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Doleac v. Real Estate Professionals9/15/2005
itration clause.
. This Court conducts de novo review on both motions to dismiss and motions to compel arbitration. Sullivan v. Mounger, 882 So. 2d 129, 132 (Miss. 2004) (citing East Ford, Inc. v. Taylor, 826 So. 2d 709, 713 (Miss. 2002). "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." Id. The second prong considers "whether legal constraints external to the parties' agreement foreclosed arbitration of those claims." Id.
Did the parties enter into a valid arbitration agreement?
. There is a dispute as to whether the arbitration agreement is valid because the language of the arbitration agreement does not foreclose or preclude litigation. Specifically, the arbitration clause in the APA states that " ny dispute under this agreement, prior to litigation, shall be submitted to arbitration in Hattiesburg, Mississippi, pursuant to the rules of the American Arbitration Association." (emphasis added). The chancery court denied the motion to compel arbitration because the court determined that the clause "is not either expressly nor impliedly binding arbitration, it is not the kind of arbitration that precludes litigation, but rather seeks to apply only as a precursor to litigation."
. This type of arbitration clause presents and issue of first impression for this Court. However, several other states and circuits have dealt with arbitration clauses similar to the one in the case sub judice. The Superior Court of Connecticut views such arbitration clauses as condition precedents to judicial action. Hartford Acc. & Indem. Co. v. Ace Am. Reins. Co., 2003 WL 22245421, at * 5 (Conn. Super. Ct. 2003). They went further and held that "an agreement by the parties to arbitrate their disputes prior to seeking any judicial relief is binding and a court should not countenance the filing of a lawsuit if arbitration proceedings have not first been brought." Id. "Whether an agreement makes arbitration a condition precedent to an action in court depends on the language of the arbitration clause." Id. (quoting Multi-Service Contractors, Inc. v. Town of Vernon, 181 Conn. 445, 447, 435 A.2d 983 (1980). Connecticut, when faced with such a clause, dismisses the action so that the parties can pursue the resolution of their dispute through arbitration. Id. at * 6. West Virginia also concludes that such clauses, if the language of the agreement makes arbitration a condition precedent to any right of action, must be complied with before any judicial suit can be maintained. Pettus v. Olga Coal Co., 72 S.E.2d 881, 887 (W. Va. 1952).
. In Colorado, the issue was whether such an arbitration clause called for a binding award or whether the award was non-binding when the parties subsequently filed a judicial suit. Ringwelski v. Pederson, 919 P.2d. 957 (Colo. Ct. App. 1996). The court there concluded that such a clause requiring arbitration as a condition precedent called for a binding arbitration award and that "such award was a condition to any further 'legal action' either to modify, correct, or vacate the award pursuant to the Uniform Arbitration Act of 1975." Id. at 959. The court reasoned that this interpretation of such a clause supports the public policy favoring the use of arbitration to resolve disputes. Id. The Colorado court went further and stated that "our interpretation of the clause is also consistent with decisions of courts from other jurisdiction which have rejected claims that similar 'condition pr
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