693 S.E.2d 394 (S.C. 2010), 26805, Herron v. Century BMW

Docket Nº:26805.
Citation:693 S.E.2d 394, 387 S.C. 525
Opinion Judge:KITTREDGE, Justice
Party Name:Heather HERRON, Natalie Armstrong, Michael Ritz, Julie Freeman, Christine Watts, Alison Dannert, Michael Blease, Michael Watts, Individually and for the Benefit of All Car Buyers Who Paid
Attorney:Dennis M. Black and Ryan L. VanGrack, of Williams & Connolly, of Washington, Steven W. Hamm, C. JoAnne Wessinger-Hill, David A. Anderson, and Jocelyn T. Newman, all of Richardson, Plowden & Robinson, of Columbia, for Appellant. A. Camden Lewis and Brady R. Thomas, both of Lewis & Babcock, of Colu...
Judge Panel:TOAL, C.J., BEATTY, HEARN, JJ., and Acting Justice JAMES E. MOORE, concur.
Case Date:April 19, 2010
Court:Supreme Court of South Carolina
 
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Page 394

693 S.E.2d 394 (S.C. 2010)

387 S.C. 525

Heather HERRON, Natalie Armstrong, Michael Ritz, Julie Freeman, Christine Watts, Alison Dannert, Michael Blease, Michael Watts, Individually and for the Benefit of All Car Buyers Who Paid " Administrative Fees" as Described below to Defendants, Respondents,

v.

CENTURY BMW a/k/a Sonic Automotive; Dick Dyer & Associates, Inc.; Galeana Chrysler Plymouth, Inc., a/k/a Galeana Chrysler Jeep, Inc.; J.L.H. Investments LP a/k/a Hendrick Honda; Overland, Inc., d/b/a Land Rover of Columbia; Taylor Toyota a/k/a Taylor Investments; and Toyota of Greenville, Inc. et. al., Defendants of whom Century BMW a/k/a Sonic Automotive is the Appellant.

No. 26805.

Supreme Court of South Carolina.

April 19, 2010

         Heard Jan. 20, 2010.

         Rehearing Denied June 9, 2010.

Page 395

[Copyrighted Material Omitted]

Page 396

         Dennis M. Black and Ryan L. VanGrack, of Williams & Connolly, of Washington, Steven W. Hamm, C. JoAnne Wessinger-Hill, David A. Anderson, and Jocelyn T. Newman, all of Richardson, Plowden & Robinson, of Columbia, for Appellant.

          A. Camden Lewis and Brady R. Thomas, both of Lewis & Babcock, of Columbia, Gedney M. Howe, III, of Charleston, Michael Eugene Spears, of Spartanburg, and Richard A. Harpootlian, of Columbia, for Respondents.

          KITTREDGE, Justice

         [387 S.C. 529] This case concerns the enforceability of an arbitration agreement. Respondents Christine and Michael Watts entered into a contract with Appellant Century BMW (Century) for the purchase of a car. The transaction included the execution of an arbitration agreement. Subsequently, the Wattses filed a class action suit against Century alleging the dealership had charged illegal administrative fees. Century moved to compel arbitration. The trial court found the arbitration agreement was unconscionable and unenforceable and denied the motion to compel. Century appealed, and we granted certification pursuant to Rule 204, SCACR.

         We hold the arbitration agreement, although an adhesion contract, is not unconscionable. Yet the arbitration provision prohibiting class actions is against public policy, which would ordinarily be severed pursuant to the agreement's severance clause. Century has insisted, however, that if the class action prohibition provision is unenforceable, it will abandon the balance of its rights under the arbitration agreement and consent to the action proceeding in the trial court. Although the arbitration agreement is otherwise enforceable, in accordance with Century's request, we affirm in result the trial court's order denying the motion to compel arbitration.

         [387 S.C. 530] I.

         In 2005, Michael Watts began looking for a car to purchase for his daughter, Christine Watts, as a graduation present. He negotiated with Century for the sale of a 2004 BMW Z4 convertible. Michael gave Century a bottom line price of $32,000, which Century initially rejected, but ultimately accepted. On the day of sale, Century presented a packet of documents Michael and Christine were to sign. Within the packet was a document titled " ARBITRATION AGREEMENT. " The arbitration agreement provided that any dispute between the parties would be subject to arbitration 1 and that the agreement was governed by the Federal Arbitration Act (FAA). The agreement further provided that the parties were waiving their right to bring or participate in a class action suit.

Page 397

          The Wattses brought a class action suit against Century and numerous other car dealerships in South Carolina, alleging the dealers charged an illegal administrative fee in violation of the South Carolina Regulation of Manufacturers, Distributors, and Dealers Act (" Dealers Act" ). S.C.Code Ann. § 56-15-10 et. seq. (2005). Century filed a motion to compel arbitration pursuant to the terms of the agreement. Relying heavily on Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 644 S.E.2d 663 (2007), the trial court found the arbitration agreement was unconscionable because there was an absence of a meaningful choice and the agreement contained oppressive and one-sided terms. Accordingly, the trial court found the arbitration agreement was unenforceable and denied Century's motion to compel.

         II.

         A.

         Arbitration

          The question of arbitrability of a claim is an issue for the courts. Partain v. Upstate Automotive Group, 386 S.C. 488, 689 S.E.2d 602 (2010) (Shearouse Adv. Sh. No. 6 at 28). [387 S.C. 531] The determination of whether a claim is subject to arbitration is subject to de novo review, but a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings. Id.

          At the outset, we recognize that there is a strong presumption in favor of the validity of arbitration agreements because both state and federal policy favor arbitration of disputes. Heffner v. Destiny, Inc., 321 S.C. 536, 537, 471 S.E.2d 135, 136 (1995). At the same time, general contract principles of state law apply to a court's evaluation of the enforceability of an arbitration clause governed by the FAA. Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 539, 542 S.E.2d 360, 364 (2001) (citing Doctor's...

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