IN THE SUPREME COURT OF MISSISSIPPI
NO. 2004-CA-01345-SCT
VICKSBURG PARTNERS, L.P., BOND, JOHNSON AND
BOND, INC., MAGNOLIA MANAGEMENT
CORPORATION, MAGNOLIA MANAGEMENT
SERVICES OF MISSISSIPPI, INC., JOE BANNON,
GEORGE T. JOHNSON AND PEGGY MINGEE
v.
ANGELA STEPHENS, INDIVIDUALLY AND AS
ADMINISTRATRIX OF THE ESTATE OF LEROY
TAYLOR
DATE OF JUDGMENT: 05/04/2004
TRIAL JUDGE: HON. ISADORE W. PATRICK, JR.
COURT FROM WHICH APPEALED: WARREN COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: BENJAMIN CONNELL HEINZ
WILLIAM R. LANCASTER
LOUIS HUNTER COMPTON, JR.
ATTORNEY FOR APPELLEE: PRO SE
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: REVERSED AND REMANDED - 09/22/2005
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
CARLSON, JUSTICE, FOR THE COURT:
¶1. This case comes to us on appeal from a circuit court order denying a motion to stay
proceedings and enforce an arbitration clause contained within the relevant nursing home
admissions agreement. Finding that the arbitration clause is valid and enforceable, except as
hereinafter discussed, we reverse the judgment of the circuit court and remand this case to the
Circuit Court of Warren County with directions to submit this case to arbitration consistent
with this opinion.
FACTS AND PROCEEDINGS IN THE TRIAL COURT
¶2. Serving as the responsible party, Angela Stephens admitted her father, Leroy Taylor to
the Vicksburg Trace Haven Nursing Home (“the Nursing Home”) on April 26, 2001. Stephens
and Taylor underwent normal check-in procedures, and each was asked to read and sign an
admissions agreement. Their signatures, along with the signature of a representative from the
Nursing Home, were required to complete the admissions agreement. Contained within the
admissions agreement was an arbitration clause. Section F stated:
The Patient and Responsible Party agree that any and all claims, dispute and/or
controversies between them and the Facility shall be resolved by binding
arbitration administered by the American Arbitration Association. The
Arbitration shall be heard and decided by one qualified Arbitrator selected by the
Facility. The Parties agree that the decision of the Arbitrator shall be final. All
Parties hereto agree to arbitration for their individual respective anticipated
benefit of reduced costs of pursuing resolution of a claim, dispute or
controversy, should one arise. All Parties hereto are hereby waiving all rights
to a jural trial.
¶3. The arbitration clause, which was located on the last page of the admissions agreement
above the appropriate signature lines, was accompanied by an acknowledgment typed in all
caps, bold faced, paragraph-form, in larger font, and stating:
THE UNDERSIGNED ACKNOWLEDGE THAT EACH OF THEM HAS READ
AND UNDERSTOOD THIS AGREEMENT, INCLUDING THE ARBITRATION
PROVISION AND HAS RECEIVED A COPY OF THIS AGREEMENT, AND
THAT EACH OF THEM VOLUNTARILY CONSENTS TO AND ACCEPTS ALL
OF ITS TERMS AND CONDITIONS.
2
¶4. On May 10, 2001, Taylor and Stephens signed a second admissions agreement.1
Contained within this second admissions agreement was likewise another arbitration clause
which again required the signatures of the three interested parties - Taylor, Stephens and a
representative from the Nursing Home. The arbitration clause was printed in boldfaced type
equal to or larger than the type found elsewhere in the admissions agreement and was, as with
the first agreement, located in Section F on the last page, just above the signature lines and
consent statement. This arbitration clause contained in the second admissions agreement
stated:
The Resident and Responsible Party agree that any and all claims and/or
controversies between them and the Facility or its Owners, officers, directors
or employees shall be resolved by binding arbitration administered by the
American Arbitration Association and its rules and procedures. The Arbitration
shall be heard and decided by one qualified Arbitrator selected by mutual
agreement of the parties. Failing such agreement each party shall select one
qualified Arbitrator and the two selected shall select a third. The Parties agree
that the decision of the Arbitrator(s) shall be final. The Parties further agree that
the Arbitrators shall have all authority necessary to render a final, binding
decision of all claims and/or controversies and shall have all requisite powers
and obligations. If the agreed method of selecting an Arbitrator(s) fails for any
reason or the Arbitrator(s) appointed fails or is unable to act or the successor(s)
has not been duly appointed, the appropriate circuit court, on application of a
party, shall appoint one Arbitrator to arbitrate the issue. An Arbitrator so
appointed shall have all the powers of the one named in this Agreement. All
Parties hereto agree to arbitration for their individual respective anticipated
benefit of reduced costs of pursuing a timely resolution of a claim, dispute or
controversy, should one arise. The Parties agree to share equally the costs of
such arbitration regardless of the outcome. Consistent with the terms and
1
The first paragraph of this second admissions agreement states in part “as of this __ ___ day of
_____, 200__.” These blanks are completed in ink as follows: “as of this 10th day of May, 2002.” This date
is obviously wrong since the record clearly reveals that the date of execution of this second admissions
agreement was May 10, 2001. However, the incorrect year in this second admissions agreement is of no
consequence in today’s case.
3
conditions of this Agreement, the Parties agree that the Arbitrator(s) may not
award punitive damages and actual damages awarded, if any, shall be awarded
pursuant to Section E.7.2
¶5. Taylor resided at the Nursing Home until November 20, 2002, when he passed away due
to alleged failures in the care provided by the Nursing Home during his residency. Based on
these alleged failures, Stephens filed this suit individually and on behalf of the estate and the
wrongful death beneficiaries of Taylor. The complaint was filed on December 27, 2002, and
it named as defendants Vicksburg Partners, L.P.; Vicksburg Associates Corp.; Bond, Johnson
& Bond, Inc.; Magnolia Management Corporation; George T. Johnson; Peggy Mingee; Eva H.
