Kendall Imports, LLC v. Diaz

• Decision Date: 01 February 2017
• Docket Number: No. 3D15–1985,3D15–1985
• Citation: 215 So.3d 95
• Parties: KENDALL IMPORTS, LLC, etc., Appellant, v. Dianellys Y. DIAZ, et al., Appellees.
• Court: Florida District Court of Appeals

215 So.3d 95

KENDALL IMPORTS, LLC, etc., Appellant,

v.Dianellys Y. DIAZ, et al., Appellees.

No. 3D15–1985

District Court of Appeal of Florida, Third District.

Opinion filed February 1, 2017.

Rehearing Denied March 30, 2017

Akerman LLP, and Christopher S. Carver, Lawrence D. Silverman, and Lorayne Perez, for appellant.

Dorta Law, and Gonzalo R. Dorta, Matias R. Dorta, and Craig A. Applebaum, for appellees.

Before ROTHENBERG, EMAS, and FERNANDEZ, JJ.

ROTHENBERG, J.

FACTS AND PROCEDURAL HISTORY

Kendall Imports, LLC ("Kendall") sold automobiles to Dayron Ortega ("Ortega"), Erislandis Marquez ("Marquez"), and Dianellys Y. Diaz ("Diaz") (collectively, "the Buyers"). The Buyers do not speak or read English. When the Buyers purchased their vehicles, they each signed two documents that were written in English—a purchase order ("purchase order") and a retail installment sales contract ("financing agreement") (collectively, "the documents"). Both the purchase order and the financing agreement contained arbitration clauses, but they were not identical.

The Buyers filed a class action lawsuit against Kendall and its finance director, seeking damages and alleging violations of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), violations of the Motor Vehicle Retail Sales Finance Act, and unjust enrichment. Specifically, the Buyers alleged that after they signed the purchase order and financing agreement, Kendall filled in the blank spaces in these documents with extra fees and products without informing the Buyers or obtaining their consent.

Kendall filed a motion to compel arbitration based on the arbitration clauses in the purchase order and financing agreement. At the evidentiary hearing conducted on Kendall's motion to compel, there was no evidence presented that the Buyers were rushed or pressured into signing the documents, sought help in translating the documents, or asked Kendall to clarify the terms of the arbitration clauses.

Following the evidentiary hearing, the trial court entered a non-final order, finding that the only discussions the sales staff had with the Buyers related to the financial terms, such as the purchase price and the monthly payments. Despite the Buyers' inability to speak or read English, Kendall did not attempt to explain the terms of the documents to the Buyers or inform them of the arbitration provisions in the documents. Moreover, the trial court found that the arbitration provisions in the purchase order and financing agreement conflict, and even if they had been written in Spanish, a reasonable person reading these documents would not have had a clear understanding of the precise terms and conditions needed to form a mutual agreement to arbitrate. Based on these findings, the trial court denied Kendall's motion to compel arbitration on two alternative grounds: (1) due to the conflicts between several of the provisions within the arbitration clauses in the purchase order and the financing agreement, Kendall and the Buyers did not have "a meeting of the minds" regarding an agreement to arbitrate and thus there was no valid agreement to arbitrate as a matter of law; and (2) even if the arbitration clauses were validly formed, they were unconscionable. Kendall timely appealed the trial court's non-final order.

ANALYSIS

I. Standard of Review

The trial court's entry of an order denying a motion to compel arbitration "presents a mixed question of law and fact." Fonte v. AT & T Wireless Servs., Inc. , 903 So.2d 1019, 1023 (Fla. 4th DCA 2005) (citing Gainesville Health Care Ctr., Inc. v. Weston , 857 So.2d 278, 283 (Fla. 1st DCA 2003) ). We review the trial court's legal determinations and interpretations of contracts de novo, Basulto v. Hialeah Auto motive , 141 So.3d 1145, 1153 (Fla. 2014) ; Royal Palm Hotel Prop., LLC v. Deutsche Lufthansa Aktiengesellschaft, Inc. , 133 So.3d 1108, 1110 (Fla. 3d DCA 2014), and presume that the trial court's findings of fact are correct unless they are clearly erroneous. See Basulto , 141 So.3d at 1155.

"[T]here are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived." Seifert v. U.S. Home Corp. , 750 So.2d 633, 636 (Fla. 1999). Only the first element—whether the parties formed a valid written agreement to arbitrate through the execution of the documents—is in dispute in the instant case.

