IN THE CIRCUIT COURT OF THE COUNTY OF ST. LOUIS STATE OF MISSOURI

Transcription

1 IN THE CIRCUIT COURT OF THE COUNTY OF ST. LOUIS STATE OF MISSOURI MICHELLE DUERLINGER, September 12, 2012 Plaintiff, Cause No. 12SL-CC00727 vs. Division 14 D.J.S./C.M.S., INC., Defendant. MEMORANDUM, ORDER AND JUDGMENT This matter is before the Court on the Defendant s Motion to Compel Arbitration and Stay Litigation. Taking judicial notice of its file, considering the arguments of the parties and being advised in the premises, the Court hereby makes the following findings, rulings and orders: The factual scenario which gives rise to this dispute is as follows: On May 23, 2011, Plaintiff Duerlinger made arrangements to purchase a Kia Sorento from Defendant (who does business as Suntrup Kia.. As part of this purchase, Duerlinger and Dealer Suntrup Kia executed two documents between them, both attached to Duerlinger s Suggestions in Opposition to Suntrup Kia s Motion as Exhibits A and B. Exhibit A is the Buyer s Order and Exhibit B is the Sales Contract. These documents evidence the parties intent to sell to Duerlinger a new 2011 Kia Sorento for a total sales price of $34,780. Because she traded in a vehicle, Duerlinger s unpaid cash balance was $24,654. Duerlinger agreed to pay $ monthly, beginning July 7, 2011, for seventy-two months. The Buyer s Order contains an arbitration provision; the Sales Contract does not.

2 Further, on page three of the Sales Contract, Suntrup Kia assigned without recourse its interest in this contract to Wells Fargo for loan servicing. Following the sale, Dueringer drove her new car off the lot and took possession of it, along with the car s title. Wells Fargo is listed as lien holder on the vehicle s title, attached to Plaintiff s Petition as Exhibit 2. What follows thereafter is a subject of some dispute between the parties and is not dispositive for purposes of this motion, other than by way of background. Judging from the pleadings, it appears that Ms. Dueringer never heard anything from Wells Fargo regarding future payments or whether her loan was accepted. According to Ms. Dueringer, she wrote two car payment checks to Suntrup Kia in July and August, 2011, which it accepted but did not cash. In September, 2011, Ms. Dueringer received calls from Suntrup Kia, asking her to come into the dealership to sign new loan papers; that her loan had not gone through. Dueringer asserts that she did not know why this could be; Suntrup Kia asserts that she did not pass her credit check. Regardless, Dueringer told Suntrup Kia that she wanted to obtain counsel and enforce her current contract with its interest rate and payment terms. Although she was requested to do so, she did not appear in the dealership to sign new loan papers. In her Petition, Dueringer asserts that she started to receive rejection letters from finance companies, which she had not contacted, in September, The Court infers that Suntrup Kia was trying to locate a willing third party loan financer, without success. In December, 2011, Suntrup Kia repossessed the car. Plaintiff Dueringer filed her Petition against Defendant Suntrup Kia, alleging a violation of the Missouri Merchandising Practices Act (Count I and Fraud (Count II.

3 Thereafter, Defendant Suntrup Kia filed its Motion to Compel Arbitration and Stay Litigation, which is now at issue before the Court. The Retail Buyer s Order, Exhibit A, states in pertinent part(s: ARBITRATION: MANDATORY ARBITRATION OF DISPUTES: Any claim, controversy or dispute of any kind between the customer and the company arising out of or related to this agreement (whether based on contract, tort, statute, fraud, misrepresentation or any other legal or equitable theory shall be resolved by final and binding arbitration, pursuant to the following terms ADDENDUM: This addendum is made a part of the Retail Buyer s Order between buyer and seller and/or Retail Installment Sale Contract between buyer and Seller dated: [left blank on original]. Should at any time from the date of execution or the above Retail Buyer s Order between the buyer and seller and/or Retail Installment Sale Contract, the buyer should not qualify for the financing of said vehicle with any financial institution that the seller is doing business with, then said contract shall become null and void and any earnest deposit paid shall be returned to the buyer. If the vehicle subject to sale and purchase hereunder is in buyer s possession, buyer shall immediately return same to seller or permit seller or its agent to obtain possession of said vehicle, and in either of such events, buyer further agrees to pay seller the cost for any damage occurring to said vehicle while same was in buyer s possession. The Retail Installment Sale Contract, Exhibit B, states in pertinent part(s: [On the front] You, the Buyer 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 Creditor Seller (sometimes we or 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. [Further, on the second page ] HOW THIS CONTRACT CAN 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 [emphasis added]. [Further, on the third page ] YOUR OTHER PROMISES TO US (c Security Interest. You give us a security interest in:

