Walker v. Daimlerchrysler Corp.

• Decision Date: 02 November 2006
• Docket Number: No. 27A02-0507-CV-596.,27A02-0507-CV-596.
• Citation: 856 N.E.2d 90
• Parties: William WALKER, Appellant-Plaintiff, v. DAIMLERCHRYSLER CORPORATION, Appellee-Defendant.
• Court: Indiana Appellate Court

856 N.E.2d 90

William WALKER, Appellant-Plaintiff, v. DAIMLERCHRYSLER CORPORATION, Appellee-Defendant.

No. 27A02-0507-CV-596.

Court of Appeals of Indiana.

November 2, 2006.

Scott M. Cohen, John D. Barker, Harry C. Bradley, Krohn & Moss, LTD, Chicago, IL, Attorneys for Appellant.

Jeffrey P. Smith, W. Randall Kammeyer, Hawk, Haynie, Kammeyer & Chickedantz, LLP, Fort Wayne, IN, Attorneys for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

William Walker ("Walker") appeals the trial court's order dismissing his complaint against DaimlerChrysler Corporation ("DaimlerChrysler"), which alleges violations of the Magnuson-Moss Warranty Act ("MMWA") and the Indiana Motor Vehicle Protection Act ("Indiana Lemon Law"), and compelling arbitration of those claims. Walker has not satisfied his burden to show us that Congress intended to preclude binding arbitration under the MMWA. We acknowledge that the Federal Trade Commission ("FTC") has concluded that the MMWA does not permit binding arbitration, but like several other courts that have addressed the issue, we find that interpretation to be unreasonable and therefore will not defer to it. In addition, Walker has not shown that the parties' agreement to arbitrate is invalid under the Indiana Lemon Law. Therefore, we affirm the judgment of the trial court.

Facts and Procedural History

On May 24, 2004, Walker purchased a 2004 Dodge Dakota ("Dakota") from a DaimlerChrysler authorized dealer. The purchase included certain warranties. Walker purchased the Dakota pursuant to DaimlerChrysler's Employee New Vehicle Purchase/Lease Program ("Program"). The Program offers customers a substantial discount by allowing them to purchase or lease new vehicles at the employee price. To participate in the Program, Walker signed a DaimlerChrysler Employee New Vehicle Purchase/Lease Claim Form ("Claim Form").

At the top of the Claim Form, in bold print, was the following statement: "THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." Appellant's App. p. 47. The Claim Form also contains a mandatory arbitration clause, which provides, in pertinent part:

I understand that, in consideration for the discount received, I will not be able to bring a lawsuit for any disputes relating to this vehicle. Instead, I agree to submit any and all disputes through the DaimlerChrysler Vehicle Resolution Process, which includes mandatory arbitration that is binding on both DaimlerChrysler and me.

* * * *

I acknowledge that this Form evidences a transaction involving interstate commerce, and, therefore, the Federal Arbitration Act ("FAA") (9 U.S.C. § 2 et. seq.) shall govern the interpretation, enforcement and proceedings of arbitration.

Id. (italics added). The next clause of the Claim Form provides, in pertinent part:

I represent to DaimlerChrysler Corporation that, before purchasing or leasing a vehicle under the Program, I received and read the Program Rules and Provisions ("Rules"), specifically including a copy of the document entitled "Vehicle Resolution Process — Binding Arbitration." I hereby acknowledge that (1) I understand the Rules (2) I agree to be bound by them and will comply with them[.]

Id. The Rules and Provisions ("Rules") referenced in the Claim Form include a Legal Agreement that details the mandatory binding arbitration procedure. The Legal Agreement provides that participants in the Program "agree that binding arbitration is solely and exclusively the final step for resolving any warranty dispute concerning vehicles purchase or leased under the Program. They may not bring a separate lawsuit." Id. at 51.

