               IN THE SUPREME COURT OF MISSISSIPPI

                       NO. 2002-CA-01669-SCT

PRE-PAID LEGAL SERVICES, INC., BROOKS
WERKHEISER, DYRE LAW FIRM, PLLC AND
ARNOLD D. DYRE

v.

SAMUEL BATTLE, REGINALD BURKS, MYRTIS
HOLLIS, JAMES ROBINSON, BENNIE IRVIN, MARY
KEELER, WILLIE McKENNY, RENATA L. MILLER,
DAVID MILLS, ERIC NORWOOD, GENEVA SHELBY,
SHEMEKIA SHELBY, PASTELLA SPRATLEY,
GEORGE WILLIAMS, LEONARD BODDIE, JOHN C.
BURWELL, ANGELA HUDNALL, MINNIE MOSELY,
CAROLINE SMITH, THELMA LOUISE SMITH,
JIMMY GRANT, SYLVIA GRANT, TONY BARFIELD,
MARY HONEYSUCKLE, LONEDELL NICHOLSON,
PATRICIA WHITFIELD, CHARLES ALEXANDER,
KENNETH M. CROOK AND BEVERLY THOMPSON

DATE OF JUDGMENT:              08/19/2002
TRIAL JUDGE:                   HON. TOMIE T. GREEN
COURT FROM WHICH APPEALED:     HINDS COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS:      RICHARD L. JONES
                               ROBERT L. GIBBS
                               ANNIE C. SANDERS
                               ANDREA LA'VERNE FORD EDNEY
                               TESELYN AFRIQUE MELTON
                               EARNEST G. TAYLOR
                               JOHN BENTON CLARK
                               SHANDA L. LEWIS
                               C. MICHAEL ELLINGBURG
ATTORNEYS FOR APPELLEES:       J. BRAD PIGOTT
                               J. DOUGLAS MINOR
                               BARRY W. GILMER
NATURE OF THE CASE:            CIVIL - CONTRACT
DISPOSITION:                   AFFIRMED AND REMANDED - 04/01/2004
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
       EN BANC.

       CARLSON, JUSTICE, FOR THE COURT:


¶1.    This matter is on appeal after a ruling by the Circuit Court of the First Judicial District

of Hinds County granting the Plaintiffs’ Motion for Partial Summary Judgment and denying

the Defendants’ Motion for Summary Judgment. In essence, the trial court granted declaratory

judgment finding that the plaintiffs had no obligation to arbitrate their disputes with the

defendants, and the defendants thus filed this appeal. For the reasons stated below, we affirm

the trial court’s ruling.

                    FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶2.    Pursuant to Miss. Code Ann. §§ 83-49-1 et seq., National Pre-Paid Legal Services of

Mississippi, Inc. (“National”) offered contracts for legal expense insurance to individuals for

a monthly fee. National is incorporated in Georgia and has its principal place of business in

Ada, Oklahoma. National, in turn, has contracted with Pre-Paid Legal Services, Inc. (“Pre-

Paid”), an Oklahoma corporation, to provide administrative services for National. National is

a subsidiary of Pre-Paid and has no employees.

¶3.    In accordance with § 83-49-13(6), National has submitted two contracts and a Legal

Shield Addendum which have been reviewed and approved by the Mississippi Insurance

Commissioner. Both contracts are in a 9-point font size and contain the following provisions

on the fifth page of the six page contract under the Subheading “General Provisions”:

       E. Specific Exclusions: The following items are specifically excluded and shall not be interpreted as included
       benefits:



                                                            2
                 ...

                 2. Any person or entity who initiates or participates in a lawsuit against the Company or any of its
                 affiliates, or is named as a defendant or respondent in a lawsuit initiated by the Company or any of
                 its affiliates, shall be specifically excluded from receiving coverage under this Contract for services
                 related to such lawsuit. All coverage under this Contract for services unrelated to a lawsuit either
                 initiated by or against the Company or any of its affiliates, shall be suspended during the pendency
                 of such lawsuit.