Williams; John Does 1 through 10; and unidentified entities 1 through 10 (as to Vicksburg
2
Contrary to the arbitration clause in this second admissions agreement, the arbitration clause in the
first admissions agreement provided for an arbitrator to be selected only by the facility (nursing home);
however, the arbitration clause in the second admissions agreement provided for one arbitrator to be selected
by mutual agreement of the parties to the agreement, and failing agreement, then each party would select an
arbitrator, with the two designated arbitrators then selecting a third arbitrator. Other noted differences are
that this second arbitration clause provides for equal sharing of the arbitration costs, regardless of the outcome
of the arbitration. Also, this second arbitration clause omits language regarding the parties’ waiver of a jury
trial, which language is in the first arbitration clause. Finally, the second arbitration clause contains language
disallowing the arbitrator(s) award of punitive damages and limits actual damages awarded by referencing
Section E.7 of the admissions agreement. Section E.7 contains language in bold-type, more prominent than
the language of paragraphs six and eight which appear immediately above and below, respectively, paragraph
seven. Section E.7 states:
Should any claim, dispute or controversy arise between the Parties or be asserted against any
of the Facility’s owner’s (sic), officers, directors or employees, the settlement thereof shall
be for actual damages not to exceed the lesser of a) $50,000 or b) the number of days the
Resident was in the Facility multiplied times the daily rate applicable to said Resident. This
limitation of liability shall be binding on Resident, Responsible Party and the Resident’s heirs,
estate and assigns.
Section E.8 states that the parties agree to waive punitive damages “against each other.” This limitation of
liability/damages as provided in Sections E.7 and E.8 will be discussed later in this opinion.
4
Trace Haven Nursing Facility) (“Vicksburg Partners”).3 Prior to any responsive pleadings
being filed, Stephens filed an amended complaint on March 13, 2003. See Miss. R. Civ. P.
15(a). By the time of the filing of the amended complaint, Stephens had received a chancery
court appointment as Administratrix of her father’s estate; therefore, the amended complaint
provided that she was also bringing the suit as the administratrix of the estate of Leroy Taylor.
The eight-count amended complaint contained claims of (1) negligence as to specified
defendants; (2) negligence as to other specified defendants; (3) medical malpractice; (4)
malice and/or gross negligence; (5) fraud; and (6) breach of fiduciary duty; as well as (7) a
statutory survival claim; and (8) a statutory wrongful death claim.
¶6. On April 29, 2003, Vicksburg Partners filed their motion to stay proceedings and
enforce dispute resolution/arbitration. On May 12, 2003, Stephens filed her response. After
conducting two hearings, receiving multiple briefs and allowing limited discovery on the issue,
the circuit court entered an order on May 4, 2004, denying Vicksburg Partners’ motion to stay
and submit to arbitration.
¶7. Shortly thereafter, Vicksburg Partners filed a motion for reconsideration or for an order
granting certification for interlocutory appeal. On June 22, 2004, the circuit court denied this
motion without addressing Vicksburg Partners’ request for certification for Interlocutory
appeal. Vicksburg Partners thereafter filed its Petition for Interlocutory Appeal by Permission
and Request for Stay. By order entered on August 23, 2004, a three-justice panel of this Court
3
By her subsequently filed second amended complaint, Magnolia Management Services of Mississippi,
Inc., was added as a party defendant. Likewise, in the end, the parties to this appeal were not altogether the
same as the party-defendants initially named when this lawsuit was first commenced.
5
considered this petition for interlocutory appeal by permission and request for stay and
accepted this petition for filing as a notice of appeal.
¶8. While the trial court record was being prepared in this case, Stephens’s attorneys filed
a motion with this Court requesting permission to withdraw as counsel, which motion was
eventually granted. The documentation before us at the time clearly revealed that Stephens did
not wish for her trial counsel to represent her on appeal. Thus, by order entered on March 31,
2005, Stephens was given fourteen days to retain counsel; however, she failed to do so, and
therefore, by order entered on April 19, 2005, this Court stated, inter alia, that we deemed
Stephens to be proceeding pro se (representing herself), and we further gave her deadlines to
submit her appellee’s brief. This she failed to do, and we thus have before us only the brief of
Vicksburg Partners. However, while we have no appellate brief before us on behalf of
Stephens, her arguments are fully before us due to the briefs and pleadings submitted to the
trial court by her trial attorneys. We note that while this case was pending in the trial court,
Stephens’s attorneys filed with that court, inter alia, a 16-page “Plaintiff’s Response Opposing
Defendants’ Motions to Stay Proceedings and Enforce Dispute Resolution/Arbitration
Clause,” with attachments, and an 11-page “Supplement to Plaintiff’s Response Opposing
Defendants’ Motions to Stay Proceedings and Enforce Dispute Resolution/Arbitration
Clause,” with attachments. Additionally, after Vicksburg Partners filed with us its Petition for
Interlocutory Appeal by Permission and Request for Stay, Stephens, still represented by
counsel, filed through her trial counsel, a 9-page Response to Petition for Interlocutory Appeal
by Permission and Request for Stay. From these filings by Stephens’s trial attorneys, we
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clearly have before us in the appellate record the issues and arguments as laid out by Stephens.
Thus, while she has no appellate attorney of record, Stephens is hardly unrepresented on appeal
regarding her arguments addressing the issues raised by Vicksburg Partners.
DISCUSSION
¶9. This case involves the denial of a motion to enforce a dispute resolution/arbitration
clause contained within a nursing home’s standard admissions form. This Court applies a de
novo standard of review to motions to dismiss and to denials of motions to compel. Sanderson
Farms, Inc. v. Gatlin, 848 So.2d 828, 834 (Miss. 2003) (citing Poindexter v. Southern
United Fire Ins. Co., 838 So.2d 964, 966-67 (Miss. 2003); East Ford, Inc. v. Taylor, 826
So.2d 709, 713 (Miss. 2002); Webb v. Investacorp, Inc., 89 F.3d 252, 256 (5th Cir. 1996)).
“Whether the circuit court had proper jurisdiction to hear a particular matter is a question of
law, and this Court must therefore apply a de novo standard of review to this issue.” Entergy
Miss., Inc. v. Burdette Gin Co., 726 So.2d 1202, 1205 (Miss. 1998) (citing Wright v. White,
693 So.2d 898, 900 (Miss. 1997)).
¶10. This Court has recognized that arbitration is favored and firmly embedded in both our
federal and state laws. Pass Termite & Pest Control, Inc. v. Walker, 904 So.2d 1030, 1032-
33 (Miss. 2004) (citing Russell v. Performance Toyota, Inc., 826 So.2d 719 (Miss. 2002);
East Ford, Inc. v. Taylor, 826 So.2d 709 (Miss. 2002); IP Timberlands Operating Co. v.
