UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-60522
CONSECO FINANCE SERVICING CORPORATION,
Plaintiff-Appellee,
VERSUS
MARY SHINALL and JOHNNIE PAYNE,
Defendants-Appellants.
Appeal from the United States District Court for the Southern District of Mississippi (01-CV-107)
October 1, 2002
Before SMITH, BENAVIDES, and PARKER, Circuit Judges. PER CURIAM:*
Appellants, Mary Shinall and Johnnie Payne, appeal the
district court’s denial of their motion to dismiss and the orders
compelling arbitration and staying their state court action. For
the reasons that follow, we affirm.
* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
-1- BACKGROUND
In the summer of 1999, Appellants, both residents of
Mississippi, visited Lakeland Drive Mobile Home Sales, d/b/a
Lakeland Mobile Home Sales (hereinafter “Lakeland”) in Vicksburg,
Mississippi. David Walters, also a resident of Mississippi and a
representative of Lakeland, assisted Appellants in viewing the two
homes on Lakeland’s lot available for sale. The home Appellants
decided to purchase was a used mobile home. Appellants made a down
payment and Lakeland agreed to finance the remainder of the
purchase. In completing the purchase transaction, Appellants
executed a Manufactured Home Retail Installment Contract and
Security Agreement (hereinafter “Contract”) containing an
arbitration clause. Although Lakeland agreed to finance the
purchase, the Contract was assigned to Conseco Finance Servicing
Corp.1 (hereinafter “Conseco Servicing”) shortly after it was
executed.
The home was delivered to Appellants and set up on their lot,
however, Appellants did not approve of the home’s condition and
refused to occupy it. Needless to say, the payments became
delinquent and the mobile home was repossessed. On May 30, 2000,
Appellants brought suit against Lakeland, Walters, Conseco
1 Conseco Finance Servicing Corp. is a Delaware corporation with its principal place of business in St. Paul, Minnesota. At the time of sale, Conseco Finance Servicing Corp. was known as Green Tree Financial Servicing Corporation.
-2- Servicing, and Conseco Finance Corp.2 (hereinafter “Conseco
Finance”) in the Circuit Court of Claiborne County, Mississippi,
seeking damages in connection with the purchase of the mobile home.
Appellants’ complaint asserted that the state court defendants made
misrepresentations with respect to the age, condition, and cost of
the mobile home. In addition, the complaint asserted that the
defendants engaged in an egregious pattern and practice of fraud
and deception in the sale and financing of mobile homes.
On June 29, 2000, Conseco Servicing and Conseco Finance
(collectively hereinafter “Conseco”) moved to dismiss the state
court action and to compel arbitration pursuant to the arbitration
clause in the Contract. On July 19, 2000, Appellants moved the
state court to continue or stay, pending discovery on the issue of
arbitrability, any hearing on Conseco’s motion to compel
arbitration. Subsequently, the state court granted Appellants’
motion and entered an order on October 12, 2000, staying the
arbitration issue and permitting the parties to conduct full
discovery. Shortly thereafter, Appellants propounded written
discovery to all defendants.
On February 12, 2001, Conseco Servicing filed the instant suit
in federal court seeking an order to compel arbitration of
Appellants’ state court claims and to stay the state court action
2 Conseco Finance Corp. is a Delaware corporation with its principal place of business in St. Paul, Minnesota. Conseco Finance Corp. is the parent company of Conseco Servicing.
-3- pending arbitration. Appellants responded on February 23, 2001,
and moved the district court to dismiss, or in the alternative, to
stay the action pending resolution of the state court proceedings.
On May 3, 2001, Conseco Finance moved to intervene in the district
court action, compel arbitration of Appellants’ state court claims,
and stay the state court proceedings pending arbitration.
The district court entered its Memorandum Opinion and Order on
June 8, 2001, denying Appellants’ motion to dismiss, ordering
Appellants to arbitrate their state court claims against Conseco
Servicing, and staying the state court proceedings relative to
Conseco Servicing. Similarly, on June 19, 2001, the district court
granted Conseco Finance’s motion to intervene and issued an order
compelling Appellants to arbitrate their state court claims against
Conseco Finance and staying the state court proceedings relative to
Conseco Finance.
