United States District Court, E.D. Arkansas, Western Division
Marshall Jr. United States District Judge
question is where the parties' dispute will be handled.
When the Millers bought a used Chevy Silverado pickup from II
Friends Auto Sales, they financed it through Credit
Acceptance. No. 2. As part of their installment contract, the
Millers also bought and financed a service contract from
First Automotive. II Friends handled all the paperwork. And
in another contemporaneous document, the Millers and the
dealer agreed to arbitration. II Friends signed for itself,
Credit Acceptance, and "any third party providing goods
or services in connection with the origination, servicing,
and collection of amounts due under the Contract if such
third party is named as a party between [the Millers, the
dealer, and others]'' No. 4-2 at 1. First
Automotive was named in the underlying retail installment
contract. No. 4-1 at 2. The arbitration agreement
covers sale-related disputes-broadly defined to include
matters of contract, tort, and statute. There was a carve-out
for each side: the Millers could go to small claims court;
and Credit Acceptance could repossess the pick-up for
nonpayment. No. 4-2 at 1. The parties'
arbitration agreement also contained a rejection option:
without affecting any other contract term, the Millers could
reject arbitration by mailing a letter to a Michigan address
within thirty days after they bought their truck. No. 4-2
at 2. The Millers signed the arbitration agreement. And
they didn't send a letter opting out.
Millers' pick-up had oil-pressure problems. They took it
to a GM dealership, Crain Buick, who worked on the truck
twice. First Automotive paid for the first repairs. The
second time, First Automotive wouldn't pay. It eventually
canceled the service contract, reporting that there was an
issue with mileage tampering and then saying that the Millers
had put oversized wheels and tires on the vehicle. Credit
Acceptance repossessed the truck. In this case, the Millers
plead repossession contrary to Arkansas law, conversion,
deceptive trade practices, and fraud. Credit Acceptance moves
for a prompt arbitration and dismissal. First Automotive
seeks the same relief. Their motions are granted as modified.
The background is the acknowledged strong federal policy
favoring arbitration. Moses H. Cone Memorial Hospital v.
Mercury Construction Corp., 460 U.S. 1, 24 (1983).
arbitration agreement valid? Dickson v. Gospel for ASIA,
Inc., 902 F.3d 831, 834 (8th Cir. 2018). Yes. It was
part of the financing deal between the Millers and Credit
Acceptance. The deal was done in several documents, but they
form one whole. Integon Life Insurance Company v.
Vandegrift, 11 Ark.App. 270, 276, 669 S.W.2d 492, 495
(1984). The deal embraced First Automotive. The retail
installment contract named that company, which provided the
extended service contract in connection with the origination
of the Millers' debt. II Friends made the arbitration
agreement for itself and others. And the Millers' claims
against First Automotive are a "dispute" about a
"service included in the Contract." No. 4-2
ail. First Automotive is a third-party beneficiary of
the Miller/ Credit Acceptance agreement to arbitrate
disagreements. Little Rock Wastewater Utility v. Larry
Moyer Trucking, Inc., 321 Ark. 303, 307, 902 S.W.2d 760,
true, as the Millers say, that First Automotive's service
contract contains a merger clause: "This contract
contains the entire agreement between You and Us and
supersedes all prior and contemporaneous agreements (both
written and oral) between You and Us concerning the subject
matter of this Contract." No. 7 at 8 (bold
removed). Why doesn't this provision undermine First
Automotive's right to invoke the arbitration clause as a
third-party beneficiary? This collision is more virtual than
real. If the Millers and First Automotive had made a side
agreement about arbitration, or anything else, their merger
clause would probably be dispositive against that agreement.
But this kind of clause doesn't necessarily bar the
Millers and Credit Acceptance (or any other party) from
contracting for the benefit of First Automotive. The Court
must instead look at the whole and gather the parties'
intentions. Here, Credit Acceptance, First Automotive, and
the Millers intended for their disputes to be arbitrated.
on Arkansas law, the Millers say the arbitration agreement
lacks mutuality. E.g., Tyson Foods, Inc. v. Archer,
356 Ark. 136, 141-42 (2004). The Court disagrees. With
reasonable carve outs for the buyers (small claims) and the
lender (repossession), all sale-related disputes must be
arbitrated. There doesn't appear to be any
non-arbitration alternative for First Automotive. If that
company refused to pay for a repair, though, the Millers had
the additional right to make a claim to Dealers Assurance
Company, the insurer who stood behind First Automotive's
obligations. All this is a bit tangled, but it doesn't
create a mutuality problem.
the parties' arbitration agreement cover the Millers'
claims? Dickson, 902 F.3d at 834. Yes. The agreement
covers "any dispute or controversy arising out of or in
any way related to the Contract. . .[.]" No 4-2at
1. These are wide words. The agreement specifically
extends to torts (such as conversion and fraud) and statutory
claims (such as Arkansas's Deceptive Trade Practices Act
and the repossession statute). Ibid. While Credit
Acceptance had the right after default to pursue repossession
without going to arbitration first, the parties' disputes
- Did the Millers default? Did Credit Acceptance follow
Arkansas law on repossession? Did First Automotive honor the
service agreement? - are matters for resolution in
motions are not granted across the board for two reasons.
Credit Acceptance and First Automotive seek an order
requiring the Millers to start arbitration within two months.
No. 4 at 3 & No. 7 at 2. But the parties'
contract contains no deadlines. The companies also ask the
Court to dismiss the case rather than staying it. While the
Court may have discretion to do this, the Federal Arbitration
Act prefers a stay, so the Court can enforce the
arbitrator's decision in due course, if need be. 9 U.S.C.
§ 3; Green v. SuperShuttle International, Inc.,
653 F.3d 769-70 (8th Cir. 2011).
to compel arbitration, No. 4 & 7, granted as
modified. Case stayed and administratively terminated. If no
party seeks relief by 30 October 2019, the Court will lift