Denmiss Corp., 726 So. 2d 96 (Miss. 1998)). Since our decision in IP Timberlands, we have
explicitly recognized the applicability of arbitration for resolving disputes and have stated that
7
we will respect the right of an individual or an entity to agree in advance of a dispute to
arbitration or other alternative dispute resolution. 726 So. 2d at 104. We have thus endorsed
the undisputed province of the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (FAA), and recognized
its clear authority to govern agreements formed in interstate commerce wherein a contractual
provision provides for alternative dispute resolution. Id. at 107. Consistent with federal law,
our case law now clearly emphasizes the favored status of arbitration:
[Q]uestions of arbitrability must be addressed with a healthy regard for the
federal policy favoring arbitration. 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). This Court has
adopted this preference for arbitration. See Smith Barney, Inc. v. Henry, 775
So.2d 722 (Miss. 2001); I.P. Timberlands Operating Co. v. Denmiss Corp.,
726 So.2d 96, 103-04 (Miss. 1998); Hutto v. Jordan, 204 Miss. 30, 36 So.2d
809, 812 (1948).
East Ford, Inc. v. Taylor, 826 So.2d at 713.
¶11. United States Supreme Court precedent clearly evidences this preference for arbitration
provisions and expressly recognizes that only generally applicable contract defenses, such as
fraud, duress, or unconscionability, can be used to invalidate arbitration provisions or
agreements contemplated under section 2 of the FAA. Doctor's Assocs., Inc. v. Casarotto,
517 U.S. 681, 687, 116 S.Ct. 1652, 1656, 134 L.Ed. 2d 902 (1996). See Allied-Bruce, Inc.
v. Dobson, 513 U.S. 265, 281, 115 S.Ct. 834, 843 130 L.Ed. 2d 753 (1995); Rodriguez de
Quijas v. Shearson/Am. Exp., Inc., 490 U.S. 477, 483-484, 109 S.Ct. 1917, 1921-1922, 104
8
L.Ed.2d 526 (1989); Shearson/Am. Exp. Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct.
2332, 2337, 96 L.Ed.2d 185 (1987). In this way, the Supreme Court does not allow state
courts to single out arbitration provisions for suspect status and “invalidate arbitration
agreements under state laws applicable only to arbitration provisions.” Doctor's Assocs., Inc.
v. Casarotto, 517 U.S. at 687, 116 S.Ct. at 1656. See Allied-Bruce, 513 U.S. at 281, 115
S.Ct. at 843; Perry v. Thomas, 482 U.S. 483, 492 n.9, 107 S.Ct. 2520, 2527, n.9, 96 L.Ed.2d
426 (1987)).
¶12. In Perry, the U.S. Supreme Court provided clear meaning to the Federal Arbitration Act
and stated:
Congress intended to foreclose state legislative attempts to undercut the
enforceability of arbitration agreements." Id., at 16, 104 S.Ct. 861 (footnote
omitted). Section 2, therefore, embodies a clear federal policy of requiring
arbitration unless the agreement to arbitrate is not part of a contract evidencing
interstate commerce or is revocable "upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C. § 2. "We see nothing in the
Act indicating that the broad principle of enforceability is subject to any
additional limitations under state law." Keating, supra, at 11, 104 S.Ct., 858.
Perry, 482 U.S. at 489-90, 107 S.Ct. at 2525.
I. WHETHER THE AGREEMENT TO ARBITRATE IS PART OF A
CONTRACT EVIDENCING INTERSTATE COMMERCE.
¶13. A threshold determination which must be considered is whether the parties’ admission
agreement falls within the provisions of § 2 of the Federal Arbitration Act. The FAA requires
“that ‘we rigorously enforce agreements to arbitrate.’” East Ford, 826 So.2d at 713 (citing
Shearson/Am. Exp. Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d
9
185 (1987)). Specifically, § 2 of the Federal Arbitration Act, relates to the enforceability of
arbitration provisions and provides that:
A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the refusal to perform the whole
or any part thereof, or an agreement in writing to submit to arbitration an
existing controversy arising out of such a contract, transaction, or refusal,
shall be valid, irrevocable and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.
9 U.S.C. § 2 (emphasis added).
¶14. In Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130
L.Ed.2d 753 (1995), a case where the Alabama Supreme Court affirmed the denial of a motion
to compel arbitration, the United States Supreme Court examined the breadth of the Federal
Arbitration Act and undertook to answer an interpretive question – “how far beyond the flow
of commerce does the word ‘involving’ reach?” Allied-Bruce Terminix, 513 U.S. at 273. In
answering this question, the Supreme Court concluded that the phrase “involving commerce”
is to be interpreted broadly and was the functional equivalent of the phrase “affecting
commerce”, which signals Congress’ intent to exercise its Commerce Clause powers to the
fullest extent. Id. at 273-74.
¶15. In 2003, the U.S. Supreme Court once again sought to quantify the broad effect of the
FAA as implemented through Congress’ Commerce Clause power. In Citizens Bank v.
Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003), the Supreme Court again
reviewed an Alabama case where the Alabama Supreme Court refused to enforce arbitration.
10
Specifically, the case dealt with debt-restructuring agreements which were executed in
Alabama by Alabama residents. Id. at 54, 123 S.Ct. at 2039.
The Alabama Supreme Court found, inter alia, that these agreements and transactions were not
sufficiently a part of interstate commerce so as to trigger FAA applicability. The U.S. Supreme
Court explained its interpretation of the Alabama Supreme Court’s decision:
Because there was no showing ‘that any portion of the restructured debt was
actually attributable to interstate transactions; that the funds compromising the
debt originated out-of-state; or that the restructured debt was inseparable from
any out-of-state projects, the court found an insufficient nexus with interstate
commerce to establish FAA coverage of the parties’ dispute.
539 U.S. at 55, 123 S.Ct. at 2039. In reversing the Alabama Supreme Court, the U.S. Supreme
Court held that “Congress’ Commerce Clause power ‘may be exercised in individual cases
without showing any specific effect upon interstate commerce’ if in the aggregate the
economic activity in question would represent ‘a general practice...subject to federal control.’”
539 U.S. at 56-57, 123 S.Ct. at 2040 (citing Mandeville Island Farms, Inc. v. Am. Crystal
Sugar Co., 334 U.S. 219, 236, 68 S.Ct. 996, 92 L.Ed. 1328 (1948). See also Perez v. United
States, 402 U.S. 146, 154, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971); Wickard v. Filburn, 317
U.S. 111, 127-128, 63 S.Ct. 82, 87 L.Ed. 122 (1942).