On appeal, Appellants contend that the district court erred
in: 1) failing to join necessary and indispensable state court
parties; 2) failing to abstain from exercising jurisdiction in
light of the parallel state court proceedings; 3) staying the state
court proceedings pursuant to the “in aid of jurisdiction”
exception to the Anti-Injunction Act; 4) failing to dismiss the
federal action due to collateral estoppel of the substantive issues
in dispute; 5) failing to dismiss the federal action in light of
Conseco’s waiver of any right to invoke federal jurisdiction; 6)
denying their motion for discovery; and 7) denying their request
-4- for a jury trial.
STANDARDS OF REVIEW
We review de novo, a district court’s assumption of subject
matter jurisdiction. See Local 1351 Int’l Longshoremens Assoc. v.
Sea-Land Serv. Inc., 214 F.3d 566, 569 (5th Cir. 2000). We review
for an abuse of discretion, a district court’s determination
whether to exercise its jurisdiction and de novo, its underlying
legal conclusions. See Safety Nat’l Cas. Corp. v. Bristol-Myers
Squibb Co., 214 F.3d 562, 564 (5th Cir. 2000). Insofar as the
availability of the exceptions to the Anti-Injunction Act is an
issue of law, we review de novo, a district court’s injunction of
a state court action. See Next Level Communications L.P. v. DSC
Communications Corp., 179 F.3d 244, 249 (5th Cir. 1999). We review
for an abuse of discretion, a district court’s decision whether to
issue an injunction that properly falls within the exceptions to
the Anti-Injunction Act. See Rolex Watch USA, Inc. v. Meece, 158
F.3d 816, 823 (5th Cir. 1998). We also review de novo, a district
court’s application of collateral estoppel and the decision to deny
a jury trial on factual issues in the context of an arbitration
agreement. See Stripling v. Jordan Prod. Co., L.L.C., 234 F.3d
863, 868 (5th Cir. 2000) (citation omitted) (“[T]he application of
collateral estoppel is a question of law that we review de novo.”);
Avedon Eng’g, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir. 1997)
(citation omitted) (“We also review de novo a district court’s
-5- decision to deny a jury trial on the factual question of whether
the parties agreed to arbitrate.”). We review a district court’s
discovery decisions for an abuse of discretion. See Moore v.
Willis Indep. Sch. Dist., 233 F.3d 871, 876 (5th Cir. 2000).
DISCUSSION
Appellants raise a number of issues on appeal. We address
each in turn below.
I. JURISDICTION TO HEAR APPEAL
Before addressing the merits of the issues presented in this
appeal, we must first determine whether we have jurisdiction over
the district court’s orders compelling arbitration. In Green Tree
Finance Corp.-Alabama v. Randolph, 531 U.S. 79 (2000), the Supreme
Court addressed the appealability of orders compelling arbitration
under the Federal Arbitration Act, 9 U.S.C. § 16(a)(3) (1999)
(hereinafter “the FAA”).3 The Supreme Court held in Green Tree
that, a district court’s order compelling arbitration is appealable
as a final decision under § 16(a)(3) if the underlying action is
dismissed. See Green Tree, 531 U.S. at 86-87. The FAA does not
define a “final decision” with respect to an arbitration. Green
Tree instructs, however, that a final decision “is a decision that
ends the litigation on the merits and leaves nothing more for the
3 Section 16(a)(3) of the FAA states in relevant part: “(a) An appeal may be taken from – . . . (3) a final decision with respect to an arbitration that is subject to this title.” 9 U.S.C. § 16(a)(3).
-6- court to do but execute the judgment.” Id. at 86 (internal
quotations and citations omitted). In a footnote to the opinion,
the Supreme Court expanded its holding beyond the specific facts
presented in Green Tree and stated that “[h]ad the District Court
entered a stay instead of a dismissal in this case, that order
would not be appealable.” Id. at 87 n.2 (citing 9 U.S.C. §
16(b)(1)).
In the instant case, Conseco contends that after granting
their motions to compel, the district court stayed its action and
thus, the orders are not appealable. Although Conseco concedes
that the district court’s orders did not expressly state that the
action was stayed, Conseco maintains that insofar as the orders
generally granted their arbitration motions and insofar as they
requested a stay pursuant to 9 U.S.C. § 3, it logically follows
that the district court stayed the action. Even a cursory reading
of Conseco’s Complaint and Petition for Order Compelling
Arbitration and for Other Relief, the district court’s Memorandum
Opinion and Order of June 8, 2001, and the subsequent Order of June
19, 2001, however, reveals the flaws in Conseco’s contention.
