United States District Court, E.D. Arkansas, Western Division
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE
dispute arises from the purchase of a vehicle from a local
dealership. On April 6, 2016, Byron and Allyson Ponder
purchased a 2014 GMC Acadia through Chase Osborn, a salesman
employed by Crain Buick GMC. The Ponders allege that Osborn,
Crain Buick GMC, and Chris Harralston represented to them
that the mileage on the Acadia’s odometer read 33, 534
miles, but they knew that it read substantially more. The
Ponders bring several causes of action against the Crain
Buick GMC defendants, but only one cause of action against
Enterprise Financial Group. Enterprise Financial was not
involved with the allegedly false representations made to the
Ponders leading up to the purchase of the Acadia. Rather, the
Ponders purchased a vehicle service agreement from Enterprise
Financial for $2, 897. The Ponders seek rescission of the
vehicle service contract and restitution. Enterprise
Financial has filed a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6). Document #13. For the
following reasons, the motion is denied.
complaint alleges the following facts. When the Ponders went
to Crain Buick GMC’s used car lot in Conway, Osborn
told them about the Acadia. He said that it was not on the
lot because the dealership had loaned it to the University of
Central Arkansas. The Ponders test drove a different Acadia
that was on the lot, and then met with Osborn and Harralston,
the Finance Manager. Osborn and Harralston told the Ponders
that the odometer of the Acadia loaned to the University read
33, 534 miles. The Ponders decided to purchase the Acadia,
entering into a Retail Installment Contract with Crain Buick
GMC. The contract indicated that the price of the Acadia was
$27, 873 and that the Ponders traded in their Toyota Camry
for $3, 129. The Ponders also purchased a Vehicle Service
Contract for $2, 897. Enterprise Financial administered the
service contract. Vehicle service contracts are sometimes
referred to as extended warranties.
the Ponders went back to pick up the Acadia, they noticed as
they were driving off the lot that the odometer read 39, 900
miles. They called Osborn, who told them that he would see
what could be done. The Crain Buick GMC Customer Relations
Manager offered the Ponders a free oil change. Then, the
Ponders told the dealership that they wanted out of the
contract because false representations had been made about
the odometer. They went to the dealership and someone handed
them a letter signed by Heath Boothby, the Financial
Director. Boothby did not meet with the Ponders, but admitted
in the letter that the representations concerning the
odometer reading were false. On April 19, 2016, an agent of
Crain Buick GMC signed the Title Assignment by Dealer and
Odometer Disclosure, and mailed it to the Ponders. The
odometer disclosure represented that the reading at the time
of the sale was 33, 534 miles.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a complaint must contain “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167
L.Ed.2d 929 (2007). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173
L.Ed.2d 868 (2009). The court must accept as true all of the
factual allegations contained in the complaint and must draw
all reasonable inferences in favor of the nonmoving party.
Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th
Cir. 2014). The complaint must contain more than labels,
conclusions, or a formulaic recitation of the elements of a
cause of action, which means that the court is “not
bound to accept as true a legal conclusion couched as a
factual allegation.” Twombly, 550 U.S. at 555,
127 S.Ct. at 1965.
Financial contends that the complaint does not state a claim
against it, emphasizing that the Ponders did not allege facts
connecting Enterprise Financial with any misrepresentations
about the odometer. Document #14 at 1-2. With respect to
Enterprise Financial, the complaint alleges:
17. . . . Plaintiffs also purchased a Vehicle Service
Contract for $2, 897 . . . .
18. The Vehicle Service Contract is administered by
Enterprise Financial Group.
* * *
96. The Vehicle Service Contract purchased by Plaintiffs is
intertwined in the Contract between Plaintiffs and Crain
Buick GMC. Plaintiffs purchased the Vehicle Service Contract
based on the false representations regarding the 2014 GMC
Acadia’s odometer reading. To the extent necessary,
Plaintiffs request the Court exercise its equitable powers
and rescind the Vehicle Service Contract and the Contract.
Document #1 at 6, 22-23, ¶¶ 17-18, 96. The Vehicle
Service Contract is attached to the complaint.Id. at
26. The contract states that it is “Administered by
Enterprise Financial Group, Inc. (EFG) or one of its
affiliated companies . . . .” Id. Allyson
Ponder purchased the contract on April 6, 2016, for $2, 897.
Id. It states that the odometer read 33, 534 miles.
Id. Significantly, the contract provides that
coverage ends either after 48 months or when the mileage of
the vehicle reaches the total of the odometer reading at the
time the contract was purchased and the term of contract
mileage. Id. The term of contract mileage was 60,
000, so the contract terminates when the mileage reaches 93,
534, if 48 months has not already passed. Id.
Ponders ask the Court to use its equitable powers to rescind
this contract and return the parties to the status quo.
Document #20 at 3. “Rescission is a remedy by which the
parties abandon, or recede from, a contract they now realize
they did not intend to make or should not have been
made.” Howard W. Brill & Christian H. Brill, 1 Ark.
Law of Damages § 31:3. Parties may voluntarily rescind a
contract, or courts may rescind a contract upon a proper
showing of mutual mistake of fact-a mistake common to both
parties. Carter v. Matthews, 288 Ark. 37,
40, 701 S.W.2d 374, 376 (1986) (“A mutual mistake of
fact as to a material element of a contract is an appropriate
basis for rescission.”). “Before a mutual mistake
will affect the binding force of a contract, the mistake must
be of an existing or past material fact which is the basis of
the contract.” Mitchell v. First Natl Bank in
Stuttgart, 293 Ark. 558, 560, 739 S.W.2d 682, 683
the complaint sets forth enough facts to state a claim for
equitable relief in the form of rescission. The Ponders
believed that the Acadia’s odometer read 33, 534 miles.
Document #1 at 5, ¶16. The Ponders purchased a Vehicle
Service Contract. Id. . at 6, ¶17. Enterprise
Financial is obligated to administer that contract.
Id. at 26. The duration of this obligation hinges
upon the Acadia’s mileage at the time of purchase.
Id. The mileage is a material fact. The contract
states that the Acadia’s mileage at the time of
purchase was 33, 534 miles, when in fact it was 39, 900
miles. Id. Accepting these facts as true, the Court
can reasonably infer that neither the Ponders, nor Enterprise
Financial, knew the current mileage at the time they agreed
to the Vehicle ...