¶16. This case clearly falls within the broad purview of the Federal Arbitration Act.
Accordingly, singular agreements between care facilities and care patients, when taken in the
aggregate, affect interstate commerce. As stated in Alafabco, “[o]nly the general practice need
bear on interstate commerce in a substantial way.” 539 U.S. at 57, 123 S.Ct. at 2040 (citing
11
Maryland v. Wirtz, 392 U.S. 183, 196-97 n.27, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968);
NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37-38, 57 S.Ct. 615, 81 L.Ed. 893
(1937).
¶17. Nursing homes through general practice, which includes basic daily activities like
receiving supplies from out-of-state vendors and payments from out-of-state insurance
companies or the federal Medicare program, affect interstate commerce. Moreover, the
defendants in this case include a Georgia corporation, a Tennessee corporation and a Louisiana
corporation, who collectively contribute to the operation of Vicksburg Partners nursing home,
which receives services and goods from out-of-state vendors, takes in out-of-state residents,
and receives payments from out-of-state insurance carriers, including federally-accredited
Medicare/Medicaid programs.
¶18. Thus, since the arbitration clause is a part of a contract (the nursing home admissions
agreement) evidencing in the aggregate economic activity affecting interstate commerce, the
Federal Arbitration Act is applicable and we, therefore, proceed with our discussion
concerning whether the relevant contract and arbitration clause were unconscionable.
¶19. In line with U.S. Supreme Court precedent, we will review the arbitration agreement in
this case, paying close attention to the strong federal policy of favoring the enforcement of
agreements to arbitrate. “Absent a well-founded claim that an arbitration agreement resulted
from the sort of fraud or excessive economic power that ‘would provide grounds for the
revocation of any contract’, the Arbitration Act ‘provides no basis for disfavoring agreements
to arbitrate statutory claims by skewing the otherwise hospitable inquiry into arbitrability.’”
12
Shearson/Am. Exp., Inc., 482 U.S. at 226, 107 S.Ct. at 2337 (citing Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444
(1985)).
II. WHETHER THE CIRCUIT COURT PROPERLY RULED THAT
THE ARBITRATION CLAUSE CONTAINED IN THE BODY OF
THE PARTIES’ ADMISSIONS AGREEMENT WAS
PROCEDURALLY UNCONSCIONABLE.
¶20. In denying Vicksburg Partners’ motion to enforce arbitration and stay proceedings, the
circuit court found that Stephens presented evidence to support her position that “had Mr.
Taylor not signed the admissions agreement he would not have been accepted into the nursing
home.” Specifically, the circuit court found “that the conditions of the agreement were on a
`take it or leave it’ basis leaving the plaintiff with no bargaining power.” The circuit court
stressed that Vicksburg Partners failed to present any evidence that an applicant had ever been
admitted despite refusing to acquiesce in the arbitration clause. Accordingly, the circuit court
found that the arbitration clause created an unenforceable contract of adhesion and stated:
The Defendants [Vicksburg Partners] asked the Court at the hearing to take
judicial notice that there were two(2) other nursing homes operating in the
county at the time of Mr. Taylor’s admission. Though that is a correct statement
of fact, the Court must also take notice that the existence of nursing homes are
limited by a statute which requires a Certificate of Need, prior to a nursing
home being opened in a particular area. Therefore, the number of openings are
limited, accompanied by long waiting lists for admission. After the plaintiff
raised the issue and put on evidence in support of the issue, the Court inquired
of the Defendants, if it could provide any contract of admission by the Nursing
Home, where the arbitration clause had been refused by the applicant and the
applicant was still admitted.....[T]he Defendants at said hearing failed to produce
any evidence to the contrary.
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¶21. In its order denying Vicksburg Partners’ motion to compel arbitration, the circuit court
clearly found that the subject contract was a contract of adhesion. While this finding is
important, it is not in and of itself sufficient to substantiate a finding that the arbitration clause
made the admissions agreement unconscionable per se. Thus, in addition to a finding that a
contract is one of adhesion, a court must still determine whether the arbitration clause
included in a contract of adhesion renders the agreement/contract unconscionable.
¶22. In general, the doctrine of “unconscionability has been defined 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) (citing Bank of Indiana Nat’l Ass’n v. Holyfield, 476 F. Supp.
104, 109 (S.D. Miss. 1979)). Conversely, a conscionable provision has been found to bear
some reasonable relationship to the risks and needs of the business. Id. Specifically, this
Court recognizes two types of unconscionability, procedural and substantive, and has readily
adopted language from the Mississippi federal district courts when reviewing contract language
under the auspices of the Federal Arbitration Act. The dispositive issue in today’s case is
whether the arbitration provision rendered the subject admissions agreement unenforceable.
Notably, we review all questions concerning unconscionability under the circumstances as they
existed at the time the contract was made. Pridgen v. Green Tree Fin. Servicing Corp., 88 F.
Supp. 2d 655, 657 (S.D. Miss. 2000) (citing York v. Georgia-Pacific Corp., 585 F. Supp.
1265, 1278 (N.D. Miss. 1984)).
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¶23. However, before going further, we perhaps ought to clearly bring into focus our
discussion concerning the two types of unconscionability – procedural unconscionability and
substantive unconscionability. Procedural unconscionability is applicable to the overall
formation of the contract in which the subject clause (such as the arbitration clause) is
contained, whereas substantive unconscionability is applicable only to the subject clause (such
as the arbitration clause) itself. Thus, while procedural unconscionability must be discussed
as to the formation of the overall contract, it must also be discussed as to the arbitration clause
itself, since the arbitration clause is contained within the overall contract. On the other hand,
when discussing and applying substantive unconscionability, we are looking only to a particular
clause within the contract, such as an arbitration clause. We are not looking at the overall
contract. As we stated in East Ford:
The courts have recognized “two types of unconscionability, procedural and
substantive.” Pridgen v. Green Tree Fin. Servicing Corp., 88 F.Supp.2d 655
(S.D. Miss. 2000) (quoting York v. Georgia-Pac. Corp., 585 F.Supp. 1265,
1278 (N.D. Miss. 1984)). Procedural unconscionability may be proved by
showing “a lack of knowledge, lack of voluntariness, inconspicuous print, the
use of complex legalistic language, disparity in sophistication or bargaining
power of the parties and/or a lack of opportunity to study the contract and
inquire about the contract terms.” Id.
Substantive unconscionability may be proven by showing the terms of the
arbitration agreement to be oppressive. York, 585 F.Supp. at 1278.
