Wilhelm v. Thor Motor Coach, Inc.

MICHAEL JOHN WILHELM, ET AL. v. THOR MOTOR COACH, INC., ET AL.

CIVIL ACTION NO. 17-1148 SECTION "B"(4)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

June 5, 2017

ORDER AND REASONS

Before the Court is Defendants' "Motion to Stay Proceedings Pending Arbitration." Rec. Doc. 11. Plaintiffs timely filed an opposition memorandum. Rec. Doc. 14. Defendants then requested (Rec. Doc. 15), and were granted (Rec. Doc. 16), leave to file a reply memorandum (Rec. Doc. 17). For the reasons discussed below,

IT IS ORDERED that the motion (Rec. Doc. 11) is GRANTED.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This case arises out of the July 12, 2016 sale of a motorhome, a 2017 Thor Synergy assembled by Defendant Thor Motor Coach, Inc. ("Thor"), from Defendant Dixie Motors, LLC ("Dixie Motors") to Michael and Betsy Wilhelm ("Plaintiffs"). Rec. Doc. 1 at ¶¶ 7-8. After purchasing the motorhome, Plaintiffs noticed several minor defects, including, for example, excessive air noise from the cabin door, a torn seal, a twisted track on a drawer, a leaky bathroom faucet, a missing driver's seat adjustment knob, and loose hardware. Id. at ¶ 14. Plaintiffs returned the motorhome to various authorized dealers for repairs "on numerous occasions," but the defects remained. Id. at ¶ 15. Plaintiffs informed Defendants of the defects and requested a rescission of the sale. Id. at ¶ 17. When Defendants refused, Plaintiffs filed the instant suit on February 9, 2017, alleging violations of Louisiana redhibition laws (LA. CIV. CODE ANN. art. 2520), violations of the Magnuson-Moss Warranty Act (15 U.S.C. §§ 2301-12), and negligent repair, and requesting damages, rescission, and attorney's fees and costs. Id. at ¶¶ 18-48.

II. THE PARTIES' CONTENTIONS

Defendants allege that Plaintiffs entered into a written arbitration agreement when they purchased the motorhome. Rec. Doc. 11-2 at 1.

Plaintiffs respond that the arbitration agreement (1) is invalid, because it was not signed by a representative of either Defendant; (2) is a violation of the Louisiana Unfair Trade Practices Act ("LUTPA"); and/or (3) does not cover claims asserted against Thor, which was not a party to the agreement. Rec. Doc. 14 at 1.

III. LAW AND ANALYSIS

"Arbitration is favored in the law." Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 526 (5th Cir. 2000) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). Section 2 of the Federal Arbitration Act ("FAA") provides that "[a] written provision in any . . . contract evidencing a transaction involving commerce to settle byarbitration a controversy thereafter arising out of such contract or transaction . . . 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. § 2.¹

According to the courts, § 2 "is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary." Moses H. Cone Mem'l Hosp., 460 U.S. at 24 (citing § 2). It was "Congress's clear intent . . . to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible." Id. at 22. Essentially, the FAA "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration . . . ." Id. at 24-25.

Thus, "where the contract contains an arbitration clause, there is a presumption of arbitrability." Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006) (quoting AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986)) (citingPrimerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002) (noting that any doubts regarding arbitrability should be resolved in favor of arbitration) (citing Southland Corp. v. Keating, 465 U.S. 1, 10 (1984))). Nonetheless, § 2 contains a savings clause that provides that an agreement to arbitrate is "enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." § 2 (emphasis added). Accordingly, to determine if the parties agreed to arbitrate, the court should consider "(1) whether a valid agreement to arbitrate between the parties exist; and (2) whether the dispute in question falls within the scope of that arbitration agreement." Pennzoil Expl. & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1065 (5th Cir. 1998) (citing Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996); In re Hornbeck Offshore (1984) Corp., 981 F.2d 752, 754 (5th Cir. 1993); Midwest Mech. Contractors, Inc. v. Commonwealth Constr. Co., 801 F.2d 748, 750 (5th Cir. 1986)).

