Conseco Finance Servicing Corp. v. Wilder, 2000-CA-000276-MR.
| Decision Date | 18 May 2001 |
| Docket Number | No. 2000-CA-000276-MR.,2000-CA-000276-MR. |
| Citation | 47 S.W.3d 335 |
| Parties | CONSECO FINANCE SERVICING CORP. (f/k/a Green Tree Financial Servicing Corp.), Appellant, v. William WILDER; Cathy Wilder; and Southern Living Housing, Inc., Appellees. |
| Court | Kentucky Court of Appeals |
Linda J. West, Christopher M. Hill & Assoc., Frankfort, KY, for Appellants.
R. Gregory Lathram, Law Offices of R. Gregory Lathram, P.S.C., London, KY, for Appellee.
Before DYCHE, HUDDLESTON, and KNOPF, Judges.
Conseco Finance Servicing Corporation, appeals from an order of the Bell Circuit Court denying its motion to compel arbitration in an action filed against it by William and Cathy Wilder. For the reasons discussed below, we reverse and remand.
In May 1995, the Wilders agreed to purchase a mobile home from Southern Living Housing, Inc., a North Carolina corporation with offices in Kentucky. The home had been manufactured by Gold Medal Homes, Inc., also of North Carolina.1 The Wilders made a down payment of $15,000.00 toward the purchase price of approximately $60,000.00 and agreed to pay the balance in monthly installments pursuant to a sales contract and security agreement (the contract). As part of the financing arrangement, Southern Living assigned the contract to Green Tree Financial Servicing Corporation, Conseco's predecessor. Conseco (as apparently was Green Tree) is a Delaware corporation with its principal place of business in Minnesota. According to the Wilders, the mobile home was marred from the time of its delivery in July 1995 by both manufacturing and installation defects. The Wilders assert that they complained repeatedly to all three companies involved in the sale, but after several months and the failure of their complaints to elicit the repairs they wanted, they ceased making payments. Conseco brought suit under the contract in March 1997 and soon thereafter repossessed the mobile home.
The Wilders instituted the present action in June 1999. Seeking to have the contract rescinded as well as other relief, they alleged that the three companies breached warranties and violated the Kentucky Consumer Protection Act (KRS Chapter 367). Conseco responded in relevant part by moving to compel arbitration pursuant to an arbitration clause in the contract. By order entered January 31, 2000, the trial court found the arbitration clause to be unconscionable and denied Conseco's motion. It is from that ruling that Conseco has appealed. The company contends that the trial court mischaracterized the arbitration clause and in so doing interfered with the company's rights under both the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) and Kentucky's version of the Uniform Arbitration Act (UAA) (KRS 417.045-240).
The contract at issue is on a three-page, preprinted, fill-in-the-blank form. In addition to a list of the parties (buyer: the Wilders, seller: Southern Living Housing, Inc., and assignee: Green Tree Financial Servicing Corporation) and an indication that the Wilders are giving a security interest in the mobile home, the first page includes details of the financing arrangements. The other terms, beginning with the make, model, and serial number of the home, appear from the bottom of page one to the middle of page three. These terms specify the Wilders' obligations to make timely payments, to maintain the home, and to keep the home insured. They include the seller's/assignee's right to repossess the home should the buyer default. And they include the arbitration provision at issue. The Wilders' initials appear at the bottom of page two, and their signatures at the end of their portion of the form2 in the middle of page three. Immediately above their signatures appears a warning to buyers in large, bold type to read the agreement before signing it. The Wilders do not allege that they were denied an opportunity to do so.
The arbitration clause provides in its entirety as follows:
All disputes, claims or controversies arising from or relating to this Contract or the parties thereto shall be resolved by binding arbitration by one arbitrator selected by you [seller/assignee] with my [buyers'] consent. This agreement is made pursuant to a transaction in interstate commerce and shall be governed by the Federal Arbitration Act at 9 U.S.C. Section 1. Judgment upon the award rendered may be entered in any court having jurisdiction. The parties agree and understand that they choose arbitration instead of litigation to resolve disputes. The parties understand that they have a right to litigate disputes in court, but that they prefer to resolve their disputes through arbitration, except as provided herein. THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY YOU (AS PROVIDED HEREIN). The parties agree and understand that all disputes arising under case law, statutory law and all other laws including, but not limited to all contract, tort and property disputes, will be subject to binding arbitration in accord with this Contract. The parties agree that the arbitrator shall have all powers provided by law, the Contract and the agreement of the parties. These powers shall include all legal and equitable remedies including, but not limited to, money damages, declaratory relief and injunctive relief. Notwithstanding anything hereunto the contrary, you retain an option to use judicial (filing a lawsuit) or non-judicial relief to enforce a security agreement relating to the Manufactured Home secured hi a transaction underlying this arbitration agreement, to enforce the monetary obligation secured by the Manufactured Home or to foreclose on the Manufactured Home. The institution and maintenance of a lawsuit to foreclose upon any collateral, to obtain a monetary judgment or to enforce the security agreement shall not constitute a waiver of the right of any party to compel arbitration regarding any other dispute or remedy subject to arbitration in this Contract, including the filing of a counterclaim in a suit brought by you pursuant to this provision.