II. Whether a valid written agreement to arbitrate exists

As stated above, the trial court made several findings of fact, and based on those findings, it concluded as a matter of law that the parties did not form a valid agreement to arbitrate. As a threshold matter, we note that there is no dispute as to any of the trial court's factual findings except for the finding that, due to the conflicts between the arbitration provisions, no reasonable person would have understood that they were agreeing to arbitrate in the event of a dispute. In addition to the dispute as to this factual determination, the trial court's other factual findings are relevant based on the facts of this case. Therefore, because the initial factual findings are relevant to the issue of formation and may have influenced the trial court's analysis, we address those findings first.

A. The relevance of the Buyers' inability to read or write English

The trial court found, inter alia , that there was no agreement to arbitrate because the Buyers could not effectively communicate in English, and there was no evidence that anyone attempted to explain the documents, and specifically, the conflicting arbitration provisions to the plaintiffs. The trial court then likened the instant case to the "Basulto" case which generated a circuit court order memorialized in Basulto v. Hialeah Auto., L.L.C. , 2007 WL 6623887 (Fla. Cir. Ct. 2007) ("Basulto I "); an opinion by this Court reviewing Basulto I ,Hialeah Auto., LLC v. Basulto , 22 So.3d 586 (Fla. 3d DCA 2009) ("Basulto II "); and an opinion by the Florida Supreme Court, Basulto v. Hialeah Auto motive , 141 So.3d 1145 (Fla. 2014) ("Basulto III "). A review of the trial court's findings in Basulto I and the Florida Supreme Court's opinion in Basulto III , however, demonstrates that the trial court's and the Buyers' reliance on "Basulto " is misplaced.

In Basulto I , the trial court found that the plaintiffs in that case did not speak, read, or write English; the documents presented to them were all in English; they were rushed into signing the documents; they were not given an opportunity to ask any questions; Potamkin's employees took it upon themselves "to explain everything to the plaintiffs" but either failed to explain the arbitration provisions or lacked a sufficient understanding to explain the arbitration provisions to the plaintiffs; the plaintiffs signed the documents which contained conditions that differed from what they were told were in the documents; and the dispute resolution provisions within the documents were inconsistent and irreconcilable. Based on these findings of fact, the trial court found that, as a matter of law, there was no meeting of the minds and thus there was no valid agreement to arbitrate.

In Basulto III , the Florida Supreme Court, citing to Tobin v. Michigan Mutual Insurance Co. , 948 So.2d 692, 696 (Fla. 2006), held that the trial court's factual findings are presumptively correct and must be upheld unless clearly erroneous. Basulto III , 141 So.3d at 1155–56. The Court then held that the trial court's factual findings, as articulated above, were supported by the record. Id. at 1156. Lastly, the Court considered whether these factual findings supported the trial court's legal determination that there was no meeting of the minds and thus no valid formation of an agreement to arbitrate. Id. at 1156.

In reaching the conclusion that the record supported the trial court's determination that there was no meeting of the minds, such that an enforceable agreement to arbitrate did not exist, the Florida Supreme Court specifically relied on its decision in Pepple v. Rogers , 104 Fla. 462, 140 So. 205, 208 (1932), and included in its reference to Pepple the following parenthetical:

The general rule is that in order for a misrepresentation to be ground for rescission and cancellation, it must be with reference to some material fact or thing, unknown to the complainant, either from his not having examined, or for want of opportunity to be informed, or from his entire confidence reposed in the defendant ....

Basulto III , 141 So.3d at 1156. From the specific inclusion of this parenthetical in its holding that the trial court's finding that there was no meeting of the minds was supported by the record, it is clear that the Florida Supreme Court's holding was premised, at least in part, by the misrepresentations made by Potamkin's employees to the plaintiffs.

The trial court's reliance on "Basulto " in the instant case is misplaced because the facts in the instant case are totally dissimilar. In fact, the only fact the instant case shares with "Basulto " is that the Buyers could not read or write English and the forms they signed were in English. There is absolutely no evidence in the record before this Court that the Buyers in the instant case were rushed, pressured, or coerced into signing the documents; that they were not given an opportunity to ask questions or seek assistance in interpreting the documents; or that they even attempted to understand what they were signing. Kendall's employees did not take it upon themselves "to explain everything to the plaintiffs," omit discussing the arbitration provisions, incorrectly explain what these provisions meant, or misrepresent the effect of these provisions.

Rather, the Buyers in the instant case have admitted that they signed the documents in question without attempting to read them or learn what they were...