IN THE SUPREME COURT OF MISSISSIPPI NO. 2019-CA-00617-SCT DAV ID CHADWICK CARRICK AND STIFEL, NICOLAUS & COMPANY , INCORPORATED

v. BETTY E M. TURNER, BY

AND THROUGH SALLY JO TURNER WALLEY , SHERRA TURNER AND NANCY

TURNER GORDON, POA

DATE OF JUDGMENT: 03/11/2019 TRIAL JUDGE: HON. ROBERT P. KREBS TRIAL COURT ATTORNEYS: W I LLIAM HARVEY BARTON CLAIRE W . KETNER JOHN ERNEST W ADE, JR. COURT FROM W HICH APPEALED: GREENE COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANTS: JOHN ERNEST W ADE, JR. CLAIRE W . KETNER ATTORNEY FOR APPELLEES: W I LLIAM HARVEY BARTON NATURE OF THE CASE: CIVIL - CONTRACT DISPOSITION: REVERSED AND REMANDED - 07/30/2020 MOTION FOR REHEARING FILED: MANDATE ISSUED:

BEFORE KING, P.J., COLEMAN AND CHAMBERLIN, JJ. KING, PRESIDING JUSTICE, FOR THE COURT: ¶1. Betty e Turner invested approxim ately $2 m i llion into a s ecurities brokerage account that w as created and m anaged by David Carrick, an investm ent broker then em p loy ed with Morgan Stanley Sm ith Barney (Morgan Stanley). Carrick later becam e em ploy ed with Stern, Agee & Leach, Inc. (Stern Agee). T urner and C arrick signed an A ccount Application in orderto transf

er Turner’s f

unds to a Stern Agee account. The Account Application incorporated by ref erence a Client A ccount Agreem ent that contained an arbitration provision. Eventu a lly , Stif el, Nicolaus & Com

pany , Inc. (Stif

el), a c quired and m erged w ith Stern Agee. T urner f iled

a lawsuit against Carrick and Stif el alleging negligent m anagem ent and supervision of her investm ent account. Carrick and Stif el m oved to com

pel arbitration. The trial court denied their m otion to com

pel arbitration, and Carrick and Stif el appealed. B ecause the trial court erred by f

ailing to com

p el arbitration, this Cour t r e v e r ses the trial court’s judgm ent and

rem ands the case to the trial court f or f urther proceedings consistent with this opinion. FACTS AND PROCEDURAL HISTORY ¶2. In 2007, Turner hired Carrick, an investm ent broker, to invest and m anage approxi ma t e l y $ 2 m illion. At that tim e, Carrick was em ploy e d with Morgan Stanley

. Carrick’s em

ploy m ent with Morgan Stanley ended in 2009. 1 ¶3. Carrick secured new em ploy m ent with the brokerage f irm S tern Agee. O n Septem ber 15, 2009, Carrick m et with Turner in order t o transf er her f unds into a Stern Agee account that Carrick would c ontinue to m anage. To execute the transf er, Stern Agee required Turner
to o pen a new acc o u n t w i t h i t. Accordingly , Turner com p leted and s igned a Stern Agee Account Application 2 that i ncorporated b y r ef erence a Cli e nt A c c ount Agreem ent. Paragraph
F of the A ccount Application stated, “ I have r eceived a copy of the CLIENT AC C O U NT

1 T u r n er alleg e d i n th e c o m p l ain t th at C arrick w as term i n a ted f o r p ro f essio n al m isco n d u ct.

2 C arrick co s ig n ed th e A cco u n t A p p licatio n o n th e sig n a tu re lin e d esig n ated f o r th e reg istered rep resen tativ e. 2AGREEMENT and agree to the term s and c onditions thereof

. B y s i g n ing below, the

custom er acknowledges receiving a copy of this ag r e e me nt.” The Account A greem ent did not contain signature lines. ¶4. The Account Application and the Account Agreem ent e a c h included predispute arbitration provisions. Paragraph H of the Account Application provided,
H. I/WE U NDERSTAND T H AT THE CLIENT ACCOUNT A G R EEMENT PROVIDED TO ME/US C ONTAINS I N N U M B E R E D P A R A G R A P H 2 2 , A P R E
- D I S P U T E A R B I T R A T I O N C L A U S E R

