. It does not include broader language that might be construed or

interpreted to cover earlier disputes between the parties. S ee Sec. Watch, Inc. v. Sentinel Sys.

,

Inc. , 176 F.3d 369, 374 (6th Cir. 1999) (where the court stated that, “[h]ad the parties i ntended8

to apply the new ADR proce sses to disputes arising under the previous contracts, we believe

they would have done so explicitly.”). Furthermore, “to interpret the arbitration clause to apply

ret roactively would cause Plaintiff to forego [his] vested right to litigate an accrued claim.”

Coffman v. Provost * Umphrey Law Firm, L.L.P.

, 161 F. Supp. 2 d 720, 727 (E.D. Tex. 2001),

aff’d , 33 Fed. Appx. 705 (5 th Cir. 2002).

¶14. The Sixth Circuit further held in Security Watch that an arbitration c lause in a 1994

dealer agreement did not cover disputes relating to products shipped under earli er agreements

that did not contain arbitration provisions. 176 F.3d 369. In concluding that previous

ship ments were not included in the scope of the arbitration provision, the Sixth Circuit

concluded that the scope of the arbitration provision did not extend over time. I d. at 372. The

court found that the agreement specifically detailed the term of the agreement to be twelve

months, and “[did] not purport to reach disputes related to the pre-1994 agreement[s]. I d

. at

372. The same can be said of the Broiler Growing Agreement here. It specifically provided

for the effective dates of the agreement: beginning February 5, 1997 and extending fo r a term

of three years; unless extended; no less , no more. Had the parties intended otherwise, they

could easily have incorporated language to that effect.

¶15. Furthermore, the text of the arbitrat ion clause reads it is effective, “with respect to any

controversy or dispute arising during the period of this ag reement . . . .” (Emphasis added).

The period of this agreement is from February 5, 1997- February 5, 2000, as indicated by the

plain unambiguous language of the contract and does not purport to extend to conduct which

occurred prior to the execution of this agreement.9

¶16. In Coffman

, the district court held th at claims arising while earlier agreements were

in effect, which did not contain arbitration clauses, were n ot arbitrable, even though the most

recen t agreement contained an arbitration provision. In determining this, the court classified

the arbitration clause as being narrow in scope. 161 F. Supp. 2d at 725.

¶17. Here, the arbitration provision contai ned neither language that was broad enough to

cover events which predated the contract’s executi on, nor language which would broaden its

application by containing terms such as “applies to all transactions occuring before or after

execution” or “all transactions bet ween us” or “all business with us.” Where such a clause

exists, a legal basis to apply the arbitration clause retroactively may exist. This is not the case

here; however, as the arbitration clause referred to “disputes or controversies arising under this

agreement,” and did not contain language or speak in terms of the parties’ “overall business

relationship” or “overall business transactions.” This narrow clause has a time specific limited

scope, i.e., “three years,” and event s pecific limited scope, i.e. “disputes or controversies

arising un der this agreement.” Our law prohibits this Court from rewriting an unambiguous

term of statement of intent and broadening an otherwise narrow arbitration clause, to grant

nonnegotiated rights to one party, especially when the conduct predated the contract execution.

¶18. The Bank directs this Court to Beneficia l National Bank, U.S.A. v. Payton , 214 F.

Supp. 2d 679 (S.D. Miss. 2001), where the trial judge held that an arbitration provision was

broad enough to apply retroactively to events which predated the amendment of the agreement.

Ho wever, the arbitration provision in P ayton is dissimilar to the provision presently before this

Court and is therefore distinguishable. Furthermore, this Court cannot ignore the language of

Payton stating that numerous courts have recognized the following:10

if [an] arbitration clause contains retroactive ti me-specific language, e.g., a

phrase reading "this agreement applies to all transactions occurring before or

after this agreement," then [the court] may apply the arbitrat i on provision to

events relating to past events. Or, if the arbitration clause contains language

stat ing that it applies to "all transactions between us" or "all business with us,"

then [the court] may apply the arbitration clause retroactively.

Id. at 6 88-89 (quoting K enworth of Dothan, Inc. v. Bruner-Wells Trucking, Inc.

, 745 So. 2d

271, 275 (Ala. 1999) (internal footnote omitted). No such language is found within the

arbitration provision at issue here.

