Imperial Industrial Supply Co. v. Quintina ( 2020 )

Case: 20-60121 Document: 00515550896 Page: 1 Date Filed: 09/02/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 2, 2020
No. 20-60121
Summary Calendar Lyle W. Cayce
Clerk
Imperial Industrial Supply Company, doing business as
Duramax Power Equipment, doing business as Factory
Authorized Outlets; Steven L. Feldman; Anthony
Bustos; Robert Raskin,
Plaintiffs—Appellees,
versus
Quintina Marie Thomas,
Defendant—Appellant.
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 2:19-CV-129
Before Haynes, Willett, and Ho, Circuit Judges.
Per Curiam:*
Quintina Marie Thomas appeals the district court’s order vacating an
alleged arbitral award granted in her favor against Imperial Industrial Supply
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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Company d/b/a Duramax Power Equipment and/or Factory Authorized
Outlets. In light of the utter lack of any evidence of any arbitration agreement
in the first place and no merits to her other challenges, we AFFIRM the
district court’s judgment.
I. Background
This appeal concerns the validity of arbitration proceedings
conducted by SITCOMM Arbitration Association and two of its employees
(collectively, “SITCOMM”) in a dispute between Quintina Maria Thomas
(“Thomas”) and Imperial Industrial Supply Company and its three
associates (collectively, “Imperial”). In October 2018, Thomas’s home in
Hawaii caught on fire. Thomas claimed that a power generator, purchased
from Imperial, caused the fire. Thomas initiated arbitration proceedings
against Imperial.
She began by sending Imperial a document titled “Conditional
Acceptance for the Value/For Proof of Claim/Agreement” (“Alleged
Agreement”) which purported to be a “binding self-executing irrevocable
contractual agreement” evidencing Thomas’s acceptance of Imperial’s
offer. The Alleged Agreement did not define what Imperial offered but
stated that “a product sale purchase agreement and warranty for the
[generator] creat[ed] an ongoing contractual relationship between [Imperial]
and [Thomas].” The Alleged Agreement further provided that Imperial
would need to propound fifteen different “Proofs of Claim” to Thomas in
order to avoid (1) breaching the Alleged Agreement; (2) admitting, by “tacit
acquiescence,” that the generator caused the fire; and (3) participating in
arbitration proceedings.
Then, Thomas sent Imperial two notices related to the Alleged
Agreement. The first notice purported that Imperial breached the Alleged
Agreement by failing to provide the proofs of claim. This notice allowed
2
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Imperial to cure the alleged breach by providing the proofs of claim within
three days. In addition, the notice stated that Imperial’s refusal to follow the
curing mechanism would result in Imperial’s admission and confessed
judgment to the alleged breach. The second notice stated that Imperial owed
the balance for the “entire contract value” 1 because it did not cure the
breach.
A few months later, Imperial received the “Notice of Arbitration
Hearing” from SITCOMM, a Missouri based arbitration association. This
notice provided a date and time for a hearing but did not provide a location
for the hearing or a description of the matter under review. “[O]ut of an
abundance of caution,” Imperial submitted several objections.
Without responding to Imperial’s objections, SITCOMM sent
Imperial the “Final Arbitration Award” on June 24, 2019, which awarded
Thomas $1.5 million for breach of the Alleged Agreement. The Final
Arbitration Award indicated the basis of arbitration was Imperial’s consent
by “tacit acquiescence.”
Imperial sued Thomas and SITCOMM, challenging the final
arbitration award in federal district court. Imperial requested (1) a
declaratory judgment that there was no valid contract to support the
arbitration proceedings; (2) an order vacating the final arbitration award; and
(3) injunctive relief against any enforcement of the final arbitration award. In
accordance with the complaint, Imperial moved to vacate the final arbitration
award. The district court granted Imperial’s motion to vacate and dismissed
the case with prejudice. Thomas timely appealed.
1
The entire contract value was for $500,000.
3
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II. Standard of Review
Ordinarily, “[w]e review a district court’s order confirming or
vacating an arbitration award de novo[.]” Rain CII Carbon, LLC v.
