IN THE SUPREME COURT OF MISSISSIPPI
COURT OF APPEALS OF THE STATE OF MISSISSIPPI
AMERICAN GENERAL LIFE & ACCIDENT
INSURANCE COMPANY AND BRIAN MUSE, APPELLANTS
VS.
AMANDA EDWARDS, DEXTRA DAVIS, HILDA JOHNSON, HEATHER DAVIS,
BRIAN WALDEN, KIMBERLY TAYLOR, DONNA SMITH, APPELLEES
No.201O-CA-00795
APPEAL FROM THE CIRCUIT COURT OF HINDS COUNTY, MISSISSIPPI
FIRST JUDICIAL DISTRICT
*************************************
BRIEF OF APPELLEES
Oral Argument Not Requested
*************************************
Don A. McGraw, Jr. (MSB~
John S. McDavid (MSBII
1
Montgomery McGraw & Collins, PLLC
175 N. Union Street
P.O. Box 1039
Canton, MS 39046
Telephone No: 601-859-3616
Facsimile No: 601-859-3622
Attorneys for Appellees
Daniel Starr Spivey (MSB ~
Spivey & Spivey
141 East Center Street
P. O. Box 8
Canton, MS 39046
Telephone: (601) 859-5251
Facsimile: (601) 859-5258
Attorney for Appellees
IN THE SUPREME COURT OF MISSISSIPPI
COURT OF APPEALS OF THE STATE OF MISSISSIPPI
AMERICAN GENERAL LIFE & ACCIDENT
INSURANCE COMPANY AND BRIAN MUSE, APPELLANTS
VS.
AMANDA EDWARDS, DEXTRA DAVIS, HILDA JOHNSON, HEATHER DAVIS,
BRIAN WALDEN, KIMBERLY TAYLOR, DONNA SMITH, APPELLEES
No. 201O-CA-00795
APPEAL FROM THE CIRCUIT COURT OF HINDS COUNTY, MISSISSIPPI
FIRST JUDICIAL DISTRICT
*************************************
BRIEF OF APPELLEES
Oral Argument Not Requested
*************************************
Don A. McGraw, Jr. (MSB# 2621)
John S. McDavid (MSB# 2365)
Montgomery McGraw & Collins, PLLC
175 N. Union Street
P.O. Box 1039
Canton, MS 39046
Telephone No: 601-859-3616
Facsimile No: 601-859-3622
Attorneys for Appellees
Daniel Starr Spivey (MSB #8609)
Spivey & Spivey
141 East Center Street
P. O. Box 8
Canton, MS 39046
Telephone: (601) 859-5251
Facsimile: (601) 859-5258
Attorney for Appellees
CERTIFICATE OF INTERESTED PARTIES
The undersigned counsel of record certifies that the following listed persons have an interest
in the outcome of this case. These representations are made in order that the justices of the Supreme
Court and/or the judges of the Court of Appeals may evaluate possible disqualification or recusal.
I.
American General Life & Accident Insurance Company, Appellant
2.
Brian Muse, Appellant
3.
Amanda Edwards, Appellee
4.
Dextra Davis, Appellee
5.
Hilda Johnson, Appellee
6.
Heather Davis, Appellee
7.
Brian Walden, Appellee
8.
Kimberly Taylor, Appellee
9.
Donna Smith, Appellee
10.
Vanessa M. Griffith, Vinson & Elkins, LLP, Attorney for Appellants
11.
R. Jarrad Garner and M. Scott Jones, Adams and Reese LLP, Attorneys for
Appellants
12.
John S. McDavid and Don A. McGraw, Jr., Montgomery McGraw & Collins, PLLC,
Attorneys for Appellees
13.
Daniel Starr Spivey, Spivey & Spivey, Attorney for Appellees
THIS the 5th day of April, 2011.
S. McDavid,
orney of Record for Appellees
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TABLE OF CONTENTS
CERTIFICATE OF INTERESTED PARTIES .....••••.•••....••••..•...••.......