Conseco contends that this provision entitles it to demand arbitration of the Wilders' claims. In support of this contention, Conseco notes that both the United States Congress and the Kentucky General Assembly have enacted statutes to govern arbitration disputes: the Federal Arbitration Act (FAA), codified at 9 U.S.C. § 1 et seq., and the Uniform Arbitration Act (UAA), codified at MIS 417.045-240. Both acts have been held to favor arbitration agreements, at least to the extent of' abolishing what once was a widespread policy against them.3 And both acts are meant to ensure that arbitration agreements are enforced according to the standards applied to other contracts.4 To that end, both acts declare that qualifying agreements5 are "valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract." KRS 417.050. Cf. 9 U.S.C. § 2. Both acts also provide for procedures whereby disputes over the existence or enforceability of an arbitration agreement may be addressed. KRS 417.060 provides in pertinent part that
(1) On application of a party showing an agreement described in KRS 417.050, and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration. If the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised. The court shall order arbitration if found for the moving party; otherwise, the application shall be denied.
Finally, because an ordinary appeal at the close of litigation will not often provide an adequate remedy for the wrongful denial of a right to arbitrate, KRS 417.220 provides in pertinent part that
(1) An appeal may be taken from:
(a) An order denying an application to compel arbitration made under KRS 417.060[.]6
Our jurisdiction to consider an appeal from what otherwise would be an unappealable interlocutory order stems from this last provision.7
It may also be well to note that our review of a trial court's ruling in a KRS 417.060 proceeding is according to usual appellate standards. That is, we defer to the trial court's factual findings, upsetting them only if clearly erroneous or if unsupported by substantial evidence, but we review without deference the trial court's identification and application of legal principles. Apparently the trial court made no factual findings in this case, but based its ruling solely on the application of certain principles of contract law to the arbitration clause quoted above. Our review, accordingly, is de novo.
The parties do not dispute that the Wilders' contract with Conseco comes within the general provisions of both the FAA and the UAA. It is a written contract incorporating a written predispute arbitration agreement, and it "involves" interstate commerce.8 Under either act, therefore, the clause is to be enforced and arbitration compelled unless the agreement to arbitrate did not encompass the Wilders' claims or unless it may be avoided "upon such grounds as exist at law or in equity for the revocation of any contract."9 (Emphasis in original.)
As set out above, the Wilders' arbitration agreement with Conseco applies to "[a]ll disputes, claims or controversies arising from or relating to this Contract or the parties thereto...." The Wilders' claims against Conseco are all based on Conseco's alleged breach of duties imposed by the contract itself or by statutes — Kentucky's Consumer Protection Act, in particular — that are brought into play by virtue of the contract. The Wilders' claims, therefore, "relate to" the contract and thus are within the scope of the arbitration agreement.
Against this conclusion, the Wilders suggest, and the trial court apparently agreed, that the Consumer Protection Act (CPA) creates an...
To continue reading
Request your trial
-
Berent v. CMH Homes, Inc.
...cases adopting the “minority” view, citing Stout v. J.D. Byrider, 228 F.3d 709, 715–16 (6th Cir.2000) ; Conseco Fin. Serv. Corp. v. Wilder, 47 S.W.3d 335, 342–43 (Ky.Ct.App.2001) ).Turning to the agreement at issue, the Taylor Court observed that the buyer's order, in which the arbitration ......
-
Hafer v. Mortgage
...the bank's security interest, is not unconscionable. [ See Pridgen, 88 F.Supp.2d at 658–59; see also Conseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335 (Ky.App.2001).] We also recognize that the plaintiffs are free to pursue their unconscionability defense in the arbitral forum. 52 S.W.3......
-
St. Matthews v. Madison
...1740, 179 L.Ed.2d 742 (2011) ; Schnuerle v. Insight Commc'ns Co. , 376 S.W.3d 561, 575 (Ky. 2012) ; Conseco Fin. Servicing Corp. v. Wilder , 47 S.W.3d 335, 341 (Ky. Ct. App. 2001) ). "An unconscionable contract is ‘one which no man in his sense, not under delusion, would make, on the one ha......
-
Torrance v. Aames Funding Corp.
...1480273 (C.D.Cal. 2000); Pridgen v. Green Tree Fin. Servicing Corp., 88 F Supp2d 655, 658 (S.D.Miss. 2000); Conseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335, 342 (Ky.App.2001); Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 542, 542 S.E.2d 360, 365 Oregon has not specifically addressed ......
-
STARE DECISIS AND INTERSYSTEMIC ADJUDICATION.
...at 20 AM. JUR. 2D Courts [section] 134 (West 2021)))); see also Fugate v. Commonwealth, 62 S.W. 3d 15, 19 (Ky. 2001) (quoting Ware, 47 S.W.3d at 335). (113) For the same kinds of reasons, Cluck argues that "many, if not all, rules of statutory interpretation" ought to be taken as "substanti......
-
Show Me the Money?: Washington Adopts the Cost Prohibitive Defense to Arbitration Clauses in Consumer Contracts
...examining the protocols and rules associated with arbitration in the United States. 3. Id. 4. See infra note 48 and accompanying text. 5. 47 S.W.3d 335 (Ky. App. 6. Federal Arbitration Act, 9 U.S.C. §§ 1-307 (1999). 7. Brief of Appellee at 5, Conseco, 47 S.W.3d 335 (Ky. App. 2001). 8. See M......