Dan Wiebold Ford v. Universal Computer

• Decision Date: 22 December 2005
• Docket Number: No. 31136.,31136.
• Citation: 127 P.3d 138,142 Idaho 235
• Parties: DAN WIEBOLD FORD, INC., an Idaho corporation, Plaintiff-Appellant, v. UNIVERSAL COMPUTER CONSULTING HOLDING, INC., Universal Computer Services, Inc., Universal Computer Systems, Inc., Universal Computer Consulting Ltd, and Dealer Computer Services, Inc., Defendants-Respondents.
• Court: Idaho Supreme Court

127 P.3d 138

142 Idaho 235

DAN WIEBOLD FORD, INC., an Idaho corporation, Plaintiff-Appellant, v.UNIVERSAL COMPUTER CONSULTING HOLDING, INC., Universal Computer Services, Inc., Universal Computer Systems, Inc., Universal Computer Consulting Ltd, and Dealer Computer Services, Inc., Defendants-Respondents.

No. 31136.

Supreme Court of Idaho, Boise, December 2005 Term.

December 22, 2005.

COPYRIGHT MATERIAL OMITTED

David E. Kerrick, Caldwell, and Blume & Stoddard, Dallas, Texas, for appellant.James D. Blume argued.

Holland & Hart, Boise, for respondents.Steven C. Bowman argued.

EISMANN, Justice.

This is an appeal from a judgment dismissing a complaint alleging violations of the Idaho Consumer Protection Act on the ground that the parties had entered into a contract that included a provision requiring them to arbitrate disputes between them.We affirm the judgment of the district court.

I.FACTS AND PROCEDURAL HISTORY

On April 20, 1993, Dan Wiebold Ford, Inc., (Dan Wiebold) entered into a written contract (Agreement) with Ford Dealer Computer Services, Inc., (FDCS), under which FDCS agreed to provide Dan Wiebold with computer hardware and software and software support services.The parties amended the Agreement over sixty times to provide for computer hardware and software changes, and they agreed to extend its term beyond the initial seven years.On July 29, 2003, Dan Wiebold filed this action to recover damages for alleged violations of the Idaho Consumer Protection Act, I.C. §§ 48-610 et seq., and to have the Agreement declared terminated.It named as defendantsDealer Computer Services, Inc., (DCS), which had acquired FDCS in 1992 and had entered into the Agreement under the name of FDCS; Universal Computer Consulting Holding, Inc., (UCCH), which was the parent company of DCS; and Universal Computer Systems, Inc., (UC Systems), Universal Computer Consulting, Inc., (UC Consulting), and Universal Computer Services, Inc., (UC Services) which had contracted with DCS to provide the computer equipment, software, and support services required under the Agreement.

The Defendants attempted unsuccessfully to have the case removed to the federal district court.The federal court remanded it back to the state court because of uncertainty as to whether the amount in controversy exceeded the jurisdictional requirement of $75,000.

On January 20, 2004, after the case had been remanded back to state court, the Defendants moved to compel arbitration pursuant to the terms of the Agreement and to have the complaint dismissed with prejudice.Dan Wiebold responded by moving to file an amended complaint which would add a claim alleging that the arbitration provision in the Agreement is unconscionable and should therefore be declared void.

The district court heard both motions on May 24, 2004.The Defendants did not object to the request to file the amended complaint, and it was filed on June 14, 2004.

On August 2, 2004, the district court issued a memorandum decision in which it determined that the arbitration clause in the Agreement was valid and that all claims alleged in Dan Wiebold's complaint were subject to arbitration.The district court dismissed this action, and Dan Wiebold then timely appealed.

II.ISSUES ON APPEAL

A.Does this Court have jurisdiction to hear this appeal?

B.Did the district court err in holding that the arbitration clause was not unconscionable?

C.Does the arbitration clause apply to claims alleged under the Idaho Consumer Protection Act?

D.Does the arbitration clause apply to the Defendants who did not sign the Agreement?

E.Should the district court be reversed on the ground that the time for requesting arbitration under the contract has expired?

F.Is either party entitled to an award of attorney fees on appeal?

III.ANALYSIS

A.Does this Court Have Jurisdiction to Hear this Appeal?

The first issue we must address is the Defendants' claim that we do not have jurisdiction to hear this appeal.They contend that appeals under the Idaho Uniform Arbitration Act are governed by Idaho Code § 7-919¹ and that such statute does not grant the right to appeal from orders compelling arbitration.They also argue that an order compelling arbitration is not a final judgment under Idaho Appellate Rule 11, and therefore it is not appealable.We need not address this Court's jurisdiction granted by Article V, § 9, of the Idaho Constitution"to review, on appeal, any decision of the district courts, or the judges thereof."Although its order may have the effect of compelling Dan Wiebold to commence arbitration if it desires to pursue its claims, the district court did not compel Dan Wiebold to participate in arbitration.It dismissed its lawsuit.The district court's order stated:

ORDER

IT IS HEREBY ORDERED, and this DOES ORDER, pursuant to the Federal Arbitration Act, the Plaintiff's claims against all Defendants are subject to arbitration.