       F. Attorney Client Contract: All benefits provided under this Contract, except Title I benefits [Legal
       Consultation and Legal Assistance Services], shall be subject to the terms of an Attorney-Client Contract to be
       executed by the Covered Person prior to the time services are rendered, which contract may require payment of
       anticipated costs to the Provider Attorney to cover legal services not covered by this Contract. All
       determinations of anticipated costs shall be made in the sole discretion of the Provider Attorney, and eligibility
       for receipt of benefits hereunder is contingent upon payment of same prior to commencement of legal
       representation by Provider Attorney.

       G. Provider Attorney: Provider Attorney is defined as a law firm designated by the Company to provide the
       benefits described in this Contract.

       ...

       K. Settlement of Disputes: In the event of a dispute, the parties will agree on an impartial attorney who will
       decide such dispute and that decision will be binding on all parties to such dispute.


Neither contract or addendum shield required a signature or acknowledgment from the person

or persons purchasing the pre-paid legal expense agreement.

¶4.    This action was brought in Hinds County Circuit Court by twenty-nine plaintiffs who

entered into one or the other contracts with National. One plaintiff, Samuel Battle, also

entered into an agreement with Pre-Paid Legal Services, Inc., to market the legal services

contracts. This marketing agreement is not at issue in this appeal. Named as defendants in the

Second Amended Complaint were Pre-Paid Legal Services, Inc. (Pre-Paid), Harlan [sic] C.

Stonecipher, Brooks Werkheiser (collectively referred to as “the Pre-Paid defendants”), Dyre

Law Firm, PLLC, and Arnold D. Dyre (collectively referred to as “Dyre defendants”). When

filing the Second Amended Complaint, the plaintiffs withdrew the breach of contract claim

against National Pre-Paid of Mississippi, removed National as a defendant, and added a claim

for declaratory judgment of no obligation to submit to arbitration. The Plaintiffs’ Motion for

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Leave to File a Third Amended Complaint, adding one additional plaintiff has not yet been ruled

upon by the trial court.

¶5.    Harland Stonecipher is the founder and CEO of Pre-Paid, and a member of the Board

of National. Stonecipher has a Motion to Dismiss for Lack of Personal Jurisdiction pending

in the trial court. Brooks Werkheiser is the former Vice President of Pre-Paid. The Dyre

defendants provided legal counseling to members in Mississippi. The Pre-Paid defendants

admit that they are not parties to the contracts with National, but maintain they are entitled to

enforce the arbitration clause of the contract.

¶6.    Plaintiffs have asserted the following eight causes of action: (1) violation of

Mississippi Deceptive Advertising Statute (§ 97-23-30) (Pre-Paid defendants only); (2) tort

of deceit (or fraud) (Pre-Paid defendants only); (3) tort of civil conspiracy (all defendants);

(4) tort of professional negligence (Dyre defendants only); (5) tort of negligent

misrepresentation (all defendants); (6) breach of fiduciary duty (Dyre defendants only); (7)

illegal payments to the Dyre defendants (all defendants); (8) fraudulent inducement of sales

contract (Battle is the only plaintiff asserting this count against Pre-Paid defendants); and (9)

declaratory judgment that their claims are not subject to arbitration (against all defendants).

Thereafter, the defendants filed suit in the U.S. District Court alleging this matter posed a

federal question under the Federal Arbitration Act and that federal court is a more convenient

forum. The defendants requested a stay in the state court action pending the outcome of the

federal court action.

¶7.    The circuit court refused to impose a stay and, instead, granted Plaintiffs’ Motion for

Partial Summary Judgment and denied defendants’ Motion for Summary Judgment.


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Specifically, the trial court declared that the defendants are not in a position to require

arbitration based on language in the National contract, that imposition of the arbitration

language would destroy certain legal rights of the plaintiffs, and there is no binding language

existing in the agreement between plaintiffs and National Prepaid.

                                 STANDARD OF REVIEW

¶8.    This Court reviews questions of law de novo. Russell v. Performance Toyota, Inc., 826

So.2d 719, 721 (¶ 5) (Miss. 2002). The underlying case was presented to the trial court by

way of summary judgment. This Court applies a de novo standard of review on appeal from a

grant of summary judgment by the trial court. Rush v. Ivy, 853 So. 2d 1226, 1229 (¶ 12)

(Miss. 2003) (citing Jenkins v. Ohio Cas. Ins. Co., 794 So.2d 228, 232 (Miss. 2001); Russell

v. Orr, 700 So.2d 619, 622 (Miss. 1997); Richmond v. Benchmark Constr. Corp., 692 So.2d

60, 61 (Miss. 1997); Northern Elec. Co. v. Phillips, 660 So.2d 1278, 1281 (Miss. 1995)).

