MOTION FOR REHEARING

Transcription

1 E-Filed Document Jun :56: CA SCT Pages: 14 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI NO CA JANE DOE APPELLANT VS. HALLMARK PARTNERS, LP; SJP ONE, LLC; NEW HORIZONS DEVELOPMENT, LLC; VERONICA MOORE; NEW HORIZONS MANAGEMENT, LLC; SECURITY ENGINEERS, INC.; AND JOHN DOES 1-10 APPELLEES On Appeal from the Circuit Court of the First Judicial District of Hinds County, Mississippi (Cause No. 25CI1:14-cv-434-JAW) MOTION FOR REHEARING A. La Verne Edney (MB No ) Amy L. Champagne (MS No ) Adam H. Gates (MB No ) Adria H. Jetton (MB No ) BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC One Eastover Center 100 Vision Drive, Suite 400 Jackson, Mississippi Telephone: (601)

2 TABLE OF CONTENTS PAGE I. INTRODUCTION... 1 II. FACTUAL AND PROCEDURAL SUMMARY... 2 III. ARGUMENT... 3 A. Motion for Rehearing Standard B. The Court's interpretation of the arbitration agreement's scope is unjustifiably narrow Neither the plain language of the arbitration agreement nor the lease imposes a geographic limitation on claims the parties agreed to arbitrate Neither the plain language of the arbitration agreement nor the controlling law supports limiting the arbitration agreement to contract disputes IV. CONCLUSION ii-

3 TABLE OF AUTHORITIES CASES Page(s) Fipps v. Glenn Miller Constr. Co., 662 So. 2d 594 (Miss. 1995)...6 Freese v. Mitchell, No CA-01045, 2014 WL (Miss. May 15, 2014)...9 Pennzoil Exploration and Production Co. v. Ramco Energy Ltd.,...6, 7, 8, F.3d 1061 (5th Cir. 1998) Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388 (5th Cir. 2002)...9 Puckett v. State, 788 So. 2d 752 (Miss. 2001)...3 Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468 (1989)...4 OTHER AUTHORITIES Black's Law Dictionary (10th ed. 2014)...4 MISS. R. APP. P. 40(a)...3 Mississippi Rule of Appellate Procedure iii-

4 Pursuant to Mississippi Rule of Appellate Procedure 40, Petitioners Hallmark Partners, LP, SJP One, LLC, Veronica Moore, and New Horizons Management, LLC (collectively "Hallmark") file this Motion for Reconsideration of the Court's May 11, 2017 opinion reversing and remanding this case. In support, Hallmark shows the following: I. INTRODUCTION Jane Doe allegedly suffered a horrific assault, and the two men responsible for the crime will be punished. But her claims against Hallmark are not rape-based, as the Court repeatedly stated in its Opinion. Rather, this is a premises liability case based on allegations that Doe's landlord failed to warn her of known dangers and failed to provide her with a safe premises. The extent of the harm she allegedly suffered is not relevant to the underlying legal analysis. Instead, the success of Doe's claims depends entirely on the duties Hallmark owed her, which arose out of her lease and were related to her leasing of the property from Hallmark. As such, Doe's claims fall squarely within the scope of the parties' arbitration agreement. Seeking to avoid the forum in which she agreed to bring her disputes against Hallmark, Doe attempts to distance herself from her status as a lessee by arguing that Hallmark would have owed her the same duties had she not been a tenant. But she was a tenant, and she signed a lease. In fact, she pleaded her status as a lessee, which necessarily involves the lease between the parties. And although her allegations, the plain terms of the arbitration agreement, and the controlling case law mandate that she arbitrate her claims, the Court nonetheless narrowly and erroneously construed the parties' broad arbitration clause at every turn, ignoring other reasonable interpretations of the agreement's scope. The Court is required to resolve any disputes about the scope of arbitration provisions in favor of arbitration unless it can be assured that there is no interpretation that would cover the dispute. Therefore, the Court should grant this motion, withdraw its May 11, 2017 Opinion, and affirm the trial court's arbitration order. 1

