Earl Scott v. EFN Investments, LLC ( 2009 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 08-14799 FEB 17, 2009
Non-Argument Calendar THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 08-80532-CV-WPD
EARL SCOTT,
Plaintiff-Appellant,
versus
EFN INVESTMENTS, LLC,
d.b.a. Napleton’s Nissan,
CITIFINANCIAL AUTO CORPORATION,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(February 17, 2009)
Before BLACK, BARKETT and MARCUS, Circuit Judges.
PER CURIAM:
Earl Scott appeals from the district court’s final order dismissing his putative
class action claims against EFN Investments, LLC and CitiFinancial Auto
Corporation (the “Defendants”), arising out of an automobile purchase. The
district court concluded that an agreement to arbitrate the parties had entered into --
separate and distinct from the sales contract for the automobile purchase -- was
valid and enforceable, thereby dismissing the case in favor of arbitration. On
appeal, Scott argues that the district court erred in ruling that the agreement to
arbitrate was not rescinded when the associated sales contract was rescinded. After
careful review, we affirm.
We review de novo the district court’s grant of a motion to dismiss for
failure to state a claim, accepting all factual allegations in the complaint as true and
construing them in the light most favorable to the plaintiff. See Hill v. White, 321
F.3d 1334, 1335 (11th Cir. 2003).
The relevant facts are these. Scott alleged that on or about April 22, 2007 he
visited Napleton’s Nissan (“Napleton’s”) to purchase a used automobile, and
ultimately selected a 2005 Nissan Altima. On that same day, Scott signed a Retail
Installment Sales Contract (“RISC”). The RISC was a “spot deliver” agreement,
wherein the used vehicle was delivered to Scott subject to acceptance by a
financing institution of the RISC. The RISC contained an arbitration clause.
According to Scott, within days after the RISC was executed the dealership
rescinded the agreement and advised that the vehicle must be returned to the
dealership immediately.
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Also on April 22, 2007, however, Scott executed a separate and distinct
Agreement to Arbitrate. This stand-alone Agreement to Arbitrate reads in part:
By entering into this Agreement to Arbitrate (“Agreement”),
Customer(s) and Dealership (collectively referred to as “the Parties”)
agree, except as otherwise provided in this Agreement, to settle by
binding arbitration any dispute between them regarding: (1) the
purchase/lease by Customer(s) of the above-referenced Vehicle; (2)
any products and services purchased in conjunction with the Vehicle;
and/or (3) any dispute with respect to the existence, scope or validity
of this Agreement. Matters that the Parties agree to arbitrate include,
but are not limited to, disputes related to the Retail Purchase/Retail
Lease Agreement and any documents incorporated therein by
reference (whether such reference is made in the Retail
Purchase/Retail Lease Agreement or the document itself), the
application for and terms of financing for the transaction, the
Finance/Lease Contract, any alleged promises, representations and/or
warranties made to or relied upon by the Parties and any alleged
unfair, deceptive or unconscionable acts or practices.
Notwithstanding any other provision of this Agreement, the Parties
agree that they are not waving their right to exercise any self-help or
provisional remedy available at law or pursuant to agreement between
them. Nor is either Party required to arbitrate any individual claim (as
opposed to a class action) that is filed and properly within the
jurisdiction of a small claims court or equivalent state court.
. . . This Agreement evidences a transaction involving interstate
commerce. The parties acknowledge and agree that the Federal
Arbitration Act (9 U.S.C. § 1 et seq.) (“FAA”) shall govern any
arbitration under this Agreement.
. . . the Parties agree that by entering into this Agreement, they are
waiving their right to a jury trial and their right to bring or participate
in any class action or multiplaintiff action in court or through
arbitration. Once one of the parties has demanded arbitration, binding
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arbitration is the exclusive method for resolving any and all claims
between then.
After Napleton’s took possession of the Nissan Altima, Scott filed this
lawsuit in state court, alleging violations of the Florida Motor Vehicle Sales
Finance Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the
Florida Unfair and Deceptive Trade Practices Act, and breach of contract. The
Defendants removed the case to federal court, and based upon the Agreement to
Arbitrate, moved to dismiss Scott’s case in favor of arbitration. The district court
agreed with the Defendants, and dismissed the case. This appeal follows.
The Federal Arbitration Act provides that a written arbitration agreement
arising from a contract involving interstate commerce “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. While we recognize the strong federal
policy in favor of arbitration, see generally Seaboard Coast Line R.R. v. Trailer
Train Co., 690 F.2d 1343, 1348 (11th Cir. 1982), we will not compel parties to
arbitrate a dispute where the parties have not agreed to do so, Klay v. All
Defendants, 389 F.3d 1191, 1200 (11th Cir. 2004). In determining the propriety of
a motion to compel arbitration, we engage in a two-step inquiry: (1) first, we
determine whether the parties agreed to arbitrate the dispute; and (2) second, we
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decide whether “legal constraints external to the parties’ agreement foreclosed
arbitration.” Id. (quotations omitted).
As for the first step, the plain language of the Agreement to Arbitrate
indicates that Scott agreed to arbitrate all disputes regarding “the purchase/lease by
Customer(s) of the above-referenced Vehicle,” as well as any “disputes related to
the Retail Purchase/Retail Lease Agreement” or “any alleged unfair, deceptive or
unconscionable acts or practices.” These encompass the very disputes that Scott
has alleged in his complaint -- which include violations of the Florida Motor
Vehicle Sales Finance Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Florida Unfair and Deceptive Trade Practices Act, and breach
of contract. It thus seems clear that under the Agreement to Arbitrate, Scott has
agreed to submit these very counts to arbitration.
As for the second step, Scott argues that because the Defendants rescinded
the sales contract, the stand-alone Agreement to Arbitrate necessarily was
rescinded. But as the Supreme Court has held, “unless the challenge is to the
arbitration clause itself, the issue of the contract’s validity is considered by the
arbitrator in the first instance.” Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440, 445-46 (2005). Because Scott is not challenging the validity of the
Agreement to Arbitrate, but that “the transaction in its entirety was
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revoked/rescinded,” the challenge must be decided by an arbitrator. Id. Moreover,
while Scott contends that there is nothing left to arbitrate because there are no
remaining substantive contractual provisions, Scott’s complaint alleges, among
other things, a breach of contract count, clearly indicating that he is challenging the
existence of these contractual provisions. Further, as the district court reasoned, if
the Agreement to Arbitrate only governed a completed sale, there would be no
need for a stand-alone agreement in addition to the arbitration clause contained in
the RISC.1 We therefore conclude that the stand-alone Agreement to Arbitrate is
valid and enforceable.
Accordingly, we affirm the district court’s dismissal of the case in favor of
arbitration.
AFFIRMED.
1
Scott also relies on several cases holding that when a party unilaterally cancels or
nullifies an entire contract, any arbitration clause contained there is also cancelled and therefore
unenforceable. As the district court found, however, these cases are distinguishable from the
instant one -- where Scott entered into a stand-alone Agreement to Arbitrate.
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