¶19. The dissent seeks refuge in the entire agreement clause to assert that the Broiler

Growing Agreement governs disputes which arose while other prior non arbitrable contracts

were in effect. The entire agreement clause in the Broiler Growing Agreement contained the

following language:

This Agreement constitutes the entire agreement be tween the parties hereto,

replacing and su

p erseding any and all prior oral or written agreements between

the parties, and the same may not be altered, modified , in whole or in part,

except in writing. This Agreement and all rights and obligations of the parties

hereunder shall be governed under the laws of the State of Mississippi.

This reliance is misplaced, because Wedgew orth has made no claim of breach of any contract,

present or prior, between himself, Rogers, and the Bank. Indeed, his complaint does not allege

non-performance or breach of any contract involving the Bank, and to succeed in his litiga tion,

Wedgeworth is not required to show a breach of any contract.

¶20. The Sixth Circuit in Security Watch c onsidered an entire agreement provision

contained in a subsequently executed contr act and found that it was inappropriate to read the

merger clause as superseding the prior contracts and stated that,11

Merger clauses are routinely incorporated in agreement s in order to signal to

the courts that the parties agree that the contract is to be considered completely

integrated. A completely integrated agreement must be interpre ted on its face,

and thus the purpose and effect of including a merger clause is to preclude the

subsequent introduction of evidence of p r eliminary negotiations or of side

agreements in a proceeding in which a court interprets the d ocument. See 2

FARNSWORTH ON CONTRACTS § 7.3 at 215-25.

176 F.3d at 372.

¶21. Also, the court in Coffman found that the purpose of an integration clause is to trigger

the parol evidence rule which precludes the enforcement of inconsistent or prior agree ments

in a finalized contract, and held that,

In this case, the integration clause prevents provisions or ob ligations in the

1994 Partnership Agreement, th e 1996 Partnership Agreement, or the 1996

Amendment No. 1 from being enforce able in the 1998 Partnership Agreement.

However, the integration clause does not necessarily require the conclusion that

Plaintiff's claims for breach of t he 1994 and 1996 Partnership Agreements fall

within the scope of the arbitration clause.

161 F. Supp. 2d at 728.

¶22. Likewise, in the case sub judice, the integration clause prevents provisions or

obligations in prior agreement s from being enforceable in the February 1997 agreement, but

it does not necessaril y follow that it requires the conclusion that the plaintiff’s claims which

arose when other agreements were in effect, whether related or not to the prior broiler growing

agreements, fal

l within the scope of an arbitration clause contained in a subsequently executed

contract.

B. Scope of Clause does not cover the Dispute between Wedgeworth and the Bank

¶23. The arbitration clause does not cover even ts which precede the execution of the

contract. In addition, the scope of the clause does not cover this dispute between Wedgeworth12

and the Bank. “If the [arbitration] clause is narrow, the matter should not be referred to

arbitration or the action stayed, unless the court determi nes that the dispute falls within the

clause.” C omplaint of Hornbeck O ffshore (1984) Corp.

, 981 F.2d 752, 754-55 (5th Cir.

1993). The dispute in this case does not fall within the narrow language of the clause which

states that only disputes “arising under” the agreement be arbitrated. The agreement is entitled,

“BROI LER GROWING AGREEMENT” and sets forth what the company agrees to do and what

the grower agrees to do in terms of the broiler flocks that are placed on the grower’s farm after

a certain date and for a defined term of years. For example, the “COMPANY agrees to

[d]eliver a flock of baby chicks for GROWER to manage, care for and raise,” and the

“GROWER agrees [t]o, pro p erly house, care for, feed and administer medicine to the chickens

. . . .” The disputes relating to the al leged tortious conduct did not a rise under this Broiler

Growing Agreement.

¶24. As this Court has stated, “[i]t is possible for the parties in the agreement to limit the

scope of the arbitration in any way that is desired.” H orne v. State Bldg. Com m’n , 222 Miss.

520, 76 So. 2d 356, 359 (1954). The parties to the Broiler Growing Agreement limited the

scope of the arbitration clause to: disputes “arising under” the agreement, which governed the

Br oiler Growing relationship between Rogers and Wedgeworth, and this Court should not

rewrite and expand the Broiler Growing Agreement to govern relationships between

Wedgeworth and the Ban k when the Bank could have required a broad arbitration clause in its

business relations with Wedgeworth, had it only chose to do so.