E Q U I RI N G A L L D I S P U T E S U N D E R THIS AGREEMENT TO BE SETTLED BY BINDING A R B I T R A T I O N . B Y S I G N I N G B E L O W , I / W E ACKNOWLEDGE THAT I/WE H AVE RECEIVED A COPY OF THIS AGREEMENT. ¶5. During litigation, S tif el produced two separate Account Agreem ents and an af f idavit attesting that the two Account Agreem ents were the only two A ccount Agreem ent s i n use during the tim e Turner was a client. The f irst Account Agreem ent S tif el produced w as dated 2012, d espite Turner having signed her Account Application in 2009. 3 Stif el later produced

an earlier Account Agreeme n t , without inf orm ation regarding the tim e period when Stern Agee/Stif el used that Account Agreem ent. Neither party has identif ied w hich version of the Account Agreem ent Turner received, 4 although b oth appear to concede that she received one

3 S tif el d id n o t p ro du ce th e e x act A cco u n t A g reem en t r eceiv ed b y T u rn er b ecau se th at A c co u n t A g reem e n t w o u ld h av e b een in T u rn e r’s p o ssessio n . S tif el p ro du ced a co p y o f th e A c co u n t A g reem en t i t b eliev ed T u rn er h ad receiv ed an d it b eliev ed h ad b een in u se in 2 0 0 9 ; th at p r o d u ced A cco u n t

A g reeem en t, h o w ev er, w as d ated 2 0 1 2

. 4 C arrick an d S tif

el a d m it in f

o o tn o te 3 o f th e i r b r i e f t h at “[ b ]ecause the separate Client Account A greem ent does not bear Ms. T urner’s signature and the original was lef t in her possession, Def

e ndants w ere unable to provide an absolute guarantee that the exem plar provided with their M otion to Com pel was the v ersion Ms. Turner received in Septem ber of 3of them , or, at least, that she a cknowledged r eceiving one of them

. Paragraph 19 5 of the 2012

Account Agreem ent provided, 19. ARBITRATION . T H I S A G RE E M E N T C O N T A I N S A P RE D I S PUTE ARBITRATION CLAUSE. BY SIGNING AN ARBIT R A TION AGREEMENT THE PARTIES AGREE AS FOLLOWS: (A) ALL P ARTIES TO T HIS AGREEM E N T A RE GIVING UP THE RI G H T T O S U E E A C H O T H E R I N C O URT, I NCLUDING THE RI G H T TO A TRIAL BY JURY, EX CEPT AS PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED. Stif el a ttested that the discrepancy between the Account Application paragraph num ber and the 2012 A ccount A g r e em ent paragraph num ber was a ty

pographical error: the Account Application had not been updated to ref lect the change in the p aragraph num ber i n which the arbitration provision was located. ¶6. Paragraph 22 of

the older Account Agreem ent states, 2 2 . A RB I T R

A T I O N . T H I S AGREEMENT CONTAI N S A P RE D I S P U T E ARBITRATION CLAUSE. B Y SIGNING AN ARBITRATION AGREEMENT THE PARTIES AGREE AS FOLLOWS: (A) ALL P A R T I E S TO THIS AGREEMENT ARE GIVING UP THE RI G H T T O S U E E A C H OTHER IN COURT, INCL U D I N G T H E RI G H T TO A TRIAL B Y JURY, EX CEPT AS PROVIDED BY THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED. Both paragraph 19 o f the 2012 Account Agreem ent and paragraph 22 of the older Account

2009.”

5 P arag rap h 2 2 o f th e 2 0 1 2 A cco u n t A g reem en t (th e p arag rap h to w h ich th e A cco u n t A p p l icatio n ref

ers) co n tain s a c h o ice o f law p ro v isio n . T h at ch o i ce o f law p ro v isio n d o es ref eren ce th e arb i tratio n p ro v isio n co n tain ed in p ara g rap h 1 9 , statin g , “[ t] h i s ag reem en t, in clu d in g th e arb i tratio n p ro v isio n s co n tain ed h e r ein , sh all b e g o v ern ed b y th e law s o f th e S tate o f A lab a m a . . . .” T h e o ld er A c co u n t A g reem en t lik ew ise p r o v id es th at th e law s o f A l ab am a g o v ern . 4Agreem ent are f airly lengthy , and dif

f er in som e of

the details. ¶7. The 2012 Account Agreem ent also included an “assignm e n t of rights” provision that stated, 26. ASSIGNMENT OF RIGH T S . I understand a nd agree that y ou m ay assign y our righ ts and duties under this Agreem ent to any subsidiary , affiliate, or successor b y m erger or consolidation w ithout notice to m e, or to any other entity after thirty day w r i tten notice to m e. This A greem e nt shall be binding on and benefit m y and y our heirs, ex ecutors, adm i nistrator, successors, and assigns. The older Account Agreem e nt provided that the agreem ent shall “inure to the benef it of [ Stern Agee’s] assigns and successors, by m erger, consolidation or otherwise.” ¶8. In 2015, Stern Agee a ssigned its rights and duties under its agreem ent with Turner to Stif el. 6 Stif el acquired and m e rged with Stern Agee. Once the acquisition and m erger were f inalized, Carrick was then em ploy ed with Stif

