JAMIE FIELDS v. HERRNSTEIN CHRYSLER, INC., et al.
Case No. 12CA827
IN THE COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT PIKE COUNTY
Released: 02/07/13
2013-Ohio-693
McFarland, P.J.
[Citе as Fields v. Herrnstein Chrysler, Inc., 2013-Ohio-693.]
APPEARANCES:
Jason Shugart and D. Dale Seif, Jr., Seif & Shugart, LLC, Waverly, Ohio, for Appellant.
Christina J. Marshall and John R. Conley, Sutter O‘Connell, Cleveland, Ohio, for Appellees, Chrysler Group, LLC, Herrnstein Chrysler, Inc., Bart Herrnstein and Todd Montgomery.
Dale A. Stalf, Wood & Lamping LLP, Cincinnati, Ohio, for Appellee, Capital One Auto Finance, a division of Capital One, N.A.
McFarland, P.J.
{1} This is an appeal from a decision by the Pike County Common Pleas Court which granted Appellees’ joint motion to compel arbitration and stayed the below action pending arbitratiоn.1 On appeal, Appellant, Jamie Fields, raises two assignments of error, contending that 1) the trial court
{2} Because we conclude that the claims against the nonsignatories stemmed from the same transaction as the claims against the signatories, and because we conclude that the claims are intertwined as between the two and alleged interdependent and concerted misconduct, we find no abuse of discretion on the part of the trial court in ordering a stay and referring the matter to arbitration. Thus, both of Appellant‘s assignments of error are overruled. Accordingly, the decision of the trial court is affirmed.
FACTS
{3} On July 10, 2010, Appellant, Jamie Fields, purchased a new, 2010 Jeep Grand Cherokee from Appellee, Herrnstein Chrysler, Inc. The vehicle purchase was finanсed by Capital One Auto Finance, Inc., an assignee of Herrnstein Chrysler, Inc. under the Retail Installment Sale
“Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Clause, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this cоntract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.”
{4} Appellant and Appellee, Herrnstein Chrysler, Inc., also executed another, separate arbitration agreement that day, entitled Agreement to Arbitrate. This agreement provided, in pertinent part, as follows:
“By entering into this Agreement to Arbitrate (“Agreement“), Customer(s) and Dealership, including any Assignee (collectively referred to as “the Parties“) agree, except as
otherwise provided in this Agreement, to settle by binding arbitration any dispute between them regarding: (1) the purchase/lease by Customer(s) of the above-referenced Vehicle; (2) any products and services purchased in conjunction with the Vehicle; (3) any financing obtained in connection with the transaction; and/or (4) any dispute with respect to the existence, scope or validity of this Agreemеnt. Matters that the Parties agree to arbitrate include, but are not limited to, disputes related to the Retail Purchase/Retail Lease Agreement and any documents incorporated therein by reference (whether such references made in the Agreement or in the document itself), the application for and terms of financing for the transaction, the Finance/Lease Contract, any alleged promises, representations and/or warranties made to or relied upon by the Parties, and any alleged unfair, deceptive, or unconscionable acts or practices.”
The Agreement to Arbitrate further provided that “[i]f any term of this Agreement conflicts with the terms of any other document or agreement between the Parties, the terms of this Agreement shall prevail.” The Agreement to Arbitrate also provided that “THIS AGREEMENT IS
{5} Within the first few months after purchasing the vehicle, Appellant noticed paint chipping and/or peeling off of the vehicle in several different locations. After contacting both Herrnstein Chrysler and Chrysler Group and being unable to obtain an offer to remedy the problem that was acceptable to Appellant, Appellant initiated a complaint in the Pike County Court of Common Pleas, naming Appellee, Herrnstein Chrysler Inc., Todd A. Montgomery, Bart Herrnstein, Chrysler Group, LLC, Capital One Auto Finаnce, Inc. as well as the John Doe finance agents and representatives of Herrnstein Chrysler, Inc. The named defendants all filed answers to the complaint, asserting as a defense the fact that Appellant‘s claims were required to be resolved through arbitration. After filing their answers, on October 24, 2011, Appellees filed a joint motion to stay and compel arbitration, citing the court to the arbitration clause contained within the Retail Installment Sales Contract, as well as the separately executed Agreement to Arbitrate.
{6} On November 10, 2011, Appellant filed a memorandum contra the motion to stay and compel arbitration. In his motion, Appellant argued, in part, that because the parties signed two different arbitration agreements,
{7} An oral hearing regarding the matter was held on January 4, 2012, and the record contains a certification by the court rеporter that the hearing was recorded. However, Appellant failed to request that any transcripts be transmitted to this Court on appeal. Thus, the transcript of that hearing is not currently before us on appeal. In Appellant‘s bench brief, he stated that “Counsel for Defendants admitted during the January 4, 2012 hearing that the Defendant HCI‘s (Herrnstein Chrysler‘s) Agreement to Arbitrate trumps the arbitration clause in the Retail Installment Sales Agreement.” As such, Appellant noted that “[t]he “Parties” to the Agreement to Arbitrate are specifically narrower than the parties as defined in the arbitration clause in the Retail Installment Sales Agreement,” and argued that only the claims against Herrnstein Chrysler, a signatory, and Capital One, which was Herrnstein‘s assignee, should be sent to arbitration.