¶25. Wedg

eworth’s contractual relationship with the Bank was established and memorialized

in six separate promissory no tes, not one of which contained an arbitration clause. The Bank13

was engaged in business and co ntractual relationships with Wedgeworth throughout the time

frame of the events complained, and at any time it could h ave insisted on including arbitration

clauses as to “all claims,” but it did not.

C. Equitable Estoppel

¶26. “ Equitable estoppel is an extraord inary remedy and should only be invoked to prevent

unconscionable results.” H arrison Enters., In c. v. Trilogy Commc’ns, Inc . 818 So. 2d 1088,

1095 (Miss. 2002). “The doctrine of equitable estoppel should be applied cautiously and only

when equity clearly requires it.” I d

. (quoting B right v. Michel

, 242 Miss. 738, 137 So. 2d

155, 159 (1962)).

¶27. The dissent raises the doctrine of equitable e stoppel as espoused in G rigson v. Creative

Artists Agency, L.L.C.

, 210 F.3d 524 (5th Cir. 2000), which alth ough instructive, this Court

is not bound to follow. G ri gson discusses two scenarios where a party should be equitably

estopped from denying an arbitratio n clause’s applicability to a non-signatory. First, G rigson

opines that equitable estoppel will allow a nonsignatory to compel arbitration, “when the

signatory to a written

agreement containing an arbitration clause must rely on the terms of the

written agreement in asserting its claims against a nonsignatory.” Id. at 527. This situation is

not before us, as Wedgeworth is not relying on the terms of the Broiler Growing Agreement

in asserting his claims against the Bank.

¶28. Grigson n

ext states that equitable estoppel will allow a nonsignatory to co mpel

arbitration, “when

the signatory to the contract containing an arbitration clause raises

all egations of substantially interdependent and concerted misconduct by both the nonsignatory14

and one or more of t

he signatories to the contract.” I d. The dissent concludes that the Bank

may compel arbit ration because Wedgeworth “raises allegations of substantially

interdependent and concert ed misconduct by both the non-signatory and one or more of the

signatories to the contract.” (¶ 48 infra). Therefore, our analysis will focus on the

intertwined-claims test.

¶29. In Grigson the plaintiff’s allegations were “intertwined with, and dependent upon

, the

distribution agreement.” I d. at 529 (emphasis added). Wedgeworth, however, does not rely

u pon the Broiler Growing Agreement in asserting his claims. Wedgeworth’s claims, as

discussed previously, are not even within the scope of the Broiler Growing Agreement.

¶30. Even though the plaintiff’s allegations are not dependent upon an agreement, state law

principles might provide for the arbitration of disputes between a nonsignatory and a signatory

to a contract, where there are allegat ions of substantially interdependent and concerted

misconduct. A non-signatory should have standing to compel arbitration where the nonsignatory has a close legal relationship, such as, alter ego, parent/subsidiary, or agency

relationship, with a signatory to the agreement. See Terminix Int’l, Inc. v. Rice, 2004 So. 2d

2823074 (Miss. 2004) quoting Washington Mut. Fin. Group, LLC v. Bailey

, 364 F.3d 260,

267 (5 th Cir. 2004) (“A nonsignatory party may be bound to an arbitration agreement if so

dictated by the ordinary principles of contract and agency.”)

. S ee also Sunkist Soft Drinks,

Inc. v. Sunkist Growers, Inc.

, 10 F.3d 753, 757 (11th Cir. 1993); J.J. Ryan & Sons, Inc. v.

Rhone Poulenc Textile, S.A. , 863 F.2d 315 (4th Cir. 1988); I nterocean Ship. Co. v. Nat’l

Ship. & Trading Corp

., 523 F.2d 527, 539 (2d Cir. 1975). However, a third party who is a15

non-signatory to a contract should not be able to enforce an arbitration agreement, under the

intertwined claims test, where there is no alter ego, parent /subsidiary, agency, or other form

of close leg

al relationship alleged, and where the “intertwined claims” do not depend on the

agreement, neither of which are present in thi s case. See P each v. CIM Ins. Corp.

, 816 N.E.2d

534 (I ll. App. Ct. 2004) (where the court held arbitration would not be compelled absent an

agency relationship between a signatory and non-signatory).

¶31. Absent allegations of substantially interdependent and concerted misconduct between

a non-signatory and a signatory who have a close legal relationship, the Mississippi law of

eq uitable estoppel should first be examined to determine if conditions are present where

equity shoul d allow a non-signatory to compel arbitration. Other jurisdictions have declined

to adopt the theory in situations simila r to Grigson

. S ee Ervin v. Nokia, Inc.