I
TABLE OF CONTENTS ..................................................... ii
TABLE OF AUTHORITIES .••••.•.••••....•.•••.••••••....••.•..•.•••....... iii
STATEMENT OF THE ISSUE ..•••.....••••...•••.....•...•..•••..•...••...... 1
STATEMENT OF THE CASE •.•••....•.••......•.•..•••.•....•••.....•••...... 1
SUMMARY OF THE ARGUMENT ..••.•......•....•......••....•..••.•••.....• 4
ARGUMENT ................................................................ 4
CONCLUSION •....•..•••..•...••...•...•••.....•......•.•......••......... 15
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TABLE OF AUTHORITIES
CASES:
Albright v. Edward Jones & Co., 571 NE2d 1329 (Ct. App. Ind. 1999) ................... 15
AmSouth Bank v. Quinby, 963 So.2d 1145 (Miss. 2007) ............................... 13
AT&T Techs., Inc. v. Communication Workers ofAm., 475 US 643 (1986) ................ 13
B. C. Rogers Poultry, Inc., et al. v. Wedgeworth, 911 So.2d 483 (Miss. 2005) ............. 12
Beneficial National Bank, USA et al. v. Payton, 214 F. Supp. 2d 679 (S.D. Miss. 2001) ...... 14
Conerly v. Marshall Durbin Food Corp., 2008 WL 4603271 (S.D. Miss.) ................. 4
EEOC v. Waffle House, Inc., 534 US 279 (2002) .................................... 12
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) .................... 5
Rogers-Dabbs Chevrolet-Hummer, Inc. v. Blakeney, 950 So.2d 170 (Miss. 2007) ........... 4
Smith Barney v. Henry, 775 So.2d 722 (Miss. 2001) ................................. 5
Smithv. Captain D's LLC, 963 So. 2d 1116 (Miss. 2007) .............................. 4
Webb v. Investacorp, Inc., 89 F.3d 252 (5 th Cir. 1996) ................................. 4
STATUTES:
Federal Arbitration Act. 9 U.S.C. §2 ........................................ 3, 4, 6, 14
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I.
STATEMENT OF THE ISSUE
Whether the Circuit Court of Hinds County was correct in finding that the Appellees' claims
occurred prior to their signing of the Arbitration Agreements and are therefore not covered by said
agreements.
II.
STATEMENT OF THE CASE
On October 16, 2008, Appellees, by and through their counsel of record, filed the instant
lawsuit against the Appellants, American General Life and Accident Insurance Company and Brian
Muse in the Circuit Court of Hinds County, Mississippi. [R. 7] Thereafter, Defendant, American
General Life and Accident Insurance Company, (AGLA) caused this matter to be removed to the
United States District Court for the Southern District of Mississippi, Jackson Division. [R. 22] In
its Complaint, Appellees assert as their causes of action the following: misrepresentation,
omission/or suppression, fraudulent inducement, constructive fraud, fraudulent deceit, accounting,
unjust enrichment, breach of implied covenants and good faith and fair dealing, negligence/gross
negligence, aiding and abetting, acting in concert/joint concurrent tort feasers, infliction ofemotional
distress and declaratory judgment stemming from circumstances surrounding Appellants' actions of
recruiting Appellees to apply for employment with AGLA.
Each Appellee was told certain
information about the salary and bonuses, prior to applying for employment, which information was
false and misleading.
Appellants filed their Answer and Defenses on December 4, 2008. A telephonic case
management conference was conducted on January 26, 2009, at which time Appellants announced
their intention of motioning the Court to compel Appellees' claims to an arbitration forum. At that
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time, the Court limited discovery to issues surrounding the Arbitration Agreement.
On March 31,2009 the U.S. District Court issued an Order remanding the case to the Hinds
County Circuit Court. The Court held that the case did not have diversity jurisdiction and thus was
not properly removed to Federal Court. [R. 59]
Appellants filed their Motion to Compel Arbitration on April 23, 2009. [R. 65] In support
thereof, Appellants produced as attachments thereto, the Employment Applications ofeach Appellee
and Employee Acknowledgment and Agreement concerning American General Life Companies'
Employee Dispute Resolution Program, along with a copy of the Employment Dispute Resolution
Plan and accompanying documents. All of these materials are attached to the Affidavit of Rod
O'Mara, which is Exhibit "A" to Appellants' Motion. [R. 69] The Sales Employee Employment
Agreements provide that "The Dispute Resolution Plan covers any matter relating to the relationship
between the Employee and the Company... whether the basis of the dispute arises at the time of
application for employment. as a result of the termination of employment or as a consequence ofthe
company's attempt to enforce a provision of this Agreement after termination of employment. [R.