Shortly after Walker's purchase, several defects arose with the Dakota, including problems with the engine, the interior and exterior trim, and the windshield. Walker brought the Dakota to a DaimlerChrysler authorized dealership for repairs on several occasions, but the repairs were not completed to Walker's satisfaction. As such, Walker's attorney wrote a letter to DaimlerChrysler "revoking his acceptance of the vehicle" and "demand[ing] the return of all funds paid towards [the Dakota], the cancellation of the contracts, and compensation for his damages." Id. at 22. DaimlerChrysler refused to comply with Walker's demands, so Walker filed a lawsuit. Count I alleged a breach of written warranty pursuant to the MMWA; Count II alleged a breach of an implied warranty of merchantability pursuant to the MMWA; Count III purported to revoke Walker's acceptance of the Dakota pursuant to section 2310(d) of the MMWA; and Count IV alleged a breach of the Indiana Lemon Law.

In response to Walker's complaint, DaimlerChrysler filed a Motion to Dismiss and Compel Arbitration then a Motion for Summary Judgment, citing the mandatory arbitration language contained in both the Claim Form and the Rules. The trial court granted DaimlerChrysler's motion for summary judgment and entered an order dismissing Walker's complaint and compelling arbitration. Walker now appeals.

Discussion and Decision

On appeal, Walker argues that the trial court erred in granting DaimlerChrysler's motion to dismiss and compel arbitration. DaimlerChrysler, on the other hand, frames the issue as whether the trial court properly granted summary judgment in its favor. This conflict is due to the fact that the trial court's order in favor of DaimlerChrysler includes both dismissal language and summary judgment language. In some cases, this ambiguity would present us with two potentially conflicting standards of review. Here, however, it makes no difference whether we treat the trial court's decision as a dismissal or a grant of summary judgment; this case turns on two questions of law, which we review de novo. MacLafferty v. MacLafferty, 829 N.E.2d 938, 941 (Ind.2005). Specifically, we must determine whether mandatory binding arbitration agreements such as the one in this case are permissible under the MMWA and the Indiana Lemon Law. We address each question in turn.

I. MMWA Claims

Walker first contends that binding arbitration agreements are unenforceable under the MMWA. This is an issue of first impression in Indiana.¹ Most courts that have addressed this issue have concluded that the MMWA allows binding arbitration agreements. We must agree.²

A. Background

We begin with a brief overview of the two federal statutes at the center of this dispute. First, the Claim Form states that the Federal Arbitration Act shall govern the interpretation, enforcement, and proceedings of arbitration. Congress enacted the FAA in 1925 to reverse the longstanding judicial hostility towards arbitration and "to place arbitration agreements on the same footing as other contracts." Davis v. S. Energy Homes, Inc., 305 F.3d 1268, 1272 (11th Cir.2002) (quoting EEOC v. Waffle House, Inc., 534 U.S. 279, 289, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002)), reh'g denied, cert. denied, 538 U.S. 945, 123 S.Ct. 1633, 155 L.Ed.2d 486 (2003). Section 2 of the FAA provides:

A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, ... 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. Section 2 represents a declaration by Congress of a liberal federal policy favoring arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). As such, there is a presumption in favor of the enforceability of contractual arbitration agreements. Walton v. Rose Mobile Homes LLC, 298 F.3d 470, 473 (5th Cir.2002) (citing Moses H. Cone Mem'l Hosp., 460 U.S. at 24-25, 103 S.Ct. 927). This presumption applies equally to claims founded on statutory rights. Id. (citing Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987)). The United States Supreme Court has emphasized that "[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

Three of the four claims in Walker's complaint allege violations of the Magnuson-Moss Warranty Act. Congress passed the MMWA in 1975 in response to an increasing number of consumer complaints regarding the adequacy of warranties on consumer goods. Davis, 305 F.3d at 1272. "The purpose of the MMWA is `to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products.'" Id. (quoting 15 U.S.C. § 2302(a)).

The question presented in this case is whether binding arbitration agreements are enforceable under the MMWA. The MMWA does not explicitly preclude binding arbitration. And though the United States Supreme Court has not yet addressed this aspect of the MMWA, it is worth noting that "[i]n every statutory right case that the Supreme Court has considered, the Court has upheld binding arbitration if the statute creating the right did not explicitly preclude arbitration." Walton, 298 F.3d at 473 (citing Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79, 90, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (Truth in Lending Act); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 35, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (Age Discrimination in Employment Act); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484-86, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989) (Securities Act of 1933); McMahon, 482 U.S. at 238, 107 S.Ct. 2332 (Securities Exchange Act of 1934 and Racketeer Influenced and...