, 812 N.E.2d 534

(Ill. App. Ct. 2004) (where the court declined to adopt the expanded interpr etation of equitable

estoppel).

¶32. Under Mississippi la w, equitable estoppel exists where there is a (1) belief and reliance

on some representation; (2) a change of position as a result thereof; and (3) detriment or

prejudice caused by the change of position

. Cothern v. Vickers, Inc., 759 So. 2d 124 1, 1249

(Miss. 2000); Covington County v. Page , 456 So. 2d 739, 741 (Miss. 1984).

¶33. We must consider the traditional elements of equitable estoppel, a s defined by this

Court, before expanding its application to deny litigants their constitutional right to a jury trial.

We are bound by our prior rulings which have defined equitable estoppel as follows:

Equitable estop pel is ‘defined generally as the principle by which a party is

precluded from denying any material fact, induced by his words or conduct upon16

which a person relied, where by the person changed his position in such a way

that injury would be suffered if such denial or contrary assertion was allowed.’

Duba rd v. Biloxi H.M.A., Inc. , 778 So.2d 113, 114 (Miss. 2000) (quoting K oval v. Koval

,

576 So. 2d 134, 137 (Miss. 1991)).

¶34. Th

e record before us fails to satisfy the requirements for the application of equitable

estoppel as de fined by our courts. It cannot be said that, when Wedgeworth signed the Broiler

Growing Agreement with Rogers, the Bank (1) believed and relied on the rep resentation (2)

changed its position as a result of the Broiler Growing Agreement and finally that (3) it

suffered detriment or prejudice as a result thereof. There is no proof that the Bank relied to

its detriment that Wedgeworth would arbitrate any claim he had against the Bank. The absence

of reliance is self evident by the Bank’s failure to raise arbitration as an affirmative defense

in its answer and then confirmed by its choice to liti g ate in court by invoking the jurisdiction

of the court by filing its counterclaim, followed by discovery.

¶35. To expand the doctrine of equitable estoppel would unf airly deny Wedgeworth access

to the courts and force him to arbitrate his claims again st the Bank, in spite of the fact that the

Bank wa s not a party to the Broiler Growing Agreement that Wedgeworth entered into with

Rogers.

¶36. Equity comes to the aid of tho se who may not or can not protect themselves. C ole v.

State, 608 So.2d 1313 , 1324 (Miss. 1992); J ohnson v. Howell

, 592 So. 2d 998, 1001 (Miss.

1991). The Bank had at least six opportunities to protect itself by inclusion of an arbitration

clau s e in its contracts with Wedgeworth, as a result of its own business relationship with17

Wedgeworth. It chose to not do so and therefore should not be granted rights under a contract

unrelated in scope or time to the events for which Wedgeworth makes claim.

CONCLUSION

¶37. The arbitration clause of the Broiler Growing Agreement is narrow, limited in scope

and contains no language revealing an intent by the parties to require retroactive app l ication

to putative claims which arose p rior to the date of the agreement. Furthermore, the elements

of equit able estoppel have not been satisfied. Finally, Wedgeworth has made no claim of

breach of any cont ract, present or prior, between himself, the Bank, and Rogers. Accordingly,

the ci rcuit court’s decision to deny the motion to compel is affirmed, and this case is

remanded for further proceedings.

¶38. AFFIRMED AND REMANDED.

WALLER,

P.J., EASLEY, GRAVES AND DICKINSON, JJ., CONCUR. SMITH,

C.J., DISSENTS WITH SEPARATE WRITTEN O PINION JOINED BY COBB, P.J., AND

CARLSON, J. DIAZ, J., NOT PARTICIPATING.

SMITH, CHIEF JUSTICE, DISSENTING:

¶39. The majority concludes that the language of the agreement does not contain a single

word or phrase which expresses an intent by the parties that the arbitration clause should be

applied retroactively to conduc t occurring prior to its execution. Furthermore, the majority

also concludes that the arbitration clause is narrow and does not cover the disputes in issue.

The majority also concludes that the B ank acceded to the jurisdiction of the trial court by

failing to raise arbitration in either its answer or affirmative defenses and invoked the

jurisdiction of the court by filing a counterclaim. These claims do arise unde r the arbitration18

provision of the contr act, and this Court should adopt the federal approach and conclude that

the Bank of Morton, as a non-signatory defendant, can compel arbit ration through the theory

of equitable estoppel. I cannot agree; and therefore, I must respectfully dissent.

