IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI NO. 2014-CA-01312-COA

BHARAT B. PATEL, NEW VISION BRANDON PLAZ A, LLC, AND JAGDISH A. BAROT APPELLANTS

v. BANCORPSOUTH BANK APPELLEE
DATE OF JUDGMENT: 08/14/2014 TRIAL JUDGE: HON. THOMAS J. GARDNER III COURT FROM W HICH APPEALED: LEE COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANTS: B. W AYNE W ILLIAMS LAW RENCE M. COCO III NORMA CARR RUFF DAN W . W EBB R. PATRICK MCCRANEY ANDREW

W ALKER ALDERMAN ATTORNEYS FOR APPELLEE: LES ALVIS J. CHASE BRYAN KEVIN B. SMITH NATURE OF THE CASE: CIVIL - CONTRACT TRIAL COURT DISPOSITION: NEW VISION AND BAROT’S MOTION TO DISMISS AND COMPEL ARBITRATION DENIED; PATEL’S MOTION TO DISMISS AND TRANSFER DENIED DISPOSITION: REVERSED, RENDERED, AND REMANDED – 03/03/2016 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC. IRVING, P. J., FOR THE COURT: ¶1. Bharat B. Patel, New V ision Brandon Plaza LLC, a nd J agdish A. Barot (collectively “the Def e ndants,” unless the context dictates otherwise) appeal a L ee County C ircuit Courtjudgm ent in f avor of BancorpSouth that deni e d Patel’s m otion to c om pel arbitration. Finding that the circuit court m isapplied the law, w e r everse and render the judgm ent of the circuit court and r em and this c ase w i t h directions to dism i ss BancorpSouth’s lawsuit, and send the case to binding arbitration.

PROCEDURAL HISTORY AND STATEMENT OF THE FACTS ¶2. In 2009, BancorpSouth held a deed of trust on a parcel of undeveloped com m ercial property of approxim ately thirty -f ive acres located in Rankin County , Mississippi. In March 2009, the prope r t y was f

acing f oreclosure. The Def

endants purchased the property bef ore
t h e f o r eclosure sale, but would later claim that t hey h ad been f raudulently induced t o purchas e it b ased on a bid am ount, set b y BancorpSouth, o f $5.3 m illion and that BancorpSouth had f

ailed to disclose that t he p roperty contained wetlands that r e quired

rem ediation. ¶3. At the tim e of purchase, New Vision executed a prom issory note (the Note) and a deed of trust. By separate, i ndividual agreem ents (the Guaranties), Barot a nd P atel guaranteed
pay m ent of the N o t e . T h e N ote and the Guaranties contained s im ilar, but not identical, arbitration provisions. Section 29 of the Note states: Any and all claim s, d i sp u t e s [ , ] or c o ntroversies

. . . by either Borrower or Lender

. . . arising f

rom or relating to (a) this Note

. . . shall be resolved upon the election o f Borrower or Lender or said third parties, by binding arbitration pursuant to this Section 29 and the code o f procedure o f the entity which is the Arbitration Organization at the tim e t he Claim is f iled. (Em phasis in original). Section 22 of the Guaranties sim ilarly

states:

2Any claim , dispute[ ,] or controversy

. . . by either Bo r r o w e r, Guarantor[ ,] or

Bank

. . . arising f

rom or relating to (a) any of th e Obligations [ o f the Guaranty ]

. . . SHALL BE resolved upon the election of G uarantor o r Bank

.

. . by BINDING ARBITRATION pursuant to this A rbitration Provision and the Code of Procedure of the Arbitration Organization i n ef f ect at the tim e the Claim is f

iled and a ll Claim s shall be f i l e d a t any Arbitration Organization of f ice. (Em phasis in original). ¶4. On Septem

ber 5 , 2012, BancorpSouth f iled suit against t h e D e f

e n d a nts in the Lee County C ircuit Court (the L ee County Action) to collect the unpaid balance of the loan. On Septem ber 2 0, 2012, bef

o re answering the Lee County Action, 1 the Def endants f iled a lawsuit i n the Rankin County C ircuit Court ( Rankin County Action) to rescind and avoid the
Note and Guaranties, dem a nding a jury trial and c l aim i ng they w ere f raudulently induced by BancorpSouth to buy the property

. The Def e ndants also c l aim e d that they had def aulted on the loan, with a n unpaid b alance of $4, 926,116.39, because t hey could not develop the property due to the f

act that it contained wetlands. ¶5. On October 24, 2012, B ancorp S o u t h f i l ed a m otion to dism iss the Rankin County Action under the f

i rst-to-f i le rule 2 or, alternatively , to transf er the case to Lee County

.

1 The docket contained in the record ref lects th a t s um m onses were issued on Septem ber 5, 2012, f

or the Def

endants, but it does not show t hat the any of t he sum m onses w e re e ver served. Additionally , the record ref lects that on October 31, 2012, a lawy e r entered an appearance on behalf of Patel only

. 2 The f irst-to-f ile r ule is well established in Mississippi: “[ W ]here t wo suits between the sam e parties o ver the sam e controversy a re brought in courts o f concurrent j urisdiction, the court which f

irst acquires j urisdiction retains jurisdiction over the whole controversy to the exclusion or abatem ent of the second suit.” Issaquena W arren Ctys. Land Co. v. W arren Cty. , 996 So. 2d 7 47, 7 50 (¶8) ( Miss. 2008) (qu o t i n g R A S F a m ily Partners LP v. Onnam 3¶6. On Novem ber 19, 2012, New Vision and Barot f iled, in the Lee County Action, a joint

a n s w e r, a com

pulsory counterclaim , and a m otion to dism iss and com p el arbitratio n . T h e f if th d ef e n s e in their answer a f

f irm atively asserted their right to arbitration as specif ied in both the N ote a nd G uaranties. The counterclai m w a s a s s erted “without waiving and expressly preserving [ New Vision and Barot’s] r ight t o arbitration.” O n the sam e day , Patel separately answered the Lee County Action. He raised f orty