Substantively unconscionable clauses have been held to include waiver of choice
of forum and waiver of certain remedies.
826 So.2d at 714.
¶24. Procedural unconscionability looks beyond the substantive terms which specifically
define a contract and focuses on the circumstances surrounding a contract’s formation. Blacks
15
Law Dictionary 1524 (6th ed. 1990). In Burdette Gin, this Court outlined procedural
unconscionability as follows:
The indicators of procedural unconscionability generally fall into two areas: (1)
lack of knowledge, and (2) lack of voluntariness. A lack of knowledge is
demonstrated by a lack of understanding of the contract terms arising from
inconspicuous print or the use of complex, legalistic language, disparity in
sophistication of parties, and lack of opportunity to study the contract and
inquire about contract terms. A lack of voluntariness is demonstrated in
contracts of adhesion when there is a great imbalance in the parties' relative
bargaining power, the stronger party's terms are unnegotiable, and the weaker
party is prevented by market factors, timing or other pressures from being able
to contract with another party on more favorable terms or to refrain from
contracting at all. Holyfield, 476 F.Supp. at 109-10.
726 So.2d at 1207.
¶25. As stated, in today’s case the circuit court focused on the lack of voluntariness and
specifically determined that the standard form contract signed by both Stephens and Taylor was
a contract of adhesion. In East Ford this Court described contracts of adhesion as contracts
that are “drafted unilaterally by the dominant party and then presented on a ‘take it or leave it’
basis to the weaker party who has no real opportunity to bargain about its terms. Such
contracts are usually prepared in printed form, and frequently at least some of their provisions
are in extremely small print.” East Ford, 826 So. 2d at 716 (citing Holyfield, 476 F. Supp. at
108 (quoting Restatement 2d, Conflicts, § 203, Comment b)).
¶26. In East Ford, this Court found that the arbitration provision contained in an offer to
purchase a used truck was procedurally unconscionable. While we found the clause to be
cloaked within the body of the contract, we cited to our holding in Burdette Gin and stated:
16
The fact that an arbitration agreement is included in a contract of adhesion
renders the agreement procedurally unconscionable only where the stronger
party's terms are unnegotiable and “the weaker party is prevented by market
factors, timing or other pressures from being able to contract with another party
on more favorable terms or to refrain from contracting at all.” Entergy Miss.,
Inc., 726 So.2d at 1207 (quoting Bank of Indiana, Nat'l Ass'n v. Holyfield,
476 F.Supp. at 109-10).
East Ford, 826 So.2d at 716 (emphasis added).
¶27. Ultimately, we focused on the facts surrounding the arbitration clause and found that
it was procedurally unconscionable. We specifically pointed out that the arbitration provision
appeared less than one-third the size of many other terms in the document, appeared in very
fine print, regular type font, and observed that all of the details concerning the vehicle were in
boldfaced print, while the arbitration provision was not. Id. at 716-17.
¶28. Importantly, in East Ford, we discussed the legal effect of a “contract of adhesion”
within the context of determining the issue of procedural unconscionability and applied logic
similar to that espoused by the Fifth Circuit in Hughes Training Inc. v. Cook, 254 F.3d 588
(5th Cir. 2001), one year earlier. In Hughes Training, the Fifth Circuit distinguished
contracts of adhesion, arbitration clauses and procedural unconscionability:
Contracts in which one party has minimal bargaining power, also referred to as
contracts of adhesion, are not automatically void. See Dillard v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1154 (5TH Cir. 1992),
cert. denied, 506 U.S. 1079, 113 S.Ct. 1046, 122 L.Ed.2d 355 (1993); In re
Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 574 (Tex. 1999). “Instead, the
party seeking to avoid the contract generally must show that it is
unconscionable.” Id. “There is nothing per se unconscionable about
arbitration agreements.” EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex.
1996).
17
254 F.3d at 594 (emphasis added).
¶29. While Mississippi state and federal precedent has fully addressed the procedural rubric
which we employ when analyzing the unconscionability of arbitration provisions, we have not
been previously confronted with a case which factually parallels today’s case. To this end, we
will buttress our review of procedural unconscionability with some recent decisions from
another jurisdiction where the court considered similar admissions agreements involving
patients and their care facilities.
¶30. In Howell v. NHC Healthcare-Fort Sanders, Inc., 109 S.W.3d 731 (Tenn. Ct. App.),
a case which was cited by Stephens in her trial court response to Vicksburg Partners’ motion
to compel, the Tennessee Court of Appeals held that the arbitration clause found within the
body of the care facilities’ admission agreement was unenforceable. While the facts in Howell
presented the same fundamental questions we must address in today’s case, the arbitration
clause as well as the facts surrounding the execution of the admissions agreement are
distinguishable. In Howell, the court found that the arbitration clause, which was located on
page ten of an eleven page agreement, was “buried” within the larger document. Id. at 734. In
support of this finding, the court noted that the arbitration provision was written in the same
size font as the rest of the agreement and did not adequately explain how the arbitration
procedure would work. Id. Additionally, the court found that the execution of the agreement
militated against enforcement as Ms. Howell had to be placed in a nursing home expeditiously
18
and the admission agreement had to be signed before admission could be accomplished. Id. at
735.
¶31. In Howell, the Tennessee Court of Appeals relied heavily on the Tennessee Supreme
Court’s holding in Buracynski v. Eyring, 919 S.W.2d 314 (Tenn. 1996). In Buracynski, the
Tennessee Supreme Court found that while the patient-doctor arbitration agreement was a
contract of adhesion and was offered to the patient on a “take it or leave it basis”, the simple
fact that a contract is one of adhesion does not necessarily render it unenforceable. Id. at 320.
The Tennessee Supreme Court examined the issue of enforceability and stated:
[I]n general, courts are reluctant to enforce arbitration agreements between
patients and health care providers when the agreements are hidden within other
types of contracts and do not afford the patients an opportunity to question the
terms or purpose of the agreement. This is so particularly when the agreements
require the patient to choose between forever waiving the right to a trial by jury
or foregoing necessary medical treatment, and when the agreements give the
health care provider an unequal advantage in the arbitration process itself.
