Eagle v. Fred Martin Motor Co.

• Decision Date: 25 February 2004
• Docket Number: No. 21522.,21522.
• Citation: 157 Ohio App.3d 150,809 NE 2d 1161
• Parties: EAGLE, Appellant, v. FRED MARTIN MOTOR COMPANY et al., Appellees.
• Court: Ohio Court of Appeals

157 Ohio App.3d 150

2004-Ohio-829

809 NE 2d 1161

2004-Ohio-829

EAGLE, Appellant, v. FRED MARTIN MOTOR COMPANY et al., Appellees.

No. 21522.

Court of Appeals of Ohio, Ninth District, Summit County.

Decided February 25, 2004.

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Laura K. McDowall and Rocco P. Yeargin, Akron, for appellant.

Susan K. Pritchard, Akron, for appellee Fred Martin Motor Company.

George R. Hicks, Cleveland, for appellee Huntington National Bank.

BATCHELDER, Judge.

{¶ 1} Appellant, Lisa Eagle, appeals from the judgment of the Summit County Court of Common Pleas, which granted the motion to stay proceedings and the motion to compel arbitration of appellee, Fred Martin Motor Company ("Fred Martin").¹ We reverse and remand for further proceedings in accordance with this opinion.

I

{¶ 2} This appeal arose from Ms. Eagle's challenge to an arbitration clause contained in the contract governing her purchase of an automobile from Fred Martin. On July 3, 2000, Ms. Eagle went to Fred Martin to purchase a used car. However, she was told by a Fred Martin Representative, who had reviewed her financial information, that she did not qualify for a purchase of a used car. Fred Martin informed her that she would nevertheless be able to purchase a new Daewoo Lanos car, and represented to her that she would be better off purchasing a Lanos because it was a good automobile with an excellent warranty. Relying on these representations, Ms. Eagle decided to purchase the Lanos. Fred Martin and Ms. Eagle entered into a purchase agreement for a 2000 Daewoo Lanos automobile.

{¶ 3} Subsequently, Ms. Eagle began to experience a number of mechanical problems with the Lanos. The most serious problem Ms. Eagle experienced with the car was the Lanos stalling while being driven, causing Ms. Eagle to lose control of the vehicle. Ms. Eagle took the car to Fred Martin on a number of separate occasions to remedy this problem, but the mechanics represented to her that they were having difficulty obtaining the parts to fix the car. Ms. Eagle continued to drive the Lanos in this unrepaired condition, until the car stopped running completely in June 2002. Ms. Eagle had the car towed to Fred Martin, where the car remained unfixed for approximately six months, while she continued to make monthly loan payments on the Lanos.

{¶ 4} Ms. Eagle picked up her car from the dealership. Shortly thereafter, the car began to experience other problems, which forced Ms. Eagle to return the car to Fred Martin once again. This time, the service department at Fred Martin presented Ms. Eagle with a repair document that she asserts contained a clause stating that Fred Martin was "disclaiming all warranties," and relieving Fred Martin of responsibility if it could not obtain the proper parts for the vehicle. Ms. Eagle avers that Fred Martin refused to fix the Lanos unless she signed this paperwork. Ms. Eagle refused to sign the paperwork, and states that she instead purchased a replacement vehicle due to the severity of the problems she was having with the Lanos.

{¶ 5} On July 1, 2002, Ms. Eagle filed a complaint for unfair and deceptive consumer sales practices and a motion for declaratory judgment against Fred Martin and the Huntington National Bank ("Huntington"). In the complaint, Ms. Eagle alleged, inter alia, that Fred Martin "committed unfair, deceptive, and unconscionable acts and practices" in violation of the Consumer Sales Practices Act, R.C. Chapter 1345.² Ms. Eagle also asserted in the complaint that the arbitration clause contained in the purchase contract is unconscionable and therefore unenforceable, and sought a declaratory judgment of the same.

{¶ 6} On July 17, 2002, Fred Martin filed a motion to stay proceedings and a motion to compel arbitration, pursuant to the arbitration clause contained in the purchase contract entered into by Ms. Eagle and Fred Martin. The arbitration clause in the contract states that arbitration was to be conducted by the National Arbitration Forum (the "NAF") in accordance with the NAF's Code of Procedure. On July 18, 2002, Ms. Eagle filed a motion for extension of time to respond to Fred Martin's motions, pursuant to Harrison v. Toyota Motor Sales, U.S.A., Inc. (Apr. 10, 2002), 9th Dist. No. 20815, 2002 WL 533478.

{¶ 7} On August 12, 2002, the common pleas court issued an order that granted Ms. Eagle's motion for leave pursuant to Harrison, in order to allow her more time to respond to the issue of the validity of the arbitration clause.³ Thereafter, Ms. Eagle submitted a brief in opposition to Fred Martin's motion to stay proceedings and motion to compel arbitration, pursuant to which Fred Martin filed a response brief. On March 11, 2003, the common pleas court issued an order that granted Fred Martin's motion to stay the court proceedings and motion to compel arbitration. It is from that order that Ms. Eagle now appeals.

