Marrs v. Walters Automobiles, Inc.
| Decision Date | 31 January 2014 |
| Docket Number | NO. 2012-CA-001235-MR,2012-CA-001235-MR |
| Parties | JOHNNY MARRS AND SHERRY MARRS APPELLANTS v. WALTERS AUTOMOBILES, INC. D/B/A WALTERS CHEVROLET BUICK APPELLEES |
| Court | Kentucky Court of Appeals |
NOT TO BE PUBLISHED
APPEAL FROM PIKE CIRCUIT COURT
The Appellants, Johnny and Sherry Marrs (hereinafter "Marrs") appeal from the Pike Circuit Court's confirmation of the arbitrator's January 18, 2012, findings of fact, conclusions of law, and judgment dismissing the complaint in its entirety, as modified on May 18, 2012. After our review of the parties' arguments, the record, and the applicable law, we conclude that this matterwas properly ordered to arbitration and that the circuit court did not err in confirming the arbitrator's decision. Finding no error, we affirm.
Marrs went to Walters Automobiles, Inc., d/b/a Walters Chevrolet Buick (hereinafter "Walters") to buy a Ford F150 after seeing an advertisement in a local newspaper. The advertisement was for a Ford F150, with a V8, for $10,995. Marrs test-drove and expressed interest in purchasing the F150. They had a 2001 Ford Ranger with 160,000 miles on it to trade toward the purchase. Marrs owed $3,757.03 on the Ranger still and according to Walters, Marrs "was upside down on the truck" and had extremely poor credit due to two past bankruptcies.
Marrs claimed that they did not discover the F150 was a V6 until after Johnny signed the paperwork and drove off the lot. Walters' salesman, James Mullins, said that Marrs advised Mullins that the F150 was a V6 and not a V8; Marrs did not object to this and continued the deal. Walters claims that the advertisement for a V8 was a mistake, and it is unknown if this mistake was made by Walters or the newspaper.
The parties entered into negotiations. Walters asserts that due to Marrs having extremely poor credit and were "upside down by thousands on their high mileage Ford Ranger" they had to not put the sale price of $10,995 on the paperwork and instead had to put the original price of the F150 of $13,990 and the difference between the two prices was added to the value of Marrs' trade in. This was done so that Marrs could obtain financing. Following completion of the RetailBuyers Order and the Retail Installment Sale Contract, Walters' Finance and Insurance Manager, Matt Sturgill, submitted the paperwork to three or four financing companies. Santander, a subprime lender, was the only lender that would approve the loan, at a rate of 19.05%. Sturgill then went through the Retail Buyers Order and Retail Installment Sale Contract with Marrs.
At issue, the Retail Buyers Order contained an arbitration clause, whereby the buyer, by signing the document, agreed and acknowledged "that any dispute arising between/among the parties of any nature whatsoever, including, but not limited to, the validity of the contract, shall be submitted to binding arbitration...." The arbitration agreement further provided that if the parties could not agree on an arbitrator, then Pike Circuit Court shall appoint an arbitration; that any arbitration proceeding would occur in Pikeville; and that the dispute would be governed by the laws of the Commonwealth of Kentucky.
The Retail Buyers Order also stated that "this order shall not become binding until accepted by dealer or his authorized representative...." At the bottom of the contract, Marrs signed next to "Purchaser's Signature." No representative from Walters signed next to "Accepted: Dealer's Signature." Both parties signed the Retail Installment Sale Contract, which did not contain an arbitration agreement.
Marrs did not attempt to dispute the transaction until ten months later. A revocation and rejection of acceptance letter was sent by Marrs' counsel toWalters' counsel on November 22, 2010. Marrs continued to drive the F150 and make his payments through the date of arbitration.
Marrs filed their complaint in the circuit court on May 20, 2010, asserting violations of Kentucky Revised Statutes (KRS) 367.170. On July 19, 2010, Walters filed a motion to dismiss and enforce the arbitration agreement. The court conducted a hearing on the matter and entered an order granting Walters' motion to enforce arbitration.
A conference call was conducted with the attorneys and the arbitrator, Thomas M. Smith, on October 6, 2010. Marrs alleged violation of KRS 367.170 and sought the following damages: overpaying for purchase of the F150, excess finance charges, humiliation, damage to credit, damage to reputation, and punitive damages. In addition, Marrs sought attorney fees.