- six af

f irm ative def

enses in his

answer, but did not r aise arbitration. However, in a separately f iled m o tion to dism iss, Patel, by ref e rence, adopted Barot and New Vision’s m otion to dism iss and com p el arbitration. He also f iled a m otion to transf

er the case to the Rankin County Circuit Court. ¶7. The Rankin County Circuit Court heard BancorpSouth’s m otion to dism i ss in April
2 0 1 3 , o n e w e e k bef

ore the hearing in the Lee C o unty Action on New Vision and Barot’ s

m otion to com

pel ar b i t ration. O n April 29, 2013, the Rankin C ounty Chancery Court dism issed the Rankin County Action under the f irst-to-f ile rule, and o n August 15, 2014, the
Lee C ounty Circuit Court denied New Vision and Barot’s m otion to d i s mi s s a n d com pel arbitration, as well as Patel’s m otion to dism iss and/or to transf er the case to Rankin County

. The trial court f

ound that the Def

endants had waived their contractual right t o arbitration by engaging in conduct inconsistent with arbitration (f iling t h e R ankin County Action). The Def endants have tim e ly

appealed.
DISCUSSION

Biloxi LLC , 968 So. 2d 926, 929 (¶16) (Miss. 2007)). 4¶8. On appeal, the grant or denial of a m otion to com p el arbitration is r eviewed de novo.
Nutt v. W yatt , 107 So. 3d 989, 993 (¶10) (Miss. 2013) ( quoting Scruggs v. W yatt , 6 0 So. 3d 758, 766 ( ¶16) (Miss. 2011)). W e also note that so f ar a s w e can tell, there is n o Mississippi precedent addressing the unique f acts presented in today ’s case—whether a def endant who is o b l i g a t e d to arbitrate a m atter waives that right by initiating litigation concerning that

m atter in a separate lawsuit. ¶9. T h e c i r c u i t court, in deny ing the Def endants’ m otion to dism iss and com p el arbitration
in t he Lee County A ction, f o und that the D ef

e ndants had waived their c o n t r actual right to arbitrate by initiating the Rankin C ounty Action. In support, the circuit court cited Century
21 Maselle & Associates v. Smith , 965 So. 2d 1031 ( Miss. 2007). Century 21 prom ulgated the test that arbitration can be waived by a party through “either active participation or substantial i nvocation of the litigation process which results in detrim ent or prejudice to the other party , or engaging in c onduct inconsistent with t im ely enf orcing the a r b itration
agreem ent

. . . .” Id. at 1036 (¶8). The circuit court applied the s e cond alternative of the test, stating that the Def

endants had engaged in “ c o n d u c t [ (the f i ling o f the Rankin County Action)] inconsistent” with enf orcing the arbitration agreem ent; thus, arbitration was waived. 3

3 The trial court f

u rther f ound the com

pulsory counterclaim by N ew V ision, Barot, and Patel in the Le e County Action, and Patel’s s eeking t o transf er this cause to Rankin County , were also i nconsistent with reques t i n g a rbitration, a nd conf irm ed the waiver of arbitration. 5¶10. “[ P]arties c laim i ng w aiver m ust of f e r suf f icient evidence at a hearing to overcom e the
presum ption in f avor of arbitration.” I

d

. The parties here agree that C entury 21 is binding, and that the second alternative of t h e test—“engaging in conduct inconsistent with tim ely enf orcing the arbitration agree me n t ”

— i s applicable. BancorpSouth claim s t his test is applicable to New Vision, Barot, and Patel a s plaintif f s in the Rankin County Action. W e
agree, but they are not seeking to a rbitrate m atters in t hat action. And, as we discuss below, what they did as plaintif

f s in the Rankin County Action i s m aterial t o that action, and what the def e ndants did, or f

ailed to do, in the Lee County Action is m aterial to that action. ¶11. In support of their a rgum ent th a t t h e i r f iling of t he Rankin County Action does not constitute waiver o r preclude arbitration in the Lee County Action, the Def endants point to the Mississippi S uprem e Court’s pronouncem ent in Mississippi Credit Center Inc. v. Horton , 926 So. 2d 167 (Miss. 2006): [ N]either delay in pursuing the right to com pel arbitration nor participation in the judicial process, standing alone, will constitute a waiver. T hat is to say , a par t y who invokes the right to com pel arbitration and pursues that right will not ordinarily waive t he r ight s im ply because of involvem ent in t he litigation process . . . . Id. at 180 (¶41). The D ef endants argue that t heir right to a r bitrate w a s t im ely asserted approxim a tely two and one-half m onths af ter the Lee County A ction was f iled; thus, according to Horton , waiver of arbitration was precluded. By t his argum ent, i t appears that the D ef endants t acitly a gree that their actions, as plaintif f s , in t he R ankin County A ction are relevant to the Lee County Action, where they are def endants. If that is what t he Def endants

6are asserting, w e disagree with that part of their argum e nt. However, w e a g r e e that the

