HHH Motors, LLP, d/b/a Hyundai etc. v. Jenny Lee Holt And Kristopher etc.

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
HHH MOTORS, LLP, D/B/A
HYUNDAI OF ORANGE PARK, CASE NO. 1D13-4397
F/K/A HHH MOTORS, LTD.,
D/B/A HYUNDAI OF ORANGE
PARK,
Appellant,
v.
JENNY LEE HOLT AND
KRISTOPHER P. HOLT, ON
BEHALF OF THEMSELVES
AND ALL OTHERS
SIMILARLY SITUATED, HA
MOTORS, LLP, D/B/A ACURA
OF ORANGE PARK; HANANIA
OAJ, LLP, D/B/A AUDI OF
JACKSONVILLE AND/OR
AUDI JACKSONVILLE;
HANANIA FOP, LLP, D/B/A
FIAT OF ORANGE PARK;
HANANIA OPM, LLC, D/B/A
ORANGE PARK MITSUBISHI;
HANANIA VOP, LLP, D/B/A
VOLKSWAGEN OF ORANGE
PARK; AND HHH MOTORS 2,
LLP, D/B/A WESTSIDE
HYUNDAI,
Appellee.
_____________________________/
Opinion filed December 3, 2014.
An appeal from the Circuit Court for Duval County.
Waddell A. Wallace, Judge.
Jon Michael Lindell of Lindell & Farson, P.A.; and Michael J. Korn of Korn &
Zehmer, P.A., Jacksonville, for Appellant.
William C. Bielecky of William C. Bielecky, P.A., Tallahassee; Deanna L. Blair of
Jacksonville Area Legal Aid, Green Cove Springs; and Brian W. Warwick of
Varnell & Warwick, P.A., The Villages, for Appellee.
ON MOTION FOR REHEARING, WRITTEN OPINION, AND
CERTIFICATION
PER CURIAM.
The crux of this dispute is whether the parties agreed in the purchase and
financing agreements at issue that this class action lawsuit must be submitted to
arbitration or whether it may proceed in court. For the following reasons, we affirm
the trial court’s determination that the parties did not agree to arbitration. In doing
so, we grant the motion for written opinion of HHH Motors, LLP, but deny its
motions for rehearing and certification.
On July 28, 2010, HHH Motors, LLP, and two of its customers, Jenny and
Kristopher Holt, executed a Retail Purchase Agreement (RPA) for the purchase of
a 2007 Dodge Ram. The RPA contained an arbitration clause which stated, in
pertinent part:
Except as specifically excluded in this agreement, purchaser and
dealer agree to submit any and all controversies, claims, or disputes
arising out of or relating to this agreement and all other agreements
executed by purchaser and dealer related to the vehicle purchase
transaction, or related to any aspect of the transaction contemplated by
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this agreement, to binding arbitration. It is the express intent of
purchaser and dealer that this arbitration provision applies to all
disputes, including contract disputes, tort claims, fraud claims and
fraud-in-the-inducement claims, statutory claims, and regulatory
claims that would not have arisen but for the vehicle purchase
transaction and resulting relationship between purchaser and dealer.
The RPA also contained a clause referring to additional documents, which stated:
You agree to execute additional forms, contracts or other documents
prepared in connection with the purchase, those required by the
various purchase documents, any retail installment or consumer credit
sale contract or those required by federal and/or state law, rule or
requirement.
After executing the RPA, the Holts executed a Retail Installment Sales Contract
(RISC) to finance the purchase of the vehicle. The RISC, however, did not contain
an arbitration clause, but included the following merger clause: “This contract
contains the entire agreement between you and us relating to this contract. Any
change to this contract must be in writing and we must sign it.”
The Holts filed a class action lawsuit against HHH Motors in circuit court
alleging violations of Florida’s Deceptive and Unfair Trade Practices Act
(FDUTPA) relating to electronic titling/registration filing fees that HHH Motors
charges its customers. In response, HHH Motors filed a motion to compel
arbitration pursuant to the arbitration clause in the RPA. In a detailed written order,
the trial court denied the motion, concluding that when the Holts signed the RISC,
which contained the merger clause, a new contract was formed. This meant that the
RISC, which did not have an arbitration clause, superseded the RPA, which did.
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And because the RISC appeared facially complete, no parol evidence could be
considered to address alleged ambiguities. The denial prompted this appeal.
The issue presented is whether a valid written agreement to arbitrate exists, a
question we review de novo. Duval Motors Co. v. Rogers, 73 So. 3d 261, 264 (Fla.
1st DCA 2011). Under federal and Florida law, a court considers three elements
when ruling on a motion to compel arbitration: (1) whether a valid written
agreement to arbitrate exists; (2) whether an arbitral issue exists; and (3) whether
the right to arbitration was waived. Seifert v. U.S. Home Corp., 750 So. 2d 633,
636 (Fla. 1999). Absent a valid written agreement to arbitrate, no party may be
forced to submit to arbitration. Id. (citing Seaboard Coast Line R.R. v. Trailer
Train Co., 690 F.2d 1343, 1352 (11th Cir. 1982) (holding that the federal policy
favoring arbitration cannot “stretch a contract beyond the scope originally intended
by the parties”)). Furthermore, the applicability of the Federal Arbitration Act
(FAA), which preempts state law and state public policy concerns, hinges on
whether such an agreement exists. McKenzie Check Advance of Florida, LLC v.
Betts, 112 So. 3d 1176, 1183 (Fla. 2013) (stating that “to the extent that Florida
law would invalidate the class action waiver on this basis, the FAA preempts
Florida law under the facts presented here.”); Seifert, 750 So. 2d at 636.