{8} After considering bench briefs submitted by the parties, the trial court issued a decision and journal entry on February 21, 2012. In its decision, the trial court found that the Agreement to Arbitrate was a “valid, subsisting, and enforceable agreement[,]” and further ordered as follows:
“1. That all claims pending in this action against Defendants Herrnstein Chrysler, Inc., Todd A. Montgomery, Bart Herrnstein and Capital One Auto Finance are referable to arbitration under the “Agreement To Arbitrate;” and
2. That any and all claims pending in this action against Defendant Chrysler Group, LLC and that are also pending against Defendant Herrnstein Chrysler, Inc., Todd A. Montgomery, Bart Herrnstein, and/or Capital One Auto Finance, are referable to arbitration under the “Agreement To Arbitrate;” and
3. That any and all claims pending in this action against Chrysler Group, LLC that are not also pending against either Defendant Herrnstein Chrysler, Inc., Todd A. Montgomery, Bart Herrnstein, or Capital One Auto Finance, are not referable to arbitration under the “Agreement To Arbitrate.”
{9} It is from this decision and journal entry that Appellant now brings his timely appeal, assigning the following errors for our review.
ASSIGNMENTS OF ERROR
“I. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY REWRITING THE ARBITRATION AGREEMENT BETWEEN THE PARTIES AND ORDERING TO ARBITRATION PLAINTIFF-APPELLANT‘S CLAIMS AGAINST THE PARTIES, TODD A. MONTGOMERY AND BART HERRNSTEIN, WHO WERE NEITHER PARTIES TO THE SUPERSEDING ARBITRATION CLAUSE, NOR SIGNATORIES TO THE ARBITRATION AGREEMENT OR CONTRACTS.
II. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY ORDERING TO ARBITRATION PLAINTIFF-APPELLANT‘S CLAIMS AGAINST DEFENDANT CHRYSLER GROUP, LLC, WHEN CHRYSLER GROUP, LLC IS NEITHER A SIGNATORY, NOR A PARTY TO THE CONTRACT OR ARBITRATION AGREEMENT.”
ASSIGNMENTS OF ERROR I AND II
{10} As Appellant‘s assignments of error are interrelated, we will addrеss them in conjunction with one another. In his first assignment of error, Appellant contends that the trial court committed reversible error by
{11} Appellees contend that the trial court did not “rewrite” the arbitration agreement, but instead relied upon the doctrine of estoppel in reaching its decision. As such, Appellee contends that the only issue on
STANDARD OF REVIEW
{12} An appellate court reviews a trial court‘s decision to grant or to deny a motion to compel arbitration or stay the proceedings under the abuse of discretion standard. K.M.P., Inc. v. Ohio Historical Society, 4th Dist. No. 03CA2, 2003-Ohio-4443, ¶ 14; see, also, Strickler v. First Ohio Banc & Lending, Inc., 9th Dist. Nos. 08CA009416 & 08CA009460, 2009-Ohio-1422, ¶ 7; River Oaks v. Krann, 11th Dist. No.2008-L-166, 2009-Ohio-5208, ¶ 41; Grady v. Winchester Place Nursing and Rehabilitation Ctr., 5th Dist. No. 08CA59, 2009-Ohio-3660, ¶ 15; Medallion Northeast Ohio, Inc. v. SCO Medallion Healthy Homes, Ltd., 9th Dist. No. 23214, 2006-Ohio-6965, ¶ 6. But, see, Bentley v. Cleveland Browns Football Co., LLC, Cuyahoga App. No. 95921, 2011-Ohio-3390, ¶¶ 12 and 13 (noting divergent authority regarding whether an abuse-of-discretion or de novo standard is the appropriate standard of review applicable to a trial court‘s decision regarding a motion to stay or compel arbitration and declining to explicitly adopt either
{13}
“If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending, uрon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one
of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement, provided the applicant for the stay is not in default in proceeding with arbitration.”
{14} Thus,
{15} “A prime objective of an agreement to arbitrate is to achieve ‘streamlined proceedings and expeditious results.‘” Kellogg v. Griffiths Health Care Group, 3rd Dist. No. 9-10-59, 2011-Ohio-1733, ¶ 23, quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 633, 105 S.Ct. 3346 (1985). “Arbitration is favorеd because it provides the parties thereto with a relatively expeditious and economical means of resolving a dispute.” Schaefer at 712; see, also, Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-54, 908 N.E.2d 408. Thus, “if a dispute even
{16} Generally, “‘parties who have not agreed to arbitrate their disputes cannot be forced to forego judicial remedies.‘” Short v. Resource Title Agency, Inc., 8th Dist. No. 95839, 2011-Ohio-1577, ¶ 13; quoting Cleveland-Akron-Canton Adverstising Coop. v. Physicians Weight Loss Ctrs. of Am., Inc., 184 Ohio App.3d 805, 2009-Ohio-5699, 922 N.E.2d 1012, ¶ 14; citing Moore v. Houses on the Move, Inc., 177 Ohio App.3d 585, 2008-Ohio-3552, 895 N.E.2d 579. However, there are certain instances when equity demands that parties who have not agreed to arbitration may be forced to do so when “ordinary principles of contract and agency” require. Id. at ¶ 14; citing McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519, 524 (C.A.2, 1980).