Conseco is correct in that the district court’s orders did not
expressly state that the district court action was stayed. Conseco
is incorrect, however, in interpreting the district court’s orders
as a stay of the district court action and in implying that they
requested a stay of the district court action. Conseco’s request
-7- for injunctive relief specifically sought to enjoin “all
proceedings on the part of Defendants, and their attorneys in the
State Court Action.” Furthermore, the district court’s order
clearly provides that the stay accompanying the order compelling
arbitration applied only to the state court proceedings relative to
the parties in the instant suit. Because the district court action
was not stayed, Appellants’ district court motion to dismiss or to
stay pending the outcome of the state court proceedings was denied,
and the orders compelling Appellants to arbitrate their claims
against Conseco ended the litigation on the merits and left nothing
more for the district court to do but execute the judgment, we
conclude that the district court’s decision was a final decision
within the meaning of § 16(a)(3) and in accordance with Green Tree.
Thus, we have jurisdiction to hear the instant appeal.
II. SUBJECT MATTER JURISDICTION
Appellants argue that the district court erred in denying
their motion to dismiss. Specifically, Appellants maintain that
Walters and Lakeland are indispensable parties to the instant
action because of their participation in the formation of the
Contract and should have been joined. Appellants further maintain
that the joinder of Walters and Lakeland would have destroyed
diversity jurisdiction under 28 U.S.C. § 1332 due to their non-
diverse status as residents of Mississippi. We disagree.
Rule 19(a)(1) requires joinder if “in the person’s absence
-8- complete relief cannot be accorded among those already parties.”
FED. R. CIV. P. 19(a)(1). When joinder of a person described in
Rule 19(a)(1) is not feasible because it will deprive the court of
subject matter jurisdiction, Rule 19(b) requires the court to
determine whether “the action should proceed among the parties
before it, or should be dismissed, the absent person being thus
regarded as indispensable.” FED. R. CIV. P. 19(b).
Contrary to Appellants’ contentions, however, Walters and
Lakeland were not necessary and indispensable parties. Appellants’
state court complaint asserts that the Contract at issue was
procured through fraud and deceit. Appellants, however, did not
specifically allege fraudulent inducement in the execution of the
arbitration agreement. Under § 4 of the FAA, an allegation that
the entire contract was fraudulently induced does not call into
question the making of an agreement to arbitrate. See Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967).
Furthermore, “the federal district court ascertains only whether
the arbitration clause covers the allegations at issue. ‘If the
dispute is within the scope of the arbitration clause, the court
may not delve further into the merits of the dispute.’” Snap-On
Tools Corp. v. Mason, 18 F.3d 1261, 1267-68 (5th Cir. 1994)
(quoting Mun. Energy Agency v. Big Rivers Elec. Corp., 804 F.2d
338, 342 (5th Cir. 1986) (citing Meridian v. Algernon Blair, Inc.,
721 F.2d 525, 528 (5th Cir. 1983)).
-9- In the instant case, the only issue before the district court
was whether Appellants were to be compelled to arbitrate their
claims against Conseco. Information regarding the participation of
Walters and Lakeland in the formation of the Contract may have been
beneficial in an examination of the merits of the underlying state
court dispute, but were not necessary to determine whether the
allegations at issue were within the scope of the arbitration
clause. Accordingly, the district court did not err in denying
joinder of Walters and Lakeland.
III. ABSTENTION
Appellants argue that the district court erred in failing to
abstain from hearing this case pursuant to the abstention doctrine
set forth in Colorado River Water Conservation District v. United
States, 424 U.S. 800 (1976) and further elucidated in Moses H. Cone
Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983).
Specifically, Appellants contend that the district court abused its
discretion in failing to abstain from hearing this case in light of
the procedural posture of the underlying proceedings and Conseco’s
improper federal litigation tactics.
“The doctrine of abstention generally applies only to cases
involving considerations of proper constitutional adjudication or
regard for federal-state relations . . . in situations involving
the contemporaneous exercise of concurrent jurisdictions.” Bank
One, N.A. v. Boyd, 288 F.3d 181, 184 (5th Cir. 2002) (internal
-10- quotation and citation omitted). Colorado River instructs,
however, that considerations of wise judicial administration may
also serve as an appropriate basis for a federal district court’s
decision to refrain from exercising jurisdiction in favor of a
parallel state court proceeding. See id.