HHH Motors argues that all three Seifert elements are met, that its right to
arbitrate vested when the RPA was executed regardless of any subsequent
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agreement entered by the parties; it thereby claims that the FAA governs the
parties’ dispute arising from the sales agreement. On the other hand, the Holts
contend that the trial court had a legally sufficient basis to determine, as a matter of
fact, that the first element of the Seifert analysis was not met, i.e., that the parties
lacked a valid written agreement to arbitrate. The Holts argue that the facts of this
case are similar to those in Duval Motors, in which this Court held that a RISC
containing a merger clause was a fully integrated document, such that parol
evidence of a retail buyer’s order (which contained an arbitration clause) was not
admissible to show disputes under contract were subject to arbitration. See Duval
Motors, 73 So. 3d at 267. It also held that the retail buyer’s order was not a valid
change to the RISC. See id. at 269. The Holts also argue that the FAA is not
triggered unless the parties first have a valid written agreement to arbitrate, a
threshold determination that should be decided by a court, not an arbitrator. They
conclude that because the trial court found that no agreement to arbitrate existed,
the FAA is inapplicable.
We agree with the well-reasoned analysis of the trial court, which followed a
two-step process in its consideration of the applicability of the arbitration clause in
the RPA. First, there must be the threshold determination of whether an agreement
to arbitrate was formed pursuant to Granite Rock Co. v. International Brotherhood
of Teamsters, 561 U.S. 287 (2010). A difference exists, however, between the
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validity of a contract and the formation of a contract. Solymar Investments, Ltd. v.
Banco Santander S.A., 672 F.3d 981, 992 (11th Cir. 2012) (“The issue of the
contract’s validity is different from the issue whether any agreement . . . was ever
concluded.”) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,
444 (2006)). Challenges to the validity of a contract are resolved by the arbitrator,
but challenges to formation or existence of a contract are resolved by the court.
Granite Rock, 561 U.S. at 296; cf. Dasher v. RBC Bank, 745 F.3d 1111 (11th Cir.
2014) (holding that whether a subsequent agreement entirely supersedes a prior
agreement is made under state law, without applying the FAA’s presumption). The
determination of whether a contract exists is governed by state law, and Florida
law permits a court to admit parol evidence to discern the parties’ intent if there is
an ambiguity in the contract language. Solymar, 672 F.3d at 991. Second, there
must be a determination of whether any subsequent challenges are to the whole
contract, or just the arbitration clause, pursuant to Prima Paint Corp. v. Flood &
Conklin Manufacturing Co., 338 U.S. 395 (1967).
In this case, the inquiry ended upon the threshold determination by the trial
court that no agreement to arbitrate existed pursuant to Granite Rock. No dispute
exists that the Holts signed the RPA first. HHH Motors argues that its right to
arbitrate vested at that point, regardless of the validity of the RPA or subsequent
action by the parties. Indeed, the trial court acknowledged that it would have been
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binding but for the execution of the RISC, which was entered concurrently. After
executing the RPA, the Holts immediately signed the RISC which stated, in part,
that “[b]y signing this contract, you choose to buy the vehicle on credit under the
agreements on the front and back of this contract.” Under the circumstances, the
trial court concluded that the RISC and its merger clause was sufficiently
unequivocal to render the RPA’s arbitration clause nugatory. Our holding in Duval
Motors is persuasive on this point and supports the conclusion that no agreement to
arbitrate was formed. While HHH Motors correctly notes that the fact pattern is
somewhat different, the issue was very similar: whether the merger clause of the
RISC precluded consideration of the retail buyer’s order. In Duval Motors, this
Court determined that the plain language of the RISC was clear and unambiguous,
so parol evidence of the arbitration clause contained in the retail buyer’s order
could not be considered. The same holds true here. HHH Motors is being held to
the language of its own concurrently-signed documents. See also Basulto v.
Hialeah Automotive, 141 So. 3d 1145 (Fla. 2014) (affirming trial court’s finding
that there were issues regarding the making of the agreement, so it was proper to
deny the motion to compel). If it intended for credit buyers to be subject to the
arbitration clause, then it could have said so in the RISC, but did not.
HHH Motors argues that when two or more documents are executed by the
same parties “contemporaneously” in the course of the same transaction
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concerning the same subject, they should be read and construed together. See, e.g.,
Quix Snaxx, Inc. v. Sorensen, 710 So. 2d 152, 153 (Fla. 3d DCA 1998)
(“Documents executed by the same parties, on or near the same time, and
concerning the same transaction or subject matter are generally construed together
as a single contract. Where a writing expressly refers to and sufficiently describes
another document, the other document, or so much of it as is referred to, is to be
interpreted as part of the writing.”). While this is true, we find no legal error in the
trial court’s conclusion that the RISC and its merger clause operated to negate the
arbitration clause in the RPA. The FAA thereby does not apply because no valid
agreement to arbitrate exists.
In its motion for rehearing and written opinion, HHH Motors claims that our
disposition of this case conflicts with the Fourth District’s decision in Morse
Operations, Inc. v. Sonar Radio Corp., 449 So. 2d 1002 (Fla. 4th DCA 1984). That
case, however, is factually different because—unlike the present case—the
financing agreement at issue in Morse Operations did not have a merger clause.
The absence of a merger clause justified a different result, there being “no support
in the record for the trial court’s conclusion that the financing agreement
superseded the underlying contract for this transaction.” Id. at 1003. Though we
find no conflict and do not certify a question of great public importance, we
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provide this opinion to explain our reasoning, which may be beneficial in the
development of this area of the law.
In conclusion, the trial court properly denied the motion to compel
arbitration.
AFFIRMED.
THOMAS, MARSTILLER, and MAKAR, JJ., CONCUR.
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