Arrasola v. MGP Motor Holdings, LLC , 2015 Fla. App. LEXIS 11708 ( 2015 )

Third District Court of Appeal
State of Florida
Opinion filed August 5, 2015.
Not final until disposition of timely filed motion for rehearing.
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No. 3D15-381
Lower Tribunal No. 14-23649
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Jose and Vanessa Arrasola,
Appellants,
vs.
MGP Motor Holdings, LLC, etc.,
Appellee.
An Appeal from the Circuit Court for Miami-Dade County, Antonio Arzola,
Judge.
Andrew J. Bernhard, for appellants.
Kurkin Brandes and Craig H. Blinderman and Marc E. Brandes (Aventura),
for appellee.
Before SALTER, LOGUE and SCALES, JJ.
SALTER, J.
Jose and Vanessa Arrasola appeal a non-final order granting the motion of
MGP Motor Holdings, LLC (doing business and identified here as “Kendall
Mitsubishi”), defendant below, to compel arbitration. We affirm.
I. Facts and Procedural Background
In June 2014, the Arrasolas visited Kendall Mitsubishi and negotiated the
purchase of a vehicle. The purchase terms required a down-payment of $1,500.00,
paid by a check post-dated for 45 days later, financing through Mitsubishi, and the
trade-in of their prior vehicle. Later that month, the Arrasolas returned to the
dealership to sign various documents. One of these documents was a “Retail
Buyer’s Order” or “RBO.” Both of the Arrasolas signed it. The Arrasolas also
provided Kendall Mitsubishi with a federal income tax Form 1099 evidencing
contractual payments to the Arrasola family business by its largest customer
(Miami FC, the Fort Lauderdale Strikers). That document and other financial
records were provided by the Arrasolas to the finance manager at Kendall
Mitsubishi to facilitate applications for a car loan covering the Arrasolas’ purchase.
Allegedly, the Kendall Mitsubishi finance manager, or others on the
manager’s behalf, prepared fraudulent W-2 forms reporting fictitious income by
the Arrasolas, and submitted the fraudulent forms with auto loan applications. The
Arrasolas claim that a financial institution telephoned Miami FC in early July 2014
to confirm the Arrasolas’ income, alerting Miami FC to the alleged fraud. The
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Arrasolas allege that Miami FC suspected that the fraudulent documents were
submitted by the Arrasolas. The Arrasolas also learned that a number of auto
lenders turned down the applications for a loan on the vehicle they sought to
purchase, allegedly damaging their credit history.
On July 9, 2014, the Arrasolas returned the vehicle to Kendall Mitsubishi,
notified Kendall Mitsubishi that they disputed any obligation to Kendall Mitsubishi
or its affiliates, and described the problems that had followed the fraudulent loan
applications. The following day, Kendall Mitsubishi’s general sales manager
issued a letter to the Arrasolas and “to whom it may concern” apologizing for what
happened and confirming that the Arrasolas had not been involved in the fraud:
Jose Arrasola and Vanessa Arrasola had nothing to do with what
happen [sic] at Kendall Mitsubishi and they had no knowledge
regarding said actions. These actions were done by the Finance
Manager and the sales person, two individuals that took matters into
their own hands with Kendall Mitsubishi having no knowledge
regarding such decision. Finding out what had happen, Kendall
Mitsubishi to action and terminated the said two individuals [sic].
According to their complaint, although the Arrasolas considered the
transaction terminated at that point, they were contacted later by a “lending
collections company . . . to advise that Kendall Mitsubishi had endorsed and
transferred the $1,500 post-dated check to the company in return for a bridge loan
during the 45-day post-dated waiting period, and that the Arrasola Family owed
the lending/collections company $1,500 plus interest.”
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In September 2014, the Arrasolas filed a six count complaint against
Kendall Mitsubishi, seeking damages for fraud, tortious interference with their
advantageous business relationship with Miami FC, defamation, violations of the
Florida Deceptive and Unfair Trade Practices Act, violations of the Florida
Consumer Collections Practices Act, and negligent misrepresentation, as well as an
award of attorney’s fees and costs. The complaint did not seek rescission of the
RBO or otherwise refer to the execution or existence of the RBO.
Kendall Mitsubishi moved to compel arbitration, and the trial court granted
that motion. This appeal followed.
II. Analysis
The RBO signed by the Arrasolas included extensive provisions relating to
arbitration. A paragraph on the front of the document, directly above their
signatures, stated:
ARBITRATION AND LIMITATION ACKNOWLEDGEMENTS
The parties agree to submit to binding arbitration as set forth in
paragraph H on the reverse side. Customer has read and understands
paragraph H. In a dispute between the parties, Customer shall not
be entitled to recover from Dealer any special damages,
consequential damages, damages to property, damages for loss of
use, loss of time, loss of profits or income, or any other incidental
damages, including, but not limited to vehicle rental charges. This
Order is not evidence of any cash payment. Cash payments are
evidenced by a separate receipt document. The Deposit will serve to
hold the Vehicle from sale to another for 24 hours from this date.