{¶ 8} Ms. Eagle timely appealed, asserting two assignments of error for review. As Ms. Eagle's first and second assignments of error involve similar questions of law and fact, we will address these assignments of error together.

II First Assignment of Error

"The trial court erred as a matter of law in finding that the arbitration clause is enforceable."

Second Assignment of Error

"The trial court erred in finding that the arbitration clause is enforceable even though the clause is internally inconsistent and ambiguous."

{¶ 9} In her first and second assignments of error, Ms. Eagle contends that the trial court erred when it found that the arbitration clause in the purchase contract is enforceable. Specifically, Ms. Eagle avers that the arbitration clause is unconscionable, internally inconsistent, and ambiguous. We agree.

A. Standard of Review

{¶ 10} When addressing whether a trial court has properly granted motions to stay proceedings and compel arbitration, the standard of review is abuse of discretion. Carter Steel & Fabricating Co. v. Danis Bldg. Constr. Co. (1998), 126 Ohio App.3d 251, 254-255, 710 N.E.2d 299; Harsco Corp. v. Crane Carrier Co. (1997), 122 Ohio App.3d 406, 410, 701 N.E.2d 1040. An abuse of discretion suggests more than an error of law or judgment but instead implies that the trial court's attitude was unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 5 OBR 481, 450 N.E.2d 1140; Schafer v. Schafer (1996), 115 Ohio App.3d 639, 642, 685 N.E.2d 1302. Absent an abuse of discretion, an appellate court may not substitute is judgment for that of the trial court. Pons v. Ohio State Med. Bd. (1993), 66 Ohio St.3d 619, 621, 614 N.E.2d 748.

{¶ 11} However, when an appellate court is presented with purely legal questions, the standard of review to be applied is de novo. Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Serv., Inc. (1992), 81 Ohio App.3d 591, 602, 611 N.E.2d 955. Under the de novo standard of review, an appellate court does not give deference to a trial court's decision. Akron v. Frazier (2001), 142 Ohio App.3d 718, 721, 756 N.E.2d 1258. In the instant case, Ms. Eagle does not raise issue with the underlying contract for the purchase of the vehicle; rather, she challenges only the enforceability of the arbitration clause in this contract, asserting that it is unconscionable.

{¶ 12} The issue of unconscionability is a question of law. Bank One, NA v. Borovitz, 9th Dist. No. 21042, 2002-Ohio-5544, 2002 WL 31312671, at ¶ 12, citing Ins. Co. of N. Am. v. Automatic Sprinkler Corp. (1981), 67 Ohio St.2d 91, 98, 21 O.O.3d 58, 423 N.E.2d 151. "On questions of law, the common pleas court does not exercise discretion, and the court of appeal's review is plenary." McGee v. Ohio State Bd. of Psychology (1993), 82 Ohio App.3d 301, 305, 611 N.E.2d 902.

{¶ 13} Because the determination of whether a contract is unconscionable is a question of law for the court, a factual inquiry into the particular circumstances of the transaction in question is required. Lightning Rod Mut. Ins. Co. v. Saffle (Nov. 6, 1991), 9th Dist. No. 15134, 1991 WL 476511; see, also, Ins. Co. of N. Am., 67 Ohio St.2d at 98, 21 O.O.3d 58, 423 N.E.2d 151. Such a determination requires a case-by-case review of the facts and circumstances surrounding the agreement. See Burkette v. Chrysler Industries, Inc. (1988), 48 Ohio App.3d 35, 37, 547 N.E.2d 1223; Vincent v. Neyer (2000), 139 Ohio App.3d 848, 854-856, 745 N.E.2d 1127. As this case involves only legal questions, we apply the de novo standard of review.

B. The Ohio Arbitration Act

{¶ 14} Ohio's public policy encourages arbitration as a method to settle disputes. Schaefer v. Allstate Ins. Co. (1992), 63 Ohio St.3d 708, 711-712, 590 N.E.2d 1242; Bellaire City Schools Bd. of Edn. v. Paxton (1979), 59 Ohio St.2d 65, 70, 13 O.O.3d 58, 391 N.E.2d 1021; Griffith v. Linton (1998), 130 Ohio App.3d 746, 750-751, 721 N.E.2d 146. Additionally, a presumption arises favoring arbitration when the claim in dispute falls within the scope of the arbitration provision. Williams v. Aetna Fin. Co. (1998), 83 Ohio St.3d 464, 471, 700 N.E.2d 859. "Therefore, a court should give effect to an arbitration provision in a contract between the parties `unless it may be said with positive assurance that the subject arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" Harrison at * 1, quoting Neubrander v. Dean Witter Reynolds, Inc. (1992), 81 Ohio App.3d 308, 311, 610 N.E.2d 1089.

{¶ 15} Revised Code Chapter 2711 authorizes direct enforcement of arbitration agreements through an order to compel arbitration pursuant to R.C. 2711.03, and indirect enforcement of such agreements pursuant to an order staying trial court proceedings under R.C. 2711.02. Maestle v. Best Buy Co., 100 Ohio St.3d 330, 2003-Ohio-6465, 800 N.E.2d 7, at ¶ 14. A party may choose to move for a stay, petition for an order to proceed to arbitration,...