Thibault v. Heartland Recreational Vehicles, LLC
| Decision Date | 19 March 2019 |
| Docket Number | Case No. 2:18-cv-732 |
| Parties | THOMAS R. THIBAULT, Plaintiff, v. HEARTLAND RECREATIONAL VEHICLES, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION AND ORDER
This matter is before the Court on Defendant Heartland Recreational, LLC's ("Heartland") Motion to Stay Proceedings and Compel Arbitration (Doc. 11). Plaintiff responded (Doc. 12) and Heartland replied (Doc. 13). This matter is fully briefed and ripe for review. For the reasons that follow, Defendant's Motion to Stay Proceedings and Compel Arbitration is GRANTED.
Plaintiff Thomas R. Thibault initiated this suit against Defendants Heartland, Southwest RV Centers, LLC ("Southwest"), and Sirpilla RV Centers, LLC ("Sirpilla"). (See Doc. 3, Am. Compl.). Plaintiff brings this action against Defendants for alleged violations of the Ohio Consumer Sales Practice Act, Ohio Revised Code § 1345.01, et seq. ("CSPA"); the Ohio Revocation Acceptance Act, Ohio Revised Code § 1302.66; and the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et. seq. (Id. at ¶¶ 43-44, 52, 63). Plaintiff also brings a claim of tortious breach of warranty against Defendants. (Id. at ¶ 57). These claims arise from Plaintiff's purchase of a 2017 Heartland North Peak 29BH recreational vehicle ("RV") that was manufactured by Heartland. (Id. at ¶ 19).
This action was originally brought in state court and was later removed to this Court on July 26, 2018. (See Doc. 1, Not. of Removal). Heartland now asks this Court to stay this action and compel arbitration. (Doc. 11, Mot. to Stay at 1). Heartland contends that Plaintiff freely entered into an agreement to arbitrate "any and all claims, demands, causes of action or disputes arising out of or relating in any way . . . [to] the recreational vehicle" by way of a limited warranty contained in the vehicle's Owner's Manual. (Doc. 11-1, Warranty at 7). The Warranty also contained a forum selection clause naming Elkhart Circuit or Superior Court in Elkhart County, Indiana the exclusive jurisdiction should Heartland elect to decline the arbitration provision identified above. (Id.). Heartland alone had the option to decline arbitration as a means of dispute resolution. (Id.). Plaintiff asserts the following arguments in opposition: (1) the Warranty is a contract of adhesion; (2) that claims for violations of Ohio Revised Code § 1345.01 and tortious breach of warranty are not arbitrable; (3) Heartland waived its right to arbitration by filing an Answer to the Plaintiff's Amended Complaint; and (4) Sirpilla and Southwest are not intended beneficiaries of the Warranty's arbitration provision. (Doc. 12, Resp. at 4-9).
Under the Federal Arbitration Act ("FAA"), arbitration contracts "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. If a party who signed an arbitration contract fails or refuses to arbitrate, the aggrieved party may petition the court for an order directing the parties to proceed in arbitration in accordance with the terms of the agreement. 9 U.S.C. § 4. The Court must then "determine whether the parties agreed to arbitrate the dispute at issue." Ackison Surveying, LLCv. Focus Fiber Sols., LLC, No. 2:15-CV-2044, 2016 WL 4208145, at *1 (S.D. Ohio Aug. 10, 2016) (Marbley, J.) (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Id. at *1; Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). In evaluating motions to compel arbitration, "courts treat the facts as they would in ruling on a summary judgment motion, construing all facts and reasonable inferences that can be drawn therefrom in light most favorable to the non-moving party." Jones v. U-Haul Co. of Mass. & Ohio Inc., 16 F. Supp. 3d 922, 930 (S.D. Ohio 2014) (Graham, J.). The Court has four tasks:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.
Heartland has moved this Court to stay proceedings pending arbitration and asserts that Plaintiff's claims are subject to the arbitration provision set forth in the Warranty. (Doc. 11, Mot. Stay at 6-7). Plaintiff argues that the arbitration agreement should not be enforced because: (1) the warranty is a contract of adhesion; (2) the statutory violation claims under Ohio Revised Code § 1345.01 and tortious breach of warranty claim are not arbitrable; (3) Heartland waived its right to arbitrate by failing to assert such when it filed its Answer to the Amended Complaint; and (4) Defendants Southwest and Sirpilla were not intended third-party beneficiaries of the warranty's arbitration provision.
