Roberto Basulto v. Hialeah Automotive, etc.
141 So. 3d 1145
| Fla. | 2014Background
- In 2004 Roberto Basulto and Raquel Gonzalez (Spanish‑only speakers) bought a 2005 Dodge Caravan from Hialeah Automotive; purchase documents were in English and some were signed blank and later filled in.
- Buyers sued for fraud and FDUTPA violations, sought rescission of arbitration agreements and the loan; dealership moved to compel arbitration.
- After an evidentiary hearing the trial court found the buyers did not understand the arbitration terms, there was no meeting of the minds, and concluded no valid arbitration agreements existed; alternatively it found the agreements procedurally and substantively unconscionable.
- The Third District affirmed denial of enforcement of the standalone arbitration Agreement as unconscionable, but reversed as to an arbitration Clause on the retail installment contract, compelling arbitration of monetary claims under the FAA.
- The Florida Supreme Court granted review for conflict with Seifert, quashed the Third District decision, reinstated the trial court order, held that the Seifert standard governs, and remanded for award of appellate attorney’s fees to the buyers under section 57.105.
Issues
| Issue | Plaintiff's Argument (Basulto) | Defendant's Argument (Hialeah Auto.) | Held |
|---|---|---|---|
| Whether a valid written agreement to arbitrate exists | Buyers: no meeting of minds; could not read English; documents blank when signed; never informed about arbitration | Dealer: arbitration clauses are in the signed contracts; language/illiteracy do not prevent enforcement | Court: trial court findings that no valid arbitration agreements existed were not clearly erroneous; Seifert first‑prong controls; arbitration may not be compelled |
| Whether FAA precludes contract‑law defenses here | Buyers: state contract defenses apply; trial court must determine agreement existence before FAA compels arbitration | Dealer: transaction implicates interstate commerce; FAA governs and generally enforces arbitration clauses | Court: FAA applies but section 4 requires the court be satisfied no issue exists as to making of the agreement; because trial court found no agreement, FAA did not require arbitration |
| Whether unconscionability can invalidate arbitration agreements and the standard to apply | Buyers: arbitration provisions unconscionable given procedural defects and substantive waivers | Dealer: severability clauses/FAA limit state invalidation; some clauses enforceable | Court: both procedural and substantive unconscionability must be shown as a defense, but under a sliding‑scale balancing approach (they need not be equal); declined to resolve unconscionability here because no agreement existed |
| Entitlement to appellate attorney’s fees | Buyers: request fees under FDUTPA and contract provision; prevailed on appeal | Dealer: FDUTPA fees not appropriate for appellate award | Held: FDUTPA not a basis for appellate fees here, but buyers entitled to appellate fees under contract fee‑shifting provision and §57.105; remanded to trial court to determine amount |
Key Cases Cited
- Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla. 1999) (three‑part framework for ruling on motions to compel arbitration)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (courts must be satisfied that making of arbitration agreement is not in issue before compelling arbitration under the FAA)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (distinguishes contract validity from whether an agreement was concluded)
- Walker‑Thomas Furniture Co. v. Brown, 350 F.2d 445 (D.C. Cir. 1965) (formative articulation of procedural and substantive unconscionability doctrine)
- Peacock Hotel, Inc. v. Shipman, 138 So. 44 (Fla. 1931) (early Florida articulation of unconscionability and equitable relief)