Howell v. Cappaert Manufactured Housing, Inc.

• Decision Date: 05 June 2002
• Docket Number: No. 2002-0165.,2002-0165.
• Citation: 819 So.2d 461
• Parties: Thomas R. HOWELL v. CAPPAERT MANUFACTURED HOUSING, INC., et al.
• Court: Court of Appeal of Louisiana — District of US

819 So.2d 461

Thomas R. HOWELL v. CAPPAERT MANUFACTURED HOUSING, INC., et al.

No. 2002-0165.

Court of Appeal of Louisiana, Third Circuit.

June 5, 2002.

Fred A. Pharis, Pharis Law Offices, Alexandria, LA, for Thomas R. Howell.

Walter K. Jamison, III, Marjorie B. Breaux, Lafayette, LA, for Cappaert Manufactured Housing, Inc. S. Aaron Siebeneicher, Johnson & Siebeneicher, Alexandria, LA, for Ed's Mobile Homes, Inc.

Court composed of NED E. DOUCET, JR., Chief Judge, and JOHN D. SAUNDERS and OSWALD A. DECUIR, Judges.

DECUIR, Judge.

Thomas R. Howell sued Ed's Mobile Homes, Inc. and Cappaert Manufactured Housing, Inc. for redhibitory defects in a new mobile home sold by Ed's and manufactured by Cappaert. Both defendants filed exceptions of prematurity alleging that a binding arbitration agreement entered into and signed by all parties precludes the plaintiff's judicial action. Howell then amended his petition to assert claims under the Magnuson-Moss Warranty Improvement Act, 15 U.S.C. § 2301 et seq., which he contends prohibits binding arbitration of certain warranty claims. The trial court determined that the binding arbitration agreement at issue is not contrary to law and is enforceable. The court granted the defendants' exception of prematurity, and Howell filed a writ application seeking review by this court. We granted the writ for consideration of the merits.

At the time of Howell's purchase of the new mobile home from Ed's, Howell signed a "Binding Arbitration Agreement," which document was also signed by representatives from both Ed's and Cappaert. He also signed a "Retail Installment Contract" which provided for arbitration, judicial reference, or trial by judge, depending on the circumstances of the claim. Additionally, Howell was given a homeowners manual, which included a copy of the Binding Arbitration Agreement, and a one year express warranty requiring binding arbitration for the resolution of all disputes.

The parties present to the court in this writ application the narrow question of whether the Magnuson-Moss Act prohibits binding arbitration agreements pertaining to claims arising from a written warranty granted to a consumer at the time of purchase. Howell argues that the Binding Arbitration Agreement should be declared void and unenforceable as to all claims asserted in the petition. However, he argues in the alternative that we should sever the Magnuson-Moss claims and allow those to proceed to resolution in state court, while the other asserted claims can be stayed for purposes of arbitration.

In 1925, Congress enacted the Federal Arbitration Act, 9 U.S.C. § 2, which provides that arbitration agreements in transactions involving commerce "shall be valid, irrevocable, and enforceable," and are generally favored in the law. Nonetheless, in subsequent congressional acts, Congress has evidenced an intent to "preclude a waiver of judicial remedies" for certain statutory rights. Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987). The McMahon case requires courts to consider three factors in determining whether Congress intended to exclude a particular statutory claim from the mandate of the Federal Arbitration Act: the text of the statute, its legislative history, and whether there is "an inherent conflict between arbitration and the statute's underlying purposes." 482 U.S. 220, 227, 107 S.Ct. 2332, 96 L.Ed.2d 185.

The Magnuson-Moss Act was passed in 1975 and applies to written consumer product warranties. It creates a federal cause of action for breach of warranty claims. The Act sets forth requirements regarding disclosures, duties, and remedies associated with warranties; it does not, however, by its terms, specifically prohibit the enforcement of binding arbitration agreements for the resolution of warranty claims. The Act, at 15 U.S.C. § 2310(a) and (d), provides, in pertinent part:

(a) Informal dispute settlement procedures; establishment; rules setting forth minimum requirements; effect of compliance by warrantor; review of informal procedures or implementation by Commission; application to existing informal procedures

(1) Congress hereby declares it to be its policy to encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms.

(2) The Commission shall prescribe rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty to which any provision of this chapter applies. Such rules shall provide for participation in such procedure by independent or government entities.

(3) One or more warrantors may establish an informal dispute settlement procedure which meets the requirements of the Commission's rules under paragraph (2). If—

(A) a warrantor establishes such a procedure,

(B) such procedure, and its implementation, meet the requirement of such rules, and

(C) he incorporates in a written warranty a requirement that the consumer resort to such procedure before pursuing any legal remedy under this section respecting such warranty, then

(i) the consumer may not commence a civil action (other than a class action) under subsection (d) of this section unless he initially resorts to such procedure; ...

(d) Civil action by consumer for damages, etc.; jurisdiction; recovery of costs and expenses; cognizable claims

(1) Subject to subsections (a)(3) and (e) of this section, a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief—

(A) in any court of competent jurisdiction in any State or the District of Columbia; or

(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.

(2) If a consumer finally prevails in any action brought under paragraph (1) of this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys' fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its discretion shall determine that such an award of attorneys' fees would be inappropriate.

The United States Supreme Court has not ruled on the question of whether the Magnuson-Moss Act constitutes an exception to the pro-arbitration language of the Federal Arbitration Act. Likewise, we know of no Louisiana court, state or federal, which has addressed the issue. It appears to be one of first impression in this jurisdiction. The parties have located cases from around the country which have decided the issue contrarily. Howell cites several cases which hold that Magnuson-Moss prohibits restrictions on the judicial forum: Yeomans v. Homes of Legend, Inc., 2001 WL 237313 (M.D.Ala., 2001); Pitchford v. Oakwood Mobile Homes, Inc., 124 F.Supp.2d 958 (W.D.Va., 2000); Raesly v. Grand Housing, Inc., 105 F.Supp.2d 562 (S.D.Miss.2000); Wilson v. Waverlee Homes, Inc., 954 F.Supp. 1530 (M.D.Ala.),affirmed, 127 F.3d 40 (11th Cir.1997); Philyaw v. Platinum Enterprises, Inc., 2001 WL 112107 (Va.Cir.Ct., 1/9/2001)(No. CL00-236).

Conversely, Ed's and Cappaert cite cases which conclude that Magnuson-Moss does not prohibit binding arbitration: Richardson v. Palm Harbor Homes, 254 F.3d 1321 (11th Cir.2001); Cunningham v. Fleetwood Homes of Georgia, Inc., 253 F.3d 611 (11th Cir.2001); Adkins v. Palm Harbor Homes, Inc., 157 F.Supp.2d 1256 (M.D.Ala.2001); In Re American Homestar of Lancaster, Inc. and Nationwide Housing Systems, Inc., 50 S.W.3d 480 (Tex.1/10/01)(No. 00-0722); Southern Energy Homes, Inc. v. Ard, 772 So.2d 1131 (Ala.6/2/2000)(No. 1971998).

In Richardson...