Def endants t i me l y a s serted their r ight to arbitrate in the Lee County Action, as the record reveals that they

asserted that right in their initial f ilings. ¶12. Since none o f the parties assert that the actions u ndertaken by the Def e ndants in the
Lee County Action to com pel arbitration were untim e l y , w e w ill not discuss this issue any f urther. The heart of BancorpSouth’s argum ent is not the ti m eliness of t he Def endants’ assertion of their right to arbitrate within the Lee County Action, but the Def endants’ f iling of t he Rankin County Action and its im pact on their r ight to com pel arbitration in the Lee County Action. ¶13. Wh i l e w e a g r e e t h a t C entury 21 i s controlling, w e f ind that the c i r c u i t c o u r t

m isapplied it. In a l awsuit brought by a plaintif f , the r ight t o com

p el arbitration o f t he issues contained in the plaintif

f ’s lawsuit belongs to t he def endant if there e x i s t s a n arbitration
agreem ent, executed b y the plaintif f and def endant, that covers the m atters addressed in the lawsuit. Theref

ore, it seem s obvious that b y initiating the Rankin C ount y Action, the Def endants, who were plaintif f s in that action, waived t heir rig h t t o arbitrate the m atters contained in t h at l awsuit because the f iling of the action itself i s inconsistent with a desire

to take advantage of

the right to arbitrate. So had the R ankin C ounty Action b een initiated
f irst and rem ained v iable, the Def endants, who w e r e plaintif f s there, would not have been able at som e point later to c hange their m inds and seek arbitration. B y the sam e t oken, it can be legi tim ately argued that by initiating the Lee County Action, BancorpSouth w aived its

7right to arbitrate the i ssues contained in that suit, but the sam e cannot b e said a b o u t P a t el,

New Vision, and Barot because they are the def

endants in the Lee County Action. ¶14. The D ef

endants argue that Nutt i s dispositive. Nutt involved two suits over the

am ount of attorney f

ees owed to Derek W y att as a result of work h e p erf orm ed in connection with l itigation on behalf of Hurricane Katrina insureds. Nutt , 107 So. 3d at 991-92 (¶¶3-5).
It was not disputed that David H. Nutt and others entered into a contract w ith W y att whereby
Nutt and others e ngaged W y att’s services. The dispute w as over the nature of the agreem ent. W y att insisted t h a t h e was part of the Katrina J oint Venture (KJV) that Scruggs Law Firm Inc., Nutt & McAlister PLLC, and others f orm ed to represent Hurricane Katrina i nsureds and that he was entitled to a m inim um ten percent f

ee-sharing interest in the K JV c ases. Id

. On the other h and, N utt a nd the o thers’ p o sition was that they orally agreed to pay W y att an annual salary plus a bonus based on ten percent of the net f ees that Nutt received f

rom cases on which W y a tt provided substantial services to clients. Id

. ¶15. The f

irst suit was f

iled by Nutt in the Chancery C o urt of Madison C ounty , w hich the
suprem e court described as f ollows: Nutt, et al., f

iled a “Verif

ied Pe t i t i o n f

or Replevin and Com

plaint f or Declarator y J u d g ment to Adjudicate Am ount Owed by N utt & McAlister, PLLC to W y att, or Am ount Owed by W y att to Nutt & McAlister, PLLC”. . .

. In t h a t a c t i o n , Nutt, et al., sought a declaration of obligations related to the oral em ploy m e nt c ontract with W y att; their c om plaint did not ref

er to the KJV, and they did not aver that W y att was a party to the KJV. Id. at 991 (¶4). The second s uit was f iled by W y att i n the Laf

ay ette Circuit Court (Laf

ay ette County Case) against Scruggs, N utt, and others. That suit claim ed t hat he had been “denied
8his s hare of KJV attorney

f ees as agreed upon by

Nutt and McAlister.” Id

. at 991-92 (¶5).
Nutt and others f

iled a m otion to transf

e r the Laf ay ette County Case to Madison County or
to stay the proceedings in the Laf ay ette C ounty Cas e p e n d i n g a f inal j udgm ent in the Madison County

proceedings. The trial court denied the m o tion. Id. a t 992 (¶6). Scruggs then f iled a m otion t o com

pel arbitration in the Laf

ay ette County Case, “seeking to com pel
W y att to arbitrate h is claim s a gainst them under the arbitration provision in the [ Katrina Joint Venture Agreem ent (KJVA)].” Id

. at (¶7). T he circuit court d enied the m o tion but stay ed the proceedings pending an appeal by Scruggs. Id

. ¶16. On appeal, the suprem e court f ound that the K JVA arbitration provision was valid and that it a pplied t o W y att’s claim s against Scruggs under the “direct-benef it r ule” even though
W y att was not a signatory to the K JVA. Id

. at (¶8). Theref ore, the suprem e court reversed and rem anded the Laf

ay e tte County

Case. ¶17. Im m e diately af

ter rem and, Nutt “f

iled a m o tion to rem ove the e arlier s tay granted by the [ c ircuit court] and to com p el arbitration of W y a tt’s claim .” Id

. at 9 93 (¶9). The circuit

court d enied Nutt’s m otion e ven though it f ound, based on the suprem e court’s r uling in the Scruggs appeal, that t he arbitration provision was also applicable to the Nutt def endants. Id

. The circuit court explained that Nutt [ and others] had waived their right to com pel arbitration by : (1) f

iling a m otion to transf

er venue prior to f

iling their m otion to c om

pel arbitration; (2) delay ing 595 d a y s bef

ore f iling t heir m otion t o com pel arbitration; and (3) f iling a prior action in Madison C ounty Chancery C o u r t seeking declaratory judgm ent regarding W y a tt’s rights under the oral em ploy m ent contract.

