Westlake Serv. v. England

689 S.W.3d 664

2024 Ark. App. 271

WESTLAKE SERVICES, LLC, Appellant

v.Amber ENGLAND, on Behalf of Herself and All Others Similarly Situated, Appellee

No. CV-22-756

Court of Appeals of Arkansas, DIVISION II.

Opinion Delivered April 24, 2024

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, TWELFTH DIVISION [NO. 60CV-22-2491], HONORABLE ALICE S. GRAY, JUDGE

Wright, Lindsey & Jennings LLP, Little Rock, by: Judy Simmons Henry, Michael A. Thompson, and P. Collins Hickman Jr., for appellant.

Corey D. McGaha PLLC, by: Corey D. McGaha; and Turner and Turner, P.A., Arkadelphia, by: Todd M. Turner, for appellee Amber England.

ROBERT J. GLADWIN, Judge

₁Westlake Services, LLC, appeals from the Pulaski County Circuit Court’s September 19, 2022 order denying its motion to compel arbitration and to dismiss or stay proceedings as well as the deemed denial of its motion to amend the order denying the motion, which was timely filed on October 3.¹

Westlake argues that (1) this case must be remanded with instructions because the order denying its motion to compel arbitration does not explain the rationale for the circuit court’s decision; (2) if the court reaches the merits of the appeal, the order denying Westlake’s motion to compel arbitration should be reversed because the arbitration ₂agreement is valid and enforceable under the Automobile Dealer’s Anti-Coercion Act, codified at Arkansas Code Annotated sections 4-75-401 to -413 (Repl. 2023) ("ADACA"); (3) the arbitration agreement satisfies mutuality of obligations; and (4) Westlake did not waive its right to compel arbitration. We reverse and remand to the circuit court with instructions to enter an order consistent with this opinion.

I. Facts and Procedural History

On April 4, 2018, appellee April England and a co-borrower signed three agreements related to the purchase of a 2004 F250 Ford Super Duty pickup truck (the "Vehicle") from nonparty Great American Auto, LLC, in Little Rock (the "Dealer- ship"): (1) a "Retail Installment Contract and Security Agreement" (the "Contract"); (2) an "Addendum to Retail Installment Contract and Security Agreement" (the "Addendum"); and (3) a "Waiver of Purchaser’s Right to Sue" (the "Arbitration Agreement"). The Contract set the price and payment terms for the Vehicle and provided the seller’s remedies on default, including self-help remedies and the right to seek a deficiency judgment.

The Contract was immediately assigned from the Dealership to Westlake. The Addendum provided that the Contract would be construed and enforced in accordance with Arkansas law, except that any usury provisions shall be governed by California law.

The Arbitration Agreement, set out in a separate document titled "waiver of purchaser’s right to sue," was signed by England. The Arbitration Agreement expressly provides that it is governed by the Federal Arbitration Act. It allows both England and Westlake "[t]o initiate an arbitration proceeding" by notifying the other party, in writing, ₃that the demanding party "wishes to arbitrate a Dispute." A "Dispute" within the scope of the Arbitration Agreement is defined to include

any dispute with Dealership and/or Westlake Financial Services … whether based in whole or in part on contract, tort, statute, or other equitable relief, arising from or relating to: (1) the Vehicle and any products and services purchased in conjunction therewith; (2) the negotiation of and terms of the Retail Installment Sales Contract, and any other documents that are part of the transaction; (3) the application for and terms of financing for the transaction; and/or (4) any question as to whether a dispute may be arbitrated (including the interpretation and scope of this Agreement to Arbitrate).

The Arbitration Agreement contained a clause that incorporated it into the Contract:

this waiver is incorporated by reference into the retail installment contract and may not be modified or amended except by a separate written agreement signed by the buyer(s) and an authorized dealership and/or Westlake financial services representative.

At its conclusion, the Arbitration Agreement contains this statement: "By signing below, Buyer(s) specifically acknowledges Buyer’s relinquishment of the right to have any dispute over the sale or operation of the Vehicle decided by a court of law, as detailed above." (Emphasis in original.)

England defaulted on the payment obligations under the Contract. Pursuant to the terms of the Contract, Westlake repossessed the Vehicle and sent England a "Notice of Intent to Dispose of Motor Vehicle," which represented that California law applied to the repossession and disposition of the vehicle, that she had the right to redeem the repossessed collateral before disposition, and that California law required England to pay a fifteen-dollar repossession-report fee to the Little Rock Police Department to redeem the vehicle under California law.