¶40. “In dete rmining the validity of a motion to compel arbitration under the Federal

Arbitration

Act, courts generally conduct a two-pronged inquiry. The first prong has two

considerations: (1) whether ther e is a valid arbitration agreement and (2) whether the parties

dispute is within the scope of the arbitration agreement.” E ast Ford, I nc. v. Taylor , 826 So.

2d 709, 713 (Miss. 2002). The second prong considers “whether legal constraints external to

the parties’ agreement foreclosed arbitration of those claims.” Id. Under the second prong,

applicable contract defenses ava ilable under state contract law such as fraud, duress, and

unconscionability may be asserted to invalidate the arbitration ag reement without offending

the Federal Arbitration Act. Id.

I. Scope of Arbitration Agreement.

¶41. The only part at issue here is whether the par ties’ dispute is within the scope of the

arbitration agreement. Wedgeworth argues that the claims asserted in his complaint do not

arise under this contract because the facts upon which the causes of action are based arose

prior to the contract of February 5, 1997, a nd arose out of Wedgeworth’s relationship with

Rogers under preceding contracts which did not contain arbitration clauses. However, the first

sentence of the arbitration clause explicitly defines its scope by sta ting that “all disputes or

cont roversies arising under this agreement” are subject to arbitration. The contract in question

go verns the relationship between Rogers and Wedgeworth. Wedgeworth alleges that as a result

of this relationship, he was required to borrow money from the Bank and loan it to Rogers.19

Wedgeworth a lso claims that as a result of, and in retaliation for, his sister’s lobbying efforts,

Rogers required a prospective purchaser of his farm to commit to substantial cap ital

improvements to the farm as a prerequisite to approval of the sale. He further alleges that each

s uccessive contract became more demanding and required expenditures of substantial

sums of money for improv ing existing facilities or for the building of new facilities.

These claims are related to his alleged wrongful treatment by Rogers and the Bank. Thus, this

relationship is governed by the contract.

¶42. Furthermore, the arbitration clause, with regard to the Bank of Morton, s tates that

“vario us loans and extensions of credit made to GROWER and COMPANY are directly related

thereto.” Wedgeworth argues that these claims do not arise under the arbitration agreement

because they occurred prior to the signing of the contract containing the arbitration clause.

The majority state s that “the language of the Broiler Growing Agreement does not include a

single wo rd or phrase which expresses an intent by the parties that the arbitration clause should

be applied retroactively to conduct occurring prior to i t s execution. However, the contract has

a provision which explicitly states that all previous agreements between the parties are

replaced by this February 5, 1997 agreement . The contract also states:

This Agreement constitu tes the entire agreement between the parties hereto,

replacing and superseding any and all prior oral or writte n agreements between

the parties, and the sam e may not be altered, modified, in whole or in part,

except i n writing. This Agreement and all rights and obligation of the parties

hereunder shall be governed under the laws of the State of Mississippi.

Thus, by continuing the grower relationship and signing the Februa ry 1997 contract

Wedgeworth agreed that this contract replaced all other existi ng contracts between the

parties

. It is therefore absolute that any dispute that arose under a prior contract is governed20

by the arbitration

clause of the February 1997 contract. Furthermore, this Court has held that

doubts as to the availability of arbitration must be resolved in fav or of arbitration. I

P

Timberlands Operating Co. v. Denmiss Corp

. , 726 So. 2d 96, 107 (Miss. 1998) (citing

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.

, 460 U.S. 1, 1 03 S. Ct. 927, 74 L. Ed.

2d 765 (1983)). “[U]nless it can be said with positive assurance that an arbitration clause is

not susceptible of an interpretation which would cover the dispute at issue, then a stay pending

arbitration should be granted.” I d. (citing Wick v. Atlantic Marine, Inc.

, 605 F. 2d 166, 168

(5th Cir. 1979)).

II. Contract Equitable Estoppel

¶43. The majority holds that Wedgeworth “does not allege non-performance or b reach of any

contract and to succeed in his litigation, Wedgeworth is n ot required to show a breach of a ny

contract.” (emphasis added.) I fail to see how Wedgeworth can be successful and prove

damages without relying upon the various growers contracts from 19 82 forward. The door is

now effectively closed on the route. Should Wedgeworth attempt to rely upon and /or

introduce the contracts he is prohibited therefrom.