9Id . Nutt appealed.

¶18. On appeal, although t he suprem e c ourt discussed Nutt’s prior f il i n g in the Madison County Chancery Court and the nature of that f iling being dif

f erent than the basis asserted by W y att i n the Laf

ay e tte County Case, it is clear f rom any objective reading of Nutt that the
suprem e court’s holding was prem ised solely on Nutt’s action in the Laf ay ette C ounty Case where he was a def

endant, not what he did prior to being m a de a def endant. Here is what the
suprem e court said:
In their f irst responsive pleading, bef ore this [ c]ourt’s decision that the Katrina JVA applied to W y a t t ’ s c l a i ms , Nutt, e t al., preserved t heir right in the alternative to com

pel arbitration, in the event of a judicial determ ination t hat the Katrina JVA applied t o W y att’s c laim s . W hen we declared that the Katrina JVA did a p p l y , t h ey tim ely f iled a m otion to com

pel arbitration, within one week of t he m andate. W e f ind that t he conduct of Nutt, et al., was consistent with tim ely seeking to com pel arbitration, o nce this [ c]ourt held that W y a tt’s claim s w ere related to the K atrina JVA. Accordingly , we conclude that N utt, et al., did not waive their right to enf orce the provision. Id . at 994-95 (¶14). At another point in the opinion, the suprem e court said this:
W e f ind that Nutt, et a l

. , d id n ot a c tively participate in litigation or substantially invoke the li t igation p rocess in this case bef ore s e eking to enf orce the provision, nor did they conduct them selves inconsistently with tim ely enf

orcing t he provisions. The trial court erred by f inding that Nutt, et al. , waived their r ight to com pel arbitration by participating in litigation and delay ing f

iling a m otion to com

pel arbitration. Id

. at 996 (¶19) ( em

phasis added). It is clear that the ultim ate m atter in dispute in both the Madison C ounty Case and the Laf ay ette County Case w a s attorney f ees, if any , owed to W y att, although the parties pursu e d d i f f erent theories or avenues to get to a determ ination
in that regard. S o w h i l e o u r case is not f actually on all-f

ours with Nutt , we nevertheless
1 0believe it is instructive on the law to be applied here.

¶19. The dissent apparently concludes that the reason the suprem e court held i n Nutt that
Nutt’s prior f

iling of the Madison County l awsuit had not waived his right t o arbitrate
W y att’s claim against it in the L af ay ette County C ase is because the two actions dealt with
very d i f f e r e n t m atters—an e m

p loy m ent agreem e nt and a joint-venture agreem ent. That is

no t a n e n t irely accurate characterization of the lawsuits. There was only one agreem ent,

w h ich was an oral em

ploy m ent agreem ent. The dispute was over whether that o r a l
agreem ent f

ell within the param eters of the a r bitration provision of the KJVA even though
W y att w a s n o t a s i g n a tory t o it. As stated, Nutt, taking the position that t he KJVA was inapplicable—though not directly litigating that issue in t he Madison County Case—sought instead in t he Madison County Case a declarat i o n o f o bligations r elated to the oral

em ploy m ent contract w ith W y att

. I t i s n ot reasonably debatable that the N utt decision declare d t h a t o n e o f the obligations related to t he oral em ploy m ent contract is that it was subject to the arbitration provision of the KJVA, w hich was the subject m atter of Laf ay ette C o unty Case. So it is clear that the two lawsuits were r elated but em ploy ed proc e d u r a l l y dif f erent m e chanism s to resolve the attorney ’s f ee dispute between the antagonists in the
l a w s u i t s . In any e vent, t here is nothing in Nutt warranting the extrapolation that if th e pleadings in Nutt’s Madison County Case had m e ntioned the KJVA, the result would have been a f inding that he waived h is right to arbitrate W y att’s c l a i m in the Laf ay ette County
Case.

1 1¶20. W e also f ind the dissent’s and BancorpSouth’s reliance on United S tates ex rel. Frank
A. Trucco & S

o n s C o. v
. Bregman Construction C orp. , 2 56 F.2d 851, 852 (7th C ir. 1958), unavailing in l i ght of the Nutt decision. Even so, we w ill brief ly d iscuss the Trucco decision. There, Bregm an Construction ( Bregm an) initially sued Frank A. Trucco & Sons’ (Trucco)

suret y i n t h e state of N ew York f or Trucco’s breach of a public-works subcontract that contained an arbitration provision. Id. Trucco then sued Bregm an in Indiana f o r breach of the sam e subcontract, and Bregm an tried to invoke the arbitration p rovision. I d. The district

court ruled that B regm a n waived i ts right to arbitrate because o f its f i ling s u it in New York. Id. The United States Court of Appeals f

or the Seventh Circuit stated: [ T]he district court p roperly determ ined this m atter. To h old otherwise w ould place Bregm an in the unique and untenable position of dem anding t he right to litigate one phase of its dis p u te with Trucco while at the sam e tim e insisting upon arbitration of another phase of its dispute, all of such controversy a rising out of its sub-contract with the other disputants.

