Galea v. FCA U.S. LLC

• Decision Date: 13 March 2018
• Docket Number: No. 334576,334576
• Citation: 323 Mich.App. 360,917 N.W.2d 694
• Parties: Loretta Gayle GALEA, Plaintiff-Appellant, v. FCA U.S. LLC, Jim Riehl's Friendly Chrysler Jeep, Inc., and U.S. Bank NA, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

323 Mich.App. 360

917 N.W.2d 694

Loretta Gayle GALEA, Plaintiff-Appellant,

v.FCA U.S. LLC, Jim Riehl's Friendly Chrysler Jeep, Inc., and U.S. Bank NA, Defendants-Appellees.

No. 334576

Court of Appeals of Michigan.

Submitted December 5, 2017, at Detroit.

Decided March 13, 2018, 9:00 a.m.

The Liblang Law Firm, PC (by Dani K. Liblang and Susan M. Martin) for Loretta G. Galea.

Wienner & Gould, PC (by Daniel K. Beitz ) for FCA US LLC and Jim Riehl’s Friendly Chrysler Jeep, Inc.

Peacock Law, PC (by Peter W. Peacock ), Kerr, Russell and Weber, PLC (by Edward C. Cutlip, Jr. ), Robert C. Davis, and William N. Listman for US Bank NA.

Before: Gleicher, P.J., and Gadola and O'Brien, JJ.

Gadola, J.

In this vehicle warranty dispute, plaintiff appeals as of right the trial court's order granting defendants' motion for summary disposition under MCR 2.116(C)(7) on the basis that the parties had entered a valid and enforceable arbitration agreement. We affirm.

I. FACTS AND PROCEDURAL HISTORY

In 2014, plaintiff purchased a new Jeep Cherokee from Jim Riehl's Friendly Chrysler Jeep, Inc. The vehicle was manufactured by defendant FCA U.S. LLC. In her complaint, plaintiff alleged that within the time and mileage limits of the manufacturer's express warranty, the vehicle experienced numerous defects and nonconformities that required extensive service, substantially impaired the value of the vehicle to plaintiff, and irreparably shook her confidence in the vehicle. In January 2016, plaintiff filed a complaint alleging breach of express and implied warranties, revocation of acceptance under Michigan's Uniform Commercial Code (UCC), MCL 440.2101 et seq ., and violation of the Michigan Consumer Protection Act, MCL 445.901 et seq . Plaintiff also alleged that the vehicle dealer violated Michigan's Motor Vehicle Service and Repair Act, MCL 257.1301 et seq ., and that the vehicle manufacturer violated Michigan's new motor vehicle warranties act, MCL 257.1401 et seq . Finally, plaintiff asserted holder liability against the finance company, U.S. Bank NA.

Defendants Jim Riehl's Friendly Chrysler Jeep, Inc., and FCA U.S. LLC moved for summary disposition under MCR 2.116(C)(7), with which U.S. Bank NA later joined, asserting that plaintiff's lawsuit was barred by an agreement to submit any warranty disputes to binding arbitration. According to defendants, plaintiff agreed to arbitration in exchange for obtaining a discount through Chrysler's "Employee Friends Program." Defendants attached to their motion a "Pricing and Acknowledgment" form bearing plaintiff's signature. The form contained the following language:

The Chrysler Employee Friends Program allows eligible purchasers to obtain a new vehicle at a substantial discount. I understand that, in consideration for this discount, I will not be able to bring a lawsuit for any warranty disputes relating to this vehicle. Instead, I agree to submit any and all disputes through the Chrysler Vehicle Resolution Process, which includes mandatory arbitration that is binding on both Chrysler and me.

The form also stated in all-caps lettering near the top of the page: "THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." Defendants argued that the signed agreement to arbitrate was presumptively valid, that the burden of proving nonarbitrability was on plaintiff as the party seeking to avoid arbitration, and that the arbitration agreement was enforceable under both state and federal law, including the Magnuson-Moss Warranty Act (MMWA), 15 USC 2301 et seq.

Plaintiff asserted that she did not voluntarily participate in the discount program, that the vehicle dealer fraudulently obtained a control number under the name of someone she did not know to secure the discount, and that she never saw the discount program documents during the purchase transaction. Plaintiff further argued that under the Federal Arbitration Act (FAA), 9 USC 1 et seq ., the trial court was required to hold a summary trial to decide the factual disputes regarding whether plaintiff voluntarily agreed to arbitration. Finally, plaintiff argued that the Federal Trade Commission (the FTC) had promulgated rules stating that mandatory, binding arbitration was prohibited under the MMWA and that the arbitration clause was unenforceable because it was not contained within the four corners of the warranty document.

