Dan Evans v. Phillip Matlock

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs May 14, 2002
DAN EVANS v. PHILLIP MATLOCK, ET AL.
Interlocutory Appeal from the Circuit Court for Maury County
No. 9166 Robert L. Jones, Judge
No. M2001-02631-COA-R9-CV - Filed December 23, 2002
An antique Dr. Pepper Dispenser was offered for sale on e-Bay’s auction site on the internet. After
the plaintiff’s bid was allegedly accepted, the seller sold the dispenser to another party. This
litigation ensued between the users of the e-Bay service, alleging breach of contract, fraud,
conspiracy, inducement of breach of contract, and other counts. The seller moved for summary
judgment on the ground that the User Agreement provided that disputes must be arbitrated. The trial
court held that the arbitration clause was inapplicable to disputes between users. We affirm.
Tenn. R. App. P. 9 Interlocutory Appeal by Permission; Judgment of the Circuit Court
Affirmed and Remanded
PATRICIA J. COTTRELL, J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S.
and WILLIAM C. KOCH , JR., J., joined.
John Shackelford Colley, III, Columbia, Tennessee, for the appellant, Phillip Matlock.
Leland Bruce Peden, Columbia, Tennessee, for the appellees, Kim Kokles and Mary Kokles.
John Russell Parkes, Columbia, Tennessee, for the appellee, Dan Evans.
OPINION
This is a controversy between users of e-Bay’s internet auction site. The plaintiff is a resident
of Oklahoma; the defendants Matlock, (father and son) are residents of Maury County, Tennessee;
the defendants Kokles are residents of Texas.
Mr. Evans alleges that he purchased an antique Dr. Pepper dispenser, owned by Robert
Matlock, from Phillip Matlock at an e-Bay auction; that the sale was confirmed; that thereafter the
Kokles purchased the dispenser from Robert Matlock; that the sale was fraudulent and designed to
interfere with his accepted bid; and that the defendants acting in concert conspired to defeat his
contractual right. He alleges damages for: (1) breach of contract; (2) violation of the Consumer
Protection Act; and (3) inducement to breach a contract.
The Kokles, the eventual purchasers of the dispenser, filed their answer alleging that Mr.
Evans merely placed a bid through the e-Bay service for the antique dispenser, and that they also
placed a bid for the dispenser which was higher than the bid placed by Mr. Evans. They denied the
allegations of the complaint, and filed a counter-complaint, cross-complaint, and third party
complaint: (1) accusing Phillip Matlock of fraud and deception with respect to the status of the
dispenser; (2) seeking, as to Robert Matlock, a declaratory judgment that they purchased the
dispenser from him, or alternatively, for damages; (3) seeking, as to Humphreys and Kennedy, a
declaratory judgment that these third-party defendants, who were late bidders at the auction, have
no ownership interest in the dispenser.
Phillip Matlock filed a motion for summary judgment, alleging that “the terms of the
Agreement under which the contract was purportedly entered requires binding arbitration in lieu of
litigation should any claim or controversy arise.” The motion was resisted on the ground that
summary judgment was inappropriate because the “applicability of the arbitration claim was in
dispute.”
The motion for summary judgment was denied on the ground that the arbitration clause “does
not contemplate binding arbitration relative to ‘user-to-user’ controversies.”
Phillip Matlock was granted a Tenn. R. App. P. 9 interlocutory appeal to review the trial
court’s determination that the arbitration clause in the User Agreement was inapplicable to user vis-
à-vis user controversies. Our review is de novo with no presumption of correctness. Mooney v.
Sneed, 30 S.W.3d 304, 305 (Tenn. 2000). Summary judgment is not appropriate if the movant
cannot demonstrate his entitlement thereto as a matter of law. Penley v. Honda Motor Co., 31
S.W.3d 181, 183 (Tenn. 2000).
Discussion
The User Agreement, admittedly binding on all participants in the e-Bay auction, provides:
17. ARBITRATION. Any legal controversy or legal claim arising out of or
relating to this agreement or our services, excluding legal action taken by e-Bay to
collect our fees and/or recover damages for, or obtain an injunction relating to, the
e-Bay site operations, intellectual property, and our services, shall be settled by
binding arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association. Any such controversy or claim shall be arbitrated
on an individual basis, and shall not be consolidated in any arbitration with any claim
or controversy of any other party. The arbitration shall be conducted in San Jose,
California, and judgment on the arbitration award may be entered into any court
having jurisdiction thereof.
