Sutton v. David Stanley Chevrolet, Inc.

• Decision Date: 13 October 2020
• Docket Number: Case No. 117,588),587 (companion to Case No. 117
• Citation: 475 P.3d 847
• Parties: Isaac SUTTON and Celeste Sutton, Plaintiffs/Appellees, v. DAVID STANLEY CHEVROLET, INC., Defendant/Appellant.
• Court: Oklahoma Supreme Court

475 P.3d 847

Isaac SUTTON and Celeste Sutton, Plaintiffs/Appellees,

v.DAVID STANLEY CHEVROLET, INC., Defendant/Appellant.

Case No. 117

587 (companion to Case No. 117

588)

Supreme Court of Oklahoma.

FILED OCTOBER 13, 2020

As Corrected: October 21, 2020

I. FACTS AND PROCEDURAL HISTORY

¶1 On or about April 29, 2016, Isaac Sutton, plaintiff/appellee, (hereafter Sutton), went shopping for a vehicle at the defendant/appellant's, David Stanley Chevrolet, Inc., (hereafter DSC), car dealership. He agreed to purchase a 2016 Chevy Silverado on credit and he agreed to trade-in his 2013 Challenger. He was informed by DSC that his credit was approved. In addition, he was given $22,800.00 for the Challenger for which he still owed $25,400.00. The documents for the purchase of the vehicle amounted to approximately eighty-six pages. This included a purchase agreement as well as a retail installment sale contract (RISC). He left the dealership that evening with the Silverado and left his Challenger. Several days later he was informed by DSC that his financing was not approved and he would need a co-signor to purchase the Silverado. Sutton visited DSC but was then told he did not need a co-signor and there was no need to return the vehicle. At the end of June his lender for his 2013 Challenger contacted him about late payments. Sutton contacted DSC who said it was not their responsibility to make those payments since they did not own the Challenger he traded-in. A few days later, he was notified by DSC that his Challenger had been stolen and the matter was not the responsibility of DSC. Sutton had to make an insurance claim on his Challenger and DSC took back the Silverado. In the meantime, Sutton continued to make payments on the Challenger.

¶2 On February 24, 2017, Sutton and his wife filed a petition against DSC. They alleged DSC's failure to abide by the terms of its contract with Sutton negatively affected Sutton's health and financial situation and he has suffered actual, statutory, and consequential damages. Their causes of action include, fraud in the inducement to purchase the vehicle, conversion, violations of the Oklahoma Consumer Protection Act, breach of contract, negligence, and intentional infliction of emotional distress. On March 20, 2017, DSC filed a motion to compel arbitration based upon a Dispute Resolution Clause (DRC) which provided for arbitration and is found in the two-page purchase agreement. The plaintiffs filed a response on April 6, 2017, wherein they alleged the RISC contained a merger clause which provided it represented the entire contract and it contained no arbitration agreement. They also claimed Sutton's alleged agreement to the provisions of the DRC was fraudulently induced and the DRC's provisions were unconscionable. On June 14, 2018, the plaintiffs filed a motion for an evidentiary hearing concerning the motion to compel arbitration.

¶3 On October 4, 2018, the district court held an evidentiary hearing. Only Isaac Sutton testified at the hearing. Certain exhibits were also admitted into evidence, including the purchase agreement and a written declaration that Sutton had made which had been attached to the plaintiffs' response to the motion to compel arbitration. From the testimony and evidence admitted, Sutton explained, what appear to be, undisputed facts surrounding the purchase transaction. Sutton placed his signature on four separate signature lines found on the two-page purchase agreement. He agrees these are all his signatures and he was not forced into executing this document. The top of the purchase agreement contains the dealer name, Sutton's name, address and telephone numbers, as well as a date of April 29, 2016. It also lists the name of the salesman. Immediately below this information is a section titled "VEHICLE PURCHASED DESCRIPTION." It contains all relevant information including the vehicle identification number of the Silverado Sutton was purchasing. Underneath this section is a signature line. To the right of this section, is another section titled "PURCHASE PRICE DISCLOSURE." It contains the price of the vehicle as well as other information including the trade-in payoff amount and rebate. Underneath this section is a signature line. At the bottom of the page, in a much smaller font, is a section titled "SECURITY AGREEMENT." Immediately underneath this section is a signature line. Under the vehicle purchased description is another section titled "TRADE-IN VEHICLE." Like the vehicle purchase description, it contains vehicle information but it only concerns Sutton's Challenger he was trading-in. However, unlike the other sections of the purchase agreement, there is no signature line immediately following the trade-in vehicle section. In fact, what is immediately underneath this section, in a small red-colored font, is a "DISPUTE RESOLUTION CLAUSE." Underneath the DRC is the signature line. As mentioned, Sutton executed each of these signature lines.

