JORJA TRADING, INC.; AUTOMATIC AUTO FINANCE, INC.; CASHFISH MOTOR PAWN, INC.; VIRGINIA RIVERS, AND MONTE JOHNSTON APPELLANTS
LEAH WILLIS AND ADRIAN BARTHOLOMEW APPELLEES
FROM THE WASHINGTON COUNTY CIRCUIT COURT [NO. 72CV-16-2237]
HONORABLE JOHN C. THREET, JUDGE AFFIRMED
Bassett Law Firm, LLP, by: Scott E. Wray and Grace K.
Johnson, for appellants.
Story Law Firm, PLLC, by: Travis W. Story and Gregory F.
Payne, for appellees.
LARRYD. VAUGHT, Judge
an interlocutory appeal of the Washington County Circuit
Court's order denying the joint motion to compel
arbitration filed by appellants Jorja Trading, Inc.;
Automatic Auto Finance, Inc.; Cashfish Motor Pawn, Inc.;
Virginia Rivers; and Monte Johnston. We affirm the circuit
Leah Willis and Adrian Bartholomew purchased a 2002 Suzuki
XL7 vehicle from Automatic Auto Finance (AAF) on October 27,
2015. AAF then assigned the sales contract to Jorja Trading.
Appellees defaulted on their payment obligations under the
sales contract. Jorja Trading filed a complaint against
Willis and Bartholomew in the small claims division of the
Washington County District Court (Springdale Division) on May
13, 2016. Both parties were properly served. Bartholomew
filed an answer on June 29, 2016. Willis did not file an
answer. After a hearing on September 21, 2016, the court
entered judgment against the appellees, who then appealed the
judgment to the circuit court. Appellees filed an answer and
a counterclaim, which asserted fourteen causes of action
stemming from alleged usury and UCC violations. On December
13, 2016, Jorja Trading filed a motion to dismiss
counterclaim and alternative motion to dismiss and compel
arbitration. The other appellants subsequently also filed
motions to dismiss and compel arbitration. After appellees
filed an amended answer and counterclaim, the court ruled
that the pending motions to dismiss and compel arbitration
were moot. Appellants then filed a new joint motion to
dismiss and compel arbitration of the amended counterclaims
and third-party claims. The circuit court held a hearing on
December 20, 2017, after which it denied the appellants'
joint motion to compel arbitration based on its finding that
the arbitration agreement lacked mutuality of obligation and
had been waived. This timely appeal follows.
review a circuit court's order denying a motion to compel
arbitration de novo on the record. Hickory Heights Health
& Rehab, LLC v. Cook, 2018 Ark.App. 409, S.W.3d,
(citing Courtyard Gardens Health & Rehab., LLC v.
Quarles, 2013 Ark. 228, 428 S.W.3d 437). Arbitration is
simply a matter of contract between parties. Id.
Whether a dispute should be submitted to arbitration is a
matter of contract construction, and we look to the language
of the contract that contains the agreement to arbitrate and
apply state-law principles. Id. The same rules of
construction and interpretation apply to arbitration
agreements as apply to agreements generally; thus, we will
seek to give effect to the intent of the parties as evidenced
by the arbitration agreement itself. Id. Finally,
the construction and legal effect of an agreement to
arbitrate are to be determined by this court as a matter of
deciding whether to grant a motion to compel arbitration, two
threshold questions must be answered. First, is there a valid
agreement to arbitrate between the parties? Second, if such
an agreement exists, does the dispute fall within its scope?
GGNSC Holdings, LLC v. Lamb, 2016 Ark. 101, 487
S.W.3d 348. In answering these questions, doubts about
arbitrability must be resolved in favor of arbitration.
Id. We are also guided by the legal principle that
contractual agreements are construed against the drafter.
Carter v. Four Seasons Funding Corp., 351 Ark. 637,
97 S.W.3d 387 (2003). "We are not bound by the circuit
court's decision, but in the absence of a showing that
the circuit court erred in its interpretation of the law, we
will accept its decision as correct on appeal."
Erwin-Keith, Inc. v. Stewart, 2018 Ark.App. 147, at
9, 546 S.W.3d 508, 512 (citing Madison Cos., LLC v.
Williams, 2016 Ark.App. 610, 508 S.W.3d 901).
appellants argue that the circuit court erred in determining
that the arbitration agreement was not valid because it
lacked mutuality of obligation. One of the necessary elements
for a valid and enforceable contract under Arkansas law is
that the parties must both be bound by mutual obligations.
Hot Spring Cty. Med. Ctr. v. Ark. Radiology Affiliates,
PA., 103 Ark.App. 252, 255, 288 S.W.3d 676, 679. While
Arkansas law does not require that the mutual obligations be
a mirror image of each other, "an obligation must rest
on each party to do or permit to be done something in
consideration of the act or promise of the other; that is
neither party is bound unless both are bound."
Hamilton v. Ford Motor Credit Co., 99 Ark.App. 124,
128, 257 S.W.3d 566, 570 (2007).
the circuit court found that the arbitration agreement lacked
mutual obligations because, while it appears to allow both
parties to employ self-help remedies and prohibits both
parties from filing a class-action lawsuit, both of those
provisions work to the exclusive benefit of the appellants;
the appellants are not actually obligated to do or forgo
anything meaningful. The arbitration agreement states that
both parties "retain the right to self-help remedies,
such as repossession." Appellants argue that if the
vehicle had been improperly repossessed or was being held by
the appellants for some other unlawful reason, the appellees
would also have the option of self-help pursuant to the
arbitration agreement. We disagree.
term "self help" is a legal term of art which,
according to Black's Law Dictionary, means to protect
one's own property or person and not resort to legal
action to do so. Under Arkansas law, repossession is
exclusively authorized for parties with a secured interest in
the property. Ark. Code Ann. § 4-9-609 (Repl. 2001). In
Gorman v. Ratliff, 289 Ark. 332, 337, 712 S.W.2d
888, 890 (1986), the Arkansas Supreme Court invalidated a
self-help provision in a lease contract because "no
entry by a landlord onto property occupied by another is
given by Act 615, except by first resorting to legal process.
Accordingly, self-help action is prohibited [under Arkansas
law]." The Arkansas Supreme Court went on to hold that,
"[f]or these reasons those provisions of the lease
authorizing the landlord's self-help remedy are
invalid." Gorman, 289 Ark. at 338, 712 S.W.2d
at 891. In Durbin v. City of W. Memphis,
Ark., No. 3:14-CV-00052-KGB, 2015 WL 1470141 (E.D. Ark.
Mar. 31, 2015), the United States District Court for the
Eastern District of Arkansas reviewed the current status of
self-help law in Arkansas and explained:
The Arkansas Supreme Court subsequently has interpreted
Gorman broadly, stating that Gorman
"outlawed the use of self-help measures to regain
property." Duhon v. State, 774 S.W.2d 830, 835
(Ark. 1989). Further, considering Gorman and
Duhon, the Attorney General of Arkansas has opined
that installing a device that would enable a landlord to cut
off utility service to tenants in the event of nonpayment of
rent would run afoul of Gorman's
prohibition of self-help eviction. See Ark. Op.
Att'y Gen. No. 2006-223, 2007 WL 201187 (Jan. 23, 2007).
Durbin, 2015 WL 1470141, at *6.
present case, while the arbitration agreement purports to
give both parties the right to employ self-help remedies,
"such as repossession," Arkansas Code Annotated
section 4-9-609 authorizes a repossession only by a