e l. ¶9. On January 8, 2018, Turner, by and through her three daugh t e r s , p u r suant to their durable power of a ttorney , 7 f iled a lawsuit a ga i n s t C arrick and Stif el alleging negligent

m anagem ent and supervision of Turner’s investm e n t account. ¶10. The def

endants f iled a Motion to Com

pel Arbitration and Stay Litigation. They argued

t h a t, pursuant to the F ederal Arbitration Act ( FAA), Turner’s A ccount Applicatio n a n d Account A greem ent m andated that t h e parties resolve the d ispute in binding arbitration. In

6 S tif el, N ico lau s & C o m

p an y , In c., C arrick ’s co d ef en d an t , is th e p rin cip al s u b sid iary o f S t i f el F in an cial C o rp o ratio n , an d it serv es as th e arm th ro u g h w h ich th at co rp o ratio n co n d u cts its w ealth m an ag em en t b u sin ess in th e U n ited S tates.

7 Wh en T u rn er f

iled th i s law su it, sh e w as eld erly an d su f f erin g f ro m d em en tia. S h e later d ied o n A u g u st 9 , 2 0 1 8

. 5response, Turner contended that she was not bound to arbit r a t ion because ( 1) Turner

contracted with Stern Agee and not Stif el, thus precluding Stif

el f rom enf orcing the contract; (2) Turner d id not receive notice o f Stern Agee’s assignm ent of i ts rights to Stif el as a
consequence of the two entities’ m erger; and (3) the contract was invalid b ecause the Account Appli cation cited paragraph 19 of the Account A g reem ent and the arbitration clause was f ound in paragraph 22 of

the 2012 Account Agreem ent. ¶11. The trial court held two hearings on the m otion to com pel arbitrat i o n . At the f

irst hearing, the trial court o rdered the parties to conduct lim ited discovery in order (1) to produce the Account A greem ent Turner originally received with her Account Application, (2) to clarif y the m e rger of and business relationship b e t w e en Stern Agee and Stif el, and (3) to produce inf

o rm a tion expounding on Stif el’s relationship to Stif

e l Financial Corporation. ¶12. The parties conducted the specif ic, lim i ted discovery

. The def e n d a n t s f

iled a supplem ental a f

f idavit in support of their initial m otion that explained, “Stif el Nicolaus and its parent com

p any , Stif el Financial, are both successors by m e r ger to Stern A gee Group and its s ubsidiary Stern Agee & Leach.” As an exhibit to their supplem ental a f f i d a v i t , the def endants provided a prior, virtually identical version o f the Account Agreem ent, which was, according to the def

endants, “the only other v ersion in existence at the t im e.” In response to the def endants’ s upplem ental a f

f idavit, Turner f

iled a supplem ental brief in which she, f or the f irst tim e, asserted that the arbitration clause was not e nf orceable b ecause she did not sign the Account Agreem ent. ¶13. Af ter the second hearing, the trial co u r t f o u n d that “there was no g enuine contract

6between the parties” and that “the arbitration clause f ails.” The trial c ourt consequently denied the def e ndants’ m otion and ordered that the case be set f or trial. ¶14. The def

endants appeal and argue the trial court erred by ref using to com

pel arbitration because ( 1) it s ubjected arbitration to a higher l evel o f scrutiny than is required by the FAA, (2) the Account Application and the Account Agreem ent are not “conf l icting and conf

using” and thus do not negate the arbitration provision, and (3) a valid agreem ent to arbitrate exists between the parties. STANDARD OF REVIEW ¶15. “This C ourt reviews questions o f law d e novo.” F radella v. S

eaberry , 952 So. 2d 165, 170 (Miss. 2007) (internal quotation m arks om itted) (quoting Pre-Paid L egal S ervs., Inc. v. Battle , 873 So. 2d 79, 82 (Miss. 2004)). Accordingly , this Court “review[ s] the grant or denial of a m otion to com

pel arbitration under the de n ovo standard o f r evie w.” Id . (internal quotation m ark om itted) (quoting Battle , 873 So. 2d at 82). DISCUSSION I. FAA ¶16. Under the FAA, Congres s e s t ablished “a n ational policy f a voring arbitration and withdrew the power of the s tates to require a judicial f orum f or the resolution of claim s which the contracting parties a g reed to resolve by arbitration.” C ovenant Health & Rehab. of Picayune, LP v. Estate of Moulds ex rel. Braddock , 14 So. 3d 695, 698 (Miss. 2009) (internal quotation m ark o m itted) ( quoting IP Tim berlands Operating Co. v. Denm i ss C orp. , 726 So. 2d 96, 107 (Miss. 1998)). “The FAA requires courts to place arbitration a greem ents ‘on equal

