152 So. 3d 745
Fla. Dist. Ct. App.2014Background
- HHH Motors (dealer) and Jenny & Kristopher Holt (buyers) executed a Retail Purchase Agreement (RPA) containing a broad arbitration clause when purchasing a 2007 Dodge Ram.
- Immediately after the RPA, the Holts signed a Retail Installment Sales Contract (RISC) to finance the purchase; the RISC contained a merger clause and no arbitration provision.
- The Holts filed a class action under FDUTPA challenging dealer fees; HHH moved to compel arbitration based on the RPA arbitration clause.
- The trial court denied the motion to compel, finding the RISC (with its merger clause) superseded the RPA such that no valid agreement to arbitrate existed.
- HHH appealed; the First DCA reviewed whether a valid written arbitration agreement existed and whether the FAA applied.
Issues
| Issue | Plaintiff's Argument (Holts) | Defendant's Argument (HHH) | Held |
|---|---|---|---|
| Whether a valid written agreement to arbitrate exists | RISC superseded RPA; no enforceable arbitration agreement | Arbitration vested when RPA executed; FAA governs disputes | Court: No valid agreement to arbitrate — RISC merger clause negated RPA arbitration clause |
| Whether the FAA applies | FAA only applies if a court finds a valid written arbitration agreement | FAA preempts state law and should govern because RPA contained arbitration clause | Court: FAA inapplicable because threshold formation requirement failed (no valid agreement) |
| Whether parol evidence may be used to show arbitration agreement | Parol evidence unnecessary because RISC is fully integrated and controls | Parol evidence and contemporaneous-document rule allow reading RPA and RISC together to preserve arbitration | Court: RISC merger clause is clear and bars considering RPA arbitration clause via parol evidence |
| Whether contemporaneously executed documents should be read together to preserve arbitration | N/A (Holts argue RISC controls) | Contemporaneous documents should be construed together to give effect to RPA arbitration clause | Court: Even construing documents, the RISC’s merger clause and lack of arbitration provision negate any arbitration agreement |
Key Cases Cited
- Duval Motors Co. v. Rogers, 73 So. 3d 261 (Fla. 1st DCA 2011) (RISC merger clause can render prior buyer’s order arbitration clause inadmissible)
- Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999) (three-part inquiry for motions to compel arbitration)
- McKenzie Check Advance of Florida, LLC v. Betts, 112 So. 3d 1176 (Fla. 2013) (FAA preemption analysis tied to existence of arbitration agreement)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (U.S. 2010) (courts decide threshold questions of contract formation/existence)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (distinguishing challenges to contract validity from challenges to formation)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (arbitrator decides challenges to validity of contract generally, not to formation)
- Basulto v. Hialeah Automotive, 141 So. 3d 1145 (Fla. 2014) (issues about making the agreement may preclude compelling arbitration)
- Morse Operations, Inc. v. Sonar Radio Corp., 449 So. 2d 1002 (Fla. 4th DCA 1984) (financing agreement without merger clause does not necessarily supersede underlying contract)
- Quix Snaxx, Inc. v. Sorensen, 710 So. 2d 152 (Fla. 3d DCA 1998) (contemporaneous documents concerning same transaction are often construed together)