Wisch Auto Grp., Inc. v. McCarthy
| Decision Date | 27 May 2021 |
| Docket Number | NO. 14-19-00483-CV,14-19-00483-CV |
| Parties | WISCH AUTO GROUP, INC., D/B/A BAYWAY CHEVROLET, Appellant v. JEFFREY MCCARTHY AND MELISSA MCCARTHY, Appellees |
| Court | Texas Court of Appeals |
On Appeal from the 23rd District Court Brazoria County, Texas
In this interlocutory appeal, appellant Wisch Auto Group, Inc. d/b/a Bayway Chevrolet ("Bayway") challenges the trial court's order denying its motion to compel arbitration and stay litigation. In five issues, Bayway argues that the trial court erred by failing to grant its motion to compel arbitration and stay litigation. We affirm.
In January 2019, appellees Jeffrey McCarthy and Melissa McCarthy ("appellees") contacted Bayway concerning a Facebook advertisement posted by Bayway for the sale of a 2014 Chevrolet Tahoe. Because the Tahoe was no longer available, they purchased a 2010 Jeep Wrangler instead. On January 11, 2019, Jeffrey McCarthy gave Bayway his most recent paystub, his most recent bank statement, and a letter from the Department of Veterans Affairs showing his disability compensation. Bayway used this information to prepare a credit application for the purchase of the Wrangler. On the same day, Bayway and the appellees also entered into a Retail Installment Sales Contract ("RISC") for the purchase of the Wrangler.
On January 15, 2019, appellees contacted Bayway and agreed to trade in their 2017 Nissan Sentra as part of the transaction to purchase a 2018 Chevrolet Silverado from Bayway. The appellees did not fill out a new credit application to purchase the Silverado; instead, Bayway used the January 11, 2019 credit application generated by appellees to purchase the Wrangler.
On January 17, 2019, the appellees went to Bayway's dealership to drop off their newly purchased Wrangler for repairs. At that time, the appellees and Bayway executed a RISC for the purchase of the Silverado for $41,024. Appellees and Bayway also executed a Conditional Delivery Agreement ("CDA") at the same time. Bayway and Appellees agreed to a $12,100 credit for the Sentra toward the Silverado purchase. In addition, the RISC stipulated that Bayway would pay off the remaining $17,918 that appellees owed to Santander Consumer USA, Inc. ("Santander") for the Sentra.
When the RISC for the Silverado was executed, Bayway informed appellees that it would be assigning its interest in the RISC to GM Financial ("GM"). On the same day that the CDA and RISC were executed, GM conditionally granted approvalon the credit application for the Silverado. On February 15, 2019, Bayway notified appellees that GM had rejected appellees' credit application for the Silverado. Appellees offered to make their first monthly payment to Bayway for the Silverado, but Bayway insisted that appellees return the Silverado and pick up their Sentra from Bayway's lot. Santander contacted appellees later that day to inform them that Bayway had not paid off the Sentra.
According to telephone transcripts, Bayway called appellees and threatened to report the Silverado as stolen if appellees did not return it to the dealership. Appellees assert Bayway accused Jeffrey McCarthy of fraud and harassed and threatened him by saying he would be sent to jail. Despite requesting Bayway to stop calling them, appellees claim that they had to set their phones to airplane mode to avoid the "nonstop" calls from Bayway. Additionally, according to appellees, Bayway admitted to setting off the appellees' car alarm every morning at 3:00 a.m., stating, "See you at 3 in the morning."
On March 1, 2019, the Pearland Police Department contacted appellees. Appellees were advised that Bayway had filed a police report, alleging that appellees had stolen the vehicle from Bayway. Officer Dennis Gassen of the Pearland Police Department testified as follows:
On March 4, 2019, Santander informed appellees that Bayway had already reported appellees' Sentra as "abandoned." Based on this information, Santander repossessed the vehicle at a $1,000 cost to appellees. Santander further notified appellees that it was planning to sell their Sentra on March 18, 2019.
On March 5, 2019, appellees filed their original petition against Bayway, alleging multiple causes of actions, including fraud, violations of the Texas Deceptive Trade and Practices Act (Tex. Bus. & Comm Code section 17.41, et seq), ("DTPA") failure to pay off their trade-in vehicle, violations of the Texas Debt Collection Act, and intentional infliction of emotional distress. Appellees additionally sought a temporary restraining order to prevent Bayway from repossessing the Silverado and for violation of the Texas Debt Collection Act. The trial court granted a temporary restraining order preventing repossession of the Silverado.