As to the first inquiry, courts "apply 'ordinary contract principles.'" Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003) (quoting Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073, opinion supplemented on denial of reh'g,, 303 F.3d 570 (5th Cir. 2002)); see also Webb, 89 F.3d at 258. Under Louisiana law, a valid contract requires capacity, consent, a lawful cause, and a valid object. Granger v. Christus Health Ctr. La., 12-1892, p. 33 (La. 6/28/13); 144 So. 3d 736,760-61 (internal citations omitted); see also LA. CIV. CODE ANN. arts. 1918, 1927, 1966, 1971. Consent is "established through offer and acceptance," which may generally "be made orally, in writing, or by action or inaction that under the circumstances is clearly indicative of consent." LA. CIV. CODE ANN. art. 1927. Further, "it is the burden of the party seeking to enforce a contract to show the contract exists." FIA Card Servs., N.A. v. Weaver, 10-1372, p. 16 (La. 3/15/11); 62 So. 3d 709, 719 (citing LA. CIV. CODE ANN. art. 1831; Kosmala v. Paul, 569 So. 2d 158, 162 (La. App. 1 Cir. 1990), writ denied, 572 So. 2d 91 (La. 1991) ("The party seeking to enforce arbitration provisions has the burden of showing the existence of a valid contract to arbitrate") (citing Ciaccio v. Cazayoux, 519 So. 2d 799, 800 (La. App. 1 Cir. 1987))).

As to the second inquiry, "the Fifth Circuit distinguishes between broad and narrow arbitration clauses." Broussard v. First Tower Loan, LLC, 150 F. Supp. 3d 709, 724 (E.D. La. 2015), as modified on denial of reconsideration, No. 15-1161, 2016 WL 879995 (E.D. La. Mar. 8, 2016).

If the clause is broad, the action should be stayed and the arbitrators permitted to decide whether the dispute falls within the clause. On the other hand, if the clause is narrow, the matter should not be referred to arbitration or the action stayed, unless the court determines that the dispute falls within the clause.

Hornbeck, 981 F.2d at 754-55 (citing Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil Co. (Pennex), 767 F.2d 1140, 1145 n.10(5th Cir. 1985), holding modified by Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327 (5th Cir. 2004) (citing Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir. 1983))). "A broad arbitration agreement is 'capable of expansive reach', intended to cover 'all aspects of the relationship' [such that] a dispute then need only 'touch matters covered' by the agreement in order to compel arbitration." Grant v. Houser, 469 F. App'x 310, 315-16 (5th Cir. 2012) (quoting Pennzoil, 139 F.3d at 1067-68). Clauses containing the "any dispute" language are of the broad type. Id. (citing Sedco, 767 F.2d at 1144; Mar-Len of La., Inc. v. Parsons-Gilbane, 773 F.2d 633, 634 (5th Cir. 1985); Neal v. Hardee's Food Sys., Inc., 918 F.2d 34, 38 (5th Cir. 1990)).

If a court is satisfied that a dispute is subject to arbitration pursuant to a written arbitration agreement, the court shall, on application of one of the parties, "stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . . ." 9 U.S.C. § 3.

Included in the instant record is a document dated July 12, 2016 and clearly labeled "ARBITRATION AGREEMENT." See Rec. Doc. 11-3 at 8. The document specifically provides that

"We", "us" and "Dealer" refer to the Dealer signing below, and includes the Dealer's employees, agents, and parent and affiliated companies and their employees and agents. "Parties" refers to you and us . . . . "Claim(s)" includes any and all disputes, claims or controversies between the Parties relating to the Vehicle or arising out of or relating to: (a) the application for and theterms of and enforceability of the sale . . . of the Vehicle, (b) the purchase or terms of any warranty, service agreement, maintenance plan, . . . or any other product or insurance, (c) any claims of breach of contract, negligence, misrepresentation, conversion, fraud, or unfair and deceptive trade practices, (d) any claim of a violation of any state or federal statute or regulation, or (e) the Vehicle's condition, warranty, workmanship, servicing, maintenance, or repair.

. . .

Upon the request of a party, any and all Claims(s) [sic] shall be decided in binding arbitration . . . .

. . .

The parties agree that once one of the parties has elected to arbitrate, binding arbitration is the exclusive method for resolving any and all Claims.

. . .

This Agreement evidences a transaction involving interstate commerce. The Parties acknowledge and agree that the [FAA] shall govern any arbitration under this Agreement. The arbitrator's decision shall be final and binding, except for any right of appeal provided by the FAA or the rules of the selected Arbitration Forum.

Id. The document was signed by both Plaintiffs and lists "DIXIE RV SUPERSTORES" as the dealer. Id. Thus, on its face, it appears that a valid arbitration agreement exists and that Plaintiffs' claims of breach of express and implied warranties, violations of federal statute, and related misconduct fall within the scope of the broad agreement. Nonetheless, Plaintiffs urge the Court to deny Defendants' motion for three reasons.

First, Plaintiffs argue that the document is not a valid contract because it was not signed by a...