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Ramick v. Howard-GM II, Inc.

Court of Appeals of Oklahoma, Division II

November 16, 2017

JILLIAN RAMICK and CLAYTON RAMICK, Plaintiffs/Appellees,
v.
HOWARD-GM II, INC., d/b/a, SMICKLAS CHEVROLET, and BBVA COMPASS FINANCIAL CORPORATION, Defendants/Appellants.

          Mandate Issued: 03/28/2018

          APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, OKLAHOMA HONORABLE ALETIA HAYNES TIMMONS, TRIAL JUDGE

          M. Kathi Rawls, Minal Gahlot, RAWLS GAHLOT, PLLC, Moore, Oklahoma, for Plaintiffs/Appellees

          C. Craig Cole, John E. Gatliff II, Kendra N. Avila, C. CRAIG COLE & ASSOCIATES, Oklahoma City, Oklahoma, for Defendants/Appellants

          REVERSED AND REMANDED FOR FURTHER PROCEEDINGS AND APPEAL DISMISSED WITHOUT PREJUDICE IN PART

          KEITH RAPP, JUDGE.

         ¶1 The defendants, Howard-GM II, Inc. d/b/a Smicklas Chevrolet (Smicklas) and BBVA Compass Financial Corporation (Compass), appeal an Order denying their motion to compel arbitration in an action filed by Jillian Ramick and Clayton Ramick (collectively, Ramicks). The defendants also appeal an order sustaining in part only their motion to dismiss.

         BACKGROUND

         ¶2 Ramicks purchased a used automobile from Smicklas. The transaction was financed through Compass.

         ¶3 Ramicks began to have trouble with the vehicle and assert that it had previously been damaged. They claim that Smicklas' sales personnel misrepresented material facts regarding the automobile. Compass refused their demand to rescind the transaction. Ramicks sued and, in their amended petition, alleged claims for fraud, rescission, breach of contract, defamation, violation of the Oklahoma Consumer Protection Act and the Uniform Commercial Code, negligence and intentional infliction of emotional distress.

         ¶4 Smicklas and Compass moved to compel arbitration based upon an arbitration provision in the Purchase Agreement Contract (Contract). [1] They also sought dismissal for failure to plead definitely allegations of fraud and for failure to state a claim.

         ¶5 The Contract provides that Ramicks agree to buy and Smicklas agrees to sell a vehicle for a price paid in accord with the Contract. A portion of the Contract is outlined in a box titled in bold print as "Please read carefully! Notice of Arbitration." The text explains the right to exercise arbitration and its consequences. The text further provides:

The Federal Arbitration Act (9 U.S.C. § 1, et seq.) governs this arbitration agreement and not any state law concerning arbitration, including state law arbitration rules and procedures. This arbitration agreement survives any termination, payoff or transfer of the Contract.

         ¶6 In addition to the Contract, Ramicks and Smicklas executed a separate Retail Installment Sales Contract (RISC). [2] The RISC is dated the same day as the Contract. Both involve the same automobile purchase transaction. The RISC recites:

You, the Buyer (and co-Buyer, if any) may buy the vehicle below for cash or on credit. By signing this contract, you choose to buy the vehicle on credit under the agreements on the front and back of this contract. You agree to pay the Seller-Creditor (sometimes "we" "us" in this contract) the Amount Financed and Finance Charge in U.S. funds according to the payment schedule below. We will figure your finance charge on a daily basis. The Truth-in-Lending Disclosures below are part of this contract.

         ¶7 The RISC sets out the credit terms and financing details of interest, consequences of failure to make payments, etc. The closing provisions provide, in part:

HOW THIS CONTRACT MAY BE CHANGED. 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. No oral changes are binding. (Signatures of Ramicks).

         ¶8 Smicklas assigned the RISC to Compass. The RISC makes no mention of the Contract and it does not contain an arbitration clause. [3] There were several additional documents included in the transaction. [4]

         ¶9 The trial court denied the motion to compel arbitration. [5] In doing so, the trial court ruled that the RISC expressed all of the contract agreements of the parties and did not contain a merger clause to merge the Contract (and its arbitration provision) into the RISC. The trial court relied on Walker v. BuildDirect.com Technologies, Inc., 2015 OK 30, 349 P.3d 549. [6]

         ¶10 The trial court also denied the motion to dismiss, except as to the fraud claim. The plaintiffs were given an opportunity to amend, but that amendment, if any, is not in the Appellate Record.

         ¶11 This Court notes that Ramicks' trial court response and their appellate brief argue that the arbitration clause was fraudulently induced and that it is unconscionable. Last, Ramicks argue that Compass is not a party to the arbitration provisions of the original contract and cannot compel arbitration. However, the motion hearing focused upon the holding of Walker and did not address these additional points. Moreover, the trial court's decision did not rule on these points. The development of applicable facts and legal analysis are first accomplished in the trial court. Bivins v. State ex rel. Oklahoma Mem'l Hosp., 1996 OK 5, ¶ 19, 917 P.2d 456, 464. Therefore, these issues are not addressed in this Opinion.

         ¶12 Smicklas and Compass have appealed. Their appeal includes the ruling denying the motion, in part, based on a failure to state a claim. Ramicks challenge this part of the appeal on the ground that it is not an appeal of a final order. Smicklas and Compass essentially concede that point by asking this Court to deem the appeal as an application to assume original jurisdiction.

         ¶13 This Court will consider only the appeal of the denial of the request to compel arbitration. The remainder of the appeal does not involve an appeal of a final order and that part of the appeal is dismissed without prejudice. This Court declines to deem the appeal as an application to assume original jurisdiction.

         STANDARD OF REVIEW

         ¶14 The sole appellate issue is whether the parties have a contract calling for arbitration. Generally state law principles apply to determine the existence of such a contract. Walker v. BuildDirect.com Technologies, Inc., 733 F.3d 1001, 1004 (10th Cir. 2013); Rogers v. Dell Computer Corp., 2005 OK 51, ¶ 14, 138 P.3d 826, 830. Clearly, the initial Contract with Smicklas does have an arbitration provision and the RISC does not have an arbitration provision. Equally apparent is that both documents, on their face, are contracts and neither incorporates the other.

         ¶15 The trial court's decision is based upon an interpretation of the RISC. The interpretation of a contract is a matter of law. Corbett v. Combined Commc'ns Corp. of Oklahoma, Inc., 1982 OK 135, ¶ 5, 654 P.2d 616, 617. A trial court's legal decision is reviewed de novo. Neil Acquisition, L.L.C. v. Wingrod Inv. Corp., 1996 OK 125, 932 P.2d 1100 n.1.

         ANALYSIS AND REVIEW

         ¶16 The resolution of this appeal depends upon whether the RISC is the entire agreement of the parties or whether there are multiple contracts. There is no question that multiple documents were executed as a part of this transaction and that one of them, the Contract, provides for arbitration.

         ¶17 Thus, Ramicks must have the Contract "go away." They reach this result by arguing that the RISC is the entire agreement and the Contract is merged without including an agreement for arbitration either specifically, or by incorporation of the Contract's arbitration clause. The Ramicks' conclusion must be in accord with Walker, where the Oklahoma Supreme Court instructs that before the Contract, or at least its arbitration clause, may be considered as merged into the RISC, the RISC must meet the following criteria:

Under the Oklahoma law of contracts parties may incorporate by reference separate writings... where (1) the underlying contract [here the RISC] makes clear reference to the extrinsic document [here the Contract], (2) the identity and location of the extrinsic document may be ascertained beyond doubt, and (3) the ...

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