On March 12, 2019, the temporary restraining order was served on Bayway while Bayway was meeting with Officer Gassen concerning the police report alleging that appellees had stolen the Silverado. Officer Gassen testified that he was present when the restraining order was served and that Bayway acknowledged receiving the restraining order. According to Officer Gassen, despite having just been served with the restraining order, Bayway handed him a set of keys and asked him to repossess the Silverado on its behalf.
On March 25, 2019, a hearing was held on appellees' application for temporary injunction, in which appellees requested the trial court extend the restraining order for the duration of the lawsuit. After hearing testimony from JeffreyMcCarthy and Officer Gassen, the trial court granted the extension, prohibited Bayway from attempting to repossess the Silverado, and ordered appellees to begin making monthly car payments into the registry of the court.
On April 1, 2019, Bayway filed an answer and counterclaims subject to arbitration, asserting a general denial, affirmative defenses, and counterclaims for breach of contract of the CDA, common law fraud, and "groundless" causes of action under the TDPA. Bayway also filed an emergency motion to dissolve the temporary injunction. On April 8, 2019, the trial court denied Bayway's emergency motion.
On April 3, 2019, Bayway filed a motion to compel arbitration and stay litigation. On June 3, 2019, the trial court held a hearing on Bayway's motion to compel arbitration and stay proceedings, ultimately denying said motion. This appeal ensued.
Bayway presents five issues on appeal: Bayway argues generally that the trial court erred by failing to grant its motion to compel arbitration and stay litigation. More specifically, in Bayway's first and second issues, Bayway argues that it established an enforceable arbitration agreement between Bayway and appellees. In its third, fourth, and fifth issues, Bayway asserts that appellees failed to meet their burden on their defenses of fraud, procedural unconscionability, and waiver.
We review the denial of a motion to compel arbitration for an abuse of discretion. See Henry v. Cash Biz, L.P., 551 S.W.3d 111, 115 (Tex.), cert. denied, — U.S. —, 139 S. Ct. 184, 202 L. Ed. 2d 40 (2018); In re Labatt Food Serv., L.P., 279 S.W.3d 640, 642-43 (Tex. 2009) (orig. proceeding); Weekley Homes, L.P. v. Rao, 336 S.W.3d 413, 418 (Tex. App.—Dallas 2011, pet. denied); see also Accord Bus. Funding, LLC v. Ellis, No. 14-19-00279-CV, 2021 WL 1745472, at *1, ___ S.W.3d ___, ___ (). A trialcourt abuses its discretion when it acts without reference to any guiding rules or principles. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). Under this standard, we defer "to the trial court's factual determinations if they are supported by evidence, but we review the trial court's legal determinations de novo." Weekley, 336 S.W.3d at 418 (citing In re Labatt Food, 279 S.W.3d at 643). Specifically, "[w]hether an arbitration agreement is enforceable is subject to de novo review." Id. But "[a] trial court that refuses to compel arbitration under a valid and enforceable arbitration agreement has clearly abused its discretion." In re 24R, Inc., 324 S.W.3d 564, 566 (Tex. 2010) (orig. proceeding) (citing In re Halliburton Co., 80 S.W.3d 566, 573 (Tex. 2002)).
"Neither federal law nor Texas jurisprudence recognize a presumption in favor of arbitration when determining initially whether a valid arbitration agreement in fact exists." J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); In re W. Dairy Transp., L.L.C., 574 S.W.3d 537, 546 (Tex. App.—El Paso 2019, no pet.); S. Green Builders, LP v. Cleveland, 558 S.W.3d 251, 255 (Tex. App.—Houston [14th Dist.] 2018, no pet.). Arbitration cannot be ordered in the absence of an agreement to arbitrate, and thus, despite strong presumptions favoring arbitration, the existence of a valid agreement to arbitrate is a settled, threshold requirement in compelling arbitration. See Morgan v. Bronze Queen Mgmt. Co., 474 S.W.3d 701, 705 (Tex. App.—Houston [14th Dist.] 2014, no pet.). "To compel arbitration, a party must: (1) establish the existence of a valid arbitration agreement; and (2) show that the claims asserted are within the scope of the agreement." In re W. Dairy Transp., L.L.C., 574 S.W.3d 537, 545 (Tex. App.—El Paso 2019, no pet.)....
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