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Stanley v. A Better Way Wholesale Autos, Inc.

United States District Court, D. Connecticut

August 15, 2018

SHAINA D. STANLEY, Plaintiff,
v.
A BETTER WAY WHOLESALE AUTOS, INC. Defendant.

          RULING ON MOTION TO STAY AND COMPEL ARBITRATION

          Michael P. Shea, U.S.D.J.

         Shaina D. Stanley (“Stanley”) brings this suit against A Better Way Wholesale Autos, Inc. (“ABW”) claiming violations of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq., and the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen. Stat. §§ 42-110a et seq. Stanley alleges that, in connection with her purchase of a used vehicle from ABW, ABW charged Stanley for several services that were not properly disclosed to her and that she did not want. Citing an arbitration provision in one of the two contracts that ABW and Stanley signed, ABW now moves to stay litigation and compel arbitration of Stanley's claims.

         For the following reasons, ABW's motion to compel arbitration and stay this action (ECF No. 15) is DENIED.

         I. Factual Background

         The following facts are drawn from Stanley's complaint, along with the exhibits attached to the parties' briefs.

         On February 10, 2017, Stanley purchased a 2011 Mazda Tribute from ABW. (See ECF No. 15-2 at 1.) The parties executed two documents on February 10, 2017 to finalize the purchase: (1) a Retail Purchase Order (the “Purchase Order”) and (2) a Retail Installment Contract (the “Installment Contract”). (Id.; ECF No. 20-1 at 4.) The Purchase Order set the key terms of the purchase of the vehicle, such as the model, price, any warranties that came with the vehicle, and any additional services or fees relating to the car; by contrast, the Installment Contract provided the terms of the financing arrangement for the portion of the purchase price that Stanley chose to finance. (ECF No. 15-2 at 2; ECF No. 20-1 at 4-7.) The Purchase Order listed the sales price as $8, 362.52 and included charges for a dealer conveyance fee of $598, a vehicle identification No. (“VIN”) etching fee of $198, an oil changes for life contract of $599, and GAP insurance[1]of $895. (ECF No. 15-2 at 2.) The Purchase Order reflected that Stanley made a down payment of $2, 000. (Id.) The Installment Contract financed Stanley's remaining balance of $6, 362.52 and similarly mentioned the GAP insurance charge of $895. (ECF No. 20-1 at 4.)

         Stanley alleges that several charges in the Purchase Order and Installment Contract were not properly disclosed to her. She claims that an advertisement for the car did not include the dealer conveyance fee that she was ultimately charged. (ECF No. 1 at ¶ 7.) She also alleges that ABW told her that the vehicle warranty included free oil changes for life, but the line item for oil changes on the Purchase Order was misaligned and a line ran through the charge, so she was unaware of that separate charge. (Id. at ¶¶ 9, 12.) This charge was also not itemized in the Installment Contract, because according to Stanley it was included as part of the cash price of the vehicle. (Id. at ¶ 19.) Stanley further claims that ABW did not provide her the option to decline the VIN etching fee listed in the Purchase Order. (Id. at ¶ 13.) Finally, Stanley alleges that ABW mandated that she purchase GAP coverage as a condition of the purchase, even though ABW knew that Stanley would not receive any benefit from GAP coverage because the amount financed was substantially below the vehicle's book value. (Id. at ¶¶ 17-18.)

         Both the Purchase Order and the Installment Contract contain arbitration clauses. The Purchase Order provides that either Stanley or ABW can elect to submit certain claims to the American Dispute Resolution Center (“ADRC”):

Any claim or dispute, whether in contract, tort, statute or otherwise including the interpretation and scope of this clause, and the arbitrability of the claim or dispute, between you and us or our employees, agents, successors or assigns, which arise out of or relate to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. . . . Binding arbitration shall be provided by American Dispute Resolution Center, Inc., under its rules of Expedited Commercial Arbitration to be applied provided there is less than $75, 000.00 in dispute . . . In the event of the American Resolution Center, Inc. [sic] shall be unwilling or unable to hear the matter, the matter may be arbitrated by any other arbitration organization or individual arbitrator that we have mutually agreed upon. . . .

(ECF No. 15-2 at 3, ¶ 9 (emphasis added).) The Installment Contract contains similar language, but specifies that Stanley may choose that the arbitration be conducted by the American Arbitration Association (“AAA”) or another body that ABW approves:

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. . . . You may choose the American Arbitration Association . . . or any other organization to conduct the arbitration subject to our approval. . . . If the chosen arbitration organization's rules conflict with this Arbitration Provision, then the provisions of this Arbitration Provision shall control.

(ECF No. 20-1 at 7 (emphasis added).) Both the Installment Contract and Purchase Order contain merger clauses. (ECF No. 15-2 at 2 (“The front and back hereof comprise the entire agreement affecting this order and no other agreement or understanding of any nature concerning same has been made or entered into.”); ECF No. 20-1 at 5 (“This contract contains the entire agreement between you and us relating to this contract.”). The Installment Contract further provides that “[f]ederal law and the law of the state of our address shown on the front of this contract [i.e., Connecticut law] apply to this contract.” (ECF No. 20-1 at 7.)

         On or about May 3, 2017, Stanley submitted a demand for arbitration to the American Arbitration Association (the “AAA”) seeking $4, 167 in damages from ABW on the basis of the non-disclosures in the Purchase Order and Installment Contract. (Id. at 2.) On June 23, 2017, the AAA wrote to ABW's counsel (the same who has appeared in this action) and advised that, pursuant to R-12 of the AAA Consumer Rules, ABW had to submit its consumer agreement for expedited review and also to the AAA's database. (ECF No. 20-2 at 2.) ABW was required to pay the fees associated with those submissions, as well as filing fees and a deposit fee for the arbitrator, totaling $3, 650. (Id.) On July 20, 2017, the AAA sent ABW a second letter, noting that it had not received the required fees and that ABW's payment must be received by August 3, 2017. (ECF No. 20-3 at 2.) The July 20 letter warned that, “should the business not comply with our request by [August 3, 2017], we may decline to administer any other consumer dispute involving this business” and “should the AAA decline to administer an arbitration, either party may choose to submit its dispute to the appropriate court for resolution.” (Id.) On August 19, 2017, the AAA sent ABW a third letter advising ABW that, since it had not received the required fees, the AAA was administratively closing the arbitration and pursuant to R-1(d), “either party may choose to submit its dispute to the appropriate court for resolution.” (ECF No. 20-4 at 2.) The AAA also requested that ABW remove AAA's name from its arbitration clause due to ABW's failure to adhere to AAA policies. (Id.) In the interim, Stanley filed this action in this Court on July 20, 2017. (ECF. No. 15-2.)

         On August 30, 2017, ABW's counsel wrote to the AAA asking it to reverse its decision declining to administer the arbitration. (ECF No. 20-5 at 2.) In that letter, ABW's counsel said that “ABW agree[d] that this matter is properly before the AAA” and purported to invoke the arbitration clause. (Id.) The AAA declined to reopen the case, writing in a September 7, 2017 email to both parties that, given that Stanley had filed in Court, the AAA would not reopen the arbitration unless Stanley consented. (ECF No. 20-6 at 2.) On ...


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