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The appellant, Phillip Matlock, argues that the language “any legal controversy or legal claim
arising out of or relating to this Agreement or our services . . . shall be settled by binding arbitration”
is conclusive of the issue. He further insists that all material facts must be treated as undisputed
because “the only attempt by the other party to create a disputed material fact was the unverified
facsimile statement filed by Mr. Evans.” This document, purporting to be an affidavit of e-Bay’s
corporate counsel, that the Agreement was applicable only to disputes involving e-Bay, is unsworn
and consequently is of no legal efficacy. The point is not crucial because the dispositive issue is one
of law; there are no contested issues of fact. Further, we cannot agree that the quoted language alone
is conclusive of the issue, because not only the entire paragraph but the entire document should be
considered in context.
A resolution of this case requires the application of contract law. While arbitration, as
contrasted to litigation, is the favored method of resolving disputes, consent of the parties to arbitrate
is required, and arbitration agreements rest upon the same legal footing as other contracts. Allied
Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S. Ct. 834 (1995). Parties cannot be forced to
arbitrate claims that they did not agree to arbitrate. Frizzell Constr. Co. v. Gatlinburg, 9 S.W.3d 79,
84 (Tenn. 1999).
We agree with the trial court that the arbitration clause is applicable only to controversies
between e-Bay and the user and not to controversies between users. The Agreement provides that
e-Bay is only a venue, and that “we are not involved in the actual transaction between buyers and
sellers” and “cannot ensure that a buyer or seller will actually complete a transaction.” The
Arbitration Clause provides that arbitration shall be conducted in San Jose, California, and “either
you or e-Bay may seek any interim or preliminary relief from a court of competent jurisdiction in San
Jose, California . . . pending the completion of arbitration” (Emphasis supplied).1
The interpretation of an agreement is not dependent upon any single provision, but upon the
entire body of the contract and the legal effect of it as a whole. Aetna Cas. & Surety Co. v. Woods,
565 S.W.2d 861, 864 (Tenn. 1978). The entire contract must be considered in determining the
meaning of any or all of its parts. Id. The principal apparent purpose of the parties is given great
weight in determining the meaning to be given to manifestations of intention of any part thereof. Id.
See also, Cocke County Bd. of Comm’rs v. Newport Utility Bd., 690 S.W.2d 231 (Tenn. 1985);
Associated Press v. WGNS, Inc., 348 S.W.2d 507 (Tenn. 1961); Rainey v. Stansell, 836 S.W.2d 117(Tenn. Ct. App. 1992); Paul v. Insurance Co. of N. Am., 675 S.W.2d 481 (Tenn. Ct. App. 1984);
Moore v. Moore, 603 S.W.2d 736 (Tenn. Ct. App. 1980).
We do not agree with the appellant that the User Agreement is ambiguous. To the contrary,
we believe the Agreement is plain and unambiguous, and enforceable according to its terms. An
1
The appellee insists that the appellant did not plead the affirmative defense of arbitration as required by Tenn.
R. Civ. P. 8.05, and consequently waived the issue he now urges upon the Court. While it is true that the ap pellant did
not plead the defense of arbitratio n in his answer, he raised this defense in his motion for summary judgment. In light
of our disposition of this case, the point does not require resolution.
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ambiguity cannot be created where none exists. Williams v. Berube & Assocs., 26 S.W.3d 640, 643
(Tenn. Ct. App. 2000). See also, Vanderbilt Univ. v. DiNardo, 174 F.3d 751 (6th Cir. 1999);
Bradson Mercantile Inc. v. Crabtree, 1 S.W.3d 648 (Tenn. Ct. App. 1999). Interpretation of
unambiguous agreements is a question of law, Hardeman County Bank v. Stallings, 917 S.W.2d 695(Tenn. Ct. App. 1995), and the Agreement cannot be construed, as insisted by appellant, to require
that disputes between users must be arbitrated in San Jose, California.
We find as a matter of law that the User Agreement does not encompass and is inapplicable
to disputes solely between users of the e-Bay auction facility. The costs of the appeal are taxed to
the appellant and the case is remanded to the trial court.
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PATRICIA J. COTTRELL, JUDGE
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