The owner of a former Suzuki dealership in Kansas City, Mo., is entitled to arbitrate rather than litigate a customer’s claims stemming from an alleged failure to deliver title to the used vehicle she bought, the Missouri Court of Appeals has ruled.
The dispute is subject to arbitration even if the underlying contract may be void, the unanimous three-judge panel said.
The conflict involves the November 2013 sale of a 2012 Hyundai Sonata by what was then Jeremy Franklin’s Suzuki of Kansas City, owned by JF Enterprises, to Lashiya Ellis for $21,105. As part of the deal, Ellis traded in her 2003 Chevrolet Tahoe.
The deal documents included an agreement requiring arbitration of all disputes in accordance with the Federal Arbitration Act, a retail buyer’s order and a retail installment sales contract. In addition, Ellis signed a sales tax disclosure statement asserting that she had paid all sales and property taxes due on the Tahoe, according to court papers.
However, the dealership discovered a few days later that Ellis owed $1,327 in taxes, meaning she hadn’t turned in the Tahoe “free and clear of any liens” as contractually required, JF Enterprises said in court documents.
Ellis’ suit, filed in Jackson County Circuit Court, claims that the dealership violated the Missouri consumer protection law and made fraudulent misrepresentations by failing to deliver title on the Sonata, which prevented her from registering the vehicle and thus voided the contract.
JF Enterprises has denied all the allegations.
Ellis also alleges that the third-party lender has required her to continue making $415-a-month payments on the Sonata despite being unable to register the vehicle. The lender didn’t participate in the appeal concerning the ability to arbitrate, and the claims against it remain pending in the circuit court, according to attorneys for the lender and JF Enterprises.
When Ellis sued JF Enterprises and the lender to rescind the transaction and to collect compensatory and punitive damages, JF Enterprises asked a circuit court judge to order arbitration, but the judge denied the request.
However, the Court of Appeals panel unanimously sided with JF Enterprises, rejecting Ellis’ argument that failure to deliver title invalidated the entire contract, including the arbitration agreement.
“Because Ellis challenges the contract as a whole and not specifically the arbitration provision, the arbitration provision is enforceable apart from the remainder of the contract,” Judge James Welsh wrote in the court’s opinion.
JF Enterprises’ lawyer, Gary Willnaeur of Kansas City, Mo., said an arbitrator must now decide whether Ellis’ arbitration agreement is valid and, if so, can then decide the merits of the dispute. Arbitration is less expensive, more efficient and usually faster than litigation, Willnaeur said.
The plaintiff’s lawyers didn’t respond to requests for comment.
Jeremy Franklin’s Suzuki of Kansas City’s former address is now that of Jeremy Franklin Mitsubishi. American Suzuki Motor Corp filed for Chapter 11 bankruptcy protection in late 2012 and ended U.S. auto sales.
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