IT IS FURTHER ORDERED, and this DOES ORDER, that this matter is hereby DISMISSED.

A district court's order dismissing a lawsuit is a final judgment which can be appealed.Castle v. Hays,131 Idaho 373, 957 P.2d 351(1998).Therefore, this Court has jurisdiction to hear this appeal.

B.Did the District Court Err in Holding that the Arbitration Clause Was Not Unconscionable?

The district court based its analysis of the arbitration clause upon the Federal Arbitration Act.It did not have the benefit of our opinion in Moore v. Omnicare, Inc.,141 Idaho 809, 118 P.3d 141(2005).The parties' Agreement provides that it "shall be governed by the laws of the State of Michigan."Therefore, Michigan law governs the validity of the arbitration clause and its scope.Id.

Under Michigan law, an arbitration provision in a contract is valid and enforceable unless there are grounds that exist at law or in equity to rescind or revoke that provision.Mich. Comp. Laws § 600.5001(2).Unconscionability is one of the traditional defenses under Michigan law to the enforcement of a contractual provision.Rory v. Continental Ins. Co.,473 Mich. 457, 703 N.W.2d 23(2005).Unconscionability is a question of law for the court to decide.Northwest Acceptance Corp. v. Almont Gravel, Inc.,162 Mich.App. 294, 412 N.W.2d 719(1987).For a contractual provision to be unconscionable, it must be both procedurally and substantively unconscionable.Id.

A contract or contractual provision is procedurally unconscionable when the weaker party had no realistic alternative to acceptance of the contract or provision.Clark v. DaimlerChrysler Corp.,268 Mich. App. 138, 706 N.W.2d 471(2005).To be substantively unconscionable under Michigan law, the inequality of the term must be so extreme as to shock the conscience.Id.It is not substantively unconscionable simply because it is foolish for one party and very advantageous to the other.Id.

In response to the Defendants' motion, Dan Wiebold offered the affidavit of its founder and owner H.D. Wiebold.In finding that Dan Wiebold had failed to show procedural unconscionability, the district court reasoned as follows:

The Affidavit of Dan Wiebold contains only one statement relating to the unconscionability claim: "At no time did Mr. Bunney or any other representative of Defendant DCS, f/k/a FDCS, ever discuss, review, or explain the arbitration provision with me."DCS's failure to offer unsolicited explanations to the arbitration provision is not a factor indicating unconscionability.

The Plaintiff has not presented evidence concerning Mr. Wiebold's business experience, or lack thereof, in 1993, or representations made by DCS/Ford Dealer Services, Inc., at the time of contracting, or the relative bargaining powers of the parties.However, it is undisputed that in 1993, Mr. Wiebold owned a dealership for a multinational automotive manufacturer.Generally, such dealerships have resources for working through legal matters such as contract negotiations.Furthermore, such dealerships sell automobiles to their customers under contracts of sale, which typically contain provisions in fine print, and often contain arbitration provisions.In 1993, having owned a Ford dealership for approximately twenty years, Mr. Wiebold had considerable experience with contracts for sale of goods and services.Business persons having comparable experience and resources would not undertake contractual obligations without understanding the consequences of doing so.The Plaintiff has failed to provide sufficient evidence from which this Court can find the arbitration provision procedurally unconscionable.(Citations omitted.)

Dan Wiebold did not offer evidence that it had no realistic alternative to purchasing the computer equipment, software, and software support services from DCS, or that comparable equipment and software could not be obtained elsewhere.On the first page of the Agreement, prior to the recitation of any terms, was the following notice: "THIS AGREEMENT IS SUBJECT TO ARBITRATION UNDER APPLICABLE STATUTE."Even if the Agreement is one of adhesion, that is not a relevant factor when determining procedural unconscionability under Michigan law.Clark v. DaimlerChrysler Corp.,268 Mich.App. 138, 706 N.W.2d 471(2005).The district court did not err in holding that Dan Wiebold had failed to show that the arbitration clause in the Agreement was procedurally unconscionable.

The district court also found that the Agreement was not substantively unconscionable.Having upheld the district court's finding on procedural unconscionability, we need not address the district court's finding that the arbitration provision was not substantively unconscionable.Because both are required to find unconscionability under Michigan law, the lack of one factor precludes a finding of unconscionability.

C.Does the Arbitration Clause Apply to Claims Alleged Under the Idaho Consumer Protection Act?

Dan Wiebold's amended complaint alleges various claims under the Idaho Consumer...