Brenda House v. Vance Ford-Lincoln-Mercury, Inc.

Citation328 P.3d 1239
Decision Date31 March 2014
Docket NumberNo. 109314.,Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 1.,109314.
PartiesBrenda HOUSE, an individual resident of Ottawa County, Oklahoma, Plaintiff/Appellant, v. VANCE FORD–LINCOLN–MERCURY, INC., an Oklahoma Corporation; and Ford Motor Credit Company, L.L.C., a foreign limited liability company, Defendants/Appellees.
CourtUnited States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

328 P.3d 1239

Brenda HOUSE, an individual resident of Ottawa County, Oklahoma, Plaintiff/Appellant,
VANCE FORD–LINCOLN–MERCURY, INC., an Oklahoma Corporation; and Ford Motor Credit Company, L.L.C., a foreign limited liability company, Defendants/Appellees.

No. 109314.Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 1.

Court of Civil Appeals of Oklahoma,
Division No. 1.

March 31, 2014.

[328 P.3d 1241]

Appeal from the District Court of Ottawa County, Oklahoma; Honorable Robert G. Haney, Trial Judge.

James W. Dunham, Jr., James W. Dunham, Jr., P.C., Tulsa, Oklahoma, for Plaintiff/Appellant.

Chris Harper, Phillip P. Owens, II, Chris Harper, Inc., Edmond, Oklahoma, for Defendant/Appellee, Vance Ford–Lincoln–Mercury, Inc.

Harvey D. Ellis, Jr., John M. Thompson, Crowe & Dunlevy, P.C., Oklahoma City, Oklahoma, for Defendant/Appellee Ford Motor Credit Company, L.L.C.

WM. C. HETHERINGTON, JR., Vice–Chief Judge:

¶ 1 Brenda House (House) appeals a trial court order denying her motion to vacate an arbitration award and granting counter motions by Vance Ford–Lincoln–Mercury Inc. (Vance) and Ford Motor Credit Company, LLC (Ford) to confirm the arbitration award. She also appeals the trial court's order which sent the parties' controversy to arbitration, claiming she was denied due process by the trial court's refusal to conduct an evidentiary hearing. The orders of the trial court ordering the controversy to arbitration and affirming the arbitrator's award are AFFIRMED.


¶ 2 House purchased a 2008 Ford F–150 crew cab with a Harley Davidson limited edition package, from Vance on May 18, 2009. She executed an Oklahoma Simple Interest Vehicle Retail Installment Contract (the Contract), note and security agreement, all of which are held by Ford. The Contract lists the vehicle as new but also states its mileage as 21,421 at the time of her purchase. The cash price for the 2008 truck was $43,630.00. As part of the transaction, House received $6,200 credit for a 1998 Ford F–150 trade-in and a $500 rebate was applied as a part of the down payment. She received “new car” 1.9% financing with Ford and a check from Vance for $500 for “TT & L” (tag, title, and lien entry expenses).

¶ 3 The first page of the Contract contains the following statement: “YOU ACKNOWLEDGE THAT YOU HAVE READ AND AGREE TO BE BOUND BY THE ARBITRATION

[328 P.3d 1242]

PROVISION ON THE REVERSE SIDE OF THIS CONTRACT.” (Emphasis in original.) The arbitration provision on the reverse of the contract lists, inter alia, various rights given up, such as the right to trial,1 and others not given up, including the right to request a court to review whether an arbitrator “exceeded its authority,” and advises it is subject to “the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and the Federal Rules of Evidence.” (Underlining in original.)

¶ 4 House filed suit against Vance and Ford (collectively, Appellees) on December 7, 2010, and amended her petition on December 10, 2010, raising claims for breach of contract, common law fraud, statutory fraud, deceit, and Oklahoma Consumer Protection Act violations. All of her claims are premised, in whole or in part, on the classification of the truck as “new” or used, representations the truck's mileage was the result of its use as a demonstration vehicle and by a sales manager, and the non-disclosure of a prior sale to another consumer.

¶ 5 Following motions to compel arbitration by Appellees, House responded, arguing fraud was a threshold issue for resolution prior to arbitration. The trial court entered a March 4, 2011 Order compelling arbitration and staying the trial court proceedings until the conclusion of the arbitration proceedings.

¶ 6 House filed a Petition in Error on April 1, 2011, in which she argued she was denied due process by the trial court's refusal to afford her an evidentiary hearing on fraud in the inducement and questioning whether Appellees' motions to compel arbitration were sufficient. In a notarized Narrative Statement filed April 5, 2011, House states, inter alia, that at a regularly scheduled Motion Docket on March 4, 2011, after the trial court stated the parties were going to arbitration, she requested an evidentiary hearing on the issue of fraud in the inducement and asked the trial court's leave to present argument, and the trial court “stated that counsel was free to do so, but that it would ‘not make any difference.’ ” Her counsel then cited Hai v. Baptist Healthcare of Oklahoma, Inc., 2010 OK. CIV APP 3, 230 P.3d 914, described the case as holding “where fraud in the inducement is properly pled, a plaintiff is entitled to an evidentiary hearing of that issue before being compelled to arbitrate,” and reiterated she moved for such a hearing. The trial court stated, “You are going to arbitration,” and concluded the hearing.