Id. at 321. In determining that the arbitration clause at issue in its case was enforceable, the
court concluded:
The arbitration procedure specified by the agreement gives no unfair advantage
to Eyring [physician]. Each side chooses an arbitrator, and the two arbitrators
chosen appoint the third arbitrator. Eyring [physician] is bound by the arbitrators'
decision, and any claim he has for payment of fees is subject to arbitration when
a medical malpractice action is asserted. The patient is clearly informed by a
provision in ten-point capital letter red type, directly above the signature line,
that “by signing this contract you are giving up your right to a jury or court trial”
on any medical malpractice claim. The agreements contain no buried terms. All
terms are laid out clearly, including Article 2 of the agreements, which binds the
spouse and heirs of the patient to the arbitration agreement.
Id. at 321.
19
¶32. While the circumstances surrounding the execution of the admission agreement in
today’s case demonstrate that the agreement is a contract of adhesion, these facts and
circumstances do not support a finding of procedural unconscionability. The contract at issue
was drafted unilaterally by the dominant party and then presented on a “take it or leave it” basis
to the weaker party who had no real opportunity to bargain about its terms. As stated by the
circuit judge, the evidence before the court established that “had Mr. Taylor not signed the
admissions agreement, he would not have been accepted into the nursing home.” However, this
finding does not necessarily substantiate the general contractual defense of procedural
unconscionability concerning the overall contract (admissions agreement) or the arbitration
clause contained within the overall contract. To this end, procedural unconscionability must
be substantiated by evidence of a lack of knowledge or voluntariness by the weaker party.
¶33. Here Stephens and Taylor together executed the admission agreements; that there were
no circumstances of exigency; the arbitration agreement appeared on the last page of a six-page
agreement and was easily identifiable as it followed a clearly marked heading printed in all caps
and bold-faced type clearly indicating that section “F” was about “Arbitration;” the provision
itself was printed in bold-faced type of equal size or greater than the print contained in the rest
of the document; and, appearing between the arbitration clause and the signature lines was an
all caps bold-faced consent paragraph drawing special attention to the parties’ voluntary
consent to the arbitration provision contained in the admissions agreement.4 Under these facts,
4
This “consent” or “acknowledgment” paragraph stated:
THE UNDERSIGNED ACKNOWLEDGE THAT EACH OF THEM HAS READ AND
20
it can not be said that there was either a lack of knowledge that the arbitration provision was
an important part of the contract or a lack of voluntariness in that Stephens and Taylor
somehow had no choice but to sign. Stephens and Taylor were two competent individuals
signing a well-marked, highly visible agreement which indicated very clearly that dispute
resolution would be accomplished by way of arbitration.
¶34. Additionally, there were two separately executed admissions agreements with
arbitration clauses. Moreover, the second of the two agreements included extra language
which was added by Vicksburg Partners to insure that its arbitration provision contained the
requisite indicia of mutuality in the arbitration process. Thus, the execution of the amended
(second) admissions agreement not only activated contractual language which insured that each
party would bear equal responsibility in the unbiased selection of the arbitrator(s), but also
provided another opportunity for Stephens and Taylor to review and reassess the admissions
agreement. For all of these stated reasons, we find that the Nursing Home admissions
agreement was not procedurally unconscionable.
III. WHETHER THE ARBITRATION CLAUSE CONTAINED WITHIN
THE ADMISSIONS AGREEMENT WAS SUBSTANTIVELY
UNCONSCIONABLE.
¶35. When reviewing a contract for substantive unconscionability, we look within the four
corners of an agreement in order to discover any abuses relating to the specific terms which
UNDERSTOOD THIS AGREEMENT, INCLUDING THE ARBITRATION
PROVISION AND HAS RECEIVED A COPY OF THIS AGREEMENT, AND THAT
EACH OF THEM VOLUNTARILY CONSENTS TO AND ACCEPTS ALL OF ITS
TERMS AND PROVISIONS.
21
violate the expectations of, or cause gross disparity between, contracting parties. “Substantive
unconscionability may be proven by showing the terms of the arbitration agreement [clause]
to be oppressive.” East Ford, 826 So. 2d at 714 (citing York, 585 F. Supp. 1278)).
Substantive unconscionability is present when 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. Bank of Indiana v. Holyfield, 476 F. Supp. 104, 110 (S.D.
Miss. 1979) (citing United States Leasing Corp. v. Franklin Plaza Apartments, Inc., 65
Misc.2d 1082, 319 N.Y.S.2d 531 (1971)).
¶36. In Buracynski, the Tennessee Supreme Court recognized substantive unconscionability
in the context of a contract of adhesion and noted that “[c]ourts will not enforce adhesion
contracts which are oppressive to the weaker party or which serve to limit the obligations and
liability of the stronger party.” 919 S.W. 2d at 320 (citing Broemmer v. Abortion Servs. of
Phoenix, Ltd., 840 P.2d 1013, 1016 (Ariz. 1992)). The Tennessee Supreme Court cited
examples in support of its assertion:
[I]n Beynon v. Garden Grove Medical Group, 100 Cal.App.3d 698, 161
Cal.Rptr. 146, 150 (1980), the court refused to enforce a provision in a group
health insurance plan which gave the health care provider the unilateral right to
reject an arbitrator’s decision without cause and to require another arbitration
before a panel of three physicians. The Beynon court noted that the insured was
unaware of the provision and the provision was unduly oppressive because the
insured was required to pay one-half the costs of both arbitrations. Finally, in
Broemmer, the court refused to enforce an arbitration agreement which was
contained in a clinic admission form and which required the arbitrators to be
physicians specializing in obstetrics and gynecology. Id. at 1016.
919 S.W.2d at 320-21.
22
¶37. The arbitration clause in today’s case is not oppressive. It provides Stephens with a fair
process in which to pursue her claims. Moreover, it is typical of arbitration clauses endorsed
by the FAA and is conscionable because it bears “some reasonable relationship to the risks and
needs of the business.” Burdette Gin, 726 So.2d at 1207 (quoting Bank of Indiana, Nat’l
Ass’n v. Holyfield, 476 F. Supp. 104, 109 (S.D. Miss. 1979).5
¶38. To invalidate the arbitration clause at bar in today’s case would be to endorse a blanket
policy of striking any arbitration clause contained within the body of a contract of adhesion.
While unconscionably oppressive terms can be facially invalid, a per se finding of substantive
unconscionability is strictly applicable only to a provision that by its very language
significantly alters the legal rights of the parties involved and severely abridges the damages
which they may obtain. In East Ford, we made a clear distinction between terms contained
within contracts of adhesion which are invalid on their face and those which are not:
While Burdette concluded that an indemnity clause within a contract of
adhesion is presumptively unconscionable, the same is not true for arbitration
clauses. Burdette involved an agreement to indemnify, which essentially allows
a party to contract away or escape liability. Arbitration agreements merely
submit the question of liability to another forum-generally speaking, they do not
waive liability. Furthermore, Congress has expressed no federal interest in
enforcing indemnification agreements as it has in guaranteeing the enforcement
of valid arbitration agreements. See Federal Arbitration Act, 9 U.S.C. §§ 1 et
seq.