¶44. In con

cluding that the arbitration clause does not apply retroactively to disputes arising

before execution of the present agreement, the majority relies on Sixth Circuit cases.

Although those cases are instructive, this court is not bound to follow the Sixth Circuit.

¶45. This Court should apply the theory of equitable estoppel and hold that the Bank of

Morton, as a non-signatory defendant, can compel arbitration. The Fifth Circuit and the

Mississippi federal district courts have both recognized that in certain situations a nonsignatory to a contract containing an arbitr ation provision may compel arbitration against a21

signatory to the contract

on the theory of equitable estoppel. G rigson v. Creative Artists

Agency, L.L.C.

, 210 F.3d 524, 527 (5 th Cir. 2000); Primerica Fin. Servs., Inc. v. Coley , 192

F. Supp. 2d 655, 657 (N.D. Miss. 2002). According to those courts, there are two situations

in which a non-signatory to a contract can comp el arbitration against a signatory: (1) when the

signatory “raises allegations of substantially interdependent and concerted misconduct by both

the non-signatory and one or more of the signatories to the contract;” or (2) when the signatory

“must r ely on the terms of the written agreement in asserting its claims against the nonsi gnatory.” I

d. This Court should follow our own federal district courts and Fifth Circuit court

opinions for guidance here, rather than relying upon Sixth Circuit views.

¶46. The issue to ultimately be determined here is of first imp ression. This Court has not

direc tly discussed the issue of whether or not a non-signatory to a contract can compel

arbitration against a signatory through the t heory of equitable estoppel. However, the

reasoning of the Mississippi federal courts are persuasive, and this Court should follow their

reasoning.

¶47. Here, Wedgeworth “raises allegations of substantially interdependent and concerted

misconduct by both the non-signatory and one or more of the si gnatories to the contract.” I d.

In the complaint, Wedgeworth files suit against Rogers, a signatory to the contract, and the

Bank, a non-signatory to the contract. Wedgeworth alleges that the defendants forced him to

borrow money from the Bank and turn that money over to Rogers. Wedgeworth alleges that

the defendants, jointly and severally, violate d the provisions of Miss. Code Ann.§ 75-21-1 in

its formation of trusts and combines in restraint and hindr ance of trade. That statute

specifically

prohibits concerted action or joint misconduct. Therefore that allegation22

necessarily requires concert ed misconduct by both Rogers and the Bank. Wedgeworth further

alleges that as a part of the loan demanded by Rogers, he was also required to give an

assignment to the Bank.

¶48. Wedgeworth’s claims raise allegations of substantially interdependent and concerted

misconduct by both the non-signatory defendant and the signatory defendant. As such, this

Court should adopt the a pproach of the Fifth Circuit and the Mississippi federal district courts

and hold that a non-signatory to a contract containing an arbitration provision may compel

arbitration against a signatory to the contract on the theory of equitable estoppel if two

situations exist: (1) when the signatory raises alleg ations of substantially interdependent and

concerted misconduct by both the non-sig natory and one or more of the signatories to the

contract; or (2) when the signat ory must rely on the terms of the written agreement in asserting

its claims against the non-signatory. Therefore, I respectfully dissent because the Bank, as a

non-signatory to the contract, is entitled to compel arbitration since W edgeworth raises

allegations of s ubstantially interdependent and concerted misconduct by both the Bank and

Rogers. Furthermore, “arbitration is favored in the law.” G rigson, 210 F.3d at 526. S ee

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24-25, 103 S. Ct. 927,

74 L. Ed. 2d 765 (1983). The theory of equitable estoppel is applied in order to fulfill federal

pro-arbitration policy. Grigson , 210 F3d at 528.

¶49. Since I believe that thi s Court should adopt the Fifth Circuit and our own federal district

court approach and conclude that the Bank of Morton, as a non-signatory defendant, can

compel arbitration through the theo ry of equitable estoppel, I must respectfully dissent.

Wedgeworth’s claims alleged substantially interdependent and concerted misc onduct by both23

Rogers and the Bank and as such equitable estoppel does apply. Furthermore, these claims do

arise under the arbitration provision of the contrac t. Accordingly, I would hold that the circuit

court erred in denying the motion to compel arbitration, and I would reverse and render.

COBB, P.J., AND CARLSON, J., JOIN THIS OPINION.