Opinion ID: 1553718
Heading Depth: 2
Heading Rank: 2

Heading: whether the arbitration agreement is substantively unconscionable.

Text: ¶ 20. This Court reviews the grant or denial of a motion to compel arbitration de novo. East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002). The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability. 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). Consistent with the position taken by the United States Supreme Court's interpretation of the FAA, this Court has followed the federal policy favoring arbitration. See East Ford, 826 So.2d at 713; IP Timberlands Operating Co. v. Denmiss Corp., 726 So.2d 96, 103-04 (Miss.1998). ¶ 21. Sawyers argues that the trial court erred in enforcing the arbitration agreement because it is substantively unconscionable. In Covenant Health & Rehabilitation of Picayune, LP v. Estate of Moulds ex rel. Braddock, this Court stated: Under substantive unconscionability, we look within the four corners of an agreement in order to discover any abuses relating to the specific terms which violate the expectations of, or cause gross disparity between, the contracting parties. Stephens, 911 So.2d at 521. Substantive unconscionability is proven by oppressive contract terms such that there is a one-sided agreement whereby one party is deprived of all the benefits of the agreement or left without a remedy for another party's nonperformance or breach.... Holyfield, 476 F.Supp. at 110. ... Our courts may remedy unconscionable agreements as follows: The law of Mississippi imposes an obligation of good faith and fundamental fairness in the performance of every contract ... this requirement is so pronounced that courts have the power to refuse to enforce any contract ... in order to avoid an unconscionable result. Section 75-2-302 of the Mississippi Code provides: If the court as a matter of law finds the contract to have been unconscionable... [it] may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. Covenant, 14 So.3d 695, 699-700. Unconscionability has been defined also as `an absence of meaningful choice on the part of one of the parties, together with contract terms which are unreasonably favorable to the other party.' Entergy Miss., Inc. v. Burdette Gin Co., 726 So.2d 1202, 1207 (Miss.1998). More specifically, Sawyers contends that the arbitration agreement provides an avenue for Herrin-Gear to pursue its claims in a court of law, while requiring Sawyers to arbitrate all claims; the arbitration agreement requires the arbitration be held in the city where Herrin-Gear is located; the arbitrator cannot award Sawyers damages for attorney's fees, lost wages, mental anguish, costs, interest, or punitive damages; and Sawyers is required to give up her right to a judge and jury, while Herrin-Gear is not. ¶ 22. The arbitration agreement does permit Herrin-Gear to bring an action for possession and/or replevin of the vehicle purchased by Sawyers in a court of law rather than resolving the matter by binding arbitration. However, mutuality of obligation is not required for a contract to be enforceable. Murphy v. Amsouth Bank, 269 F.Supp.2d 749, 752 (S.D.Miss. 2003). See also McKenzie Check Advance of Miss., LLC v. Hardy, 866 So.2d 446, 453 (Miss.2004) ([p]ursuant to Mississippi law, mutuality of obligation is not required for an arbitration agreement to be enforceable...). Also, as discussed by the trial court, [i]t is common for such provisions to be contained in an arbitration agreement where there is collateral or a security interest at stake, because an arbitrator would not have authority to grant certain relief that only courts could give. As such, the provision whereby a limited exception to arbitration is given only to Herrin-Gear to obtain possession of the subject vehicle by replevin in the event of Sawyer's default under the terms of the sales contract does not render the arbitration agreement substantively unconscionable. ¶ 23. Further, Sawyers's contention that the arbitration agreement requires her to give up the right to a judge and jury while Herrin-Gear is not subject to the same requirement is without merit. The arbitration agreement states that any controversy or claim between Buyer(s)/Lessee(s) and Dealer ... shall be resolved by binding arbitration. The only very limited exception is the one discussed supra, concerning the right of replevin on the part of Herrin-Gear. The fact that there is also a clause stating, Buyer(s)/Lessee(s) acknowledge and agree that by agreeing to arbitrate as set forth