Credit Acceptance Corp. v. Front

Citation231 W.Va. 518,745 S.E.2d 556
Decision Date19 June 2013
Docket Number12–0545.,Nos. 11–1646,s. 11–1646
PartiesCREDIT ACCEPTANCE CORP., Defendant Below, Petitioner v. Robert J. FRONT and Billye S. Front, Plaintiffs Below, Respondents. Credit Acceptance Corp., Defendant Below, Petitioner v. Ocie Shrewsbury, Plaintiff Below, Respondent.
CourtSupreme Court of West Virginia

OPINION TEXT STARTS HERE

Syllabus by the Court

1. An order denying a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal under the collateral order doctrine.

2. ‘A contract term is unenforceable if it is both procedurally and substantively unconscionable. However, both need not be present to the same degree. Courts should apply a ‘sliding scale’ in making this determination: the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the clause is unenforceable, and vice versa.' Syllabus Point 20, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011)[, overruled in part on other grounds by Marmet Health Care Center, Inc. v. Brown, –––U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (per curiam).] Syllabus point 9, Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 729 S.E.2d 217 (2012).

3. Where an arbitration agreement names a forum for arbitration that is unavailableor has failed for some reason, a court may appoint a substitute forum pursuant to section 5 of the Federal Arbitration Act, 9 U.S.C. § 5 (1947) (2006 ed.), only if the choice of forum is an ancillary logistical concern. Where the choice of forum is an integral part of the agreement to arbitrate, the failure of the chosen forum will render the arbitration agreement unenforceable.

4. “A state statute, rule, or common-law doctrine, which targets arbitration provisions for disfavored treatment and which is not usually applied to other types of contract provisions, stands as an obstacle to the accomplishment and execution of the purposes and objectives of the Federal Arbitration Act, 9 U.S.C. § 2, and is preempted.” Syllabus point 8, Brown ex rel. Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), overruled in part on other grounds by Marmet Health Care Center, Inc. v. Brown, –––U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (per curiam).

Don C.A. Parker, Bruce M. Jacobs, Nicholas P. Mooney, Spilman Thomas & Battle, PLLC, Charleston, WV, for the Petitioner.

Ralph C. Young, Christopher B. Frost, Hamilton Burgess Young & Pollard, Fayetteville, WV, for the Respondents, Robert J. Front & Billye S. Front.

Ralph C. Young, Christopher B. Frost, Steven R. Broadwater, Jr., Hamilton Burgess Young & Pollard, Fayetteville, WV, for the Respondent, Ocie Shrewsbury.

DAVIS, Justice:

Two appeals have been consolidated for decision in this matter. In these consolidated appeals, Credit Acceptance Corp., petitioner (hereinafter Credit Acceptance), appeals orders issued by the Circuit Court of Raleigh County in each case that denied Credit Acceptance's motion to compel arbitration. 1 Credit Acceptance contends that, in both of these cases, the circuit courts erred by concluding that the arbitration agreements were unconscionable based upon the unavailability of arbitration forums named therein, and because the debtors in the agreements waived their respective rights to a jury trial. Because we find that one of the arbitration forums named in the agreements remains available to arbitrate the parties' disputes, and because an arbitration agreement is not rendered unenforceable solely because a party thereto waives his or her right to a jury trial, we reverse both of these cases and remand for entry of orders compelling arbitration.

I.FACTUAL AND PROCEDURAL HISTORY

The cases underlying these consolidated appeals all involve the purchase of an automobile. We relate the particular facts of each case separately below.

A. Front Plaintiffs

On August 17, 2007, Robert and Billye Front (hereinafter collectively the Fronts) purchased a 2003 Chevrolet Cavalier automobile from Finish Line Pre–Owned Auto Sales (hereinafter “Finish Line”). To purchase this vehicle, the Fronts executed a retail installment and security agreement with Finish Line. Finish Line assigned all its rights, title, and interest in the contract and the vehicle to Credit Acceptance in exchange for Credit Acceptance financing the purchase.

Thereafter, on April 17, 2008, the Fronts purchased a 2005 Ford Focus vehicle from Prestige Ford Lincoln–Mercury, Inc. (hereinafter “Prestige”). As with their first automobile purchase, the Fronts executed a retail installment contract with Prestige. Prestige subsequently assigned all its rights, title, and interest in the contract to Credit Acceptance.