5 II. FACTUAL AND PROCEDURAL SUMMARY Jane Doe, a former resident of Hallmark Gardens, sued Hallmark and its contracted security company, Security Engineers, Inc. ("SEI"), after allegedly being assaulted in the parking lot of the apartment complex. Doe's Complaint alleges that she "left her apartment," (R.14), "began to walk[] towards her car in the parking area located adjacent to the leasing office in the center of the apartment complex," (R.14) (3), and was attacked as she "came within the close vicinity of her car, [which was] parked directly in front of Hallmark Garden's mailbox area in the center of the parking lot." R.15. In support of her premises liability claim, Doe contends that both Hallmark and SEI "owned, possessed, controlled, supervised, managed, performed and/or provided or failed to provide adequate security services" (R.15); "failed to take any action to maintain safe premises by providing adequate security measures" (R.15-16); failed to "take adequate and reasonable security precautions or measures to protect invitees at Hallmark Gardens and the premises surrounding Hallmark Gardens from foreseeable harm and danger" (R.16); failed to timely notify Hallmark residents of a spike in area carjackings (R.16); allowed Does' attackers to "loiter on the premises" (R.17); and "did not come to [Doe's] aid" during the attack. R.15 Hallmark and SEI moved the trial court to compel arbitration under the arbitration agreement Doe executed as an addendum to her lease. R , Specifically, the parties agreed to arbitrate "any dispute, claim or controversy" "arising out of or in any way related to Lessee's occupancy and leasing of the subject property from Lessor." R. 53. Finding both that the arbitration agreement was valid and that Doe's allegations fell within the scope of the agreement, the trial court granted the motion, stayed the case, and ordered the parties to arbitration. R

6 Doe appealed, and this Court issued its Opinion reversing and remanding the case on May 11, The Court agreed that the arbitration agreement was valid, but, finding that the agreement was limited, held that Doe's claim fell outside of the agreement's scope. Specifically, the Court held that the clause "arising out of or in any way related to Lessee's occupancy and leasing of the subject property" covered only contract-based claims arising out of the lease. Op. at 15. Hallmark timely requests rehearing. III. ARGUMENT A. Motion for Rehearing Standard. A motion for rehearing "shall state with particularity the points of law or fact which, in the opinion of the movant, the court has overlooked or misapprehended and shall contain such argument in support of the motion as the movant desires to present. The motion for rehearing should be used to call attention to specific errors of law or fact which the opinion is thought to contain." MISS. R. APP. P. 40(a); see also Puckett v. State, 788 So. 2d 752, 764 (Miss. 2001). B. The Court's interpretation of the arbitration agreement's scope is unjustifiably narrow. Although this Court acknowledged that it must "focus on factual allegations in the complaint rather than the legal causes of action asserted" 1 in determining whether Doe's claims fall within the scope of the arbitration agreement, the Court nonetheless held that Doe's suit against Hallmark was not covered because it was pleaded as a premises liability claim and not a contract claim. 2 This Court's narrow reading of the arbitration agreement to cover only contract- 1 In its Opinion, the Court found that "all factual allegations giving rise to Jane's lawsuit involve an attack in the parking lot of Hallmark apartments" (Op. at 16), ignoring the factual allegations Doe pled. See Op. at Indeed, Doe alleged she was present at the time and place of the attack because she was a resident of the apartment complex and was approaching her car in the apartment complex's parking lot. Id. 2 Op. at 15 ("The parties simply did not contemplate arbitrating Jane's... lawsuit predicated upon a tort theory of common-law negligence, unrelated to the rights and obligations of the lease."); Op. at 21 ("Also, she does not allege Hallmark violated her contractual rights as lessee of Apartment 9-C."); Op. at 3

