Ford Motor Credit Co. v. Jones

• Decision Date: 20 March 2018
• Docket Number: WD 80809
• Citation: 549 S.W.3d 14
• Parties: FORD MOTOR CREDIT COMPANY, LLC, Appellant, v. Tony L. JONES, Jr., Respondent.
• Court: Missouri Court of Appeals

549 S.W.3d 14

FORD MOTOR CREDIT COMPANY, LLC, Appellant,

v.Tony L. JONES, Jr., Respondent.

WD 80809

Missouri Court of Appeals, Western District.

Opinion filed: March 20, 2018

Motion for Rehearing and/or Transfer to Supreme Court Denied May 1, 2018

Application for Transfer Denied July 3, 2018

Thomas Byrne, for Appellant.

Jesse Barrett Rochman, for Respondent.

Before Division One: Thomas H. Newton, Presiding Judge, Victor C. Howard, Judge and Karen King Mitchell, Judge

VICTOR C. HOWARD, JUDGE

Ford Motor Credit Company, LLC appeals the judgment of the Jackson County Circuit Court denying its motion to compel arbitration and stay proceedings. It presents six points on appeal. In the first three points, Ford Motor Credit claims the trial court erred in finding the parties' arbitration agreement unconscionable and unenforceable. In its last three points, Ford Motor Credit claims the trial court erred in waiving its right to seek arbitration. The judgment is reversed, and the case is remanded.

Facts

In March 2013, Tony Jones and Rebecca Wilson jointly executed a Kansas Vehicle Retail Installment Contract and Security Agreement ("Retail Installment Contract") with Bob Allen Ford to document their purchase and financing of a 2013 Ford Focus. The Retail Installment Contract is a two page document. The following appears in all capital letters toward the bottom of the first page:

YOU ACKNOWLEDGE THAT YOU HAVE READ AND AGREE TO BE BOUND BY THE ARBITRATION PROVISION ON THE REVERSE SIDE OF THIS CONTRACT.

The following appears in its own box at the bottom of the second page of the Retail Installment Contract:

READ THIS ARBITRATION PROVISION CAREFULLY AND IN ITS ENTIRETY

ARBITRATION

Arbitration is a method of resolving any claim, dispute, or controversy (collectively, a "Claim") without filing a lawsuit in court. Either you or Creditor ("us" or "we") (each, a "Party") may chose at any time, including after a lawsuit is filed, to have any Claim related to this contract decided by arbitration. Neither party waives the right to arbitrate by first filing suit in a court. Claims include but are not limited to the following: 1) Claims in contract, tort, regulatory or otherwise; 2) Claims regarding the interpretation, scope, or validity of this provision, or arbitrability of any issue; 3) Claims between you and us, your/our employees, agents, successors, assigns, subsidiaries, or affiliates; 4) Claims arising out of or relating to your application for credit, this contract, or any resulting transaction or relationship, including that with the dealer, or any such relationship with this parties who do not sign this contract.

RIGHTS YOU AND WE AGREE TO GIVE UP

If either you or we choose to arbitrate a Claim, then you and we agree to waive the following rights:

• RIGHT TO A TRIAL, WHETHER BY A JUDGE OR JURY

• RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR A CLASS MEMBER IN ANY CLASS CLAIM YOU MAY HAVE AGAINST US WHETHER IN COURT OR ARBITRATION

• BROAD RIGHTS TO DISCOVERY AS ARE AVAILABLE IN A LAWSUIT

• RIGHT TO APPEAL THE DECISION OF AN ARBITRATOR

• OTHER RIGHTS THAT ARE AVAILABLE IN A LAWSUIT

Rights You and We Do Not Give Up: If a Claim is arbitrated, you and we will continue to have the following rights, without waiving this arbitration provision as to any Claim: 1) Right to file bankruptcy in court; 2) Right to enforce the security interest in the vehicle, whether by repossession or through a court; 3) Right to take legal action to enforce the arbitrator’s decision; 4) Right to request that a court review whether the arbitrator exceeded its authority; and 5) Right to seek remedies in small claims court for disputes or claims within that court’s jurisdiction.

You may choose the American Arbitration Association, Case Filing Services, 1101 Laurel Oak Road, Suite 100, Voorhees, NJ 08043 (www.adr.org), or any other organization subject to our approval, to conduct the arbitration. The applicable rules (the "Rules") may be obtained from the selected organization. If there is a conflict between the Rules and this contract, this contract shall govern. This contract is subject to the Federal Arbitration Act ( 9 U.S.C. § 1 et seq. ). The arbitration decision shall be in writing with a supporting opinion. Judgment upon the award rendered by the arbitrator may be enforced in any court having jurisdiction. If the total of your filing, administration, service, or case management fee and arbitrator or hearing fee exceeds $125, we will advance the amount in excess of $125 up to a maximum of $2,500, which may be reimbursed by decision of the arbitrator at the arbitrator’s discretion. Each party shall be responsible for its own attorney, expert and other fees, unless awarded by the arbitrator under applicable law. Any portion of this arbitration provision that is unenforceable shall be severed, and the remaining provisions shall be enforced. Except, however, if a waiver of class action rights is deemed or found to be unenforceable for any reason in a case in which class action allegations have been made, the remainder of this arbitration provision shall be unenforceable. Notwithstanding any other provision of this arbitration provision, the validity and scope of the waiver of class action rights shall be decided by the court and not by the arbitrator.