The district court’s orders do not explain its decision to
exercise jurisdiction. Nevertheless, we begin our analysis with
the federal court’s virtually unflagging obligation to exercise the
jurisdiction conferred upon them. See id. “Abstention from the
exercise of federal jurisdiction is the exception, not the rule.”
Id. at 813. “Abdication of the obligation to decide cases can be
justified under [the abstention] doctrine only in the exceptional
circumstances where the order to the parties to repair to the state
court would clearly serve an important countervailing interest.”
Id.
There is no hard and fast rule for determining whether to
dismiss a federal action because of parallel state court
litigation. Factors relevant to the decision, however, include: 1)
which court first assumed jurisdiction over the res; 2) the
inconvenience of the federal forum; 3) the desirability of avoiding
piecemeal litigation; 4) the order in which jurisdiction was
obtained by the concurrent fora; 5) whether and to what extent
federal law provides the rules of decision on the merits; and 6)
the adequacy of the state court proceeding in protecting the rights
-11- of the party invoking federal jurisdiction. See id. at 818; Moses
H. Cone, 460 U.S. at 23, 26; Black Sea Inv., Ltd. v. United
Heritage Corp., 204 F.3d 647, 650 (5th Cir. 2000) (citation
omitted). No single factor is dispositive. Rather, the decision
whether to abstain requires a careful balancing of these factors as
they apply in a given case.
The first factor is not applicable to the instant case as
there has been no exercise of jurisdiction over any res or
property. With respect to the second factor, Appellants assert
that the federal forum is inconvenient due to the geographic
distance between Claiborne County (the location of the state court
action) and Hinds County (the location of the federal court action)
and thus, this factor weighs in favor of exercising jurisdiction.
We disagree. The question is not whether the federal forum is
inconvenient, but rather “whether the inconvenience of the federal
forum [to the parties] is so great that this factor points toward
abstention.” Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185, 1193
(5th Cir. 1988). Because Claiborne County and Hinds County are
neighboring counties, any inconvenience would be minor. Thus, this
factor weighs in favor of exercising jurisdiction. The third
factor also weighs in favor of exercising jurisdiction. Although
it is generally desirable to avoid piecemeal litigation when
possible, the FAA “requires piecemeal resolution when necessary to
give effect to an arbitration agreement.” Moses H. Cone, 460 U.S.
-12- at 20.
Mindful of the Supreme Court’s caution against giving “too
mechanical a reading to the ‘priority’ element,” we find that the
fourth factor, the order in which jurisdiction was obtained by the
concurrent fora, weighs slightly in favor of abstention. Id. at
21. The state court action was filed almost nine months prior to
the federal action. Furthermore, the state court had issued an
order permitting discovery and Appellants had propounded written
discovery.
The only question before the district court was whether
Appellants should be compelled to arbitrate their state court
claims against Conseco. “The FAA establishes that, ‘as a matter of
federal law, any doubts concerning the scope of arbitrable issues
should be resolved in favor of arbitration . . . .’” Bank One,
N.A., 288 F.3d at 186 (quoting Moses H. Cone, 460 U.S. at 15).
Thus, the fifth factor, whether and to what extent federal law
provides the rules of decision on the merits, weighs in favor of
the district court exercising jurisdiction. The sixth factor, the
adequacy of the state proceedings in protecting the rights of the
party invoking federal jurisdiction is a neutral factor. See
Evanston Ins. Co., 844 F.2d at 1193 (explaining that the adequacy
of the state proceedings “can only be a neutral factor or one that
weighs against, not for, abstention”). Although the FAA represents
federal policy, enforcement of it is left in large part to the
-13- state courts. See Moses H. Cone, 460 U.S. at 26 n.32.
Because no single factor is dispositive and the weight
accorded to any single factor depends upon the circumstances of the
particular case, ending our analysis with these six factors would
present a fairly close call due to the state court’s prior
assumption of jurisdiction. Yet, the balance would still tip
slightly in favor of the district court exercising jurisdiction.
A determination of whether exceptional circumstances warranting
abstention are present in any given case, however, is not
restricted to an examination of these six factors alone. Although
not called into play in Moses Cone, there, the Supreme Court
instructed that “the vexatious or reactive nature of either the
federal or the state litigation may influence the decision whether
to defer to a parallel state litigation under Colorado River.”
Moses H. Cone, 460 U.S. at 26 n.20.
Relying on the arbitration provision in the Contract, Conseco
countered Appellants’ state court complaint with a motion to compel
arbitration. Appellants opposed Conseco’s arbitration motion and
moved the court for a stay or continuance of any hearing on
Conseco’s motion in order to allow the parties to take discovery
relevant to the enforceability of the arbitration provision.
