Case Name: Rudolph D. SULLIVAN, Jr. v. PROTEX WEATHERPROOFING, INC. and ATX Telecom, Inc.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 2005-03-31
Citations: 913 So. 2d 256
Docket Number: No. 2003-CA-02274-SCT
Parties: Rudolph D. SULLIVAN, Jr. v. PROTEX WEATHERPROOFING, INC. and ATX Telecom, Inc.
Judges: SMITH, C.J., COBB, P.J., AND CARLSON, J., CONCUR. RANDOLPH, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION, JOINED BY WALLER, P.J., EASLEY AND GRAVES, JJ. DIAZ, J., NOT PARTICIPATING.
Reporter: Southern Reporter, Second Series
Volume: 913
Pages: 256–266

Head Matter:
Rudolph D. SULLIVAN, Jr. v. PROTEX WEATHERPROOFING, INC. and ATX Telecom, Inc.
No. 2003-CA-02274-SCT.
Supreme Court of Mississippi.
March 31, 2005.
Gregory Moreau Johnston, Madison, attorney for appellant.
Patrick Ryan Beckett, Paula Graves Ar-delean, Emerson Barney Robinson, Jackson, attorneys for appellees.

Opinion:
DICKINSON, Justice,
for the Court.
¶ 1. This is a dispute over an arbitration clause in an employment agreement which was part of a global transaction to sell the assets of a business. The question presented is whether that arbitration clause may be used to force arbitration of a dispute over a different agreement which had no' arbitration clause.
FACTUAL BACKGROUND
¶ 2. Rudolph D. Sullivan, Jr., and Mike Scrimpshire invented, developed, and eventually patented a device to weatherproof joints in coaxial cable. They manufactured and sold the device through their company, Protex, Inc., which they eventually decided to sell. After negotiations with ATX, a Canadian telecommunications company, they reached an agreement which culminated in a July, 2001 closing of the sale.
¶ 3. On July 1, 2001, the various parties signed the documents necessary to close the transaction, including an Asset Purchase Agreement and employment contracts for both Sullivan and Scrimpshire. The parties to the Asset Purchase Agreement were:
Purchaser: PROTEX WEATHERPROOFING, INC., a wholly owned subsidiary of ATX which was formed for the purpose of taking ownership of the assets being purchased and continuing the business of Protex;
ATX: ATX TELECOM, INC., a Canadian corporation which provided the funds to purchase the assets; .
Vendor: PROTEX, INC., a Mississippi corporation which owned most of the assets being sold;
Principals: JAMES MICHAEL SCRIMPSHIRE and RUDOLPH D. SULLIVAN, JR., owners of Protex, Inc., and some of the intellectual property being sold.
¶ 4. The parties to Sullivan's employment contract (the "Employment Contract") were Sullivan and Protex Weatherproofing. The Employment Contract provided that he would work four and a half years for Protex Weatherproofing for a minimum salary of $70,000 for the year 2001, with salary increases each year based on the financial performance of Protex Weatherproofing. Section 4.03 of the Employment Contract provided:
Notwithstanding anything contained in this Agreement, in the event that the employment relationship is terminated without Cause, the Employee shall be entitled to receive a continuation of his remuneration for the unexpired term of this Agreement or to receive a lump sum payment in lieu thereof
¶ 5. After the closing, Sullivan became vice president and a director of Protex Weatherproofing and worked for approximately one year until September 30, 2002, when he was terminated. Claiming his termination was without cause, Sullivan demanded the lump sum payment provided in section 4.03 of the Employment Contract. When Protex Weatherproofing refused to pay, he filed suit against Protex Weatherproofing and ATX.
¶ 6. On January 22, 2003, ATX and Pro-tex Weatherproofing filed answers. Both affirmatively alleged that Sullivan's claims were "subject to mandatory and binding arbitration." Additionally, the defendants filed a joint motion to compel arbitration.
¶ 7. The parties extensively briefed and argued their respective positions to the learned trial judge who, on October 14, 2003, entered an order compelling arbitration and dismissing the complaint without prejudice. Aggrieved, Sullivan appeals.
ANALYSIS
¶ 8. Sullivan raises the following issues on appeal:
I. Arbitration should not be compelled in this matter as plaintiff has made claims against ATX that are independent of the "Employment Contract."
II. Arbitration should not be compelled in this matter, as ATX is a nonsigna-tory to the "Employment Contract."
III. ATX should not be allowed to enjoy the protection of the arbitration provision of the "Employment Contract" while claiming no liability to plaintiff under the Employment Contract.
¶ 9. 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).
¶ 10. First, we find no challenge in this appeal to the dismissal of Protex Weatherproofing. Sullivan's assignments of error relate only to the application of the Arbitration Provision to ATX, who was not a signatory to the Employment Contract. Thus, we do not address the dismissal of Protex Weatherproofing and turn to Sullivan's claims concerning ATX.