herein, Buyer(s)/Lessee(s) give up the right to go to court and the right to a jury trial, does not make the agreement one-sided. The clause merely reinforces the previous notion of binding arbitration and thus emphasizes the point that the buyer(s)/lessee(s) understand the rights that they are relinquishing. A party such as Herrin-Gear already would be aware of the relinquishment of these rights, since it obviously was responsible for drafting the document containing the arbitration agreement. Sawyers also asserts that the arbitration agreement is substantively unconscionable in that it requires that [a]ny Arbitration proceeding shall be conducted in the city where Dealer's dealership is located. This Court agrees with the trial court's analysis here: Since Plaintiff purchased the automobile in Jackson, it is not unreasonable that she would expect to have to bring a lawsuit regarding that automobile in Jackson. Moreover, the Plaintiff has not provided any evidence of any kind of hardship that would be caused if she were required to arbitrate in Jackson. The Court finds that Plaintiff has not established that this provision is unfair. Certainly, if Sawyers was able to make the journey to Jackson to purchase her vehicle, the arbitration agreement is not one-sided as to deprive Sawyers of all its benefits simply because she has to drive approximately 150 miles from Waynesboro to Jackson. ¶ 24. Lastly, Sawyers argues that the arbitration agreement maintains that the arbitrator cannot award Sawyers damages for attorney's fees, lost wages, mental anguish, costs, interest or punitive damages. The trial court determined that the parties have not agreed to limit any remedies that could be awarded in arbitration, and there is no limitation on remedies that can be awarded by the arbitrator under the applicable [Better Business Bureau] Rules. The Arbitration Agreement does state that [t]o the extent permitted by law, the Arbitrator(s) shall have no authority to award punitive damages or other damages not measured by the prevailing party's actual damages.... Like the trial court, we do not interpret this clause as an agreement by the parties to limit any of the remedies which might be awarded in arbitration. Even so, the parties may be limited as to the amount of punitive damages which might be awarded, since such an award would have to be measured by the prevailing party's actual damages, but such limitation is by no means unreasonable. Additionally, this clause certainly does not dispose of Sawyers's right to any compensatory or actual damages. ¶ 25. Our analysis is supported by the Supreme Court of the United States, which has held that on the issue of punitive damages, [t]he precise [punitive damages] award in any case, of course, must be based upon the facts and circumstances of the defendant's conduct and the harm to the plaintiff, and there must be efforts to ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425-26, 123 S.Ct. 1513, 1524, 155 L.Ed.2d 585 (2003). The Campbell Court likewise stated that each [punitive damages] award must comport with the principles set forth in Gore.  Campbell, 538 U.S. at 427, 123 S.Ct. at 1525 (citing BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996)). We thus find our analysis on this issue is not inconsistent with the United States Supreme Court's analysis in Campbell. ¶ 26. Sawyers cites Pitts v. Watkins, 905 So.2d 553, 557 (Miss.2005) (home purchasers sued home inspector alleging breach of duty, misrepresentation, breach of contract, gross negligence, and negligence) for the proposition that a limitation-of-liability clause which leaves a party with no adequate remedy is substantively unconscionable. While this proposition undoubtedly is true, today's case is easily distinguishable from Pitts, inasmuch as Sawyers is left with the ability to seek any damages measured by the prevailing party's actual damages. In Pitts, liability was limited to $265, the amount paid for the home inspection at issue, and no recovery was available for consequential damages. Id. at 556. This is certainly not the situation before the Court today, and in this respect, Pitts is inapplicable. ¶ 27. The arbitration agreement at issue is not so one-sided that Sawyers is deprived of all the benefits of the agreement or left without a remedy for Herrin-Gear's nonperformance or breach. Thus, for the reasons stated, the trial court did not commit error in finding that the arbitration agreement was not substantially unconscionable. Accordingly, this issue has no merit.