Plaintiff argues that Heartland waived its right to arbitrate by failing to assert such a right when it filed its Answer to the Amended Complaint. (Doc. 12, Resp. at 7-8). For the reasons that follow, the Court finds that Heartland has not waived its right to enforce the arbitration clause contained in the Warranty.
There is a "strong presumption in favor of arbitration" and "waiver of the right to arbitration is not to be lightly inferred." Reidy v. Cyberonics, Inc., No. 1:06-CV-249, 2007 WL 496679, at *4 (S.D. Ohio 2007) (Dlott, J.) ). However, a party may implicitly waive its right to arbitration "when the party actively participates in litigation or acts inconsistently with its rights to proceed with arbitration." Mantaline Corp. v. PPG Indus., Inc., 225 F.3d 659 (6th Cir. 2000) (quoting Siam Feather & Forest Prods. Co., Inc. v. Midwest Feather Co., Inc., 503 F. Supp. 239, 242 (S.D. Ohio 1980) (Rubin, C.J.)) (internal quotes omitted). To determine whether a party has waived its right to enforce an arbitration provision, the court may consider the following factors:
1) filing responsive pleadings while not asserting a right to arbitration; 2) filing pretrial motions; 3) engaging in extensive discovery; 4) using discovery methods not available in arbitration; 5) litigating issues on the merits; 6) the length of delay in invoking an arbitration right and seeking a stay; 7) the proximity of the trial date; 8) the prejudice to the opposing party, and 9) whether the party has filed a counterclaim.
Konica Minolta Bus. Sols., U.S.A., Inc. v. Allied Office Prods, Inc., et al., No. 2:06-CV-71, 2006 WL 3827461, at *11 (S.D. Ohio Dec. 27, 2006) (Graham, J.) (citing Systran Fin. Servs. Corp. v. Giant Cement Holding, Inc., 252 F. Supp. 2d 500, 506 (N.D. Ohio 2003)). No one factor is dispositive, rather a court must determine whether, under the totality of the circumstances, "the defaulting party has acted inconsistently with the arbitration right." Systran, 252 F. Supp. 2d at506 (citing Nat'l Found. for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772, 774 (D.C. Cir. 1987)).
Looking at the totality of the circumstances of the present case, the Court finds that Heartland has not waived its right to invoke the Warranty's mandatory arbitration clause. The case was removed to this Court on July 26, 2018. (See Doc. 1, Not. of Removal). Heartland filed its Motion to Stay and Compel Arbitration on September 12, 2018. (See Doc. 12, Mot. Stay). In the interim, little to no discovery has taken place. (See generally Docs. 1-11). No issue has been litigated on the merits. No trial date has been set for this matter. And Heartland has not asserted a counterclaim. Further, Plaintiff will suffer little prejudice if this matter is sent to arbitration pursuant to the valid arbitration agreement. The only factor weighing in favor pf Plaintiff is that Heartland submitted its Answer and failed to invoke the arbitration provision. This alone is not enough. As such, the Court finds that Heartland has not implicitly waived its right to invoke the arbitration provision in the Warranty.
As mentioned above, the Court must undertake a four-party inquiry to determine whether an arbitration agreement is enforceable:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.
In determining whether the parties agreed to arbitrate under the first prong of the Stout test, the Court must apply the "applicable state law of contract formation." Prachun v. CBIZ Benefirts& Ins. Servs., Inc., No. 2:14-CV-2251, 2015 WL 5162522, at *3 (S.D. Ohio Sept. 3, 2015) (Marbley, J.) (quoting Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 666 (6th Cir. 2003)); see also Ackison Surveying, 2016 WL 4208146, at *1) ("Whether the parties' contract evinces an agreement to arbitrate is governed by principles of state contract law."). Thus, "state-law contract defenses like fraud, forgery, duress, mistake, lack of consideration or mutual obligation, or unconscionability, may invalidate arbitration agreements." Cooper v. MRM Inv. Co., 367 F.3d 493, 498 (6th Cir. 2004).
Heartland asserts that the parties...
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