Although we have not yet been confronted with a declaratory judgment finding against

arbitration, we have reviewed the grant or denial of a motion to compel arbitration under the

de novo standard of review. Tupelo Auto Sales, Ltd. v. Scott, 844 So.2d 1167, 1169 (¶ 5)

(Miss. 2003) (citing East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss. 2002) and Webb

v. Investacorp, Inc., 89 F.3d 252, 256 (5th Cir. 1996)).

                                       DISCUSSION

¶9.    Although the parties raise numerous issues on appeal, one issue is dispositive, and we

thus need address only that issue.

       I.     WHETHER THERE WAS AN AGREEMENT TO ARBITRATE.



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¶10.   The critical issue before us today is whether the language contained in the pre-paid legal

services plan constitutes a binding arbitration provision. The Pre-Paid defendants contend that

the statute requires that legal expense plans contain an arbitration clause and that the contract

contains a binding arbitration provision for any disputes that arise. In the Mississippi statute

permitting pre-paid legal expense agreements, the Legislature has required that entities selling

legal expense insurance contain “[a] statement describing a procedure for settling disputes

between or among the sponsor, participating or staff attorneys, and the subscribers.” Miss.

Code Ann. § 83-49-13(2)(f). The Federal Arbitration Act provides that:

       A written provision in any ... contract evidencing a transaction involving
       commerce to settle by arbitration a controversy thereafter arising out of such
       contract or transaction ... 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. This Court “will respect the right of an individual or an entity to agree in advance

of a dispute to arbitration or other alternative dispute resolution.” Russell v. Performance

Toyota, Inc., 826 So.2d at 721-22 (¶ 6) (citing IP Timberlands Operating Co., v. Denmiss

Corp., 726 So.2d 96, 104 (¶ 29) (Miss. 1998)).

       In determining the validity of a motion to compel arbitration under the Federal
       Arbitration Act, courts generally conduct a two-pronged inquiry. The first prong
       has two considerations: (1) whether there is a valid arbitration agreement and (2)
       whether the parties' dispute is within the scope of the arbitration agreement.
       ...
       Under the second prong, the United States Supreme Court has stated the
       question is “whether legal constraints external to the parties’ agreement
       foreclosed arbitration of those claims.

East Ford, Inc. v. Taylor, 826 So.2d at 713 (¶¶ 9-10) (citing Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)).

¶11.   The provision in the pre-paid legal expense agreement provides as follows:

                                                6
       K. Settlement of Disputes: In the event of a dispute, the parties will agree on
       an impartial attorney who will decide such dispute and that decision will be
       binding on all parties to such dispute.

This Court has not yet been faced with deciding whether such a statement is sufficient to

evidence an agreement to settle disputes through arbitration. However, the U.S. District Court

for the Northern District of Mississippi was faced with a remarkably similar situation to the

one in the present case. In an action concerning a life insurance policy, the plaintiff signed

only the application. The insurer moved to compel binding arbitration that included “all

disputes, claims, questions, and controversies of any kind or nature arising out of, or relating

any way to, this policy, its subject matter, its negotiation, issuance, or termination” which was

contained in the endorsement to the life insurance policy.

¶12.   After setting forth the Mitsubishi standard, the district court held:

       Even with these instructions in mind, this court has no hesitation in finding that
       the parties never agreed to arbitration and that plaintiff did not waive her right
       to seek adjudication of her claims in court. The application was the only
       document plaintiff ever signed; there is, of course, no mention in its contents
       of the arbitration endorsement. That endorsement is part of the insurance
       contract which plaintiff received upon completion of the application process.
       When plaintiff received the policy, she was given the option of "return[ing] it for
       any reason," in which case, the policy was "void from the beginning...." There was
       no notice, no discussion, and no negotiation of the arbitration endorsement,
       circumstances, which, in this court's view, hardly signify either agreement or
       waiver. The arbitration endorsement is therefore not enforceable, and this matter
       may proceed in this court.