7f

ooting with all other contracts[ .]’” Kindred Nursing C trs. Ltd. P ’ship v. Clark , 137 S. C t. 1421, 1424, 197 L. Ed. 2d 8 06 (2017) (quoting DIRECTV , Inc. v. Im burgia , 136 S. Ct. 463, 465, 193 L. Ed. 2d 365 (2015)). It precludes courts f rom apply ing state law “ in a f ashion that disf avors or interf

eres with arbitration.” Id. (quoting AT&T Mobility, LLC v. Concepcion , 563 U.S. 333, 342, 131 S. Ct. 1740, 1747, 179 L. Ed. 2d 742 (2011)). ¶17. The FAA provides that
A written provision in

. . . a c ontract evidencing a transaction i n v o l v i n g [ interstate] comm e rce to settl e b y a r b i t ration a controversy thereaf ter arising out of such contract or transaction

. . . shall be valid, irrevocable, enf orceable, save upon such grounds as exist at law or in equity f o r the r evocation o f any contract. 9 U.S.C. § 2 (2012). Rely i ng on Congress’s authority under the C omm erce Clause, the FAA “creates a body of f

e deral and substantiv e l aw that i s applicable i n both state and f ederal courts.” IP T

im berlands Operating Co. , 726 So. 2 d at 107 (citing M oses H. Cone Mem ’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983)). ¶18. This Court “will respect the right of an i ndividual o r an entity to agree in advance of

a dispute to arbitration or other alternative dispute resolution.” I d. a t 104. “Ar t i c l e s o f
agreem ent to arbitrate, and awards thereon are to be liberally construed so as to encourage the settlem ent of disputes and the p revention of litigation, and every r easonable presum ption will be indulged in f

a vor o f the validity of arbitration proceedings.” Id. a t 106 (internal quotation

m arks om itted) (quoting Hutto v. Jordan , 36 So. 2d 809, 812 (Miss. 1948)). ¶19. “In determ i ning the validity of a m otion to com pel arbitration under the [ FAA], courts generally conduct a two-prong inquiry .” E. Ford, Inc. v. Taylor , 826 S o. 2d 709, 713 (Miss.

82002). The f i r s t p r ong determ ines “whether the parties intended t o arbitrate the dispute.” Harrison Cty. Com m ercial Lot, LLC v. H. Gordon Myrick, Inc. , 107 So. 3d 943, 949 (Miss. 2013) (intern a l q u o t ation m arks om itted) (quoting Scruggs v. Wyatt , 6 0 So. 3 d 758, 766 (Miss. 2 011)). “The f

irst prong has two considerations: (1) whether there is a valid arbitration
agreem ent and (2) whether the pa r ties’ dispute is within the scope of the arbitration
agreem ent.” Taylor , 826 So. 2d at 713. “Under the s econd prong, the United States Suprem e Court has stated the question is ‘whether legal constraints external to the parties’ agreem ent f oreclosed arbitration of thos e claim s.’” Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler–Pl

y m outh, Inc. , 473 U.S. 614, 626, 1 05 S. Ct. 3346, 87 L. E d. 2d 444 (1985)). “Under the s econd prong, applicable contract def enses a vailable under state contract law such

as f raud, duress, and unconscionability m ay be asserted to invalidate the arbitration agreem ent without of

f ending the Federal A rb i t r ation Act.” Id . (citing Doctor’s Assocs., Inc. v. Casarotto , 517 U.S. 681, 686, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996)).
II. W hether a valid arbitration agreement exists between the parties. 8 ¶20. The trial court f

ound that no contract, thus no agreem ent to arbitrate, existed between

t he parties, pronouncing that the Account Agreem ent w as “on its f ace, . . . co n f

u s i n g a n d conf licting.” This Court em

ploy s ordinary principals of contract law to determ ine whether a valid arbitration agreem ent exists. H. Gordon M yrick, Inc. , 107 So. 3d a t 950. If a contract