Finding Appellants’ motion well taken, the state court entered an
order on or about October 11, 2000, permitting full discovery and
staying any hearing on Conseco’s motion to compel arbitration
-14- pending discovery. On February 12, 2001, displeased with the
course of progress in the state court action and four months after
the state court stayed, pending discovery, any hearing on the
motion to compel arbitration, Conseco Servicing filed the instant
federal suit to compel arbitration.
Conseco’s resort to the federal courts, nearly nine months
after the initiation of the state court action and four months
after the entry of an adverse order, appears at first glance to be
an abuse of the federal courts. Conseco was free to pursue
compulsion of arbitration in a parallel federal action upon being
served in the state court action. Conseco elected, however, to
pursue arbitration in state court. Only after the state court
issued an order, not limiting discovery to the issue of
arbitrability, but permitting full discovery and staying any action
on the motion to compel arbitration, did Conseco decide to resort
to the federal courts.
“The Supreme Court has noted that ‘the vexatious or reactive
nature of either the federal or the state litigation may influence
the decision whether to defer to a parallel state litigation under
Colorado River.’” Allen v. La. State Bd. of Dentistry, 835 F.2d
100, 105 (5th Cir. 1988) (quoting Moses H. Cone, 460 U.S. at 18
n.20). We are mindful, however, that “[a] party who could find
adequate protection in state court is not thereby deprived of its
right to the federal forum, and may still pursue the action there
-15- since there is no ban on parallel proceedings.” Evanston Ins. Co.,
844 F.2d at 1193.
The sequence of events in this case demonstrate that Conseco’s
initial position in state court and its resort to the federal
courts were consistent with the policy of the FAA to move the case
out of court and into arbitration as quickly as possible. There
was no improper forum shopping or attempt to undermine the
authority of the state court to enforce its order. Although the
question is close, we find that this case does not present the
exceptional circumstances necessary to abstain from exercising
jurisdiction in favor of the ongoing proceedings in state court.
Accordingly, the district court did not abuse its discretion in
exercising jurisdiction.
IV. STAY OF STATE COURT PROCEEDINGS
Appellants argue that the district court erred in staying the
state court proceedings, insofar as they related to the parties to
the federal court action, pursuant to the “in aid of jurisdiction”
exception to the Anti-Injunction Act, 28 U.S.C. § 2283. More
exactly, Appellants contend that the “in aid of jurisdiction”
exception is inapplicable to the instant case because: 1) there is
no property or res involved; and 2) the case was not removed from
state court, but rather filed in federal court as a totally
separate and independent proceeding. Appellants, however, fail to
cite any controlling authority for this argument and we find it
-16- totally without merit.
Section 2283 states that “[a] court of the United States may
not grant an injunction to stay proceedings in a State court except
as expressly authorized by Act of Congress, or where necessary in
aid of its jurisdiction, or to protect or effectuate its
judgments.” 28 U.S.C. § 2283. Often referred to as the
relitigation exception, the “necessary in aid of its jurisdiction,
or to protect or effectuate its judgments” exception, is applicable
when “the claims or issues which the federal injunction insulates
from litigation in state proceedings actually have been decided by
the federal court.” Chick Kam Choo v. Exxon Corp., 486 U.S. 140,
148 (1988). The stay at issue here properly falls within the
exception for injunctions. Accordingly, we find no abuse of
discretion on the part of the district court in staying the state
court proceedings.
V. Collateral Estoppel
Appellants maintain that the district court erred in failing
to dismiss this action because Conseco was collaterally estopped
from litigating the substantive issues involving arbitration as a
result of the state court’s discovery order. We disagree.
Under Mississippi law, “[c]ollateral estoppel provides that an
issue of ultimate fact which was a valid and final judgment may not
be re-litigated between the same parties in a subsequent suit.”
Farris v. State, 764 So.2d 411, 423 (Miss. 2000) (citing Ashe v.
-17- Swenson, 397 U.S. 436, 443 (1970). “Where the elements of estoppel
have been satisfied, the court’s inquiry is not whether the court’s
order was erroneous, but only that it was the final judgment of the
case.” State ex rel. Moore v. Molpus, 578 So.2d 624, 642 (Miss.