In reply, defendants argued that in Abela v. Gen. Motors Corp. , 469 Mich. 603, 677 N.W.2d 325 (2004), the Michigan Supreme Court rejected both the single-document rule and the FTC's conclusion that the MMWA barred agreements for binding arbitration of claims covered by the MMWA. Defendants also argued that the arbitration clause was valid and enforceable because plaintiff admitted that she received a copy of the sales document that contained the arbitration clause, she obtained a discount in exchange for the agreement to arbitrate, and she signed all the relevant documents to complete the transaction.

Following a hearing, the trial court issued an order granting defendants' motion for summary disposition. The trial court concluded that there was no factual dispute regarding the agreement to arbitrate, noting that plaintiff did not dispute signing the arbitration acknowledgment form. The court also concluded that the rules promulgated by the FTC did not supersede binding Michigan caselaw, which held that binding arbitration agreements are permitted under the MMWA. Finally, the court rejected plaintiff's contention that the arbitration agreement was invalid under the single-document rule, concluding that such a requirement was rejected by the Michigan Supreme Court in Abela .

II. STANDARD OF REVIEW

We review de novo a trial court's decision to grant or deny a motion for summary disposition under MCR 2.116(C)(7). Hicks v. EPI Printers, Inc. , 267 Mich. App. 79, 84, 702 N.W.2d 883 (2005). A motion under MCR 2.116(C)(7) is appropriately granted when a claim is barred by an agreement to arbitrate. Maiden v. Rozwood , 461 Mich. 109, 118 n 3, 597 N.W.2d 817 (1999). "A party may support a motion under MCR 2.116(C)(7) by affidavits, depositions, admissions, or other documentary evidence." Id. at 119, 597 N.W.2d 817. However, "a movant under MCR 2.116(C)(7) is not required to file supportive material, and the opposing party need not reply with supportive material. The contents of the complaint are accepted as true unless contradicted by documentation submitted by the movant." Id . Whether an arbitration agreement exists and is enforceable is a legal question that we review de novo. Hicks , 267 Mich. App. at 84, 702 N.W.2d 883.

III. VOLUNTARY AGREEMENT TO ARBITRATE

Plaintiff first argues that the trial court erred by granting summary disposition in favor of defendants because she did not knowingly participate in the employee friends discount program and did not receive a substantial discount on her vehicle. Plaintiff also argues that the trial court erred by failing to hold a summary hearing under 9 USC 4 of the FAA because there were material questions of fact regarding whether she voluntarily agreed to arbitration. We disagree.

"An arbitration agreement is a contract by which the parties forgo their rights to proceed in civil court in lieu of submitting their dispute to a panel of arbitrators." Beattie v. Autostyle Plastics, Inc. , 217 Mich. App. 572, 577, 552 N.W.2d 181 (1996). When assessing whether a dispute must be submitted to arbitration, courts must first "determine whether an arbitration agreement has been reached by the parties." Horn v. Cooke , 118 Mich. App. 740, 744, 325 N.W.2d 558 (1982). A contract to arbitrate does not exist unless it was formed by the mutual assent of the parties. Id ."A party cannot be required to arbitrate an issue he has not agreed to submit to arbitration." Id. "The determination of whether an arbitration contract exists is for the courts to decide, applying general contract principles." Id. at 744-745, 325 N.W.2d 558.

"Michigan law presumes that one who signs a written agreement knows the nature of the instrument so executed and understands its contents." Watts v. Polaczyk , 242 Mich. App. 600, 604, 619 N.W.2d 714 (2000). "Moreover, mere failure to read an agreement is not a defense in an action to enforce the terms of a written agreement." Id . Plaintiff's signature appears on a one-page document that clearly states in conspicuous language and font that plaintiff is entering an agreement to arbitrate in exchange for a friends and family discount. Plaintiff does not deny signing this document, nor does she assert that her signature was obtained under duress. Accordingly, plaintiff has not set forth any arguments to persuade us that she did not knowingly and voluntarily enter the arbitration agreement.

We also find unpersuasive plaintiff's argument that inadequate consideration supported the arbitration agreement because she paid more than the manufacturer's suggested retail price for the vehicle. Both a dealer worksheet, which plaintiff signed, and an incentives configuration form that are part of the lower court record indicate that the discount was applied to plaintiff's purchase of the vehicle. Plaintiff offered no evidence to the contrary in the trial court or on appeal. Plaintiff therefore has not shown failure of the consideration given in exchange for the agreement to arbitrate.

Plaintiff also contends, citing MCL 440.2204(1) of Michigan's UCC, that the arbitration agreement is invalid because she signed the arbitration agreement on May 31, 2014, while she made the down payment on the vehicle on April 19, 2014. MCL 440.2204(1) states the following: "A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." Nothing in this section precludes additional terms in subsequent documents from becoming part of a sales contract. Plaintiff's argument that the arbitration agreement...