The arbitrator conducted a hearing on January 29, 2011, and issued his findings of fact, conclusions of law, and judgment favorable to Walters, which was later modified on May 18, 2012, but remained favorable to Walters. Walters filed a motion to accept arbitrator's judgment and motion to dismiss. Marrs filed a response and a motion to stay arbitration or in the alternative vacate the award, or to modify and correct the award. Marrs asserted that the arbitration was not valid. After more motions were filed reiterating the issues, the court entered its order of July 5, 2012, whereby it denied Marrs' motion to vacate the arbitration award and instead confirmed the award as modified on May 18, 2012. Marrs' complaint was dismissed with prejudice. It is from this order that Marrs now appeals.
Marrs presents three arguments on appeal, namely: (1) the circuit court did not have jurisdiction to enforce an arbitration clause that was not contained in the retail installment sales contract1 as required by KRS 190.100 and KRS 417.050, between Marrs and Walters; (2) the arbitration clause is unconscionable;2 (3) the arbitrator exceeded his powers by failing to render his award based on evidence and facts presented. In response, Walters argues (1) waiver;3 (2) the court had jurisdiction to order arbitration since the arbitration clause satisfies the requirements under KRS 417.050 or 417.200 and, thus, thearbitration agreement is valid and enforceable; and (3) the arbitrator did not exceed his statutory authority.
We believe that the arguments presented by the parties are more properly condensed into two issues: (1) did the trial court properly submit this matter to arbitration, and (2) did the trial court err in confirming the arbitration award? Accordingly, we now turn to the two issues before this Court.
First, we must assess whether the trial court properly submitted this matter to arbitration. While it is true that Kentucky law generally favors the enforcement of arbitration agreements, the existence of a valid arbitration agreement is a threshold matter which must first be resolved by the court. Mt. Holly Nursing Center v. Crowdus, 281 S.W.3d 809, 813 (Ky. App. 2008) (internal citations omitted) and General Steel Corp. v. Collins, 196 S.W.3d 18, 20 (Ky. App. 2006) (internal citations omitted). The burden of establishing the existence of an arbitration agreement that conforms to statutory requirements rests with the party seeking to enforce it. Dutschke v. Jim Russell Realtors, Inc., 281 S.W.3d 817, 824 (Ky. App. 2008).
Once the existence of a valid arbitration agreement is found by the trial court, then enforcement of the agreement is required, under both federal law and Kentucky law, unless valid grounds for revoking a contract are established:
Whether state or federal law governs makes little practical difference, however, because the Kentucky Uniform Arbitration Act (KUAA) contained in Kentucky Revised Statutes (KRS) Chapter 417 is similar to and has been construed consistently with the FAA. Furthermore,both the FAA and KUAA state that arbitration agreements must be enforced unless valid grounds for revoking any contract are established.
American General Home Equity, Inc. v. Kestel, 253 S.W.3d 543, 550 (Ky. 2008) (internal footnote omitted). See also Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850, 857 (Ky. 2004) ().
Sub judice Marrs signed the Retail Buyers Order which contained an arbitration clause, whereby the buyer, by signing the document, agreed and acknowledged "that any dispute arising between/among the parties of any nature whatsoever, including, but not limited to, the validity of the contract, shall be submitted to binding arbitration...." While the representative from Walters failed to sign the Retail Buyers Order, acknowledging the dealer's acceptance of the contract, we do not believe that this precludes arbitration in this instance. First, our law is clear that a written agreement, duly executed by the party to be held to its terms (here Marrs), who had an opportunity to read it, will be enforced according to its terms. Conseco Finance Servicing Co. v. Wilder, 47 S.W.3d 335, 341 (Ky. App. 2001).
While the doctrine of unconscionability does provide a narrow exception to that rule, we find nothing unconscionable about the form of the agreement in this instance. The arbitration agreement was properly set forth, encompassing all statutory requirements. Second, we believe that Walters clearly accepted the contract between the parties. The Retail Buyers Order stated that"this order shall not become binding until accepted by dealer or his authorized representative...."
While the Retail Buyers Order stated, "Accepted: Dealer's Signature" the contract did not explicitly limit the dealer's acceptance to a signature. Marrs left the dealership with the F150, Walters took Marrs' trade in, the parties negotiated and Walters did formalize the acceptance of the transaction with a signature on the Retail Installment Sale Contract. See KRS 355.2-206:
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