Partain v. Upstate Automotive Group

Citation386 S.C. 488,689 S.E.2d 602
Decision Date08 February 2010
Docket NumberNo. 26768.,26768.
CourtUnited States State Supreme Court of South Carolina
PartiesAmos Keith PARTAIN, Petitioner, v. UPSTATE AUTOMOTIVE GROUP, Respondent.

Parham, of Greenville, and John C. Moylan, III, of Wyche, Burgess, Freeman & Parham, of Columbia, for Respondent.

PER CURIAM.

In this case we consider whether a tort claim premised on an alleged "bait and switch" is subject to an arbitration clause. Because we find the alleged conduct was not within the contemplation of the parties when they entered into the agreement, we find that the arbitration clause does not apply and we reverse the Court of Appeals opinion to the contrary.

FACTS

In March 2006, Petitioner Amos Keith Partain met with Mikel Gadoran, an employee of Respondent Upstate Automotive Group (Upstate Auto) and discussed the purchase of a 2006 Nissan truck. After negotiations over the sale price, Gadoran phoned Partain and informed him that Gadoran's sales manager had authorized the sale at Partain's offered price. Shortly thereafter, Partain visited Upstate Auto for a test drive. Days later Partain received a phone call from Gadoran telling him that he could come pick up the truck.

Partain returned to Upstate Auto where he completed paperwork and Upstate Auto employees walked him through the "vehicle introduction" process with a Nissan truck. During the "vehicle introduction" Partain noticed that a truck bed extension previously affixed to the truck was missing. Upstate Auto employees explained that the extension had been removed but would be reinserted. Partain drove the truck home and eventually came to the conclusion that the truck was not the same vehicle he had negotiated to buy or taken for a test drive at Upstate Auto.

Partain filed suit against Upstate Auto alleging that he had been the victim of a "bait and switch" in violation of the South Carolina Unfair Trade Practices Act. Consequently, Partain alleged he was entitled to three times his actual damages plus interest, costs, and attorney's fees. Upstate Auto asserted three affirmative defenses in its Answer, including an arbitration agreement with Partain. Based on the arbitration agreement, Upstate Auto moved to dismiss Partain's claim. The circuit court denied Upstate Auto's Motion to Dismiss and Motion for Reconsideration. Upstate Auto appealed and the Court of Appeals reversed. Partain v. Upstate Automotive Group, 378 S.C. 152, 662 S.E.2d 426 (Ct.App.2008). This Court granted certiorari. We now reverse the Court of Appeals.

STANDARD OF REVIEW

The question of arbitrability of a claim is an issue for judicial determination unless the parties provide otherwise. See Zabinski v. Bright Acres Associates, 346 S.C. 580, 596, 553 S.E.2d 110, 118 (2001). The determination whether a claim is subject to arbitration is subject to de novo review. See Gissel v. Hart, 382 S.C. 235, 240, 676 S.E.2d 320, 323 (2009). Nevertheless, a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings. See Aiken v. World Fin. Corp. of South Carolina, 373 S.C. 144, 148, 644 S.E.2d 705, 707 (2007).

ISSUES

Partain raises the following issues on certiorari:

I. Did the Court of Appeals err in holding that a "significant relationship" exists between Partain's Complaint and the contract between Partain and Upstate Auto?

II. Did the Court of Appeals err in holding that Upstate Auto's alleged conduct does not constitute "illegal and outrageous acts" unforeseeable to a reasonable consumer in the context of normal business dealings?

DISCUSSION
I. Did the Court of Appeals err in finding a "significant relationship" between Partain's claim and the contract?

The policy of the United States and of South Carolina is to favor arbitration of disputes. Zabinski, 346 S.C. at 596, 553 S.E.2d at 118. Unless a court can say with positive assurance that the arbitration clause is not susceptible to any interpretation that covers the dispute, arbitration should generally be ordered. Aiken, 373 S.C. at 149, 644 S.E.2d at 708, citing Zabinski, 346 S.C. at 596-97, 553 S.E.2d at 118-19. Regardless of the label the plaintiff uses, when deciding whether an arbitration agreement encompasses a dispute, a court must determine whether the factual allegations underlying the claim are within the scope of the broad arbitration clause. Zabinski, 346 S.C. at 597, 553 S.E.2d at 118. Moreover, even if the court finds that a claim is outside of the scope of the arbitration clause, the clause may still apply. "A broadly-worded arbitration clause applies to disputes that do not arise under the governing contract when a significant relationship' exists between the asserted claims and the contract in which the arbitration clause is contained." Zabinski, 346 S.C. at 598, 553 S.E.2d at 119, citing Long v. Silver, 248 F.3d 309 (4th Cir.2001). Thus, a claim falls within the scope of an arbitration clause if it is encompassed by the language of the clause or if a "significant relationship" exists between the claim and the contract.

Apparently, the Court of Appeals found that the claim is not within the scope of the arbitration agreement as it proceeded directly to finding a "significant relationship" between Partain's claim and the contract. Because we find that the factual allegations underlying Partain's claim are encompassed by the terms of the arbitration clause, we need not reach the "significant relationship" question. Nevertheless, while we disagree with the reasoning of the Court of Appeals, we agree that, at least on its face, the arbitration clause applies.

The arbitration clause in the contract for sale between Partain and Upstate Auto provides in relevant part:

Buyer/Lessee acknowledges and agrees that all claims, demands, disputes, or controversies of every kind or nature that may arise between them concerning any of the negotiations leading to the sale, lease or financing of the vehicle terms and provisions of the sale, lease or financing shall be settled by binding arbitration conducted pursuant to the provision[s] of 9 U.S.C. section 1, et. [s]eq. and according to the Commerical Rules of the American Arbitration Association[.] Without limiting the generality of the forgoing, it is the intention of the buyer/lessee and the dealer to resolve by binding arbitration all disputes between them concerning the vehicle its sale, lease or financing and its condition including disputes concerning the terms and condition of the sale, lease or financing, the condition of the vehicle, any damage to the vehicle, the terms and meaning of any of the documents signed or given in connection with the sale, lease or financing, any representations, promises, or omissions made in connection with the negotiations for the sale, lease or financing, credit life insurance, disability insurance and vehicle extended warranty or service contract purchased or obtained in connection with the vehicle.

Partain's complaint alleges that, upon completion of the sale, Upstate Auto presented a truck to him that "was not the same truck that [Partain] had test driven ... and was not the same truck that he had negotiated to buy...." His claim is therefore encompassed by the following language: "Buyer/Lessee acknowledges and agrees that all claims, demands, disputes, or controversies of every kind or nature that may arise between them concerning any of the negotiations leading to the sale ... of the vehicle and provisions of the sale ... shall be settled by binding arbitration...." Consequently, the factual allegations underlying Partain's...

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