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The reverse side of the document contained a full page of “Terms and
Conditions,” including more extensive provisions regarding arbitration:
H. Dealer and Customer agree that any controversy, claim, suit,
demand, counterclaim, cross claim, or third party complaint arising
out of, or relating to this Order or the parties' relationship (whether
statutory or otherwise and irrespective of whether the Financing
Approvals were obtained), including, but not limited to any matter
that may have induced the Customer to enter into a relationship
with Dealer (collectively referred to as "Claim"), as well as the
validity of this provision, shall be submitted to final and binding
arbitration in the county and state where Dealer is situated.
1. The Parties agree that any Claim shall be arbitrated by a
single arbitrator on an individual basis and not as a class action.
Customer expressly waives any right it may have to arbitrate a class
action. Customer may choose the American Arbitration Association,
335 Madison Ave., Floor 10, New York, NY 10017-4605
(www.adr.org), or any other organization that the parties may choose
subject to mutual approval. If the parties cannot agree, the Dealer
shall choose. Customer can obtain a copy of the rules of these
organizations by contacting the arbitration organization or visiting the
website.
2. Arbitrators shall be attorneys or retired judges and shall be
selected pursuant to the applicable rules. The Arbitrator shall apply
governing substantive law in making an award. The arbitrator’s award
shall be final and binding on all parties.
3. Dealer shall advance your filing, administration, service or
case management fee and your arbitrator or hearing fee all up to a
maximum of $2500, which may be reimbursed by decision of the
arbitrator at the arbitrator’s discretion. Each party shall be responsible
for its own attorney, expert and other fees, unless awarded by the
arbitrator under applicable law.
4. The prevailing party shall be entitled to recover all
Arbitration fees described in paragraph 3 above, as costs to the extent
paid and/or due and owing from such party, and shall be entitled to
enforce the award in a circuit court of competent jurisdiction.
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5. This arbitration requirement shall not apply to: (a) any action
by Dealer for repossession of the Vehicle (but it does apply to any
counter-claim thereto except as otherwise provided in this paragraph);
or (b) any action within the jurisdiction of the small claims court as
set forth in Florida Rule of Court 7.010(b).
CUSTOMER UNDERSTANDS AND AGREES: (1)
THAT IF A DISPUTE IS ARBITRATED, CUSTOMER WILL GIVE
UP THE RIGHT TO A TRIAL BY A COURT; (2) THAT IF A
DISPUTE IS ARBITRATED, CUSTOMER WILL GIVE UP THE
RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR
CLASS MEMBER IN ANY CLASS CLAIM AGAINST DEALER,
INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY
CONSOLIDATION OF INDIVIDUAL ARBITRATIONS; (3)
DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE
GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND
OTHER RIGHTS THAT CUSTOMER AND DEALER WOULD
HAVE IN COURT MAY NOT BE AVAILABLE IN
ARBITRATION; (4) TO RESOLVE ALL DISPUTES WITH
DEALER BY BINDING ARBITRATION RATHER THAN
LITIGATION IN ANY COURT EXCEPT AS SPECIFICALLY SET
FORTH ABOVE; AND (5) THAT NOTWITHSTANDING
ANYTHING TO THE CONTRARY, TO WAIVE ANY AND ALL
RIGHT TO ANY TRIAL BY JURY FOR ANY CLAIM
NOTWITHSTANDING THE ENFORCEABILITY OF THIS
ARBITRATION PROVISION.
6. Within thirty (30) days of the arbitrator’s appointment, the
arbitrator shall establish the procedure for the exchange of
information bearing in mind the expedited nature of arbitration. The
arbitrator’s award shall be final and binding on all parties, except that
in the event the arbitrator’s award for a party is $0 or against a party is
in excess of $100,000, or includes an award of injunctive relief
against a party, that party may request a new arbitration under the
rules of the arbitration organization by a three-arbitrator panel. The
appealing party requesting new arbitration shall be responsible for the
filing fee and other arbitration costs subject to a final determination by
the arbitrators of a fair apportionment of cost.
7. Both parties retain any rights to self-help remedies, such as
repossession. Neither party waives the right to arbitrate by using self-
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help remedies or filing suit. Any court having jurisdiction may enter
judgement on the arbitrator’s award. This clause shall survive any
termination, payoff or transfer of this contract.
8. This Agreement is subject to the Federal Arbitration Act, 9
U.S.C.A. § 1, et. seq. To the extent that any part of this provision is
ruled illegal or unenforceable by any finder of fact or law, so much
hereof as is ruled illegal or unenforceable shall be deemed severed
and the remaining provisions shall survive.