ConocoPhillips Co., 674 F.3d 469, 472 (5th Cir. 2012). Due to the “strong
federal policy favoring arbitration, judicial review of an arbitration award is
extraordinarily narrow.” Id. at 471–72 (citation omitted). However,
“[b]ecause arbitration is simply a matter of contract between the parties, the
strong federal policy favoring arbitration does not apply to the initial
determination of whether there is a valid agreement to arbitrate,” which is
“governed by ordinary state-law contract principles.” Klein v. Nabors
Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013) (internal quotations and
citations omitted). We will apply the federal policy favoring arbitration only
after the existence of a valid agreement to arbitrate is found. See Klein, 710 at
236–37; see also Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 219 (5th
Cir. 2003) (holding that when “a party attacks the very existence of an
agreement . . . the courts must first resolve that dispute”).
III. Discussion
On appeal, Thomas argues that the district court lacked jurisdiction
to adjudicate this case because she received untimely notice of Imperial’s
motion to vacate the arbitral award, as required by the Federal Arbitration
Act (“FAA”). 2
The FAA’s principal purpose is to “ensur[e] that private arbitration
agreements are enforced according to their terms.” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 344 (2011) (citations omitted). It was enacted to
2
The Appellees asserted jurisdiction in the district court based upon diversity
jurisdiction. 28 U.S.C. § 1332. On appeal, Thomas does not contest that there is complete
diversity of citizenship and that the amount in controversy exceeds $75,000.
4
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address the “longstanding judicial hostility to arbitration agreements that
had existed at English common law and had been adopted by American
courts, and to place arbitration agreements upon the same footing as other
contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991).
As a result of the FAA, there is a “strong federal policy favoring arbitration.”
ConocoPhillips Co., 674 F.3d at 471. However, the language of the FAA
indicates a “contract” or “agreement” is necessary to invoke the mandatory
arbitration provision. See 9 U.S.C. § 2; Concepcion, 563 U.S. at 339(recognizing the “fundamental principle that arbitration is a matter of
contract”).
We apply Mississippi law in determining whether there was a valid
contract. 3 In Mississippi, “[t]he elements of a valid contract are: (1) two or
more contracting parties, (2) consideration, (3) an agreement that is
sufficiently definite, (4) parties with legal capacity to make a contract,
(5) mutual assent, [and] (6) no legal prohibition precluding contract
formation.” Woodruff v. Thames, 143 So. 3d 546, 554 (Miss. 2014) (quotation
omitted) (emphasis added). As the district court noted, “nothing in the
documents submitted in the record demonstrate[d] a scintilla of mutual
assent. There [wa]s no document in the record signed by [Imperial],”
including the Alleged Agreement that forms the basis of the arbitral award.
Imperial Indus. Supply Co. v. Thomas, No. 2:19-CV-129-KS-MTP, slip op. at
4 (S.D. Miss. Jan. 8, 2020). We agree; “tacit acquiescence” to the Alleged
Agreement is insufficient to constitute a valid contract.
Tacit acquiescence between relative strangers ignores the basic tenets
of contract law. See Restatement (Second) of Contracts § 17
3
The parties do not contest the district court’s application of Mississippi law. We
agree with the district court that Mississippi law is appropriate in this case.
5
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(1981) (acknowledging, with certain exceptions, the formation of a contract
requires a “manifestation of mutual assent”); Magee v. Nationstar Mortg.,
LLC, No. 5:19-MC-017-H, 2020 WL 1188445, at *2 (N.D. Tex. Mar. 11,
2020) (acknowledging tacit acquiescence to the terms of an arbitration
agreement is “contrary to hornbook contract law”) (citations omitted); see
also O’Shaughnessy v. Young Living Essential Oils, L.C., 810 F. App’x 308,
311–12 (5th Cir. 2020) (noting that an enforceable arbitration agreement
requires a “meeting of the minds”). Mississippi contract law follows general
common law principles on what constitutes mutual assent. See Mathis v.