79] It is clear from reviewing these materials, in connection with the circumstances surrounding
Appellees' claims, the Arbitration Agreement is wholly inapplicable to the current dispute.
Appellants set forth in their Motion that, when Appellees were hired in 2007, each signed
an Employment Agreement which contained a provision that obligates Appellees to resolve all
claims arising from or related to their employment relationship consistent with AGLA' s Employee
Dispute Resolution Plan. [R. 65] Furthermore, the Appellants contend that the Appellees also signed
a separate, stand-alone document in which each acknowledged his or her obligation to abide by the
terms of the EDRP. Id. Furthermore, Appellants contend thatthese Agreements are in writing, were
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signed voluntarily by each Appellee, and require Appellees to arbitrate all claims arising from, or
related to, their employment. ld. In furtherance of its position, the Appellants' contend that the
claims asserted against both Appellants are subject to the Federal Arbitration Act, which mandates
the enforcement ofthe Arbitration Agreements and that this Court should compel the claims asserted
in the initial Complaint to binding arbitration pursuant to the terms of the Arbitration Agreements.
On April 27 , 2010 the Hinds County Circuit Court denied the Appellants' Motion to Compel
Arbitration. The Court found:
"The claims asserted by the Appellees fall outside the scope of the
Arbitration Agreements as each of the claims arose prior to applying
for employment. At the time of the asserted wrongful acts, the
Appellees were not applicants for employment and, thus, the
Arbitration Agreement is invalid as it relates to the claims set forth in
the herein Complaint." [R 354]
Although it is denied that the Appellees had any knowledge of their obligation to abide by the terms
of the Employee Dispute Resolution Plan or that they knowingly signed these acknowledgments,
Appellees would admit at this time that the Employee Dispute Resolution Plan acknowledgments
were nevertheless signed by each of the Appellees as Appellants contend. Appellees concede that the
Agreements and acknowledgments pertaining to arbitration were executed by each Appellee, and no
argument surrounding the manner in which the acknowledgments or related materials were executed
or the circumstances surrounding their execution will be presented. Instead, Appellees contend that
the claims presented in this litigation fall outside the scope of the Arbitration Agreements, thereby
invalidating the arbitration requirements.
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III.
SUMMARY OF THE ARGUMENT
The Complaint sets out certain misrepresentations and fraudulent conduct that occurred prior
to the Appellees' signing of the Employment Applications. The Arbitration Agreements specifically
state that they cover disputes arising at the time of application for employment, during employment
or as a consequence of termination. The Appellees claims arose prior to the application for
employment and thus are not covered in the scope of the Arbitration Agreements.
IV.
ARGUMENT
The Federal Arbitration Act dictates that Arbitration Agreements "shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract." Rogers-Dabbs Chevrolet-Hummer, Inc. v. Blakeney, 950 So. 2d 170 at ~ 12 (Miss. 2007),
quoting 9. U.S.C. § 2. Although there exists a strong federal policy in support of Arbitration
Agreements, the first issue involved in this analysis is not connected with this policy at all. The Court
must determine whether the parties agreed to arbitrate the disputes at issue. Conerly v. Marshall
Durbin Food Corporation, 2008 WL 4603271, 3 (S.D. Miss.), citing Webb v. Investacorp, Inc., 89
F. 2d 252,258 (5 th Cir. 1996).
Once it has been determined that the matter involves interstate commerce, a two-step inquiry
by the Court remains when making a determination as to whether the claims should be subjected to
arbitration in accordance with the Agreement: (1) whether there is a valid Agreement to arbitrate
between the parties; and (2) whether the dispute in question falls within the scope of that Arbitration
Agreement. Id. In determining the scope of the Arbitration Agreement, "Courts often characterize
arbitration language as either broad or narrow." Smith v. Captain D's LLC, 963 So.2d 1116, ~15
-4-
(Miss. 2007), quoting MS Credit Ctr., Inc. v. Horton, 926 So.2d 167, 175 (Miss. 2006). Although
not the case here, The United States Supreme Court has found similar language-"any controversy or
claim arising out of or related to"- to constitute a broad arbitration provision. Id.
See also Smith
Barney, Inc. v. Henry, 775 So.2d 722, 726 (Miss. 2001), citing Prima Paint Corp. v. Flood &
Conklin, MFG., Co., 388 U.S. 395,406 (1967).
