A customer cannot be forced to arbitrate a dispute if the dealership does not properly sign an arbitration agreement, the Alabama Supreme Court has ruled.
The court said Kathy Headrick is entitled to sue a Bessemer dealership in circuit court rather than arbitrate her claim that it fraudulently obtained a $2,417 initial payment on her new 1996 Chevrolet Camaro and failed to apply the payment toward the balance she owed.
Headrick signed a lease agreement and buyer's order for the vehicle at Premiere Chevrolet Inc. The buyer's order contained a provision requiring arbitration of disputes, but there was no such requirement in the lease agreement.
The dealership signed only the lease agreement; no Premiere representative signed the buyer's order.
Headrick sued Premiere and its finance and insurance manager for fraud, breach of contract, deception and unjust enrichment, seeking compensatory and punitive damages.
'She claimed the defendants defrauded her into parting with her $2,417 initial payment by falsely telling her the payment would apply to reduce the balance shown in the lease,' the state Supreme Court said.
A judge in Jefferson County Circuit Court denied the defendants' motion to compel arbitration, and Premiere appealed.
The Alabama Supreme Court upheld that decision, saying the language of the buyer's order requires 'both acceptance and a signature by Premiere.' Without that acceptance and signature, 'there was no enforceable agreement to arbitrate,' Justice Douglas Johnstone wrote.
Headrick's lawyer, Garve Ivey Jr. of Birmingham, said his client had no complaints about the Camaro: 'It's not a car problem; it's a financing problem.'
A lawyer for the dealership, Cecil MaCoy of Birmingham, said, 'We had hoped the plaintiff's signing of the agreement would be enough to enforce it against her.' But the ruling means dealerships should 'always sign the buyer's order.'
The case now returns to circuit court for trial.