¶4 From his testimony and declaration, Sutton stated the DSC finance manager showed him the purchase agreement and said that this document was for verifying his personal information, the vehicle information on both vehicles, and how much he would be paying. The finance manager went over Sutton's personal information, the vehicle information and pointed out the trade-in value as well as the rebate. The finance manager would hold the various documents in one hand and with the other he showed Sutton where he needed to sign. He would then take away the documents. At no time was the DRC discussed. On cross-examination Sutton was asked whether he read the DRC at the time he executed the purchase agreement. He replied he had not due to various reasons that will be discussed later in this opinion. The DRC provides that all matters under the DRC shall be submitted to binding arbitration pursuant to the Federal Arbitration Act (FAA), Title 9 U.S.C. § 1, et seq. It also provides for the arbitrator's fee to be divided equally between the parties to arbitration. On direct examination, Sutton testified his family is on a tight budget and he would not have the money to pay any arbitration fees. If he was required to pay such fees he would have to find a new home.

¶5 The district court asked Sutton's attorney whether it was her position that when DSC's finance manager explained some of the terms of the purchase agreement and other documents, but without mentioning at all the dispute resolution clause, that that in and of itself is fraudulent inducement. She agreed that was her position. Defendant's counsel disagreed and said the finance managers' actions were not enough to constitute fraudulent inducement. In concluding the hearing, the district court stated "I'm going to rule consistent with what I ruled the other day, that I believe it is enough to get to fraudulent inducement. I'm not going to rule on the unconscionability issue." The issue of whether or not the RISC with the merger clause would defeat the purchase agreement's DRC was not discussed at the hearing or ruled upon by the court. On November 7, 2018, the district court issued an order. It states that after hearing Sutton's testimony, the evidence and arguments of counsel, defendant's motion to compel arbitration should be overruled. The order does not specify the grounds for denying the motion but it would appear from the court's statements at the hearing it was based upon fraudulent inducement.

¶6 On December 5, 2018, DSC appealed the order overruling their motion to compel arbitration. The appeal is one from an interlocutory order appealable by right. Okla.Sup.Ct.R. 1.60 (i) ; 12 O.S. 2011, § 1879. The matter was assigned to the Oklahoma Court of Civil Appeals, Div. IV. on April 17, 2019. On October 30, 2019, the court filed its opinion. The court noted:

A duty to speak may arise from partial disclosure, the speaker being under a duty to say nothing or to tell the whole truth. One conveying a false impression by the disclosure of some facts and the concealment of others is guilty of fraud, even though his statement is true as far as it goes, since such concealment is in effect a false representation that what is disclosed is the whole truth.

Deardorf v. Rosenbusch, 1949 OK 117, ¶0, 201 Okla. 420, 206 P.2d 996 (Syllabus by the Court). The court agreed with DSC that Deardorf does not say that when one explains part of a written contract one must always then also explain or read aloud every other provision of the contract, including provisions unrelated to the portions of the contract discussed. It found the decision in Specialty Beverages, L.L.C. v. Pabst Brewing Co., 537 F.3d 1165 (10th Cir. 2008) to be particularly accurate on this point. The court therein found, a "duty [to speak] could also arise, even though it might not exist in the first instance [one based upon fiduciary duty], once a defendant voluntarily chooses to speak to [a] plaintiff about a particular subject matter ." Id. at 1180 (emphasis added). See also 37 Am. Jur. 2d Fraud and Deceit § 203 ("In general, once a person undertakes to speak, that person assumes a duty to tell the whole truth and to make a full and fair disclosure as to the matters about which the person assumes to speak ." (emphasis added) (footnotes omitted)); 37 Am. Jur. 2d Fraud and Deceit § 204 ("[W]hen a party makes a disclosure upon a subject during negotiation, it has a duty to clarify the matter and ensure it is truthful[.]" (emphasis added)). The court noted, however, under our jurisprudence we have held "[w]here the peculiar circumstances give rise to a duty on the part of one of the parties to a contract to disclose material facts and the party remains silent to his or her benefit and to the other party's detriment, the failure to speak constitutes fraud." Croslin v. Enerlex, Inc., 2013 OK 34, ¶17, 308 P.3d 1041. But the court did not find any peculiar circumstances here. It found under the "particular circumstances" Sutton's allegations of...