* * * *
W e hold, in the instant case, that Bregm a n, b y f i ling its New York action, repudiated its own prom ise to arbi trate a s set out in i ts sub-contract with Trucco. This repudiation gave use-plaintif f the election of

arbitration which it did not exercise in the New York action. By f iling its com

plaint u nder the Miller Act in this c ourt u se-plaintif f then m ade its election not to ar b itrate. Thus, each party e lected n o t t o a r b itrate, the one by f iling an action in New York f o r alleged f

ailures o n a perf

orm ance bond, and the other by bringing suit in Indiana f

o r m oney alleged due f

or l abor a nd m a terials under a p a y m ent bond, both actions arising out of the sam e sub-contract. W e hold that Bregm an thereby conclusively

waived its right to arbitration in the instant case

. Id. at 853-54. ¶21. W e acknowledge that the f acts in Trucco are som e what com parable t o our f

acts, but
1 2point out that they are dif f erent in a signif

icant aspect in that in Trucco , B regm an, the party seeking to com

pel a rbitration, apparently was not precluded f

rom continuing his pursuit of the separate litigation that he had initiated. 4 Here, the Def endants were u nable t o pursue the Rankin C ounty Action bec a u s e of the f irst-to-f ile rule. That was not t he case in Trucco ; otherwise Trucco would not have been able to m aintain its lawsuit. Further, had Bergm an’s separate lawsuit been dism issed at the tim e of the h earing on its m otion i n Trucco to com pel arbitration, there would have been no reason f or the Seventh Circuit’s f

inding that Bregm an

was “dem anding the right to litigate one phase of i ts d ispute w ith Trucco while at the sam e tim e insisting upon arbitration of another phase of its dispute.” Here, at the tim e that the Lee County circuit judge denied the Def endants’ m otion to com

p el, m ore than f

our m onths had
p a ssed s ince the D ef

endants’ Rankin County A ction had been dism issed. So h ere, u n l i k e Bergm an’s p osition in Trucco , the Def endants’ position was not untenable as they were not
attem pting to have their d i s p u t e w ith BancorpSouth resolved by both a jury panel and an arbitration panel. The m ost that they d i d was seek a transf er of the L ee County Action to Rankin County

. ¶22. W e also a gree with Patel’s argum ent that th e R a n k i n C o u n t y A c t i o n could not constitute a waiver of a

r b i t r a t i on because that court lacked subject-m atter jurisdiction. Under the priority -jurisdiction rule, jurisdiction w a s established in Lee County bef ore the

4 T he Trucco decision does not inf orm us as t o the tim e proxim ity o f t h e f i l i n g of Bregm an’s lawsuit and the f iling of Trucco’s lawsuit. 1 3Def

endants f iled their Rankin C ounty Action. Theref ore, i t seem s logic a l t o u s t h a t the Rankin County Action h a d no ability to im pact t he rights of a n y party and c ould not support waiver. ¶23. For the reasons d i scussed, we f ind that the circuit court erred in ref u sing to grant the Def endants’ m otion to com

pel. C onseq u e n t l y , w e reverse and render the judgm ent of the circuit court and rem and this case f or proceedings consistent with this opinion. ¶2 4

. THE JUDGMENT OF THE CIRCUIT COURT OF LEE COUNTY IS REV E R S E D AND RENDERED, AND THIS CASE I S REMANDED WITH DIRECTIONS TO DISMISS B A N C ORPSOUTH’S LAWSUIT A ND SEND THIS CASE TO BINDING ARBITRATION. ALL C O S T S O F THIS APPEAL ARE ASSESSED TO THE APPELLANTS. LEE, C.J., CARLTON, F A I R AND JAMES, JJ., C ONCUR. WILSON, J., CONCURS IN RESULT ONLY WITHOUT SEPARAT E W R I TTEN OPINION. BARNES, J., D ISSEN T S W I TH SEPARATE WRITTEN OPINION, JOINED BY GRIFFIS, P.J., ISHEE AND GREENLEE, JJ. BARNES, J., DISSENTING: ¶25. I respectf

ully dissent. The trial court properly f o und Def endants’ f iling suit in Rankin
Count constituted an act i nconsistent with arbitration. Th e r e f o r e , I would af

f irm the trial court’s denial of

Def endants’ m otion to dism iss and com p el arbitration. ¶26. T h i s c a s e i n v o l v e s the unique situation where Def endants requested arbitration o n
repay m e nt of the Note and Guaranties in this suit af ter f iling suit in another county “arising
f rom or relating to” the sam e docum ents. The trial court, in d eny ing Def endants’ m otion to dism iss and c om

p el arbitrati o n, f

ound that Def

e ndants waived t heir contractual right to arbitrate, citing in support C entury 21 M

aselle & Associates v. Smith , 965 S o. 2d 1031 (Miss.
1 42007). C

entury 21 prom

ulgated the t est that arbitration can b e w a ived by a party through “either active p articipation o r substantial invocation o f the l itigation process which results
in detrim ent or p rejudice to the other party , or engaging in conduct inconsistent with tim ely enf orcing the arbitration agreem ent

. . . .” Id. at 1036 (¶8). The trial c ourt correctly applied the second alternative of the test, stating that t he f iling of t h e R a n k in County Action constituted “ conduct i nconsistent” with enf orcing the arbitration agreem ent; t hus, arbitration was waived. 5 ¶27. W h ile “waiver of arbitration is not a f avored f i n d i ng,” M ississippi does “recognize waiver when the party seeking arbitration t akes actions inconsistent with enf orcing arbitration

. . . .” Nutt v. W yatt , 107 So. 3d 989, 9 93 (¶11) (Miss. 2 013). “[ P]arties claim ing waiver m ust of f er s uf f icient evidence at a hearing to overcom e the presum ption in f avor of arbitration.” Century 2 1 , 965 So. 2d at 10 3 6 ( ¶ 8 )