The arbitration-related provisions on both sides of the RBO were in a small
font but were legible. In opposition to Kendall Mitsubishi’s motion to compel
arbitration, and in seeking a reversal in the present appeal, the Arrasolas assert that:
(a) the parties mutually abandoned or terminated the RBO, such that no valid or
enforceable contract to arbitrate exists; (b) the arbitration provisions in the RBO
are procedurally and substantively unconscionable, and should not be enforced;
and (c) the trial court erred in denying the Arrasolas an evidentiary hearing on
contract formation, abandonment, validity, and unconscionability. The parties
acknowledge that the standard of review applicable to an order compelling
arbitration is de novo. Murphy v. Courtesy Ford, L.L.C., 944 So. 2d 1131, 1133-
34 (Fla. 3d DCA 2007).
A. Abandonment
The arbitration provisions within the RBO are presumptively enforceable
under the three prerequisities set forth in Seifert v. U.S. Home Corp., 750 So. 2d
633 (Fla. 1999). First, there is a valid written agreement to arbitrate. Second, the
claims in the complaint fall within the sweeping definition set forth in paragraph H
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of the RBO, i.e., a “controversy, claim, suit, demand, counterclaim, cross claim,
or third party complaint arising out of, or relating to [the RBO] or the parties'
relationship (whether statutory or otherwise and irrespective of whether the
Financing Approvals were obtained), including, but not limited to any matter
that may have induced the Customer to enter into a relationship with Dealer
(collectively referred to as ‘Claim’), as well as the validity of this provision.”
Third, Kendall Mitsubishi did not waive its right to arbitration merely by accepting
the return of the vehicle or issuing a letter of apology.
Florida’s statutes relating to arbitration include a “gatekeeper” provision
allocating arbitrability issues between court and arbitrator:
(1) An agreement contained in a record to submit to arbitration
any existing or subsequent controversy arising between the parties
to the agreement is valid, enforceable, and irrevocable except upon a
ground that exists at law or in equity for the revocation of a contract.
(2) The court shall decide whether an agreement to arbitrate
exists or a controversy is subject to an agreement to arbitrate.
(3) An arbitrator shall decide whether a condition precedent to
arbitrability has been fulfilled and whether a contract containing a
valid agreement to arbitrate is enforceable.
§ 682.02, Fla. Stat. (2014).
In the present case, the Arrasolas do not dispute that they signed the RBO, or
that the RBO contains a provision to arbitrate. They challenge the continued
effectiveness and validity of the entire RBO and do not maintain that they were
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fraudulently induced to enter into the arbitration provisions alone. Here as in
Depaoli v. Exotic Motorcars & Jewelry, Inc., 2008 WL 4279645 (S.D. Fla. 2008),
the state law claim of invalidity or termination of the agreement as a whole must
itself be considered in the first instance by the arbitrator rather than the court.
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-45 (2006) (holding
that whether in federal or state court, a challenge to the validity of the contract as a
whole, and not specifically to the arbitration clause within it, must go to the
arbitrator and not the court).
B. Unconscionability
The Arrasolas’ claim of procedural and substantive unconscionability relies
upon Basulto v. Hialeah Automotive, 141 So. 3d 1145 (Fla. 2014). That case is
readily distinguishable, however, as it came to the appellate courts with an
extensive record establishing that the automobile purchasers did not read or
understand English; that the dealership had the purchasers “sign the contract in
blank, with the representation that the agreed-upon numbers would be filled in;”
and that when the contract was completed it allowed the purchasers “a lower trade-
in allowance than the amount agreed upon.” Id. at 1148-49. No such facts are
present in the record before us here. Kendall Mitsubishi has acknowledged that
claims of unconscionability, like the claims of abandonment or termination, may
be presented to the arbitrator for determination.
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C. Evidentiary Hearing
The Revised Florida Arbitration Code authorizes the trial court “summarily
to decide” a motion to compel arbitration “unless it finds that there is no
enforceable agreement to arbitrate.” § 682.03(1)(b), Fla. Stat. (2014). The word
“decide” in the Code replaced the word “hear” in 2013, suggesting that an
evidentiary hearing is unnecessary if the court has concluded that there is an
agreement to arbitrate. See Fi-Evergreen Woods, LLC v. Robinson, 135 So. 3d
331, 335, n.4 (Fla. 5th DCA 2013). On this record, however, we need not reach
the effect of that statutory amendment; there is no dispute that the RBO was
knowingly executed and that it contained a mandatory arbitration provision.
III. Conclusion
The issue on appeal is not whether the Arrasolas may litigate, rather than
arbitrate, their substantive claims against Kendall Mitsubishi. The issue is whether
there was an agreement to arbitrate the threshold determination of contract
enforceability, termination, abandonment, rescission, or unconscionability. The
trial court correctly determined that, in this case and in light of the RBO, the
arbitrator should make that front-end assessment.
Affirmed.
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