4 The vehicle and all parts or goods put on it. This secures payment of all you owe on this contract. It also secures your other agreements in this contract. You will make sure the title shows our security interest (lien in the vehicle. [Further, on the fourth page ] For a personal or household vehicle: Oral agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable. To protect you (borrower(s and us (creditor from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we agree in writing to modify it. [emphasis added] Based on the foregoing contractual provisions, Defendant argues that Plaintiff must be compelled to have her claims submitted to arbitration, because the mandatory arbitration language contained in the Buyer s Retail Order Form (Exhibit A is the written modification to the Sales Contract (Exhibit B referred to by the above except as we agree in writing to modify it. In addition, Defendant argues that the installment contract (which omits the arbitration language is void because the financing fell through and, thus, nullified the contract. Plaintiff argues that the Retail Order Form (Exhibit A has been wholly merged or subsumed by the Sales Contract (Exhibit B language of any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us Generally, [a]rbitration is a matter of contract, and a party cannot be required to arbitrate a dispute that it has not agreed to arbitrate. Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 435 (Mo. banc Therefore, it is axiomatic that [b]efore a party may be compelled to arbitrate under the FAA, a court must determine whether a valid agreement to arbitrate exists between the parties and whether the specific dispute falls within

5 the substantive scope of that agreement. Dunn at The existence of a merger clause is a strong indication on the face of the contract that the writing is intended to be complete. CIT Group/Sales Financing Inc. v. Lark, 906 S.W.2d 865, 868 (Mo.App. E.D There is applicable recent precedent; Krueger v. Heartland Chevrolet, Inc., 289 S.W.3d 637, 639 (Mo.App. W.D Of note, the holding in Krueger was recently examined in Johnson v. JF Enterprises, LLC, WD73990, 2012 WL (Mo. Ct. App. Mar. 27, 2012, which followed the holding of Kruger; the opinion of the Missouri Court of Appeals, Western District, is unreported as the case was ordered transferred to the Missouri Supreme Court on July 13, Briefing is on-going and oral argument is not scheduled until November 8, The Court finds that it is not in the interests of justice or efficiency to stay proceedings on this case, waiting for an unknown period of time, for the Supreme Court to rule. No opinion has issued to date and this Court will not speculate on what the result might be or when it might occur. Therefore, Krueger is still the controlling law and the Court applies it to the issues before it. In Krueger, the Kruegers executed three documents in the purchase of a used vehicle from a dealership: a retail buyer's order, an arbitration addendum, and a retail installment contract. Id. at 638. After the Kruegers brought suit against the dealership, alleging that the vehicle had sustained undisclosed damage prior to its sale, the dealership sought to compel arbitration pursuant to the terms of the arbitration addendum. Id. The Kruegers opposed the motion, arguing that the vehicle was ultimately purchased and financed pursuant to the Retail Installment Contract, which did not reference or incorporate the Arbitration Addendum. Id. The Court held that the Krugers could not be compelled to arbitrate the dispute, because the Retail Installment Contract did not reference or incorporate the

6 arbitration addendum and that it contained a merger clause stating that it was the complete and exclusive agreement between the parties. Kruger at In determining the retail installment contract was the controlling agreement between the parties, the Krueger court did not examine the order in which the documents were executed. Instead, the court focused on the language contained in the retail installment contract. The Court found that the retail installment contract superseded the arbitration addendum because it did not refer to or incorporate any of the other documents executed by the parties and had a merger clause that clearly stated it was the complete and exclusive statement of the agreement between the parties. Kruger at 639. Defendant argues that Kruger is distinguishable from this case, because the Kruger s dispute arose in the context of a dealership s alleged failure to disclose prior damage to the vehicle, not a case where buyer s credit was insufficient. The Kruger court discussed this issue in its opinion, referencing Walker Mobile Home Sales, Inc. v. Walker, 965 S.W.2d 271 (Mo.App Kruger at 639. In Walker, a buyer bought a mobile home from a dealer. The buyer signed a purchase agreement to buy the home and a separate retail installment credit agreement to finance the purchase. As in this case, a finance company initially approved the buyer s credit application. Only later did the finance company decline to provide credit. The buyer tried to make payments directly to the mobile home seller, but the seller rejected the payments and sued buyer for the cash price of the mobile home. Walker at 639. In finding that the arbitration language was superseded by the merger clause, the Court in Kruger found that [T] the installment contract superseded any other contracts between the parties because it contained a clause stating that it was the only agreement.

7 Walker at 275. As a result, the installment contract became the only document governing the terms of the purchase, and the cash purchase agreement could not be enforced. Id. The dealer argued it never intended to finance the mobile home purchase, but the court found nothing in the installment contract to support that conclusion. Id. Had the Seller wanted to condition its credit sale on the approval of third-party financing, it could easily have added such a provision but did not do so. Id. Krueger at 640. This Court is bound by the precedent before it. Defendant s Motion to Compel Arbitration and Stay Proceedings is hereby DENIED. Case set for a case management conference on:, 2012, at 9 am. SO ORDERED: Kristine Allen Kerr Circuit Judge, Division 14 cc: Copies mailed, postage pre-paid, to all parties by counsel.