The plan itself defines specifically what is covered by the arbitration provisions. Thus, the
primary question that needs to be answered is specifically whether the scope of Appellees' claims
arose (I) "at the time of application for employment" or (2) "as a result of the termination of
employment or as a consequence of the company's attempt to enforce a provision of this Agreement
after termination of employment. See page 7, "Alternate Dispute Resolution Plan", [R.79] of each
of Appellees respective Applications, which are attached as Attachments 1 through 7 to Rod
O'Mara's Affidavit (Rod O'Mara's Affidavit is attached as Exhibit "A" to Appellants' Motion to
Compel Arbitration l ). Further reference to the limitation of the subject Arbitration Agreements can
be found at Page 2,
'U 3, B, Subparts 2 and 4 of American General Life Companies Employment
Dispute Resolution Plan. [R.l52] Sub-part 2 limits the application and coverage of the Arbitration
Agreement to issues that relate to "the employment or application for employment of an employee,
including the terms, conditions, or termination of such employee. " Sub-part 4 is directed towards "any
other matter related to ... claims or disputes ... whether the dispute arises at the time of application for
employment, during employment or as a consequence ofthe termination of employment...." [R. 153]
The subject claims and disputes that comprise this litigation fall outside of the scope of the
I Each of the Applications contain the same language on Page 7 under the heading "Alternate Dispute Resolution Plan", as is
quoted in Paragraph 4 above. The reference to each of the Applications was enumerated only to demonstrate that each
Application is identical and the arguments presented herein apply to each Appellee.
-5-
application and coverage of the Employee Dispute Resolution Plan and the arbitration requirements
contained therein, as each of the Appellees' claims arose prior to applying for employment.
Furthermore, the Appellees' claims do not touch or delve on any issues arising during employment
. or as a consequence of any termination.
In order to reach the core ofthe issue of scope, application and coverage of the claims in the
context of the Arbitration Agreement, focus needs to be directly given to certain provisions contained
in the Appellees' applications and the Alternative Dispute Resolution Plan. These provisions
demonstrate that the Arbitration Agreement does not apply to Appellees' claims. Specifically, the
Appellees' employment agreement set forth in Page 7 of each respective agreement under the heading,
"Alternative Dispute Resolution Plan" the following:
The sales employee agrees that the American General
Employee Dispute Resolution Plan, as it may be amended
from time to time, is the exclusive means for resolving
employment-related legal claims with the Company.
American General Life and Accident Insurance Company
has adopted a Dispute Resolution Plan in accordance with
the Federal Arbitration Act. The Dispute Resolution Plan
covers any matter relating to the relationship between the
Employee and the Company, including all claims or
disputes arising out of the interpretation or enforcement of
any duties, rights, or obligations or the Parties set forth in
this Agreement, all claims amounting to common law tort
or pursuant to public policy, and all claims under any
federal, state, or local human rights or employment rights
statute or wage and hour statute, including, but not limited
to Title VII of the 1964 Civil Rights Act, the Age
Discrimination in Employment Act of 1967, the
Rehabilitation Act of 1973, the Americans with Disabilities
Act, the Family and Medical Leave Act, Title 42 U.S.C.
Section 1981, the Civil rights Act of 1991 the Fair Labor
Standards Act, and any similar state statute or any state
retaliatory discharge statute, whether the basis for the
dispute arises at the time of application for employment, as
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a result of, the termination of employment or as a
consequence of the company's attempt to enforce a
provision of the Agreement after termination of
employment. [R.79]
Additionally, the American General Life Companies Employment Dispute Resolution Plan,
[R.152] provides the following insight as to the application of the arbitration provisions:
•
"Dispute" means a claim, demand, controversy to which this
Plan applies, including claims, demands or controversies
which may have arisen in whole or in part prior to the
effective date of this Plan, between persons bound by the
Plan or by an Agreement to resolve disputes under the
Plan... [R. 152]
•
"Employee" is defined as an applicant for employment,
employee or former employee of the Company residing in
the United States. [R. 153]
•
"Party" is defined as the Company and any Employee
covered by this Plan. [R. 153]
•
"Application and Coverage" is the applicability of the Plan
that applies to and binds the Company, each Employee who
is in the employment of the Company or who makes
Application for employment with the Company on or
anytime after January 1, 2002, the effective date of this Plan,
and the heirs, beneficiaries and assigns of any such persons
[R. 153].
