United States District Court, E.D. Tennessee, Knoxville
CLIFFORD SHIRLEY, JR. UNITED STATES MAGISTRATE JUDGE
case is before the undersigned pursuant to 28 U.S.C. §
636(c), Rule 73(b) of the Federal Rules of Civil Procedure,
and the consent of the parties, for all further proceedings,
including entry of judgment [Doc. 9].
before the Court is the Defendant's Motion to Dismiss
Action and Compel Arbitration [Doc. 5]. The Plaintiff filed a
Response [Doc. 10], objecting to the Motion, and the
Defendant filed a Reply [Doc. 12]. The parties appeared
before the Court on September 7, 2017, for a hearing on the
Motion. Attorney Mark Brown appeared on behalf of the
Plaintiff. Attorney Ted Raynor appeared on behalf of the
Defendant. Accordingly, for the reasons explained below, the
Court finds the Motion [Doc. 5] well-taken,
and it is GRANTED.
following facts are taken from the Amended Complaint, unless
otherwise noted. The Amended Complaint alleges that on
October 1, 2015, the Plaintiff purchased a 2015 Infiniti Q50
vehicle (“Vehicle”) from the Defendant's
store. [Doc. 11 at ¶ 5]. The Defendant drove the Vehicle
to Knoxville, Tennessee, where the Plaintiff signed the
paperwork to complete the purchase of the Vehicle.
[Id.]. The total purchase price of the Vehicle was
$31, 198.23. [Id. at ¶ 6]. The Plaintiff paid
$1, 800.00 down with the balance of the purchase financed
through Navy Federal Credit Union. [Id.]. The
Defendant certified the Vehicle as “Certified
Pre-Owned.” [Id. at ¶ 7].
Amended Complaint continues that on February 28, 2017, the
Plaintiff's wife was driving the Vehicle when she was
rear-ended in a car accident causing damage to the passenger
side of the Vehicle. [Id. at ¶ 9]. The
Plaintiff worked through his insurance company, as well as
the insurance company of the at-fault driver, to have the
damage to the Vehicle repaired. [Id. at ¶ 10].
The Plaintiff took the Vehicle to Harper Auto Square in
Knoxville, an Infiniti dealer, for repairs. [Id. at
¶ 11]. While there, the technicians discovered that the
Vehicle had been in a previous accident and suffered damage
to the driver's side of the Vehicle, which was not part
of the February 28, 2017 accident. [Id.]. The
technicians also discovered that the area where the previous
damage had occurred was beginning to rust. [Id.].
Amended Complaint states that the Plaintiff was not told
during the process of purchasing the Vehicle about a previous
accident or damage, nor was the Plaintiff told that the
Vehicle had been previously repaired. [Id. at ¶
12]. The Amended Complaint alleges that the insurance company
will not pay for the previous damage to the Vehicle, forcing
the Plaintiff to pay out-of-pocket. [Id. at ¶
13]. The Amended Complaint continues that the Plaintiff is
left with a Vehicle that was not as represented and has
diminished value. [Id. at ¶ 13]. The Amended
Complaint alleges breach of contract, fraud, negligent
misrepresentation, and violations of the Tennessee Consumer
Protection Act. [Id. at ¶¶ 15-23].
Finally, the Amended Complaint states that the arbitration
provision contained in the contract is not enforceable.
[Id. at ¶¶ 29-32].
POSITIONS OF THE PARTIES
Defendant moves the Court for an order compelling arbitration
and dismissing the Complaint. In the alternative, the
Defendant requests that the Court compel arbitration and stay
the proceedings. The Defendant asserts that the Federal
Arbitration Act mandates that the Court grant its Motion to
Compel Arbitration. Specifically, the Defendant states that
the parties have agreed to arbitrate disputes regarding the
sale of the Vehicle and that there are no legal constraints
foreclosing arbitration. Further, the Defendant argues that
despite the Plaintiff's failure to seek arbitration, it
may seek to enforce the agreement to arbitrate. Finally, the
Defendant states that an order dismissing this case and
compelling arbitration is warranted.
Plaintiff responds [Doc. 10] that the Defendant's
arbitration provision is unenforceable. The Plaintiff states
that the arbitration provision is not supported by
consideration. The Plaintiff explains that the arbitration
provision unilaterally allows the Plaintiff or the Defendant
to choose arbitration and that the Plaintiff has not and will
not willingly choose arbitration. The Plaintiff further
asserts that the arbitration provision at issue is an
adhesion contract. The Plaintiff explains that he had to
agree on the terms on the contract to get that particular
Vehicle, which was unavailable elsewhere.
Defendant replies [Doc. 12] that the parties' arbitration
agreement is clearly supported by adequate consideration. In
addition, the Defendant asserts that the parties'
arbitration agreement is not an unconscionable adhesion
STANDARD OF REVIEW
Federal Arbitration Act (“FAA”) “expresses
a strong public policy favoring arbitration in a broad range
of disputes.” Cooper v. MRM, Inc., 367 F.3d
493, 498 (6th Cir. 2004). Specifically, it provides that
agreements to arbitrate “shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.
§ 2. It is well established that federal law creates
“a general presumption of arbitrability, and any doubts
are to be resolved in favor of arbitration ‘unless it
may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers
the asserted dispute.'” Highlands Wellmont
Health Network Inc. v. John Deere Health Plan, Inc., 350
F.3d 568, 576-77 (6th Cir. 2003) (quoting AT&T
Techs., Inc. v. Commc'n Workers of Am., 475 U.S.
643, 650 (1986)).
compelling an unwilling party to arbitrate, the court must
engage in a limited review to determine whether the dispute
is arbitrable; meaning that a valid agreement to arbitrate
exists between the parties and that the specific dispute
falls within the substantive scope of that agreement.”
Javitch v. First Union Sec., Inc., 315 F.3d 619, 624
(6th Cir. 2003). The party opposing arbitration has the
burden to show that the agreement is not enforceable.
Mounts v. Midland Funding, LLC, 237 F.Supp.3d 930
(E.D. Tenn. 2017) (citing Green Tree Fin. Corp., -Ala. v.
Randolph, 531 U.S. 79, 91-92 (2000)). “In order to
meet this burden, ‘the party opposing arbitration must
show a genuine issue of material fact as ...