McCreary v. Liberty Nat'l Life, 6 F. Supp. 2d 920, 920-21 (N.D. Miss. 1998). As in

McCreary, the plaintiffs in the case sub judice signed only the application, which did not

contain an arbitration provision.




                                               7
¶13.   "[A]rbitration is a matter of contract and a party cannot be required to submit to

arbitration any dispute which he has not agreed so to submit." AT & T Technologies, Inc. v.

Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 1418 (1986)

(citing United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct.

1347, 1353, 4 L.Ed.2d 1409 (1960), and United Steelworkers v. American Mfg. Co., 363

U.S. 564, 570-71, 80 S.Ct. 1343, 1364-65, 4 L.Ed.2d 1403 (1960) (Brennan, J., concurring)).

New Jersey courts require that an agreement must clearly foreclose any court remedies in

order to be enforceable. "If the defendant wanted to enter into an agreement to bind plaintiff

to arbitration under all circumstances, it should have written an inclusive arbitration clause."

Quigley v. KPMG Meat Marwick, LLP, 330 N.J. Super. 252, 270-71, 749 A.2d 405, 415-16

(N.J. Super. Ct. App. Div. 2000).

¶14.   Other states give the benefit of the doubt to favor arbitration, even where the party does

not sign the agreement. Comvest, L.L.C. v. Corporate Secs. Group, Inc., 507 S.E.2d 21 (Ga.

Ct. App. 1998) (finding securities purchaser may be bound by agreement to arbitrate even in

the absence of his signature); Solle v. Western States Ins. Agency, Inc., 999 P.2d 328, 332

(¶ 23) (Mont. 2000) (holding that any doubts must be resolved in favor of arbitration).

¶15.   In the case sub judice, we do not find a clear showing that the parties have agreed to

arbitration. In so doing, we must balance the intent of the parties with the constitutional right

to a trial by jury. Miss. Const. art. 3, § 31. We are persuaded by the district court’s reasoning

in McCreary. Just as in McCreary, here there was no notice, no discussion, and no

negotiation of the arbitration agreement. Further, based upon the language in this clause, we



                                               8
do not find that an average citizen would realize that he or she is giving up his or her right to

a trial by jury under the broad, general language contained in the pre-paid legal expense

agreement.

¶16.   Additionally, the purported arbitration provision is contradicted because the contract

also contemplates a lawsuit being filed by either National or the plaintiffs. Both contracts

contain the following provision:

       E.     Specific Exclusions: The following items are specifically excluded and
              shall not be interpreted as included benefits:

                      ...

              2.      Any person or entity who initiates or participates in a lawsuit
                      against the Company or any of its affiliates, or is named as a
                      defendant or respondent in a lawsuit initiated by the Company or
                      any of its affiliates, shall be specifically excluded from receiving
                      coverage under this Contract for services related to such lawsuit.
                      All coverage under this Contract for services unrelated to a
                      lawsuit either initiated by or against the Company or any of its
                      affiliates, shall be suspended during the pendency of such lawsuit.



(emphasis added).

¶17.   Based upon the foregoing, we find that there was not a valid, binding arbitration

agreement contained in the pre-paid legal expense agreement. Therefore, the trial court did

not err in granting the Plaintiffs’ Motion for Partial Summary Judgment and denying the

Defendants’ Motion for Summary Judgment.

                                       CONCLUSION

¶18.   Based on the prior decisions of this Court, there can be no doubt that when addressing

arbitration issues, we have readily acknowledged that there is a strong federal policy favoring


                                               9
arbitration. 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). However, for the foregoing reasons, we affirm the trial court’s

grant of partial summary judgment and declaratory judgment finding that the plaintiffs’ claims

are not subject to arbitration, and we remand this case to the trial court for further proceedings

consistent with this opinion.

¶19.   AFFIRMED AND REMANDED.

      SMITH, C.J., WALLER, P.J., EASLEY, GRAVES AND DICKINSON, JJ.,
CONCUR. COBB, P.J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION. DIAZ,
J., NOT PARTICIPATING.




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