The claims asserted in the Complaint by and on behalf of each ofthe Appellees occurred prior
to each of them becoming "Parties" to the Employment Dispute Resolution Plan, as they do not meet
the definition of "employee" as is contained in the Plan. At the time of the occurrence of the
wrongful acts set forth in the Complaint, the Appellees were not parties to the Agreement Appellants
seek to enforce. They were not employees; they were not applicants for employment; and the plan
clearly does not apply to Appellees as it relates to claims that arose prior to their having applied for
employment by its clear language. Accordingly, each of the claims fall outside ofthe scope of the
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Arbitration Agreement requirements.
With respect to the claims asserted by the Appellees in this case, the factual details underlying
each of the claims are eerily similar as it concerns each Appellee and the representations made to
them by the Appellants prior to their application for employment. Appellant Muse made numerous
representations concerning salary and bonuses that were false. Additionally, the circumstances
surrounding Appellant Muses' contact with the Appellees prior to their application for employment
is also similar. Each of the Appellees were contacted by Brian Muse on behalf of Appellant,
American General Life and Accident Insurance Company prior to each having entered into an
application for employment with AGLA. [R. 261-276] In these Affidavits, each Appellee, under oath,
state that Brian Muse initiated contact with them concerning potential employment in efforts to recruit
and/or entice them from leaving their previous employer in order to apply for employment with
American General. Id. In summation, each ofthe Appellees' Timeline is as follows:
•
Amanda Edwards applied for employment with American General Life and Accident
Insurance Company on May 16, 2007. This coincides with the date of the application
that is attached as Attachment "1" to Rod O'Mara's Affidavit, which is attached as
Exhibit "A" to Appellants' Motion. This was the date Amanda Edwards applied for
employment with American General, at which time she became an applicant. Brian
Muse contacted her prior to May 16, 2007, at which time he made representations to
her concerning American General, the salary, the bonus and compensation this
Appellee could expect to receive if she would leave her employment and apply for a
job with American General. It was based on these misrepresentations that Amanda
Edwards applied for employment with American General. [R.261-262]
•
Dextra Davis applied for employment with American General Life and Accident
Insurance Company on April 30, 2007. This was the date he became an applicant, and
he was contacted by Brian Muse before this date at which time he made the similar
representations made to the other Appellees. [R. 263-264]
•
Nell Johnson became an applicant for employment with American General Life and
Accident Insurance Company on April IS, 2007, as reflected on Attachment "3" to the
Affidavit of Rod O'Mara, which has been repeatedly referenced in this Response. She
too was contacted by Brian Muse prior to that date at which time similar
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misrepresentations were made in order to entice her to become an applicant with
AGLA. [R. 265-266]
•
Heather Davis became an applicant on June 7,2007, as reflected on Attachment "4"
to the Affidavit of Rod O'Mara. Again, she was contacted by Brian Muse prior to that
date, at which time the subject misrepresentations were made. See Exhibit "B", which
is attached hereto and incorporated herein by reference. Furthermore, attached as
Exhibit "1" to the Affidavit of Heather Davis is an email chain from Brian Muse to
Heather Davis, well in advance ofthe June 7, 2007 application date of Heather Davis.
These emails clearly indicate Brian Muse's attempts at enticing Heather Davis to
apply for employment with AGLA. These emails were in April of 2007, and are
reflected on Attachment "4" to Rod O'Mara's Affidavit, she did not become an
applicant until June 7, 2007. Clearly, these misrepresentations would have occurred
prior to Heather Davis being an applicant for employment. [R. 267-270]
•
Brian Walden became an applicant for employment with AGLA on April 13,2007,
as is reflected on Attachment "5" to the Affidavit of Rod O'Mara. He too was
misrepresented by Brian Muse as to salary, bonus and compensation he would expect
to receive. These misrepresentations were made prior to April 13, 2007, the
application date of Brian Walden. [R. 271-272]
•
Kimberly Taylor became an applicant with AGLA on August 8, 2007. She too was
contacted by Brian Muse prior to her application date, at which time Brian Muse made
numerous misrepresentations to Kimberly Taylor. [R. 273-274]
•
Exhibit "G", which is attached hereto and incorporated herein by reference, embodies
the Affidavit of Donna Smith. Donna Smith (formerly known as Donna Stingly),
became an applicant with ALGA on April 9, 2007. Muse's misrepresentations, as it
concerns Donna Smith, occurred prior to April 9, 2007, her application date. [R. 275276]
It is clear that the Arbitration Agreement sets forth that the Employment Dispute Resolution
Plan applies to each employee who is in the employment of the company or who makes application
for employment with the company. [R. 152] At the time of these misrepresentations, as alleged in the
Complaint and set forth in each of the Appellees' Affidavits, the Appellees were not employees of
the company nor were they "making application for employment with the company." See Paragraph
13 of Appellees' Complaint, [R. 9] wherein the Appellees contend that Muse initially addressed each
Appellee about employment. These Appellees were employed with other individuals or entities, as
-9-
the case may be, and were initially contacted by Brian Muse concerning American General, potential
employee salaries, commissions and bonus structures. [d. None of the Appellees, during the time
in which these claims arose, took any affirmative action to change employment or enter into
discussions with Brian Muse concerning applying for employment with American General Life and
Accident Insurance Company. See Appellees' Affidavits, attached as Exhibits "A" through "G", [R.