₄Westlake sold the Vehicle and applied the proceeds of the sale to the balance owed under the Contract. Westlake then sued England for the deficiency in the Pulaski County District Court, Sherwood Division, requesting a deficiency judgment for $5,123.27, plus interest at the Contract rate of 21.79 percent. After Westlake served England, she appeared in the district court action and moved to dismiss Westlake’s complaint because the 21.79 percent interest rate exceeds Arkansas’s prohibition on interest rates exceeding 17 percent. Westlake filed a response, and other motions were filed by the parties, but England never sought to compel arbitration in the district court action. Westlake’s district court action against England remains open.

On April 18, 2022, England filed a class-action complaint against Westlake in the Pulaski County Circuit Court. England’s complaint sought to have a class certified and asserted claims against Westlake for violation of the Arkansas Deceptive Trade Practices Act, violation of the usury provisions of the Arkansas Constitution, violation of certain provisions of the Arkansas Uniform Commercial Code, unjust enrichment, and declaratory judgment. Specifically, she challenged the allegedly usurious interest rates in Westlake’s contracts and addenda as well as Westlake’s practices of requiring consumers to pay repossession-report fees to law enforcement agencies.

On May 3, Westlake moved to compel arbitration in the circuit court action, seeking to enforce the terms of the Arbitration Agreement and to dismiss or stay proceedings ("the Motion"). In response, England raised three arguments in opposition: (1) the Arbitration Agreement does not comply with the ADACA and, specifically, section 4-75-413; (2) the ₅Arbitration Agreement fails on the element of mutuality of obligation; and (3) Westlake waived any right to compel arbitration in this matter when it sued England in district court to collect a deficiency judgment. On June 15, Westlake filed a reply addressing each of England’s arguments.

On September 7, the circuit court held a hearing on Westlake’s Motion. At the conclusion of the hearing, Westlake’s counsel orally requested that any order on the Motion contain specific findings of fact and conclusions of law. The circuit court responded from the bench, "If the Court is required to, the Court will. If the Court’s not required to, I might not. So, I don’t—I don’t believe that the Court is required to make specific findings. I do what the Court’s required to do." The circuit court otherwise took the Motion under advisement.

On September 19, the circuit court filed an order denying Westlake’s Motion. The order contained no specific findings of fact or conclusions of law and, instead, simply stated, "Upon consideration of all matters before it, the Court hereby denies Defendant’s Motion to Compel Arbitration and to Dismiss or Stay Proceedings."

On October 3, Westlake timely filed its original notice of appeal and a Rule 52(b) motion to amend the order denying its Motion. The motion to amend reiterated Westlake’s oral request made at the hearing for specific findings of fact and conclusions of law addressing all of the parties’ arguments both for and against arbitration. As an exhibit to the motion to amend, Westlake attached a copy of the Arkansas Supreme Court’s decision in Robinson Nursing & Rehabilitation Center, LLC v. Phillips, 2022 Ark. 109, 2022 WL 1576781 ("Phillips III"). England ₆did not respond to the motion to amend. Moreover, the circuit court never ruled on it; accordingly, the motion to amend was deemed denied by operation of law as of November 2, the thirtieth day from the date it was filed. See Ark. R. Civ. P. 52(b)(1) (2023); Ark. R. App. P.–Civ. 4(b)(1) (2023). Westlake filed an amended notice of appeal, adding the deemed denial of its motion to amend, on November 4, 2022.

II. Standard of Review

[1] We review a circuit court’s order denying a motion to compel arbitration de novo on the record, with the entire case open for review. DIRECTV, Inc. v. Murray, 2012 Ark. 366, at 3, 423 S.W.3d 555, 559; GGNSC Holdings, LLC v. Lamb, 2016 Ark. 101, at 5, 487 S.W.3d 348, 352. Even under that standard, we do not reverse absent a showing by an appellant that the circuit court erred. Diamante, LLC v. Dye, 2013 Ark. App. 630, at 4, 430 S.W.3d 196, 199.

III. Discussion

A. Necessity of Remand for Explanation of the Circuit Court’s Rationale

Westlake initially argues that, in order to ensure that the parties are provided a full and fair opportunity for appeal, the circuit court should be specifically instructed on remand to provide specific findings of fact and conclusions of law that address every argument the parties raised in support of, or in opposition to, arbitration.

[2] Westlake notes that the Arkansas Supreme Court has held that specific findings of fact and conclusions of law are required on orders denying motions to compel arbitration. See Robinson Nursing & Rehab. Ctr., LLC v. Phillips, 2022 Ark. 193, at 4, 2022 WL 16641560 ("Phillips IV"); Phillips ₇II...