¶ 7 House filed an Application for Stay of Arbitration Pending Appeal and for Expedited Ruling on Hearing with the Oklahoma Supreme Court on April 11, 2011. The Court issued an April 12, 2011 order advising her the motion would not be considered until she had presented the motion to the trial court and the trial court had ruled upon it. House filed a motion in the trial court on April 12, 2011, seeking to stay the arbitration pending appeal or for an expedited ruling or hearing. An April 13, 2011 Order of the trial court denies that motion.

¶ 8 The Oklahoma Supreme Court granted House's Application for an Emergency Stay of the arbitration process in an April 14, 2011 Order. Appellees filed a joint response to the motion to stay, arguing Appellant failed to meet the criteria under Okla.Sup.Ct. R. 1.15(c)(2) for such a stay. After denying a request by Appellant to file a reply, the Oklahoma Supreme Court denied Appellant's request for a stay pending appeal, citing Rule 1.15, on May 4, 2011. The Court then issued a May 9, 2011 Order memorializing the denial of the application and, citing Rogers v. Dell Computer Corporation, 2005 OK 51, 138 P.3d 826 and

[328 P.3d 1243]

12 O.S.Supp.2006 § 1857(C), stating the “April 14, 2011 stay order is dissolved.”

¶ 9 An arbitration award was entered in December of 2011. The trial court denied House's motion to vacate the award and granted separate motions by Appellees to confirm the award in an April 6, 2012 Order. The 7–page arbitration award, signed on December 6, 2011, is attached as Exhibit A to the April 6, 2012 Order. The arbitrator finds the evidence did not support a conclusion House was injured by Vance's non-disclosure of the prior transaction, there was no evidence of misuse of the truck prior to the sale to House, and she had no problems with the truck during the approximately 30 months she had used the truck.2 In the award, the arbitrator finds in favor of Vance and Ford, grants no relief or award to House, orders the parties to bear their own respective attorney fees and costs, and assesses $1,275.00 in American Arbitration Association fees and expenses and $9,463.80 for arbitrator compensation and expenses.

¶ 10 House filed an April 11, 2012 Supplemental Petition in Error in which she alleges the trial court erred by refusing to vacate the arbitrator's award because it fails to comply with the parties' arbitration agreement, the award exceeds the arbitrator's powers, and the award disregards Oklahoma law. She raises arguments going to the merits of the underlying transaction, such as Vance's claims regarding what it asserted were a failed sale, the truck's status as new or used, and the non-disclosure of earlier transaction. House argues the arbitration award does not qualify as the required “reasoned award,” it contains “bare” conclusions, and it therefore is impermissible and outside of the arbitrator's powers. She further claims the award manifestly disregards applicable law and is subject to vacatur under the Federal Arbitration Act (FAA).

¶ 11 In an April 13, 2012 Order addressing deficiencies in the record, the Oklahoma Supreme Court notes briefing was previously completed in the appeal and House had filed a Supplemental Petition in Error. Among other things, the Court's order sets dates for various filings, and directs Appellees to respond to the Supplemental Petition in Error, directs House to “file a supplemental brief in chief, limited to the issues raised by the April 6, 2012 order,” directs “Appellee” to file a supplemental answer brief, and allows House to file a reply brief. House, Vance, and Ford each filed supplemental appellate briefs within the time limits set by the Court's order.


¶ 12 We first address House's allegations regarding the trial court order compelling arbitration. She argues the parties' contract is governed by Oklahoma law and it was error to fail to conduct an evidentiary hearing on whether the contract was induced by fraud. She further contends the trial court failed to follow “proper procedure” in considering Ford's Motion to Compel Arbitration. Appellees argue factual concessions by House obviated the need for such a hearing.

¶ 13 House cites Shaffer v. Jeffery, 1996 OK 47, 915 P.2d 910, as rejecting the severability doctrine of Prima Paint Corporation v. Flood Conklin Manufacturing Company, 388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) and as granting her a “clear right” to an evidentiary hearing on the issue of fraud in the inducement. Under that doctrine, fraud regarding the arbitration clause may be severed and considered separately from the remainder of a contract. We read Shaffer, which addressed an initial construction of § 802(A) of the Oklahoma Arbitration Act, 15 O.S.1991 § 801–§ 818, in light of subsequently developed law. In Rogers v. Dell Computer Corporation, 2005 OK 51, ¶ 13–¶ 14, 138 P.3d 826, 830, the Oklahoma Supreme Court states:

In considering whether an arbitration provision is binding on the parties, it is severed

[328 P.3d 1244]

from the rest of the contract. A.T. Cross v. Royal...

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