7 based claims arising out of the lease of Apartment 9-C (Op. at 30) is not consistent with the language of the agreement, is unsupported by the law, and disregards entirely the attendant rights and realities of a lessee's occupancy of leased premises. As shown below, the arbitration agreement is subject to a much broader interpretation; the Court therefore erred in not resolving any perceived ambiguity in its scope in favor of arbitration. Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, (1989). 1. Neither the plain language of the arbitration agreement nor the lease imposes a geographic limitation on claims the parties agreed to arbitrate. The Court erred in imposing a geographic limitation on claims subject to the arbitration agreement. First, the Court neglected to consider an alternative definition of "occupancy" consistent with an intent to arbitrate the claims at issue. In reaching its opinion, it appears that the Court interpreted "occupancy" to mean only "residing in." But Black's Law Dictionary also defines "occupancy" as "[t]he period or term during which one owns, rents, or otherwise occupies property." BLACK S LAW DICTIONARY (10th ed. 2014). Thus, an equally plausible reading of the clause is that the parties intended to arbitrate all claims related to Doe's leasing of the subject property during the term of the lease, i.e., during her occupancy, without intending a geographic limitation at all. Second, the Court's reading of the arbitration agreement to cover only claims "arising out of Doe's "occupancy and leasing of [her apartment]" (Op. at 17) ignores relevant provisions of the lease and the realities of apartment living. Indeed, the terms of Doe's lease make plain that she had been granted rights beyond the confines of Apartment 9-C. For example, (1) the lease provision titled "Condition of the Premises" provided Doe an opportunity to "inspect the 30 ("Hallmark's arbitration clause here does not include claims beyond those related to the contract..."); Op. at 30 ("the arbitration agreement here makes no mention of agreeing to arbitrate tort, negligence, personal injury, or other common law claims"); Op. at 32 ("Hallmark drafted an arbitration clause... omitting any language indicating Jane would have to arbitrate claims based on personal injury, common-law duties, or tort."). 4

8 Premises and surrounding areas," R ; (2) the lease also identified rules for using the entire property, including the common areas, by stating that the "rules and regulations now or hereinafter made in regard to the Premises, common areas, and surrounding areas are expressly made a part of the Lease," R. 47; and (3) the lease authorized Doe to use the parking lots by granting her the right to park her car on "the Premises," R. 48. Thus, in her role as a signatory to the lease, Doe had rights and obligations related to her apartment and the common areas of the apartment complex, including the parking lot. Simply stated, Doe s leasing of the property gave her rights to more than the interior of Apartment 9-C; thus, "the subject property" should not have been interpreted so narrowly. A broader reading of the "occupancy and leasing of the subject property" to include the apartment unit and the common areas is also supported by the realities of apartment living and is consistent with the parties' intent to arbitrate claims arising out of or related to Doe's status as a lessee. An apartment lessee's occupancy necessarily entails regular use of common areas such as sidewalks, parking lots, and mailboxes. And the lessee expects and enjoys broader access to such areas than does the general public or even a non-resident invitee. See, e.g., R. 48 (For instance, 29 provides that the owner will tow "unauthorized" vehicles). Indeed, Doe's own allegation that Hallmark allowed her attackers to "loiter" on the property recognizes that she had rights to the use of common areas not shared by non-lessees. R. 17, Compl., 32. Thus, Doe's presence in the parking lot at the time of her injury was, as she alleged in her complaint, 3 a result of and authorized by her status as a lessee of "the subject property." And as the Dissent appropriately notes, the duty Hallmark owed Doe with respect to the safety of the parking lot depends on her right to be on the property, which the property owner granted to her under the terms of her lease. Op. at 40 (J. Dickinson, dissenting) (quoting Fipps v. Glenn Miller Constr. 3 See, R.14-15, Compl