. The parties agree t hat C entury 2 1 is binding, a nd the second alternative of the test

– “engaging in conduct inconsistent with tim ely enf

orcing the a rbitration agreem ent” – is applicable. BancorpSouth claim s this test

5 The trial court f

urther f ound the com

pulsory counterclaim by New Vision, Barot, and Patel in the Lee County Action, and Patel’s s eeking t o transf er this cause to Rankin County , were als o i nconsistent with requesting a rbitration, a nd conf irm ed the waiver of arbitration

. Since the counterclaim was com pulsory under Mississippi Rule of Civil P r o c e d ure 13(a), however, I disagree with the trial court that the counterclaim contribute d to t he waiver of a rbitration. Had the com pulsory counterclaim n ot b een asserted, New Vision and Barot would have been subject to a c l a i m o f w a iver. See M.R.C.P. 13(a) Advisory Com m i ttee N otes (Subject to the exceptions, “ counterclaim s are com p ulsory if t hey arise out of the sam e transac t i o n o r occurrence that is the subject m atter of the opposing party ’s claim ”; generally , com

pulsory counterclaim s are asserted in pending litigation to avoid waiver.). 1 5is a

pplicable to New Vision, Barot, and Patel as p laintif f s in the Rank i n C o unty Action, because they c om m e nced the R ankin County Action bef ore they f iled an answer or any other pleading in the Lee County Action. Def endants insist that the f

i ling of the Rankin County Action in n o way im

pacted their right to arbitrate in the L ee C ounty Action. I agree with the trial court that although in Century 21 the test was a pplied to def

endants, it can properly be applied to plaintif

f s as well. ¶28. Def

endants claim that m e re involvem ent in the litigation or judicial process does not constitute waiver, citing Mississippi Credit Center I nc. v. Horton , 9 26 So. 2d 1 67, 180 (¶41) (Miss. 2006): 6 [ N]either delay in pursuing the right to com pel arbitration nor participation in the judicial process, standing alone, will constitute a waiver. That i s to say , a party w h o invokes the right to com pel arbitration and pursues that right will not ordinarily waive t he r ight s im ply because of i nvolvem ent in the litigation process . . . . They argue their right to arbitrate was tim ely asserted approxim ately two a n d one-half

m onths a f

ter the Lee County Action was f i l e d ; t hus, according to Horton , w aiver of arbitration was precluded. ¶29. However, Def

endants ignore the f

a ct t hat this case d eals wi t h t w o s e p a r a t ely f iled suits, u nlike Horton and num erous other cases Def endants cite. This case is unique in that

6 In Horton , while the d e f endants tim ely asserted their right t o com pel arbitration in t h e i r a n s w ers, they did not f i le a m otion to com

pel arbitration in a reasonable t im e, and “proceeded to s u

bstantially engage the litigation process” f or e ight m onths. Horton , 926 So. 2d at 180 ( ¶ ¶ 41, 43). B ecause of both delay and engaging in the litigation p rocess, the suprem e court f

o u nd the def

endants’ right to arbitration was waived. Id. at 181 (¶¶45-46).

1 6it deals with the interaction of two s epara te cases and w aiver of t he contractual right to

arbitrate. It is n ot t he tim eliness of asserting the right t o arbitrate within the Lee County Action t h a t i s a t i s sue, but the f iling o f t he Rankin County Action, and its i m pact on Def endants’ right to c om

pel arbitration of the Lee County Action. The proper tim e to raise arbitration is at the tim e the party f irst advances arbitrable issues. Galion Iron W orks & Mfg.

v. J.D. Adams Mfg. , 128 F.2d 4 1 1, 414 (7th Cir. 1 942). New Vision, Barot, and P atel m ade the strategic decision to f ile a lawsuit d em anding a jury trial in Rankin C ounty concerning the sam e issues that they later r aised in their Lee County c o u n t e rclaim

. It is obvious that Def endants wanted to litigate; they just did n ot want to litigate in Lee County

. As adm itted b y Def e ndants in oral a rgum ent, t hey f iled a com

pulsory counterclaim , but only wanted t o arbitrate BancorpSouth’s claim f or repay m ent. They wanted a jury t rial in Rankin County

on their claim s against BancorpSouth. They contended, as t hey did below, that the Rankin County Action would only be a rbitrated if BancorpSouth dem a n ded arbitration. 7 This

7 At the trial court hearing, counsel f or New Vision and Barot stated:
Your Honor, if I m ight respond to one thing that [ BancorpSouth’s counsel] just said

. . . I want to m ake sure that I’m clear in term s of the nature of the R ankin County case versus the nature of this case. The Rankin County case, again, is our claim s against BancorpSouth. And it m ay be t hat we have waived the right to arbitrate our claim s against them

. Now it’s up t o t hem [ as] to whether o r not they want to arbitrate those.
But as it r e l a t e s t o t heir claim s against us w hich are p ending here, we have invoked our right to a rbitration. So there is a distinction there that they want to som ehow m erge together, but they are distinct claim s. 1 7rationale, however, ignores the contractual language that “ any a nd all claim s, disputes and

controversies

. . . arising f rom or relating to” the Note are to be resolved by arbitration at the election of the borrower or lender. There is no contractual provision f or splitting a cause of action between arbitration and litigation. ¶30. Un d e r C e n t u r

y 2 1 , p r o s e c u t i n g t h e R a n k i n C o u n t y A ction is inconsistent with arbitration and constitutes waiver. At the tim e New Vision and Barot invoked arbitration in

t h e Lee County Action, they were seeking to litigate their c l aim s against Bancor p S o u t h i n Rankin County