Both of the retail installment contracts executed by the Fronts in connection with their vehicle purchases contained arbitration clauses. The clauses were nearly identical 2 and stated, in part:

The Federal Arbitration Act governs this Arbitration Clause. You and we understand and agree that You and we choose arbitration instead of litigation to resolve Disputes. You and we voluntarily and knowingly waive any right to a jury trial. ... 3

....

You or we may elect to arbitrate under the rules and procedures of either the National Arbitration Forum or the American Arbitration Association; however in the event of a conflict between these rules and procedures and the provisions of this Arbitration Clause, You and we agree that this Arbitration Clause governs for that specific conflict. You may obtain the rules and procedures, information on fees and costs (including waiver of the fees), and other materials, and may file a claim by contacting the organization of your choice....

....

It is expressly agreed that this Contract evidences a transaction in interstate commerce.4 The Arbitration Clause is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”) and not by any state arbitration law.

(Footnotes added). After the Fronts executed the aforementioned contracts, one of the selected arbitration forums, the National Arbitration Forum (hereinafter “NAF”), was sued by the State of Minnesota. As a result of this suit, the NAF entered into a consent decree forbidding it from conducting consumer arbitration. See CompuCredit Corp. v. Greenwood, –––U.S. ––––, –––– n. 2, 132 S.Ct. 665, 677 n. 2, 181 L.Ed.2d 586 (2012) (“In 2009, after the Attorney General of Minnesota filed an action alleging that NAF had engaged in numerous violations of consumer-protection laws, NAF entered into a consent decree barring it from handling consumer arbitrations.”). Shortly thereafter, [i]n July 2009, AAA issued a moratorium on arbitrating cases concerning consumer debt collections if those cases were brought by the company and the consumer did not consent to the arbitration.” Montgomery v. Applied Bank, 848 F.Supp.2d 609, 613 (S.D.W.Va.2012). Thus, one of the contractually designated arbitrators, NAF, was no longer available to arbitrate any dispute that arose under the Credit Acceptance/Front contracts, and the other designated arbitrator, AAA, was available only on a limited basis.

The Fronts commenced two civil actions against Credit Acceptance in the Circuit Court of Raleigh County in May 2011. The claims related to communications the Fronts allegedly received from Credit Acceptance after their debt under the two retail installment contracts was in arrears. Each complaint set forth four causes of action: (1) violations of the West Virginia Consumer Credit and Protection Act (hereinafter “the WVCCPA”); (2) negligence; (3) intentional infliction of emotional distress; and (4) invasion of privacy. In each case, Credit Acceptance filed a motion to compel arbitration and dismiss, or, in the alternative, to stay the action pending arbitration. The circuit court consolidated the two cases and ultimately denied Credit Acceptance's motions. The circuit court found that the contracts were not procedurally unconscionable at the time of their formation, but the subsequent unavailability of one of the selected arbitration forums materially changed the contracts and rendered them procedurally unconscionable. The court additionally found that the unavailability of one of the selected forums rendered the contracts substantively unconscionable. Finally, the circuit court found that the arbitration agreements violated the Fronts' fundamental right under the West Virginia Constitution to use the court system to seek justice and violated the WVCCPA, which the circuit court interpreted as prohibiting a consumer from waiving the right to a jury trial. The court designated the order as a “final order.” It is from this order that Credit Acceptance appeals.

B. Shrewsbury Plaintiff

Ocie Shrewsbury and Virgil Shrewsbury 5 (hereinafter collectively the Shrewsburies) purchased a 2000 Ford Expedition from Greg Lilly Auto Sales, Inc. (hereinafter “Lilly Auto”), on July 11, 2010. In connection with this purchase, the Shrewsburies executed a retail installment contract and security agreement with Lilly Auto. Lilly Auto then assigned all its rights, title, and interest in the contract and the vehicle to Credit Acceptance, who financed the purchase. The retail installment contract executed by the Shrewsburies in connection with their vehicle purchase contained an arbitration clause using the same language as that quoted above from the 2005 Front contract. Notwithstanding the fact that the NAF was no longer available to arbitrate any dispute that arose under the contract, and the AAA was available only on a limited basis,6 the contract nevertheless designated those two organizations as arbitrators of any disputes in the same manner as those organizations had been designated in the Credit Acceptance/Front contracts.

On May 17, 2011, Ocie Shrewsbury (hereinafter Ms. Shrewsbury) filed a civil action against Credit Acceptance in the Circuit Court of Raleigh...

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