826 So.2d at 716.
5
Even though Burdette Gin involved a contract containing an indemnity clause, and not an arbitration
clause, we have cited Burdette Gin in arbitration cases to guide us in determining whether the provision under
attack was conscionable by applying the “reasonable relationship to the risks and needs of the business” test.
East Ford, 826 So.2d at 715.
23
¶39. Without doubt, the arbitration provision contained in the body of the parties’ admissions
agreement is enforceable. It merely provides for a mutually agreed-upon forum for the parties
to litigate their claims and is benign in its effect on the parties’ ability to pursue potential
actions.
IV. WHETHER THE LIMITED LIABILITY AND PUNITIVE
DAMAGES CLAUSES IN THE ADMISSIONS AGREEMENT
ARE SUBSTANTIVELY UNCONSCIONABLE.
We now turn our attention to the limitation of liability and punitive damages provisions
to determine whether they, by their very language, are substantively unconscionable and
therefore unenforceable. Our concerns with the arbitration clause in the second admissions
agreement is with language that, in its practical effect, creates a windfall for one party by
curtailing another. Specifically, such language can be found starting with the last sentence of
that clause which states that “[c]onsistent with the terms and conditions of this Agreement, the
Parties agree that the Arbitrator(s) may not award punitive damages and actual damages
awarded, if any, shall be awarded pursuant to Paragraph E.7.”6 Paragraph E.7 of the contract
provides:
Should any claim, dispute or controversy arise between the Parties or be
asserted against any of the Facility’s owner’s (sic), officers, directors or
employees, the settlement thereof shall be for actual damages not to exceed the
lesser of a) $50,000 or b) the number of days the Resident was in the Facility
multiplied times the daily rate applicable to said Resident. This limitation of
6
While the trial court did not specifically address the issue of limitation of liability/damages in its order,
Stephens, through her trial counsel, clearly laid this issue out in her pleadings filed with the trial court.
24
liability shall be binding on the Resident, Responsible Party and the
Resident’s heirs, estate and assigns.[7]
(Emphasis added). However, we must also read Section F and paragraph E.7 in conjunction
with paragraph E.8, which states that “[t]he parties hereto agree to waive punitive damages
against each other and agree not to seek punitive damages under any circumstances.” In reading
this language, we find that Vicksburg Partners has effectively limited Stephens to recovery of
actual damages not to exceed $50,000 while Vicksburg Partners is not so limited, and that they
have precluded damages which could only be recovered against Vicksburg Partners.
¶40. As stated, the doctrine of substantive unconscionability invalidates oppressive terms
which by their very nature render a contract oppressive, such as terms which violate the
reasonable expectations of parties or which involve gross disparities in price. Thus, it is
beneficial and appropriate to support an argument against a suspect term by demonstrating that
the term was contained in a contract in which one party has minimal bargaining power – a
contract of adhesion. East Ford, 826 So.2d at 716. Therefore, laying a foundation that a
contract was one of adhesion makes an argument targeting a provision for a substantive
unconscionability review easier to prove. As noted earlier, while a contract of adhesion does
not demonstrate per se procedural unconscionability, it does provide a strong basis from which
to attack the voluntary and knowledgeable formation of the entire contract. In much the same
way, demonstrating a contract to be one of adhesion can make a facially oppressive term
presumptively invalid.
7
This last sentence concerning limitation of liability is not found in the first admissions agreement.
25
¶41. In East Ford, we noted this effect and held that a contractual term which essentially
allows a party to contract away or escape liability is presumptively unconscionable. Id. It
follows that contractual terms which by their very nature greatly affect the legal rights of a
party to litigate or recover appropriate damages, when not freely bargained for and openly
discussed, must be stricken under the doctrine of unconscionability. In Burdette Gin, we
applied this very reasoning and concluded that an indemnification clause significantly altered
the legal rights of the weaker party and rendered the parties’ contract unconscionably
oppressive. Specifically, we held that “[s]ince it is possible that both the employer and the
utility could be jointly liable in an accident such as the one at issue in this case, it is not
reasonable to allow Entergy, with significantly greater bargaining power, to essentially
unilaterally impose the indemnity clause upon its customers such as Burdette Gin.” Burdette
Gin, 726 So.2d at 1208. In so holding, we determined that the clause at issue in Burdette Gin
allowed Entergy to shield itself from liability by protecting it from its own potential
negligence. Id.
¶42. In our case today, the limitation of liability clause contained in section E.7 places a
unilateral ceiling on Vicksburg Partners’ potential liability. To this end, they have issued a
contract of adhesion containing a contractual provision which is one-sided on its face and
unilaterally oppressive in its effect. Moreover, in applying a substantive review to this
provision, we can not help but take notice of the fact that Stephens’s ability to fairly adjudicate
her claim has been severely hamstrung and limited to a maximum recovery of $50,000, or less,
26
while Vicksburg Partners has access to an unlimited damage award. Clearly, this provision by
its very nature evidences garden variety substantive unconscionability inasmuch as it is
encapsulated in a contract of adhesion. Accordingly, the limitation on liability clause is
unenforceable and is stricken from the parties’ contractual agreement.
¶43. Additionally, while the waiver of punitive damages in paragraph E.8 applies to all parties
to the contract, we find that based on the facts and circumstances of today’s case, the practical
effect of paragraph E.8 likewise causes it to be substantively unconscionable. While we can
think of numerous factual scenarios which would justify Stephens seeking punitive damages
against Vicksburg Partners, we are conversely for the most part unable to develop factual
scenarios which would justify Vicksburg Partners seeking punitive damages against Stephens.
In other words, Vicksburg Partners suffers little, if any, but gains a lot by waiving its rights to
recover punitive damages, while the same is not true for Stephens. In consideration of the
effect of the clause itself and the initial determination that today’s contract is one of adhesion,
we find that this waiver of punitive damages clause is also unenforceable.