. It was only because BancorpSouth had “beaten them to the courthouse” that arbitration even becam e an i ssue. 8 Def endants also argue that BancorpSouth has shown no prejudice by the f

i ling of the Rankin County Action. However, under the second alternative of the Century 21 waiver rule, there i s n o r equirem ent of prejudice to the other party

. Century 21 , 965 So. 2d at 1036 (¶8). ¶31. D e f

e n d a n t s r e ly o n Nutt as dispositive. N utt involved two suits, a nd held that a plaintif f bringing a court action seeking lim ited relief does not waive the plaintif f ’s right to arbitrate other issues. Nutt , 107 So. 3d at 995 ( ¶14). In Nutt , t he plaintif f , David Nutt, f

iled

a l awsuit in Madison County Chancery Court on a n em ploy m ent a g reem ent seeking replevin and a declaratory judgm ent f rom Derek W y att. Id. at 991 (¶4)

. T h e n , W y a tt sued Nutt in

8 Sim ilarly , Patel was t he co-plaintif f in the Rankin C ounty A c t ion, and did not raise arbitration as an af

f irm ative def

ense when he f

iled his answer in t h e Lee C ounty Action. Further, Patel f

iled a m otion to transf

er venue of the Lee County Action to Rankin County , not a m ot i o n t o com

pel arbitration. These actions conf irm Patel’s desire to litigate, not arbitrate. 1 8Laf

ay ette County Circuit Court f o r attorney ’s f

ees claim ed under a joint-venture agreem ent. Id. at 9 91-92 (¶5). Nutt invoked arbitration in the second suit, and the trial court denied it

as waived. Id. at 9 93 (¶9). The suprem e court reversed the trial court’s judgm ent, however, holding that Nutt’s f

iling of the f

irst suit in Madison C ounty w as not a waiver of the right to arbitrate W y att’s claim s i n Laf a y ette County b ecause t he two actions dealt with very dif f erent

m atters – an em

ploy m ent agreem ent and a joint-venture agreem ent. Id. at 993, 996 (¶¶9, 18). Here, New Vision and Barot’s com pulsory counterclaim in the Lee County Action and their earlier-f iled Rankin County Action both clearly “aris[ e] f rom or r elat[ e] to” the contractual docum ents that f

orm ed the basi s f

o r B a ncorpSouth’s Lee C ounty com plaint. W hether Def endants owe BancorpSouth repay m ent o n t h e N ote and Guaranties is central to both suits. 9 Thus, Nutt

is distinguishable. ¶32. I f ind Unit e d S t a t e s e

x r e l

. F rank A. Trucco & Sons Co. v. Bregman Construction Corp. , 256 F.2d 851, 852 (7th Cir. 1 958), cited by BancorpSouth, instructiv e . Bregm an initially sued Trucco’s surety i n the state of New York f or T rucco’s breach of a p ublic-works subcontract that c ontained an arbitration provision. Id. Trucco then sued Bregm an in Indiana f o r breach of the sam e s ubcontract, and Bregm an tried to invoke the arbitration provision. Id. The d i strict court ruled that Bregm an waived its right to arbitrate because of its f iling suit in New Y ork. Id. T he United States Court of A ppeals f or the S eventh Circuit

9 BancorpSouth’s Lee County Act i o n s e e k s enf orcem ent of the N ote and two Guaranties. As noted b y th e L e e C o u n t y Circuit Court, the Lee County counterclaim was “alm ost identical” to the allegations of the Rankin County com

plaint. 1 9held: [ T]he district court p roperly determ ined this m atter. To hold o therwise w ould

place Bregm an in the unique and untenable position of dem anding t he right to litigate o n e phase of i ts dispute with Trucco while at the sam e tim e insisting upon arbitration of another phase of its dispute, all of such controversy a rising out of its sub-contract with the other disputants. Id. at 853. ¶33. Here, N ew Vision and Barot were dem a nding the right to litigate their claim s against BancorpSouth in Rankin County w hile insisting upon arbitration of BancorpSouth’s claim s. I agree with the Seventh Circuit that this would be an “untenable position.” The trial court did not err in f

i nding Def

endants’ act o f f

iling suit i n R a n k i n C o u n t y “inconsistent with arbitration.” ¶34. Patel f

il e d s u p p l e me n t a l a u t h o r i t y under M ississippi Rule of Appellate Procedure 28(k), claim ing t he Rankin County Action could not constitute waiver of arbitration because that court lacked subject-m atter jurisdiction. Patel s tates, under the priority -jurisdiction rule, jurisdiction was established i n Lee County , and Rankin County was without subject-m atter jurisdiction. Since the Ra n k i n County Action lacked subject-m a tter jurisdiction, and thus

was dism i ssed without p rejudice and not on t h e me r its, Patel argues t he Rankin County Action had no ability to im pact the rights of any party , and could not support waiver. I do

not f ind this argum ent persuasive; the suit was f iled and prosecuted with the intent to litigate, which are acts inconsistent with waiver. ¶35. Def

endants f urther a rgue that BancorpSouth has “contracted a w ay [ its] right to claim

2 0waiver.” Both the Note a n d Guaranties provide: “IF ARBITRATION IS NOT CHOSEN

