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Jacobia Dunn v. B&B Automotive and Helm Associates

June 5, 2012


The opinion of the court was delivered by: Buckwalter, S.J.


Currently pending before the Court is the Motion of Defendants B&B Automotive, Inc. and Helm Associates, Inc. (collectively "Defendants") to Remand the Case to the American Arbitration Association for binding arbitration. For the following reasons, the Motion is granted and the Complaint is dismissed with prejudice.


According to the facts set forth in the Complaint, Plaintiff Jacobia Dunn visited Defendant B&B Automotive ("Dealer") car sales dealership in Croydon, Pennsylvania on June 10, 2010. (Compl. ¶ 7.) The Dealer showed Plaintiff a pre-owned 2000 Mitsubishi Mirage, bearing Vehicle Identification Number JA3AY26C7YU053971 (the "Vehicle"). (Id. ¶ 8.) The Dealer certified the vehicle's mileage to be 97,3000. (Id. ¶ 9.) At the time of the actual transfer of the Vehicle from Dealer to Plaintiff, however, the Vehicle's mileage was in excess of 7,000 more miles. (Id. ¶ 10.) In addition, prior to the formation of any agreements of sale, the Dealer failed to inform Plaintiff that the vehicle had been a prior rental vehicle and had been involved in a collision in December 2003. (Id. ¶ 11.) In reliance upon the Dealer's representations, Plaintiff agreed to purchase the Vehicle by completing and signing a Retail Installment Sales Contract ("RISC") for the Vehicle, involving a sales price of $10,374.00 and a down payment of $487.00 (Id. ¶ 13.)

Subsequently, Defendant Helm Associates, Inc. ("Creditor") purchased the RISC from the Dealer. (Id. ¶ 14.) On September 6, 2011, Creditor sent a repossession tow truck to Plaintiff's home to repossess the Vehicle. (Id. ¶ 15.) The odometer rollback, past fleet history, and past accident history severely reduced or eliminated the retail value of the Vehicle at the time of purchase by Plaintiff. (Id. ¶ 16.)

On January 24, 2012, Plaintiff initiated the current lawsuit in federal court against the Defendants. Count I alleges violations of federal odometer law under 49 U.S.C. § 32705, et seq. (Id. ¶¶ 20--23.) Count II claims fraud/violation of Pennsylvania Unfair Trade Practices Consumer Protection Law, 75 Pa.C.S. § 7137. (Id. ¶¶ 24--37.) Finally, Count III asserts breaches of express and implied warranties. (Id. ¶¶ 38--41.)

Defendants filed the present Motion to Remand the Case to Arbitration on April 26, 2012. Plaintiff filed her Response on May 11, 2012 and Defendants submitted a Reply Brief on May 23, 2012. The Motion is now ripe for judicial review.


Section 2 of the Federal Arbitration Act ("FAA") provides that arbitration agreements "evidencing a transaction involving [interstate] commerce . . . shall be valid, irrevocable, and enforceable, save upon grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "The purpose of the Act was to abolish the common law rule that arbitration agreements were not judicially enforceable." Cost Bros., Inc. v. Travelers Indem. Co., 760 F.2d 58, 60 (3d Cir. 1985). The FAA, therefore, "preempts state law that might 'undercut the enforceability of arbitration agreements.'" Id. (quoting Southland Corp. v. Keating, 465 U.S. 1, 16 (1984)).

The FAA creates a strong policy in favor of arbitration. Any doubt over whether a particular dispute is covered by an arbitration agreement should be resolved in favor of arbitration. AT& T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986). Nonetheless, a court cannot order the arbitration of any claim unless the parties to a dispute have agreed to arbitration. Medtronic AVE, Inc. v. Advanced Cardiovascular Sys., Inc., 247 F.3d 44, 54 (3d Cir. 2000). Before compelling an unwilling party to arbitrate, the FAA requires the court to ensure that the dispute is arbitrable. AT&T Techs., 475 U.S. at 648--49; John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1988) (holding that before compelling arbitration, a court must ensure that: (1) the parties entered into a valid arbitration agreement; and (2) the dispute between the parties falls within the language of the arbitration agreement). Notably, when ruling on a motion to compel arbitration under the FAA, a court may only determine whether the merits of the case should be arbitrated or litigated, and may not consider the merits of the underlying claims. Great W. Mtg. Corp. v. Peacock, 110 F.3d 222, 228 (3d Cir. 1997). If a valid agreement exists and the controversy falls within its terms, then, as noted above, the clause "shall be valid, irrevocable, and enforceable," and the court must mandate arbitration. 9 U.S.C. § 2.


In the present case, Defendants contend that the RISC executed by the parties incorporated, by reference, an Arbitration Agreement, signed by both parties. This Agreement gave either party the option of electing arbitration pursuant to either the rules of the American Arbitration Association or the National Arbitration Forum to resolve any disputes as per the terms of the Arbitration Agreement. Although Defendants' counsel notified Plaintiff's counsel of their election to proceed to arbitration in this matter, Plaintiff's counsel declined to do so based on his belief that the Arbitration Agreement is invalid. Defendants now seek enforcement of that Agreement.

To determine whether to grant a motion to compel arbitration, the court must first establish that a valid arbitration agreement exists. Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529, 533 (3d Cir. 2005); Brown v. City of Phila., No. Civ.A.10-2687, 2010 WL 4484630, at *4 (E.D. Pa. Nov. 9, 2010). "This requires the court to look toward the relevant state law of contracts." Brown, 2010 WL 4484630, at *4 (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Parilla v. IAP Worldwide Servs., VI, Inc., 368 F.3d 269, 275 (3d Cir. 2004)). Under Pennsylvania law, a valid contract exists when: (1) both parties manifested an intention to be bound by the agreement; (2) the terms of the agreement are sufficiently definite to be enforced; and (3) the agreement is supported by consideration. SeeBlair v. Scott Specialty Gases, 283 F.3d 595, 603 (3d Cir. 2002).

Plaintiff, in this case, does not contest the existence of the Arbitration Agreement, which states, in ...

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