PriorityOne Bank v. Laura Folkes, 371 So.3d 1284

Background

PriorityOne made a 2019 commercial line-of-credit to Laura Folkes secured by a deed of trust; Folkes later filed bankruptcy and the trustee made one payment of $9,394 credited to the loan.
PriorityOne foreclosed after Folkes defaulted under her bankruptcy agreement and sold the property to a third party.
Folkes sued in chancery court to set aside the foreclosure as procured in bad faith, alleging PriorityOne accepted a substantial payment and acted improperly; relief sought was equitable (setting aside the foreclosure).
PriorityOne invoked an arbitration clause in the Note and Deed of Trust and moved to compel arbitration; the bank had earlier answered, engaged in discovery, and filed a motion for summary judgment on the original complaint.
The chancery court denied the motion to compel arbitration, finding Folkes had made a prima facie showing warranting equitable adjudication; the Mississippi Supreme Court affirmed, holding PriorityOne waived the right to arbitrate by substantial participation in litigation.
The record shows a parallel circuit-court action (with some additional tort allegations) was later ordered to arbitration; the dissent argued arbitration applied to the chancery claims, but the majority limited review to waiver and affirmed.

Issues

Issue	Plaintiff's Argument (Folkes)	Defendant's Argument (PriorityOne)	Held
Whether PriorityOne waived its right to compel arbitration by participating in litigation	Folkes: PriorityOne substantially participated (answer, discovery, summary-judgment practice) and thereby waived arbitration for her equitable claim	PriorityOne: Participation occurred before Folkes amended; amended complaint added new matters and revived arbitration right	Court: Waiver — PriorityOne’s extensive pre-amendment litigation (including motion for summary judgment) waived arbitration as to the chancery equitable claim
Whether the amended chancery complaint eliminated the waiver by adding new claims that trigger arbitration	Folkes: Amended complaint did not add discrete new causes of action in chancery; it only added factual context to the equitable claim	PriorityOne: Amended complaint incorporated new claims (from circuit filing), so arbitration clause was triggered and waiver should not apply	Court: Amended complaint did not obviate waiver; Folkes represented amended pleading did not add non-equitable causes in chancery and waiver stood
Whether the arbitration clause excludes equitable claims (i.e., whether equitable relief must be litigated in court)	Folkes: The clause expressly allows seeking equitable relief in court, so her chancery equitable claim is excluded from arbitration	PriorityOne: The arbitration clause broadly covers "all disputes" including torts and claims concerning collateral; equitable-exception language does not bar arbitration of related disputes	Court: Declined to decide the clause’s scope because waiver resolved the appeal; the majority did not need to construe the equitable-exception clause

Key Cases Cited

E. Ford, Inc. v. Taylor, 826 So. 2d 709 (Miss. 2002) (two-pronged test for arbitration enforceability)
Carrick v. Turner ex rel. Walley, 298 So. 3d 1006 (Miss. 2020) (apply ordinary contract principles to arbitration agreements)
H. Gordon Myrick, Inc. v. Harrison Cnty. Com. Lot, LLC, 107 So. 3d 943 (Miss. 2013) (waiver of arbitration through litigation conduct)
In re Tyco Int’l Inc. v. Tyco Int’l (US) Inc., 917 So. 2d 773 (Miss. 2013) (extensive pretrial participation can waive arbitration)
Cox v. Howard, Weil, Labouisse, Friedrichs, Inc., 619 So. 2d 908 (Miss. 1993) (participation in many aspects of litigation indicates waiver)
MS Credit Ctr., Inc. v. Horton, 926 So. 2d 167 (Miss. 2006) (litigation acts can obviate arbitration rights)
Rogers-Dabbs Chevrolet-Hummer, Inc. v. Blakeney, 950 So. 2d 170 (Miss. 2007) (standard of review for arbitration orders)
Sledge v. Grenfell Sledge & Stevens, PLLC, 263 So. 3d 655 (Miss. 2018) (effect of amended pleadings on prior claims and arbitration arguments)