8 T u r n er d o es n o t assert an y state l aw co n tract d ef en ses, th u s w h eth er a v a lid arb itratio n ag reem e n t ex ists i s th e so le issu e b ef o re th is C o u rt. F u r

th er, g iv en o u r ru lin g th at th e trial co u rt sh o u ld b e rev ersed b ecau se a v alid arb itratio n ag reem en t ex i sts, w e d eclin e to a d d ress C arrick an d S t if el’s arg u m en t th at th e trial co u rt erred b y ap p ly in g a” h eig h ten ed stan d ard ” b y ch aracterizin g th e arb itratio n ag reem en t as a w aiv er o f th e r ig h t to a j u ry trial. 9is unam

biguous, a court m

ust apply the plain m eaning. Id. If a contract is am b iguous, those

am biguities are ty

pically construed against the contract’s draf ter. Id. However, in the case of arbitration, am

biguities r e g arding arbitration s hould be construed in f avor of arbitration. Id. ¶21. First, the trial court f aulted t h e d i s c r epancy between paragraph H of the Account Applicatio n a nd the 2012 Account Agreem ent. Paragraph H o f the Account Application stated that the arbitration clause was contained in paragraph 22 of the Account Agreem ent. But paragraph 19, not paragraph 22, contained the arbitration provision in the 2012 Account Agreem ent. Yet, without regard to the p a ragraph ref

erence, the Account Application provides in c apital letters that the parties are agreeing to “a pre-dispute arbitration clause requiring all disputes under this agreem e nt to be settled by b inding arbitration.” The Account Application alone is suf

f icient to i n d i c a t e t he unam biguous intent o f the parties to arbitrate. “If no

am bi g uity exists, this Court will a ccept the plain m eaning of the i nstrum ent as the intent of the parties.” Fradella , 952 So. 2d at 171 (quoting IP Tim berlands Operating Co. , 726 So. 2d

at 106). I t is clear that a valid arbitration agreem ent exists and that the trial court should h ave

com pelled arbitration. ¶22. W h at is not clear f rom the record is which Account Ag r e e me n t , a n d theref ore which arbitration p r o v i s i o n, governs arbitration. The trial court did not appear to m ake a clear determ ination regarding w hich A ccount Agreem ent Turner received. It m ay also b e that Stif el is unable to m eet its burden of showing which specif ic arbitration p rovision applies. If neither applies, the FAA m ay provide f o r how to determ ine the m etho d of arbitration. See NC

1 0Leasing, L LC v. Junker , 1 72 So. 3d 155, 158-59 (Miss. 2015); 9 U.S.C.A. § 5 (W est) (If no

m ethod of arbitration is provided by the arbitration provision, “then u p o n the application of either party t o the controversy the court shall designate and a ppoint an arbitrator or arbitrators

or um pire, as the case m ay require, who shall act under the said a greem ent with the sam e f orce and ef f ect as if h e or they had been specif i cally nam ed therein[ .]”). Thus, this Court rem ands the case f or a determ ination regarding which A ccount Agreem ent’s arbitration provision, if either, applies. ¶23. Turner asserts that Stif el is not entitled to e nf

orce the arbitration agreem ent between
Turner and Stern Agee because Stif el was not a signatory to the contract at issue. Turner’s own

com plaint alleged that Stif

el is a successor in interest to Stern Agee. Theref o re, the agreem ent

encom passes Stif

el as a party that m ay co n t ractually com pel Plaintif

f s t o arbitration. The Plaintif f s cannot now deny S t i f

e l t he benef

it o f the arbitration provision within the Account Agreem ent that it relied on to “delineate [ its] dut i e s a n d r esponsibilities with regard to the transaction.” Fradella , 952 So. 2d at 175. CONCLUSION ¶24. The parties entered into a v alid and enf o rceable arbitration agreem e nt in the Account Application. Accordingly , this C ourt r everses the trial court’s j udgm ent deny ing Carrick and Stif el’s m otion t o com

pel arbitration. W e rema n d t h i s case with directions to com pel the parties to subm it to arbitration and to d eterm ine which version of the Account Agreem ent, if either, a pplies to that arbitration; i f neither applies, the trial court should look to the FAA f or guidance regarding the specif i cs of arbitration.

1 1¶25. REVERSED AND REMANDED.

KITCHENS, P.J., COLEMAN , MAX WELL, BEAM, CHAMBERLIN AND ISHEE, JJ., CONCUR. RANDOLPH, C.J., AND G RIFFIS, J., NOT PARTICIPATING.

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