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Brown v. David Stanley Cheverolet Inc.

United States District Court, W.D. Oklahoma

December 22, 2017




         Before the Court is Plaintiffs' Motion to Reconsider and Brief in Support [Doc. No. 11], which seeks relief from the Order of November 17, 2017 [Doc. No. 10], compelling arbitration. Defendants timely responded in opposition [Doc. No. 12], and Plaintiffs filed a reply [Doc. No. 13]. The matter is fully briefed and at issue.


         Plaintiffs purchased a 2008 Cadillac STS-V from David Stanley Chevrolet. [Doc. No. 1-1 at ¶ 5]. As part of the purchase, Plaintiffs signed a Purchase Agreement, which contained a Dispute Resolution Clause. [Doc. No. 3-1]. The Dispute Resolution Clause, which Plaintiffs separately signed, appeared in red typeface on the front of the Purchase Agreement. See Defs.' Mot. to Dismiss, Ex. 1 [Doc. No. 3-1 at 1]. The Dispute Resolution Clause provided that “any controversy, claim or dispute” between the parties “arising out of, or related, to this sale or transaction” be submitted to binding arbitration. [Doc. No. 3-1 at 1]. Plaintiffs allege that about one month after the sale, David Stanley Chevrolet demanded an additional payment of $1, 500.00. [Doc. No. 1-1 at ¶ 13]. Plaintiffs also allege that David Stanley Chevrolet failed to pay off the loan on the trade-in vehicle and sold it to a third party. [Doc. No. 1-1 at ¶ 16]. Compass Bank allegedly repossessed the trade-in vehicle, sold it and demanded Plaintiffs pay the deficiency balance. [Doc. No. 1-1 at ¶ 21].

         Plaintiffs commenced this action in the District Court of Oklahoma County on February 1, 2017. [Doc. No. 1-1]. Defendants removed this action to federal court [Doc. No. 1] and moved the Court to enter an order compelling arbitration [Doc. No. 3]. Plaintiffs filed a response in opposition [Doc. No. 8], and Defendants replied [Doc. No. 9]. On November 17, 2017, the Court entered an Order compelling arbitration and administratively closed the case pending the outcome of the arbitration proceedings. [Doc. No. 10]. Plaintiffs now ask the Court to revisit its ruling. Specifically, Plaintiffs assert that the Court should have conducted an evidentiary hearing to determine whether Plaintiffs were fraudulently induced into signing the arbitration clause.


         The Court finds that Rule 59(e) governs its decision because Plaintiffs' motion was filed within 28 days after the judgment was entered. See Fed. R. Civ. P. 59(e). Relief under Rule 59(e) may be warranted (1) when there has been a change in the controlling law, (2) when there is new evidence that was previously unavailable, or (3) when necessary to correct clear error or prevent manifest injustice. See Somerlott v. Cherokee Nation Distrib., Inc., 686 F.3d 1144, 1153 (10th Cir. 2012); see also Barber ex rel. Barber v. Colo. Dep't of Revenue, 562 F.3d 1222, 1228 (10th Cir. 2009) (Rule 59(e) relief is appropriate where “the court has misapprehended the facts, a party's position, or the controlling law.”). It is not an appropriate use of such a motion “to revisit issues already addressed or advance arguments that could have been raised in prior briefing.” Servants of the Paraclete v. John Does, I-XVI, 204 F.3d 1005, 1012 (10th Cir. 2000).


         Plaintiffs assert that the Court erred in not conducting an evidentiary hearing. Plaintiffs, however, do not challenge the Court's other findings in its November 17, 2017 Order compelling arbitration [Doc. No. 10]. Similar to the summary judgment standard, “[w]hen parties do not dispute the material facts surrounding an arbitration provision, then a district court, while viewing the facts most favorable to the non-moving party, can decide as a matter of law whether the parties actually agreed to arbitrate.” Ragab v. Howard, 841 F.3d 1134, 1139 (10th Cir. 2016). Only when there is a genuine dispute of material facts must the trial court proceed summarily to trial to resolve the factual disputes. Id. (citing to 9 U.S.C. § 4).

         Thus, the moving party is required to present evidence sufficient to demonstrate the existence of an arbitration agreement. Once that showing has been made, the party opposing arbitration must demonstrate a genuine issue of material fact as to the making of the arbitration agreement. See e.g., Avedon Engineering, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir. 1997). When it is apparent that no material disputes of fact exist, “it may be permissible and efficient for a district court to decide the arbitration question as a matter of law through motions practice and viewing the facts in the light most favorable to the party opposing arbitration.” Howard v. Ferrellgas Partners, L.P., 748 F.3d 975, 978 (10thCir. 2014).

         Defendants presented evidence sufficient to demonstrate the existence of an arbitration agreement. Accordingly, the burden shifted to Plaintiffs to raise a genuine issue as to the making of the agreement, using evidence comparable to the evidence identified in Fed.R.Civ.P. 56. In concluding that Plaintiffs had failed to assert any facts to support their assertion that they were fraudulently induced into signing the Dispute Resolution Clause, the Court reviewed Ms. Brown's affidavit [Doc. No. 8-2] and the parties' other submissions. [Doc. No. 10 at 15-16]. An evidentiary hearing would not change this outcome.

         It is undisputed that Plaintiffs signed all three documents - the Purchase Agreement, the Spot Delivery Agreement and the Retail Installment Sale Contract - on the same day as part of one transaction. The Purchase Agreement contained the separately executed Dispute Resolution Clause, which appeared conspicuously on the front of the document in red typeface. Plaintiffs did not assert a claim for rescission of the arbitration agreement or raise any allegations in the Petition challenging the validity or enforceability of the arbitration clause. [Doc. No. 1-1]. Moreover, Plaintiffs admitted that the Dispute Resolution Clause in the Purchase Agreement provided for binding arbitration pursuant to the FAA. See Pls.' Resp. at ¶ 3 [Doc. No. 8].

         The Dispute Resolution Clause was clearly visible to Plaintiffs on the front of the Purchase Agreement in red typeface.[1] Although they may not have chosen to read the clause, Plaintiffs signed it. The agent's statements concerning the main purpose of the Purchase Agreement were generally accurate and did not give rise to any duty to speak regarding the arbitration clause.

         An evidentiary hearing was simply not required as a predicate to this Court compelling arbitration. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 29 (1983) (approving appeals court's sua sponte determination that the underlying dispute was arbitrable, thus effectively entering a Section 4 order compelling arbitration, where appeals court had in the record full briefs and evidentiary submissions ...

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