261-276] in addition to Paragraph 12 to 13 of Appellees' Complaint, [R. 9].
Simply put, Brian Muse contacted each ofthe Appellees through his own initiative and actions
and made representations about salary and bonuses to each of the Appellees prior to the date of each
of their respective applications. It was based upon these representations that the Appellees were
initially enticed into taking affirmative action in the form of engaging in the application process with
AGLA and through the assistance of Brian Muse. [R. 261-276] Because each ofthe Appellees were
not making application for employment with the Company, the plan does not bind each of the
Appellees to arbitrate the claims that have been asserted in the Complaint. Had the claims asserted
in the Complaint occurred after the effective date of each of the Appellees' applications, Appellees
would rightfully be subject to the Employment Dispute Resolution Plan and would be entitled to only
one avenue of recourse, that being arbitration. However, that is not the case under these facts, and
holding otherwise would create an unjust effect. Appellees did not intend for events occurring prior
to applying for employment to be included in their agreement to submit disputes with AGLA to
arbitration. It is clear that the Appellants did not intend that result either.
As an example, assume the Appellees were contacted by Brian Muse and that the same
misrepresentations were communicated to them as are alleged in the Complaint and contained in the
Affidavits. Further assume that the Appellees terminated their current employment based upon these
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representations, but, prior to contacting Muse to apply for employment with AGLA, each of the
Appellees, through communications with former
employees of AGLA, learned that the
representations of Muse were false. Even further, assume that each of the Appellees then attempted
to re-secure their prior jobs only to learn that option was not available and that further attempts at
securing employment were fruitless. Assume this predicament caused economic damages to each of
the Appellees similar to that which is the subject to this litigation. To hold that Appellees under this
scenario would be subjected to an Arbitration Agreement with AGLA would create an unjust result.
The only difference in the preceding example and the facts that are before this Court is that the
Appellees each took the initiative following these representations to "make application for
employment" with American General by contacting Brian Muse and entering into a formal
application, as reflected and attached as 1-7 to the Affidavit of Rod O'Mara. Nevertheless, the claims
accrued prior to becoming applicants and are not covered by the Agreements.
Although Appellees were subjected to having representations of Brian Muse prior to their
application, it should be of no consequence for purposes of the Arbitration Agreement that they
learned that these representations were false during their employment with American General as
opposed to immediately before signing the application, as depicted in the foregoing example. The
fact ofthe matter remains is that the representations were false the entire time. The claims in this suit
clearly arose prior to each Appellee making application for employment with American General, and
these claims rightfully fall outside the scope ofthe Arbitration Agreement because the claims did not
arise from the employment or the application for employment of an employee. Secondly, the claims
arose from misrepresentation made by AGLA through Brian Muse before each Appellee became an
"applicant for employment". Either way, the subject dispute is not within the scope of the agreement.
