The Supreme Court of Mississippi has reversed and remanded a trial court's refusal to enforce an arbitration agreement after rejecting the plaintiff's arguments against arbitration. The Court also instructed the trial court to try to determine which arbitration agreement applied and, if that could not be determined, to look to the FAA to determine the specific terms of the arbitration.
Bettye Turner invested approximately $2 million with David Carrick, an investment broker employed by Morgan Stanley Smith Barney. Carrick subsequently moved to Stern, Agee & Leech, Inc. To facilitate the transfer of Turner's funds to the new brokerage, Turner signed an account application. That referenced a client account agreement, which the account application stated (in bold, capital letters) "contained in numbered paragraph 22, a pre-dispute arbitration clause requiring all disputes under this agreement to be settled by binding arbitration." Carrick subsequently left Stern, Agee & Leech, Inc. and joined Stifle, Nicolaus & Company, Inc. ("Stifel"). Turner (through her daughters) subsequently sued Stifel for mismanagement in Mississippi state court. Stifel moved to compel arbitration. The trial court denied that motion.
On appeal, the Supreme Court of Mississippi reversed and remanded. Contrary to the trial court's conclusion that there was "no contract, [and] thus no agreement to arbitrate" because the a agreement was "'confusing and conflicting.'" The Supreme Court concluded that the "parties entered into a valid and enforceable arbitration agreement in the account application." The account agreement itself, the Court held, was "sufficient to indicate the unambiguous intent of the parties to arbitrate." The Court also rejected Turner's argument that Stifel could not enforce the agreement because it was not a party to it. Turner alleged, the Court explained, that Stifel was a successor in interest to Stern, Agee & Leech, Inc., and Stifel could therefore invoke arbitration. Finally, the Court also rejected Turner's argument that the provision was invalid because the account application referred to the arbitration clause as being in paragraph 22 of the account agreement, even though the arbitration clause was in paragraph 19 of one of the two account agreements in existence at that time. The Court remanded the case, however, for a determination regarding which of the two arbitration clauses contained in the two account agreements applied and, if that could not be determined, to apply the FAA to determine the specifics of arbitration.
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