¶44. In analyzing the effect of substantive oppression one treatise recognized that courts
have the broad authority to discover substantive abuse in the form of harshness in a specific
unreasonable provision which was included in an agreement without the employment of any
procedural abuse in its formation. 8 Richard A. Lord, Williston on Contracts § 18:14, at 89
(4 t h ed. 1998). It likewise notes that “[s]uch a contractual provision may be invalidated on
unconscionability grounds as a form of oppression reached under the Code’s “principle...of the
prevention of oppression.” Id.
27
¶45. This Court has readily recognized this remedial power of courts and has recognized a
court’s ability to invalidate provisions which are unconscionable and oppressive. In Norwest
Financial Mississippi, Inc. v. McDonald, 905 So.2d 1187, 1194 (Miss. 2005) we held that,
“courts have the ability to restrict enforcement of specific terms of a contract that are viewed
as unconscionable.” To this end, courts have the ability to strike terms which render an
otherwise valid contractual arrangement unconscionable. In Russell v. Performance Toyota,
Inc., 826 So.2d 719, 724-25 (Miss. 2002), we noted this remedial authority provided to the
courts of our state:
Russell contends that the following two sentences within the arbitration
agreement violate Miss.Code Ann. § 15-1-5 (1995): “[Arbitration] must be
initiated within 180 days after the claim or controversy first arises. Failure to
timely initiate arbitration shall constitute a waiver of the claim or controversy.”
Russell states that the sentences attempt to shorten the statute of limitations
designated in § 15-1-5, and therefore the arbitration agreement is void.
Mississippi case law, however, holds that if a court strikes a portion of an
agreement as being void, the remainder of the contract is binding. See, e.g.,
Lawler v. Government Employees Ins. Co., 569 So.2d 1151, 1153
(Miss.1990); Plaza Amusement Co. v. Rothenberg, 159 Miss. 800, 131 So.
350, 357 (1930) (“If an illegal condition is annexed to a contract, it will not
void the whole contract, but the illegal part will be treated as void.”) (citing
Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692 (1910)). Also, the Fifth
Circuit has held that a limitation in an insurance policy was void under
Mississippi law, but that the remainder of the policy was not affected by the void
provision. Richards v. Allstate Ins. Co., 693 F.2d 502, 505 (5th Cir.1982).
Finally, the United States District Court for the Southern District of
Mississippi, applying Mississippi law, specifically struck a time limitation
period contained in a contract and declared that the remainder of the contract
was binding. Smith v. Orkin Exterminating Co., 791 F.Supp. 1137, 1142
(S.D.Miss.1990). We find that, even if the limitation time period contained in
the arbitration agreement were void, the arbitration agreement is still binding.
Performance Toyota, 826 So.2d at 724-25.
28
¶46. Of particular note, the parties’ contract recognizes this contractual “saving” device and
explicitly acknowledges the preferred remedy of striking unenforceable provisions as opposed
to the draconian remedy of striking the entire agreed upon and otherwise valid contractual
arrangements. To this end, both admissions agreements contain an identical paragraph which
states: “In the event any provision of this Agreement is held to be unenforceable for any
reason, the unenforceability thereof shall not affect the remainder of this Agreement, which
shall remain in full force and effect and enforceable in accordance with its terms.” This
language is delineated as paragraph E.1 under “Miscellaneous Provisions” in the first
admissions agreement and as paragraph E.1 under “Other Important Provisions” in the second
admissions agreement.
¶47. In today’s case, we have referred to our prior decisions in East Ford and Burdette Gin,
both which cited Bank of Indiana decided by the United States District Court for the Southern
District of Mississippi. In Bank of Indiana, the district court stated:
The law of Mississippi imposes an obligation of good faith and fundamental
fairness in the performance of every contract governed thereby; in fact, this
requirement is so pronounced that courts have the power to refuse to enforce
any contract or limit the application of any clause therein in order to avoid an
unconscionable result. Miss. Code Ann. § 75-2-302 (1972) states:
(1) If the court as a matter of law finds the contract or any clause
of the contract to have been unconscionable at the time it was
made the court 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.
29
476 F. Supp. at 109. Thus, our action today in finding a portion of the arbitration clause to be
unconscionable, but yet enforcing the remainder of the arbitration clause which we find to be
conscionable and otherwise enforceable, is consistent with our case law, statute, and basic
principles of contract law.
¶48. We have considered our recent decision in Pitts v. Watkins, 905 So.2d 553 (Miss.
2005), and find that this case is clearly distinguishable. In Pitts, we were confronted with a
contract which, inter alia, (1) allowed one party to the contract to go to court to recover
damages, while the other party was limited to arbitration, (2) attempted to shorten the statute
of limitations, and (3) limited the amount of damages one of the parties could otherwise
recover as a matter of law. Id. at 558. The language in the arbitration clause in today’s case
pales in comparison to the oppressive language contained in the arbitration clause in Pitts.
CONCLUSION
¶49. Today’s case is clearly in line with our important holdings in East Ford, Performance
Toyota, and Burdette. We have hopefully today driven home a point for the benefit of the
bench and the bar, as well as those individuals or entities who find themselves involved with
contracts containing arbitration clauses. Arbitration is about choice of forum – period. With
that having been said and in focusing on today’s case, while this Court agrees that there could
certainly be factual circumstances predicated on exigency and need for immediate health care,
as evidenced in cases of hospital-patient admissions agreements, where the agreement at issue
might require the patient to choose between forever waiving available remedies in a judicial
30
forum, or forgoing necessary medical treatment, this is not that case. We save for another day
the resolution of a case with that factual scenario. The facts in today’s case do not evidence an
oppressive bargain, while albeit there does exist a contract of adhesion. Both the patient, as
well as the person responsible for him, willingly, knowingly, and voluntarily agreed to have
future disputes decided by a mutually selected arbitration panel. We have invalidated any limit
on Vicksburg Partners’ liability and removed language restricting punitive damages, and we find
that the parties should undertake arbitration as agreed and avail themselves of the federally
endorsed and substantively benign arbitration clause contained in the body of their contract.
¶50. For these reasons, we reverse the circuit court order denying Vicksburg Partners’
motion to compel arbitration and remand this case to the Circuit Court of Warren County with
directions to compel the parties to submit to arbitration consistent with this opinion.
¶51. REVERSED AND REMANDED.
SMITH, C.J., WALLER AND COBB, P.JJ., EASLEY, DICKINSON AND
RANDOLPH, JJ., CONCUR. GRAVES, J., DISSENTS WITHOUT SEPARATE
WRITTEN OPINION. DIAZ, J., NOT PARTICIPATING.
31