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In B.C. Rogers Poultry, Inc. et al. v. Wedgeworth, 911 So.2d 483 (Miss. 2005) a poultry
grower brought an action against a bank and a poultry company. Wedgeworth was a contract poultry
grower for Rogers, wherein he had contracted with Rogers to grow chickens owned and ultimately
processed by Rogers, for a fee. Id. at
'\I
3. The contracts were referred to as Broiler Growing
Agreements, which generally stated the obligations of each of the parties to the agreements. Id. The
bank Defendant sought to enforce an Arbitration Agreement under the most recent contract between
Rogers and Wedgeworth, but none of the prior contracts between these parties contained such an
Agreement. Id. However, this Arbitration Agreement did not contain a provision that it would apply
to disputes which existed before its execution. Id. The trial Court denied the bank's Motion to
Compel Arbitration, which prompted the subject appeal. In Wedgeworth, the Plaintiff contended that
the dispute originated before the contract and was therefore outside the scope of the Arbitration
Agreement. Id. at '\I 6.
The Court recognized the United States Supreme Court's acknowledgment that "we do not
override the clear intent of the parties, orreach a result inconsistent with the plain text of the contract,
simply because the policy favoring arbitration is implicated." Id. at '\I 8, quoting EEOC v. Waffle
House, Inc., 534 U.S. 279,294 (2002). In so recognizing, the Mississippi Supreme Court noted that
the language of the Broiler Growing Agreement did not contain a single word or phrase which
expresses an intent by the parties that the arbitration clause should be applied retroactively to conduct
occurring prior to its execution. Wedgeworth, 911 So.2d at '\18. They noted that the plain text of the
contract between Rogers and Wedgeworth contained no language evidencing Wedgeworth's intent
to waive his fundamental right to a jury trial in a dispute with the Bank or Rogers for prior alleged
wrongdoing. Id. at '\110. The United States Supreme Court has stated that, "arbitration is a matter
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of contract and a party cannot be required to submit to arbitrate any dispute which he has not agreed
to submit." Id. at ~ 11, quoting AT&T Techs., Inc. v. Commun. Workers ofAm., 475 U.S. 643, 648
(1986).
In the instant litigation, not only were the Appellees not parties to the Arbitration Agreement
at the time the claims arose by virtue of the clear fact that they were not applicants for employment,
but the Arbitration Agreement fails to include any retroactive language beyond "making application
for employment". Any dispute arising prior to Appellees becoming applicants for employment are
not covered under the Agreement.
In Wedgeworth, just as is in the case of the Arbitration Agreement that is before this Court for
review, the arbitration provisions contain no "language broad enough to cover events which predated
the contract's execution, nor language which would broaden its application by containing terms such
as 'applies to all transactions occurring before or after execution' or 'all transactions between us' or
'all business with us.'" Wedgeworth, 911 So.2d at ~ 17.
In AmSouth Bank v. Quimby, a bank customer brought an action against a bank, alleging that
its failure to pay benefits under a credit disability insurance policy constituted a tortious breach of
contract and caused him emotional distress. 963 So.2d 1145 (Miss. 2007). A line of credit was
opened by Quimby in 1985. In 2000 a Customer Agreement containing an arbitration clause was
mailed to Quimby. Id at ~ 2. The Court, in reliance upon the analysis and holding of the Wedgeworth
opinion, held that Plaintiff's cause of action accrued before the effective date of the Arbitration
Agreement, thus warranting the denial of the bank's Motion to Compel Arbitration. Id. at ~4 and ~
30. It is a requirement that specific, retroactive language within an Arbitration Agreement exist
before a preexisting controversy can fall within its scope. Id at ~ 14.
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The only retroactive language in the Arbitration Agreement in the case at bar is limited
specifically to the date of application. [R. 153] The Plan states it applies to matters related to the
relationship between an Employee... and the Company, "whether the basis arises at the time of
application for employment, during employment or as a consequence of termination." [R. 153] The
subject Agreement did not contain "language broad enough to cover events which predated the
contract's execution, nor language which would broaden its application by containing terms such as
'applies to all transactions occurring before or after execution' or 'all transactions between us' or 'all
business with us. ", See Wedgeworth, 911 So.2d at ~ 17.
The Federal Courts have also dealt with the issue of retroactive application of arbitration
agreements when the dispute accrued prior to the date of the Agreement. In Beneficial National Bank,
U.S.A., et al. v. Payton, the Court provided an Opinion on this very issue. 214 F.Supp.2d 679
(S.D.Miss. 2001). In the Payton case, a cardholder brought a state-court action against the issuer of
a credit card and its assignee, alleging that his participation in a credit transaction was fraudulently
induced, and the issuer and assignee brought an action to compel arbitration pursuant to the Federal
Arbitration Act. Id. Although it was ultimately held that the dispute was subject to arbitration, the
opinion took notice of the effect of retroactive language in these types of agreements:
As numerous courts have recognized, if [an]
arbitration clause contains retroactive time-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 arbitration provision to
events relating to past events. (Footnote omitted). Or, if
the arbitration clause contains language stating that it
applies to "all transactions between us" or "all business
with us," then [the court] may apply the arbitration clause
retroactively.