1991) (internal quotation and citation omitted). In the present
case, the state court’s discovery order did not adjudicate all of
the claims of the parties. As such, it was interlocutory in nature
and not a final judgment on the merits. See MISS R. CIV. P. 54(a);
Cunningham v. Mitchell, 535 So.2d 589, 592 (Miss. 1988) (holding
that order compelling discovery was not an appealable final
judgment). Accordingly, this assignment of error lacks merit.
VI. WAIVER OF ARBITRATION
Appellants assert that Conseco’s resort to the federal courts
after receiving an adverse ruling in the state court constituted
reactive and vexatious conduct resulting in a waiver of any right
to invoke federal jurisdiction. “Fifth Circuit precedent places a
‘heavy burden’ on a party claiming waiver of arbitration rights.”
Snap-On Tools Corp., 18 F.3d at 1267 (citation omitted).
“Accordingly, we indulge a presumption against finding waiver.”
Id. (citing Walker v. J.C. Bradford & Co., 938 F.2d 575, 577 (5th
Cir. 1991). Insofar as we have already found that Conseco’s resort
to the federal courts did not amount to reactive and vexatious
conduct warranting abstention, we similarly find no waiver of any
right to seek compulsion of arbitration in federal court.
-18- VII. DENIAL OF DISCOVERY
Appellants contend that the district court erred in denying
discovery relative to the enforceability of the arbitration
agreement. Specifically, Appellants argue that their defenses of
fraud and unconscionability turn upon factual questions and thus,
they should be entitled to conduct discovery. We disagree.
“[I]n FAA suits, the federal courts conduct ‘an expeditious
and summary hearing, with only restricted inquiry into factual
issues’ bearing on the making of the arbitration agreement.” Snap-
On Tools Corp., 18 F.3d at 1265 n.4 (citing Moses H. Cone, 460 U.S.
at 22). Appellants allegations of fraud and unconscionability were
not directed specifically at the arbitration agreement, but at the
Contract in general. A general allegation that a contract was
fraudulently procured does not call into question the making of an
agreement to arbitrate. See Prima Paint Corp., 388 U.S. at 403-04.
The issue before the district court was not whether the arbitration
agreement was unconscionable or procured by fraud, but whether
Appellants should be compelled to arbitrate their claims against
Conseco. The discovery sought by Appellants was not necessary to
answer the question before the district court. Accordingly, we
find that the district court did not abuse its discretion in
denying discovery.
VIII. TRIAL BY JURY
Appellants argue that they are entitled to a jury trial under
-19- § 4 of the FAA relative to the issue of arbitrability and that the
district court erred in compelling arbitration. Appellants
essentially put forth two arguments.4 First, Appellants contend
that they “did not knowingly, voluntarily and intellectually waive
their right to a trial by jury.” In support of this contention,
Appellants maintain that they were fraudulently induced to sign the
Contract containing the arbitration clause and therefore, cannot be
compelled to arbitrate any of the claims that have been asserted in
state court because the Contract was procured through fraud,
trickery, and deceit. As we have stated throughout this opinion,
however, an allegation that the contract, as a whole, was procured
by fraud does not call into question the making of an agreement to
arbitrate. “Under Supreme Court precedent, a party must challenge
the making of the agreement to arbitrate itself in order to create
a jury-triable issue.” Dillard v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 961 F.2d 1148, 1154 n.9 (5th Cir. 1992) (internal
quotation omitted) (citing Prima Paint Corp., 388 U.S. at 403-04).
Second, Appellants assert that because they requested a jury
trial in both the state and federal court actions, the FAA requires
that they receive one. This argument is not persuasive. “A party
4 We note that Appellants also contend that the “district court erred in not holding the arbitration agreement unconscionable, or alternatively, allowing discovery on this issue.” Appellants fail, however, to show why the arbitration agreement was unconscionable but rather, make only unsupported general allegations directed at the Contract as a whole. Accordingly, we find this argument lacking in merit.
-20- to an arbitration agreement cannot obtain a jury trial merely by
demanding one.” Id. (citation omitted). Even if Appellants’s
allegations of fraud and unconscionability were taken as true,
there would be no legal basis for submitting the issue to a jury.
Thus, we find no error in the district court’s denial of
Appellants’ request for a jury trial.
CONCLUSION
For the reasons stated above, we AFFIRM the district court’s
Memorandum Opinion and Order of June 8, 2001, and the subsequent
Order of June 19, 2001, staying the state court action and
compelling Appellants to arbitrate their claims against Conseco.
-21-