BY E ITHER PARTY AT ANY STAGE OF AN ACTION OR PROCEEDING IN COURT,
BOTH BORROW ER A N D LENDER H EREBY W AIVE A L L RIGHTS TO TRIAL BY JURY.” (Em

phasis in o riginal). N ew Vision and Barot interpret this t o m ean that they m ay
assert arbitration a t any t i me . I d o not. As BancorpSouth notes, this provision is located under a separate heading: “ W AIVER O F JURY TRIAL.” In c ontext, the p rovision indicates that no party will have t he right t o a jury t rial even if the dispute is not arbitrated; it does not

m ean the parties can raise arbitration at any t im e. 10 ¶36. Lastly , a t oral argum e nt, New V ision and B arot claim ed the f ollowing language f

rom the Not e m e a n s t h a t t he act of instituting a lawsuit is not a w aiver of arbitration: “THE
INITIATION OF A CLASS ACTION O R AN ACTION IN W HICH BORROW ER IS ONE
OF TW O OR M ORE PLAINTIFFS SHALL NOT RELIEVE EITHER PARTY F ROM THE OBLIGATIONS OF A RBITRATION CONTEMPLATED BY THIS S ECTION 29.” New Vision and B arot, however, read the provi s i o n o u t of context. The f ull third paragraph of Section 29 of the Note provides:
IN THE EVENT BORROW ER INITIATES AN ACTION AT LAW OR IN EQUITY AGAINST LENDER EITHER AS A MULTI-PLAINTIFF LAW SUIT OR IN A CLASS A CTION LAW SUIT, THE PROVISIONS OF

10 Patel r elatedly argue s that BancorpSouth breached the arbitration provisions by taking the position t hat Def endants waived the right to arbitrate. I am not p ersuaded by this argum ent. BancorpSouth’s assertion of waiver does not b reach t he arbitration agreem ent any m ore than Def

endants breached the agreem ent by d em anding a jury trial i n the R a n kin County Action in violation of the Note and Guaranties. 2 1THIS SECTION 29 SHALL APPLY TO BORROW ER, ALONE OR AS AN

INDIVIDUAL AND S HALL NOT APPLY SO AS TO REQUIRE ARBITRATION FOR A PLAIN T I FF CLASS OR F OR A GROUP OF P L A I N T I F F S , B O R

R O W E R B E I N G I N D I V I D U A L L Y A N D S E P A R

A T E L Y BOUND BY THE T ERMS OF THIS SECTION 29 RATHER THAN AS A CLASS R EPRESENTATIVE OR GROUP. MOREOVER, THE INITIATION OF A C LASS ACTION OR AN A CTION IN W HICH B O R R OW ER IS ONE OF TW O OR MORE PLAINTIFFS SHALL N O T R E L I E V E E I T H E R P A R T Y F R O M T H E O B L I G A T I O N S O F ARBITRATION CONTEMPLATED BY THIS SECTION 29. ¶37. The paragraph clearly addresses t wo separate situations. The f irst part concerns class arbitration. S

e e g enerally T hom as H. Oehm ke, Oehmke Commercial Arbitration § 16:9 (Def enses to class arbitration

– Prohibition on class arbitration); § 16:13 (Def enses to class arbitration – W a iver of class arbitration) (3rd ed. 2015). In the event the borrower (New Vision) initiates a class action ( o r m ulti-party action) against BancorpSouth, the arbitration provisions only apply to the individual borrower, and election b y BancorpSouth to arbitrate will not require arbitration f or a plaintif

f class or group of

plaintif f s. The second concerns the rights of the unwilling class m em bers or “involuntary plaintif f s .” S ee In r e P iper Funds
Inc. , 71 F.3d 298, 303-04 (8th C ir. 1995) (contractual right to arbitrate “ m ay n ot be s acrif iced

on the a ltar of ef

f icient c l a s s a ction m anagem ent”; “unwilling class m e m ber’s right to arbitrate m ay n ot be held h o s tage

. . . . ”); M .R.C.P. 19(a) ( joinder o f parties; i nvoluntary plaintif f s). The last sentence, written in the passive, versus active, voice, p rovides that i f a class or m ulti-party action is f

i led a nd the borrower is one of the plaintif f s, that alone will not prevent the borrower f

rom exercis i ng its right to arbitrate. This situation applies if the lawsuit is initiated a nd the b orrower is a plaintif f ; i t does not state that the borrower can
2 2initiate t he ac t i on and still dem and arbitration. H ad the parties intended that result, the

provision would have b een written in t he sam e m anner as the f i rst sentence: “[ I]n the event borrower initiates an action at law or in equity against lender

. . . .” It was not. Further, it would m ake n o sense f

or the contract to provide that a party could not b e f ound to have waive d a r

bitration if it f

i led a lawsuit on b ehalf of two or m ore plaintif f s without a

co r r e s p o n ding provision r egarding f iling as a s ingular plaintif f

. Lastly , this paragraph concerning class action a nd m ulti-plaintif

f lawsu i t s i s f

o u n d only in the Note but not the Guaranties; theref

ore, if New Vision’s interpretation is correct, the result would m ean that
New Vision had n ot waived arbitration by f iling the Rankin County A ction but, having no

s i mi l ar provision in the Guaranties, Barot and Patel would have waived their righ t s t o arbitrate. I do not accept New Vision and Barot’s interpretation of this last sentence. ¶38. Based on the f

oregoing, I f

ind t he trial court c o rre c t l y d e t e r mi n ed that Def endants waived their r i g h t t o arbitrate by f iling the Rankin County Action. Accordingly , I would af f irm the trial court’s denial of Def endants’ m otion to dism iss and com pel arbitration. GRIFFIS, P.J., ISHEE AND GREENLEE, JJ., JOIN THIS OPINION.

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