Id. at 688-89. Furthermore, footnote 11 of this opinion, located at page 688, acknowledged an
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Indiana opinion that stated an Arbitration Agreement which covered "all accounts which the
undersigned may open or reopen" applied prospectively only. Jd., quoting Albright v. Edward D.
Jones & Co., 571 N.E.2d 1329, 1333 (Ct.App.Ind 1999). Without the inclusion of specific
retroactive language within the Agreement, the Agreement cannot extend in any direction but
forward from the date each Appellee became applicants with AGLA. The claims of Appellees relate
to the "recruitment"of Appellees, which logically would have occurred prior to Appellees being
applicants.
The subject agreement does not contain any retroactive language. The subject agreement
covers disputes that relate from the time the Appellees "[made] application for employment". It
should be applied prospectively only from that point forward, and the misrepresentations made by
Muse, as set forth in the Complaint and Affidavits, rightfully fall outside the scope.
V.
CONCLUSION
The Appellees' claims arose prior to their signing of the Arbitration Agreements. The
Arbitration Agreements did not contain any retroactive language, thus the Appellees' claims are not
within the scope of the Arbitration Agreements. The Hinds County Circuit Court was correct in its
ruling and Appellees respectfully request that it be affirmed.
Respectfully submitted this the 5th day of April, 2011.
AMANDA EDWARDS, DEXTRA DAVIS, ffiLDA
JOHNSON, HEATHER DAVIS, BRIAN WALDEN
KIMBERLY TAYLOR AND DONNA SMITH
BY:~~.~~~
J~cDavid. Couns~ ppellees
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OF COUNSEL:
Don A. McGraw, Jr. (MS~
John S. McDavid (MSB#~
Montgomery McGraw & Collins, PLLC
175 N. Union Street
P.O. Box 1039
Canton, MS 39046
Telephone No. (601) 859-3616
Facsimile No. (601) 859-3622
Email: DmcGraw@mmcolaw.com
Email: Jmcdavid@mmcolaw.com
Attorneys for Appellees
Daniel Starr Spivey (MSB",
Spivey & Spivey
141 East Center Street
P.O.Box8
Canton, MS 39046
Telephone: (601) 859-5251
Facsimile: (601) 859-5258
Attorney for Appellees
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CERTIFICATE OF SERVICE
I, John S. McDavid of Montgomery McGraw & Collins, PLLC, do hereby certify that I have
this day filed the foregoitig Brief ofAppellees with the Clerk of the Court, using the ECF system,
which sent notification of such filing to the following participants:
R. Jarrad Gamer
M. Scott Jones
Adams and Reese, LLP
111 East Capitol Street, Ste. 350
Post Office Box 24297
Jackson, Mississippi 39225-4297
Attorneysfor American General Life
And Accident Insurance Company and
Brian Muse
Vanessa M. Griffith
Vinson & Elkins, LLP
2001 Ross Ave., Ste. 3700
Dallas, Texas 75201
Attorney for American General Life
And Accident Insurance Company and
Brian Muse
SO CERTIFIED, this the 5th day of April, 2011.
~J>."m~
Z:lFirm Data\JSM\[ACTIVE FILES]\Edwards el al v. AlG\Appea!\Pleadings\Brief of Appellees 0322.wpd
-17-
CERTIFICATE OF SERVICE
I, John S. McDavid of Montgomery McGraw & CoIlins, PLLC, do hereby certifY that I have
this day transmitted via U. S. Mail, postage prepaid a true and correct copy of the above and
foregoing Brief of Appellee to the following:
Judge Winston Kidd
Hinds County Circuit Court
P.O. Box 327
Jackson, MS 39205
SO CERTIFIED, this the 11'h day of April, 2011.
J11:}~f'~
Z:\Firm Dala\DAMPl\{ACTIVE CASES]\{FORECLOSURE 2011]\Madison Spec, LLc\pleadings\Certilicate of Service 10 Judge Winston Kidd 0411 • file no. 20) \·OOO7J.wpd