406 P.3d 592
Okla. Civ. App.2017Background
- Najera purchased three trucks from David Stanley Chevrolet (DSC) in 2014; for each sale he executed a Purchase Agreement and a Retail Installment Sale Contract (RISC) on the same date.
- Each Purchase Agreement contains a red-ink Dispute Resolution Clause requiring arbitration under the Federal Arbitration Act.
- Each RISC contains a merger/"how this contract can be changed" clause stating: "This contract contains the entire agreement between you and us relating to this contract." The RISC does not include an arbitration clause.
- Najera sued DSC for wrongful repossession and other claims; DSC moved to compel arbitration. Najera argued there was no assent to arbitration, alleged fraud in obtaining his signature, claimed unconscionability, and asserted the RISCs constituted the entire agreement (precluding arbitration).
- The trial court ruled the RISCs were the parties’ entire agreements and denied the motion to compel arbitration. DSC appealed.
- The Court of Civil Appeals reversed, holding the Purchase Agreements and RISCs can be harmonized and that the arbitration clause applies; the case was remanded for further proceedings on Najera’s other attacks on arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the RISC is the parties’ entire agreement so as to exclude the separate Purchase Agreement arbitration clause | Najera: RISC merger clause means the RISC governs the transaction and excludes contemporaneous documents (so no arbitration) | DSC: Purchase Agreement and RISC are part of the same transaction; Purchase Agreement expressly ties related documents together and contains an arbitration clause | Held: Documents are contemporaneous and can be harmonized; RISC does not negate or conflict with arbitration clause; arbitration applies |
| Whether inconsistent terms require the RISC to supersede the Purchase Agreement | Najera: RISC supersedes conflicting terms, so financing terms control and arbitration is excluded | DSC: Purchase Agreement states only directly conflicting terms are superseded by RISC; RISC contains no dispute-resolution term, so no conflict exists | Held: The RISC supersedes only directly conflicting terms; no conflict as to dispute resolution, so arbitration remains effective |
| Whether extraneous contemporaneous documents can be given effect despite a merger clause in the RISC | Najera: Merger clause bars incorporation of other contemporaneous agreements | DSC: Merger clause applies only to the RISC itself and does not render other contemporaneous documents meaningless | Held: Merger clause limited to the RISC; harmonization avoids rendering other documents nugatory; arbitration clause stands |
| Whether the court should decide threshold validity defenses to arbitration (e.g., fraud, unconscionability) | Najera: Raises fraud, lack of assent, unconscionability attacking arbitration's validity | DSC: Move to compel arbitration based on enforceable arbitration clause; challenges to whole contract are for arbitrator if they do not target clause specifically | Held: Trial court did not decide those defenses; appellate court refused to address them in first instance and remanded for further proceedings on those issues |
Key Cases Cited
- Johnson ex rel. Johnson v. JF Enter., LLC, 400 S.W.3d 763 (Mo. 2013) (contemporaneous vehicle sale documents construed together; arbitration clause enforceable and harmonizable with financing contract)
- Arizon Structures Worldwide, LLC v. Global Blue Tech.-Cameron, LLC, 481 S.W.3d 542 (Mo. Ct. App. 2015) (documents with mutually exclusive forum-selection and arbitration provisions cannot both be enforced)
- Mooneyham v. BRSI, LLC, [citation="682 F. App'x 655"] (10th Cir. 2017) (under Oklahoma law, RISC merger clause applies only to RISC; contemporaneous arbitration agreement can govern disputes)
- Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S. 17 (2012) (under FAA, challenges to the contract as a whole are for the arbitrator unless the challenge is to the arbitration clause itself)
- Walker v. BuildDirect.com Techs., Inc., 349 P.3d 549 (Okla. 2015) (consumer contract does not incorporate separate online terms absent adequate notice; distinguished where buyer actually signed the arbitration agreement)