At the bottom of the first page, the Retail Installment Contract was assigned to Ford Motor Credit Company (Ford Motor Credit).

In August 2015, Ford Motor Credit filed a Petition in Cass County, Missouri for breach of contract. The Petition sought recovery of a deficiency due following Jones and Wilson’s failure to make payments to Ford Motor Credit as required by the contract and Ford Motor Credit’s subsequent repossession and sale of the vehicle. Ford Motor Credit sought a deficiency balance of $8290.90, plus interest from the date of the judgment, reasonable attorney fees, and costs as provided in the Retail Installment Contract.

In October 2015, a default judgment was entered against both Jones and Wilson in the Cass County case. Pursuant to Jones’s Motion to Set Aside Default Judgment, and by an Agreed Order entered in September 2016, the judgment was set aside as to Jones only.¹ Jones then filed a Motion and Order for Change of Venue of the Cass County case to Jackson County, Missouri. That motion was granted in December 2016.

On or about December 19, 2016, Jones filed an Answer to Plaintiff’s Petition, Affirmative Defenses, and putative class action Counterclaim against Ford Motor Credit. Jones’s Counterclaim sought class certification and alleged, inter alia, that Ford Motor Credit failed to provide sufficient pre-sale and post-sale notices required by the UCC relating to the repossession and sale of the vehicle, entitling Jones (and putative class members) to damages. Jones also sought punitive damages and attorney’s fees.

Ford Motor Credit filed a Motion to Compel Arbitration and Stay Proceedings on or about February 21, 2017. The motion came before the trial court for a hearing on April 11, 2017. The trial court denied Ford Motor Credit’s motion in a judgment dated May 22, 2017. First, it concluded the arbitration agreement unconscionable and unenforceable. The trial court found: (i) Ford Motor Credit had a superior bargaining position; (ii) the arbitration agreement was difficult to understand; and (iii) the arbitration agreement was one-sided. Second, the trial court concluded Ford Motor Credit waived its right to arbitrate. It found: (i) Ford Motor Credit knew of the right to arbitrate; (ii) Ford Motor Credit acted inconsistently with its right to arbitrate; and (iii) Jones was prejudiced by Ford Motor Credit’s actions.

This appeal follows.

Standard of Review

"The judgment of the trial court will be affirmed on appeal unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law." Bertocci v. Thoroughbred Ford, Inc. , 530 S.W.3d 543, 550 (Mo. App. W.D. 2017). "Whether the trial court should have granted a motion to compel arbitration is a question of law that is reviewed de novo. " Id. "However, issues relating to the existence of an arbitration agreement are factual and require our deference to the trial court's findings."

Katz v. Anheuser–Busch, Inc., 347 S.W.3d 533, 539 (Mo. App. E.D. 2011).

Analysis

Ford Motor Credit’s first three points pertain to the trial court’s finding that the arbitration agreement was unconscionable. It argues the trial court erred because: (1) the arbitrator is the one who decides whether the arbitration agreement is unconscionable; (2) mutuality is not required under state law or the FAA; and (3) the finding of unconscionability is not supported by substantial evidence.

Ford Motor Credit’s last three points pertain to the trial court’s finding that it waived the arbitration agreement. It argues that the trial court erred because: (1) the arbitrator is the one who decides if arbitration has been waived; (2) the FAA preempts state law with respect to prejudice as it relates to class actions; and (3) the FAA preempts state law with respect to prejudice as it relates to the petition to collect a deficiency.

For ease of discussion, these arguments as well as Jones’s assertions in his Respondent’s Brief are taken out of order.

Existence of a Valid and Enforceable Arbitration Agreement

Ford Motor Credit attached a copy of the Retail Installment Contract to its petition. That contract was between the dealership and Jones and Wilson. An assignment from the dealership to Ford Motor Credit appears at the bottom of the contract. Ford Motor Credit included with the petition an affidavit signed by Lorrie Rowe, an employee of Ford Motor Credit. The affidavit averred that the attached contract was a true and complete copy of the contract between the parties. Ford Motor Credit attached the same contract to its Motion to Compel. Ford Motor Credit subsequently filed an affidavit from Todd Kolchinsky, an employee of Ford Motor...