9 Co., 662 So. 2d 594, (Miss. 1995)). Here, the parties agreed to arbitrate all disputes arising out of or related to the "occupancy and leasing of the subject property" not those arising out of or related to the occupancy and leasing of "the Premises" 4 or "the apartment." That choice must be given effect. But even if the Court's interpretation of "the subject property" to mean the "Premises," as that term is used in the lease, were proper, the Court's limitation of the property to Apartment 9-C would be in error. Indeed, the lease refers to the parking lot as the "Premises," which is further evidence that the parties intended the lease to cover more than just the interior of Doe's apartment. R.48, 29. Thus, the Court's narrow interpretation of the "subject property" to mean only "Apartment 9-C" replaces the agreement's terms, elevates a single term in Doe's lease above all others, and disregards the special status enjoyed by tenants in common areas, all of which rewrites the parties agreement in the most narrow manner possible. The Court should reconsider its Opinion and affirm the trial court's order of arbitration. 2. Neither the plain language of the arbitration agreement nor the controlling law supports limiting the arbitration agreement to contract disputes. a. Pennzoil Exploration mandates a broad reading of the arbitration agreement. The Court's attempt to distinguish the broad arbitration agreement at issue in Pennzoil Exploration, 139 F.3d 1061 (5th Cir. 1998) from the equally broad agreement here does not survive scrutiny and produces a result that is inconsistent with the intent of the parties. In Pennzoil Exploration, the parties agreed to arbitrate any dispute "arising out of or in relation to or in connection with this Agreement," 139 F.3d at 1064, which this Court construed to mean any dispute related to the "contractual relationship between the two parties." Op. at 19. In contrast, the Court found that this agreement, which covers any dispute "arising out of or in any 4 If the Court's interpretation of "the subject property" includes "Premises" as that term is used in the lease, then the location covered by the arbitration agreement would necessarily include both Apartment 9- C, R.43, 1, and the parking lot, R.48, 29. 6

10 way related to Lessee s occupancy and leasing of the subject property," "does not cover any dispute 'arising out of or in any way related to' the lease i.e., the contractual relationship between Jane and Hallmark." 5 Id. The "key distinction," as the Court described it, is the difference between the terms "lease" and "leasing of the subject property." Id. This is a distinction without a meaningful difference. Indeed, "leasing" is simply the present participle of "lease," and necessarily refers to the contractual relationship between the two parties Doe and Hallmark that arises out of and relates to the lease. Thus, the plain language of this arbitration agreement is just as broad as that in Pennzoil Exploration and covers all disputes "arising out of or in any way related to" the lease and the ongoing relationship of Doe and Hallmark as lessee and lessor. b. The Court further erred in ignoring the "in any way related to" clause of the arbitration agreement. As demonstrated above, the arbitration agreement here is not limited in geography or to certain causes of action. But even if the Court had not improperly construed "occupancy and leasing of the subject property", the broad arbitration provision in the parties' agreement should still have been found to encompass premises liability claims. As this Court correctly observed, it "has adopted the Fifth Circuit's distinction between 'narrow' and 'broad' arbitration provisions." Op. at 18. That distinction turns on whether the arbitration provision at issue limits arbitrable claims to those "arising out of" the contract or whether it expands the scope to include claims also "related to" or "connected to" the contract. Op. at 18 (quoting Pennzoil Expl., 139 F.3d at 1067). 5 Although the Court reads the arbitration agreement to cover only contract or lease-based claims, there can be no doubt that, had the assault occurred inside Doe's apartment, the Court would be hard-pressed to hold that it did not "arise out of or in any way relate [to Doe's] occupancy and leasing of the subject premises." Indeed, the Court seemed to acknowledge as much when it noted "Jane was not assaulted in Apartment 9-C." Op. at 21. 7