¶ 11. Sullivan says arbitration of his claims against ATX should not be compelled because he made claims against ATX under the Asset Purchase Agreement, which had no arbitration provision. He argues that these claims are "independent" of the Employment Contract. Stated differently, Sullivan claims ATX should not be allowed to use the arbitration provision in the Employment Contract to compel arbitration of disputes involving the Asset Purchase Agreement.
¶ 12. The Employment Contract, to which Sullivan is a party, contains an arbitration provision which includes the following language: "[Sullivan] agrees that any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration." (emphasis added). Sullivan does not dispute that he is bound by this language. He claims that the language has nothing to do with his claim under the Asset Purchase Agreement.
Claims under the Asset Purchase Agreement
¶ 13. Sullivan's complaint alleges that, "From the inception . the defendants did not provide adequate funding, marketing support, or other resources" necessary for Protex Weatherproofing to succeed. Sullivan further claims the formation of Protex Weatherproofing was a sham, that ATX entered the Asset Purchase Agreement solely for the purpose of obtaining the patents, and that ATX never had any intention of making Protex Weatherproofing a viable company.
¶ 14. Sullivan's complaint alleges four causes of action against Protex Weatherproofing and ATX: fraud, breach of contract, gross breach of duty of good faith and fair dealing and misrepresentation. Sullivan bases each of these causes of action on his claim that he was not paid what he was due under the Employment Contract.
¶ 15. COUNT I. — FRAUD, alleges he was fraudulently induced into signing the Asset Purchase Agreement and selling his patents "in return for false promises of consideration, including the [Employment] Contract."
¶ 16. COUNT II. — BREACH OF CONTRACT, alleges that defendants "are liable to [Sullivan] for wrongfully and tortiously breaching their [Employment] Contract with Plaintiff in failing to continue the compensation or providing a lump sum payment as required under the Contract." The claim for breach of contract does not allege any breach of the Asset Purchase Agreement.
¶ 17. COUNT III. — GROSS BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING, alleges the defendants breached their duty by failure to provide "the consideration promised to [Sullivan] under the Asset Purchase Agreement and [Employment] Contract."
¶ 18. COUNT V.(sic) — MISREPRESENTATION, alleges the defendants misrepresented "the consideration and support it would provide to [Sullivan]."
¶ 19. Sullivan cannot deny that his entire complaint, and each cause of action, involves a "dispute or controversy arising out of, relating to, or in connection with [the Employment Contract], or the interpretation, validity, construction, performance, breach, or termination thereof." Nor can Sullivan deny that he has sued ATX for breach of the Employment Contract. Consequently, Sullivan bound himself to arbitrate the claims.
¶ 20. Sullivan must arbitrate his claims for a second reason. The Asset Purchase Agreement and the Employment Contract were part of a global transaction. In Sullivan v. Mounger, 882 So.2d 129 (Miss. 2004), an employment agreement containing an arbitration provision and other agreements not containing arbitration provisions, were executed as part of a global transaction. When a dispute arose under a document which did not contain an arbitration provision, we held that "when separate documents are executed at the same time, by the same parties, as part of the same transaction, they may be construed as one instrument." Id. at 135, ¶ 21.
¶ 21. In Mounger, we cited with approval Neal v. Hardee's Food Systems, Inc., 918 F.2d 34 (5th Cir.1990), and Personal Security & Safety Systems, Inc. v. Motorola Inc., 297 F.3d 388 (5th Cir.2002). The Neal court held:
Under general principles of contract law, separate agreements executed contemporaneously by the same parties for the same purposes and as part of the same transaction are to be construed together. Neal, 918 F.2d at 37 (emphasis added).
Mounger, 882 So.2d at 135. The Personal Security & Safety Systems, Inc. court held:
[T]he licensing agreement's arbitration provision governs claims arising out of the stock purchase agreement because the agreements were executed together as part of the same overall transaction and therefore are properly construed together. Personal Security & Safety Systems, Inc. 297 F.3d at 390.
Mounger, 882 So.2d at 134.
¶ 22. The separate opinion says Moun-ger is distinguishable because "in the case sub judice, the same parties did not sign each agreement." This is surprising for two reasons.
¶ 23. First, the same parties did not sign all the same documents in Mounger. One of the documents in issue was the Mutual Release and Termination Agreement which was "entered into between Sullivan, Tritel and other 'undersigned parties' " who were not signatories on the other documents. Mounger, 882 So.2d at 133-34.
¶ 24. Second, for purposes of Sullivan's breach of contract claim, the separate opinion easily adopts Sullivan's position that, pursuant to the "alter ego" doctrine, ATX and Protex Weatherproofing are the same parties. However, for purposes of denying the defendants' request to arbitrate, the separate opinion finds they are separate. This reasoning is bewildering; ATX is either the "alter ego" of Protex Weatherproofing, or it is not.
¶ 25. Mounger did not require, and we have never held, that in order for docu ments to be construed together, they must include a written provision which specifically recites that all documents are part of an integrated, or global, transaction.