Jackson Cty. Bd. of Supervisors, 916 So. 2d 564, 569 (Miss. Ct. App. 2005)
(“The term ‘mutual assent’ means a ‘meeting of the minds of both ... parties
to a contract; the fact that each agrees to all the terms and conditions, in the
same sense and with the same meaning as the others.’”) (quoting BLACK'S
LAW DICTIONARY (6th ed. 1991)). While there may be exceptions in cases
involving parties with longstanding relationships, 4 generally speaking,
“silence or inaction does not constitute acceptance of an offer.” Norcia v.
Samsung Telecomms Am., LLC, 845 F.3d 1279, 1284 (9th Cir. 2017); see
Grandoe Corp. v. Gander Mountain Co., 761 F.3d 876, 888 (8th Cir. 2014).
If Thomas’s argument was valid, it would turn the notion of mutual
assent on its head in ordinary purchase cases like this one: buy an item from
a dealer or manufacturer, then mail a letter saying “you agree if you don’t
object,” and you can have whatever deal you want if the dealer/manufacturer
4
“Silence may operate as acceptance where, because of previous dealings, the
offeree has given the offeror reason to understand that silence is intended as a manifestation
of assent.” Brown v. Ally Fin. Inc., No. 2:18-CV-70-KS-MTP, 2019 WL 6718672, at *2
(S.D. Miss. Dec. 10, 2019), appeal dismissed sub nom., No. 20-60122, 2020 WL 4757041 (5th
Cir. June 8, 2020) (quoting R.C. Const. Co., Inc. v. Nat’l Office Sys., Inc., 622 So. 2d 1253,
1255-56 (Miss. 1993)). There is no such relationship of previous dealing here. Thomas
bought the power generator at issue and then started sending the alleged “agreements” to
Imperial.
6
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doesn’t respond. Thomas fails to cite a single case that would support such
a ridiculous notion. Other than buying a power generator from Imperial,
Thomas has offered no evidence of previous dealings; certainly she offers no
evidence that would support silence as acquiescence. The conspicuous lack
of mutual assent 5 means that a valid contract was never formed. 6
Section 12 requires that “[n]otice of a motion to vacate . . . an award
must be served upon the adverse party . . . within three months after the
award is filed or delivered.” 9 U.S.C. § 12. Thomas argues that this section
is jurisdictional in nature and that Imperial failed to timely provide notice.
We need not decide whether this section applies when there is no valid
agreement to arbitrate or whether this provision is jurisdictional because we
conclude that Appellees are correct that the motion to vacate was served
when it was deposited in the mail. Thomas’s “refusal” of the service does
not change that. See Anthony v. Marion Cty. Gen. Hosp., 617 F.2d 1164, 1168
n.5 (5th Cir. 1980) (“Fed.[]R.[]Civ.[]P. 5(b) provides that service is complete
upon mailing. Moreover, refusal to accept mail does not vitiate service.”)
5
Thomas’s unilateral attempt to impose treble penalties on a non-party is not well
taken. We observe this case is one of many involving dubious SITCOMM arbitration
awards. See, e.g., PennyMac Loan Servs., LLC v. Sitcomm Arbitration Ass’n, No. 2:19-CV-
193-KS-MTP, 2020 WL 1469458 (S.D. Miss. Mar. 26, 2020); Magee, No. 5:19-MC-017-H,
2020 WL 1188445; Nichols v. U.S. Bank, Nat’l Ass’n, No. 2:19-MC-162, 2020 WL 61049(S.D. Miss. Jan. 6, 2020); Brown, No. 2:18-CV-70, 2019 WL 6718672.
6
Thomas also argues that her due process rights were violated because Imperial
“intentional[ly] served all of their ongoing service of process of legal notices to fabricated
addresses.” However, Thomas did not raise her due process argument at the district court
level and has thus waived this argument on appeal. See United States v. Bigler, 817 F.2d
1139, 1140 (5th Cir. 1987).
7
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(citations omitted). Thus, we need not address Thomas’s § 12 arguments
further. 7
IV. Conclusion
For the foregoing reasons, we AFFIRM the district court’s order
granting Imperial’s motion to vacate the arbitral award.
7
She has also either waived or failed to sustain her other challenges to the service
of process and personal jurisdictional issues.
8