11 Broad agreements that include the "related to" language, like the agreement here, encompass not only claims "literally 'aris[ing] under the contract,'" but also "all disputes between the parties having a significant relationship to the contract regardless of the label attached to the dispute." Id. (emphasis added). As the Dissent explained, "[b]ecause this arbitration clause employs the broad language "in any way related to," any dispute that merely touches upon Doe's 'occupancy and leasing of the subject property' is subject to arbitration." Op., at 38 (J. Dickinson, dissenting). This Court's interpretation of the arbitration agreement to cover only contract or lease-based claims ignores entirely the broad "in any way related to" clause. In other words, the arbitration agreement is not limited to contract claims as a matter of law, but instead extends to all claims, including tort claims, that in any way touch upon Doe's status as a tenant. 6 Doe's claim that her landlord negligently failed to warn her and to provide a safe premises for her more than "touch" upon her "occupancy and leasing of the subject property." The very duty on which Doe will rely to prove her negligence claim against Hallmark is dependent on her right to be in the parking lot at the time of the alleged incident; that right was granted to Doe by Hallmark in the lease. Doe s premises liability claim is therefore within the scope of the arbitration agreement. IV. CONCLUSION While it is certainly true that "even broad clauses have their limits," Pennzoil Expl., 139 F.3d at 1067, n.8., the Court's narrow interpretation of the phrase, "occupancy and leasing of the subject premises," is unjustified and will spawn confusion in the lower courts. Neither the geographic limitation nor the limitation on covered causes of action found by the Court is justified by the plain language of the arbitration agreement or supported by the law. Because, as 6 To hold otherwise disregards the plain language of the agreement and invites future plaintiffs to avoid the effect of their agreements through artful pleading. For example, had Hallmark refused to repair a nonfunctional smoke detector and Doe suffered injury, she could avoid arbitrating her claim that Hallmark breached paragraph 37 of the lease by pursuing her claim for damages under a tort theory. 8

12 demonstrated above, "it cannot be said with positive assurance that [this] arbitration clause is not susceptible of an interpretation which would cover the dispute at issue," the Court erred in not "resolv[ing] doubts concerning the scope of coverage" in favor of arbitration, Pennzoil Expl., 139 F.3d at 1067 (internal quotations omitted), consistent with the "liberal policy favoring arbitration" and "strong federal policy favoring enforcement of arbitration provisions," Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388, 392 (5th Cir. 2002). See also, Freese v. Mitchell, No CA-01045, 2014 WL , *4 ( 22) (Miss. May 15, 2014) ("All doubts concerning the scope of arbitrable issues, the construction of the contract language, and asserted defenses to arbitration must be resolved in favor of arbitration."). Accordingly, Petitioner respectfully requests that the Court reconsider and withdraw its May 11, 2017 Opinion and affirm the circuit court's order of arbitration. Respectfully submitted this the 8th day of June, HALLMARK PARTNERS, LP, SJP ONE, LLC, VERONICA MOORE, AND NEW HORIZONS MANAGEMENT, LLC By its Attorneys, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC BY: /s/ Amy L. Champagne AMY L. CHAMPAGNE OF COUNSEL: A. La Verne Edney (MB No ) ledney@bakerdonelson.com Amy L. Champagne (MB No ) achampagne@bakerdonelson.com Adam H. Gates (MB No ) agates@bakerdonelson.com Adria H. Jetton (MB No ) ajetton@bakerdonelson.com 9

13 10 BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC One Eastover Center 100 Vision Drive, Suite 400 Jackson, Mississippi Telephone: (601)

14 CERTIFICATE OF SERVICE I, Amy L. Champagne, hereby certify that I electronically filed the foregoing document with the court s electronic filing system which sent notification of such filing to the following: TRIAL COURT JUDGE: Honorable Jeff Weill, Sr. Hinds County Circuit Court P. O. Box Jackson, Mississippi ATTORNEYS FOR APPELLANT: Jesse Mitchell, III Jessica McLaurin The Mitchell Firm, PLLC 774 Avery Blvd. N., Suite G Ridgeland, Mississippi ATTORNEYS FOR SECURITY ENGINEERS, INC.: Leslie M. Hand Patrick Patronas Bryan A. Grayson Lloyd, Gray, Whitehead & Monroe, PC th Place South, Suite 300 Birmingham, Alabama I further certify that I have forwarded via U.S. Mail a copy of the foregoing pleading to any party not registered with MEC. This the 8th day of June, /s/ Amy L. Champagne AMY L. CHAMPAGNE 11