¶ 26. In advocating this new requirement, the separate opinion relies heavily on the "Integrated Transaction" provision discussed in Mounger. However, this reliance is misplaced. This Court in Mounger specifically pointed out that the Stock Purchase Agreement, one of the documents sued upon by the plaintiff in Mounger, "[did] not contain the Integrated Transaction provision." Mounger, 882 So.2d at 133.
The global transaction
¶ 27. It would be difficult to envision a transaction more "global" than the sale of assets in the case sub judice. The Employment Contract was specifically made "an integral part" of the Asset Purchase Agreement. Section 1.2 of the Asset Purchase Agreement states:
The following schedules shall be appended to this agreement and shall form an integral part thereof, namely:

Schedule 8.1(k) — Form of Employment Contract
¶28. Stated another way, without the Asset Purchase Agreement, there would have been no Employment Contract, and without the Employment Contract, there would have been no Asset Purchase Agreement. Both agreements were not only part of the same overall transaction (as in Mounger), but were by them very terms part of the same agreement. The Asset Purchase Agreement incorporated the Employment Contract and made it an integral part thereof. It would therefore seem clear that the terms of the Employment Contract became terms of the Asset Purchase Agreement. Interestingly, it is Sullivan himself who most forcefully makes this point in paragraph 6 of his complaint. He describes his Employment Contract as "further consideration for Plaintiffs patents." In his fraud claim, Sullivan says he was fraudulently induced into entering into the Asset Purchase Agreement and selling his patents "in return for false promises of consideration, including the [Employment] Contract, which it is now obvious the Defendants had no intention of honoring."
¶ 29. It is also worth noting again that in the Complaint's only "Breach of Contract" count, Sullivan alleges that Defendants breached the Employment Contract. No allegation is found therein that Defendants breached the Asset Purchase Agreement.
¶ 30. The Employment Contract, which the parties specifically agreed was an "integral part" of the Asset Purchase Agreement, contained an arbitration provision. Therefore, applying a familiar geometric theorem (A=B; B=C, therefore A=C), the arbitration provision of the Employment Contract was also an "integral part" of the Asset Purchase Agreement.
¶ 31. In reaching our decision today, we also considered the following:
(1) According to the specific terms of the Asset Purchase Agreement, execution of the Employment Contract by Sullivan was a condition precedent to the obligation of Sullivan, Protex Weatherproofing, and ATX to close the purchase.
(2) The Employment Contract was not only an exhibit to the Asset Purchase Agreement, but was specifically made an "integral part" of the Asset Purchase Agreement.
(3) The Employment Contract and the Asset Purchase Agreement were both dated July 1, 2001. .
(4) In the Complaint, Sullivan characterizes his Employment Contract as part of the consideration for' the Asset Purchase Agreement.
(5) Both Sullivan and Protex Weatherproofing, Inc., signed the Employment Contract, which contained the arbitration provision.
(6) Although ATX did not sign the Employment Contract, its name is included in the file path at the bottom of the document: (0: Lawyers JLD ATX Telecom Inc Protex employment contract — rudy2.wpd).
(7) The Asset Purchase Agreement identifies Protex Weatherproofing Inc.,, as "a wholly-owned subsidiary of ATX, for the purpose of completing the transaction contemplated by the said letter of intent."
(8) The Asset Purchase Agreement says the "letter of intent" provided that this wholly-owned subsidiary of ATX was formed for the purpose of purchasing the assets of Protex.
¶ 32. Sullivan makes no credible claim that his dispute under the Employment Contract is not subject to arbitration. We hold that all of Sullivan's claims are subject to the arbitration provision in the Employment Contract.
CONCLUSION
¶ 33. In summary, this case involves the sale of a business. The buyer required the seller to sign an employment contract. All the documents were executed on the same date. The purchase agreement incorporated the Employment Contract, and therefore its terms and provisions, as an "integral part" thereof. One of the terms of the integrated employment contract was an arbitration provision. Under any definition and analysis, this was a global transaction which must be controlled by our holding in Mounger. We therefore affirm the judgment of the Circuit Court of Rankin County.
¶ 34. AFFIRMED.
SMITH, C.J., COBB, P.J., AND CARLSON, J., CONCUR. RANDOLPH, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION, JOINED BY WALLER, P.J., EASLEY AND GRAVES, JJ. DIAZ, J., NOT PARTICIPATING.
. Sullivan sued both Protex Weatherproofing and ATX for breach of his Employment Contract. Sullivan claims ATX is the alter ego of Protex Weatherproofing.
. In his complaint, Sullivan alleges ATX breached the Employment Contract, even though ATX did not sign it. This alter ego approach is confirmed in Sullivan's response to the motion to compel arbitration, in which Sullivan says, "It is admitted that Protex and ATX breached the employment contract with plaintiff." Finally, in his memorandum supporting his response to the motion to compel arbitration, Sullivan says, "It is also notable, that while Protex is the alter-ego of ATX."
. Also stated as: Two things equal to the same thing are equal to each other.