{17} Under an equitable estoppel theory, “a nonsignatory who knowingly accepts the benefits of an agreement is estopped from denying a corresponding obligation to arbitrate.” I Sports v. IMG Worldwide, Inc., 157 Ohio App.3d 593, 2004-Ohio-3113, 813 N.E.2d 4, ¶ 13. While thаt scenario is not applicable sub judice, as noted in Sports I, several federal circuits have also recognized an “alternate estoppel theory” whereby “arbitration
{18} As set forth in I Sports, supra, at ¶¶ 16, 17 and 20:
“Where estoppel has been extended to ‘intertwined claims,’ it is generally applied in two circumstances: (1) where a signatory must rely on the terms of the written agreement in asserting claims against a nonsignatory and (2) where the signatory alleges substantially interdependent misconduct by both the nonsignatory and one or more signatories to the contract. Grigson v. Creative Artists Agency, L.L.C. (C.A.5, 2000), 210 F.3d 524, 527, quoting
MS Dealer Serv. Corp v. Franklin (C.A.11, 1999), 177 F.3d 942, 947. Whether equitable estoppel should be applied will turn on the facts of each case. Grigson, 210 F.3d at 527.”
{19} Under the first circumstance for “intertwined claims,” еquitable estoppel binds a nonsignatory to an arbitration clause only when the signatory to the written agreement “must rely on the terms of the written agreement in asserting its claims against the nonsignatory.” Hill v. G.E. Power Sys., Inc. (C.A.5, 2002), 282 F.3d 343. It is not sufficient that the plaintiff‘s claims “touch matters” concerning the agreement or that the claims are “dependent upon” the agreement. Id. at 348–349.
***
The second circumstance under which equitable estoppel is applied arises when the signatory to the contract alleges “substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.” Hill, 282 F.3d at 348.”
LEGAL ANALYSIS
{20} As set forth above, this matter stems from Appellant‘s purchase of a new vehicle from Herrnstein Chrysler, Inc., which developed a paint problem within a few months after purchase. Specifically, the paint on the vehicle began to chip and peel frоm several different locations. When
{21} In his complaint, Appellant initially set forth а twenty-eight paragraph section entitled “Common Facts,” which alleged that defendants Herrnstein Chrysler, Inc., Chrysler Group, Bart Herrnstein as well as the John Doe financing agents and employees were all “Defendants Suppliers” for purposes of the agreement between the parties. Appellant further alleged that at all times, “Defendants Suppliers” were acting as “dealers” while dealing with him and further that Chrysler Group and Herrnstein Chrysler were both in the business of supplying automobiles in the State of Ohio and providing warranties for new automobiles. Appellant further alleged in the common facts section that he was forced to hire legal counsel to seek redress as a result of “Defendants Suppliers’ misconduct.”
{22} Appellant‘s complaint went on to allege claims based upon the Consumer Sales Practices Act, deceptive trade practices, breach оf express warranties, breach of implied warranties, the Equal Credit Opportunity Act,
{23} Appellant does not dispute that the first, second, third, fifth, sixth and seventh claims in his complaint were properly referred to arbitration as against Herrnstein Chrysler, which was a signatory to the agreement.2 He claims instead that it was improper to refer these claims to arbitration as against the other parties, which were not signatories to the agreement. However, as set forth above, Appellant alleges common facts
{24} Further, we conclude that the claims alleged by Appellant fell within the purview of the arbitration agreement, which covered the purchase of the vehicle, the financing of the vehicle, the scope and validity of the arbitration agreement, any alleged promises, representations and/or warranties made to or relied upon by the parties, as well as any alleged unfair, deceptive or unconscionable acts or practices. We reach our decision in part based upon Appellant‘s own categorization of Appellees as “Defendants Suppliers” whose common actions led to the filing of the underlying lawsuit. Our conclusion is further supported by the fact that all of Appellant‘s claims arise out of a single transaction, which was the purchase of a new vehicle from Herrnstein Chrysler.
{25} Thus, we conclude that this is one of those limited situations in which a nonsignatory may bind a signatory to an arbitration agreement. As
JUDGMENT AFFIRMED.
It is ordered that the JUDGMENT BE AFFIRMED and that the Appellees recover of Appellant costs herein taxed.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Pike County Common Pleas Court to carry this judgment into execution.
Any stay previously granted by this Court is hereby terminated as of the date of this entry.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
Exceptions.
Abele, J. & Kline, J.: Concur in Judgment and Opinion.
For the Court,
BY:
Matthew W. McFarland
Presiding Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment entry and the time period for further appeal commences from the date of filing with the clerk.