AutoNation USA Corp. v. Leroy

105 S.W.3d 190, 2003 Tex. App. LEXIS 3277, 2003 WL 1884889
CourtCourt of Appeals of Texas
DecidedApril 17, 2003
Docket14-02-00496-CV, 14-02-00728-CV
StatusPublished
Cited by94 cases

This text of 105 S.W.3d 190 (AutoNation USA Corp. v. Leroy) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AutoNation USA Corp. v. Leroy, 105 S.W.3d 190, 2003 Tex. App. LEXIS 3277, 2003 WL 1884889 (Tex. Ct. App. 2003).

Opinion

OPINION

WANDA McKEE FOWLER, Justice.

In these consolidated actions, AutoNation seeks mandamus relief from the trial court’s denial of a motion to compel arbitration, and appeals the trial court’s order certifying a class. We conditionally grant the writ of mandamus, reverse the trial court’s order certifying a class, and remand.

BACKGROUND FACTS

AutoNation formerly operated used-car megastores in Texas and elsewhere in the United States. Customers who purchased a used car signed a “Purchase Agreement” detailing the various charges and credits related to the transaction. On the back of the Purchase Agreement was the following provision:

*194 Any controversy or claim arising out of or relating to this Purchase Agreement or the breach thereof shall be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Any controversy or claim subject to this arbitration provision shall be decided by one arbitrator, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Any arbitration proceeding shall be conducted in the city and state where the vehicle purchased hereunder was purchased from [AutoNation],

Customers who financed their purchase also signed a “Retail Installment Contract” (“RIC”) governing the terms of the financing. The RIC did not include an arbitration provision.

The Purchase Agreement reflected that AutoNation charged a documentary fee of $50 in connection with the purchase of a vehicle. Both the Purchase Agreement and the RIC included a statement that the documentary fee may not exceed $50. In 1997, AutoNation began charging customers a vehicle preparation fee of $45. Between December 1997 and February 1998, however, certain RIC forms reflected a documentary fee of $95. According to Au-toNation, the $95 charge was the result of a computer programming error that caused the $50 documentary fee to be combined with the $45 vehicle preparation fee.

Theresa Leroy, suing for herself and on behalf of a proposed class, alleged that the $95 documentary fee in the RIC violated section 348.006 of the Texas Finance Code, which prohibits a documentary fee in excess of $50. Leroy also complained that the vehicle preparation fee is not authorized under Chapter 348.

Leroy moved for certification of a class of all persons or entities who purchased and financed a car from AutoNation in Texas and were charged more than $50 for a documentary fee or who were charged a vehicle preparation fee. AutoNation opposed the motion for class certification and moved to compel Leroy to arbitrate her claims as provided in the Purchase Agreement.

The trial court denied AutoNation’s motion to compel arbitration, finding that Leroy’s claims focused on the RIC and were outside the scope of the arbitration clause contained in the Purchase Agreement. At the same time, the trial court granted Leroy’s motion for class certification. The court defined the class as follows:

Any person who purchased and financed a car at AutoNation in Texas from 1997 to present where the retail installment contract reflects a documentary fee in excess of $50.00, save and except that there is excluded from the class any person who opts out of inclusion in the class after receiving notice of the action.

This mandamus and interlocutory appeal followed.

DISCUSSION

Because we find the arbitration issue dispositive of both the mandamus action and the appeal, we will first discuss Auto-Nation’s request for mandamus relief. We will then address AutoNation’s appeal of the class certification order.

I. AUTONATION’S REQUEST FOR MANDAMUS RELIEF

In the mandamus action, AutoNation contends the trial court abused its discretion by denying AutoNation’s motion to compel arbitration because (1) Leroy’s claims fall within the scope of the arbitration provision in the Purchase Agreement, and (2) the Purchase Agreement and RIC must be construed together. In response, Leroy contends that mandamus should be denied because AutoNation’s own actions *195 show it does not consider disputes arising under the RIC to be within the scope of the arbitration provision, and her Finance Code claims arise solely under the RIC and are completely independent of the Purchase Agreement. Leroy additionally attempts to avoid the effect of the arbitration clause by asserting that the clause is unconscionable and AutoNation was not diligent in seeking mandamus relief.

A. The Applicable Law

The parties agree this action is governed by the Federal Arbitration Act (FAA) and mandamus is the appropriate method by which to challenge the trial court’s ruling. See 9 U.S.C. § 2 (2000); In re Am. Homestar of Lancaster, Inc., 50 S.W.3d 480, 484 (Tex.2001). In determining whether to grant mandamus relief in the context of a denial of an order to compel arbitration under the FAA, we apply an abuse of discretion standard. See Am. Homestar, 50 S.W.3d at 483. A trial court has no discretion to determine what the law is and has no discretion in applying the law to the facts. Id. 1 Consequently, the trial court’s failure to analyze or apply the law correctly is an abuse of discretion. Id.

The Texas Supreme Court has unequivocally held that “[flederal and state law strongly favor arbitration.” Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996). The Court has further stressed that “a presumption exists in favor of agreements to arbitrate under the FAA,” and that “[c]ourts must resolve any doubts about an agreement to arbitrate in favor of arbitration.” Id. A party opposing an arbitration agreement bears the burden of defeating it. Id. Once the party seeking arbitration establishes that an agreement exits under the FAA and that the claims raised are within the agreement’s scope, the trial court has no discretion but to compel arbitration. Id.

The Texas Supreme Court has also emphasized that under the FAA, “any doubts as to whether [a plaintiff’s] claims fall within the scope of the agreement must be resolved in favor of arbitration.” Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex.1995). Indeed, “[t]he policy in favor of enforcing arbitration agreements is so compelling that a court should not deny arbitration ‘unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue.’ ” Id. (quoting Neal v. Hardee’s Food Sys., Inc., 918 F.2d 34, 37 (5th Cir.1990)).

In determining whether a claim falls within the scope of an arbitration clause, courts must “focus on the factual allegations of the complaint, rather than the legal causes of action asserted.”

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Finley Res., Inc. v. Ep Energy E&P Co.
443 P.3d 838 (Wyoming Supreme Court, 2019)
Pinto Technology Ventures, L.P. v. Sheldon
526 S.W.3d 428 (Texas Supreme Court, 2017)
Southwinds Express Construction, LLC v. D.H. Griffin of Texas, Inc.
513 S.W.3d 66 (Court of Appeals of Texas, 2016)
Cash Biz, LP v. Henry
539 S.W.3d 342 (Court of Appeals of Texas, 2016)
Branch Law Firm L.L.P. v. Osborn
532 S.W.3d 1 (Court of Appeals of Texas, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
105 S.W.3d 190, 2003 Tex. App. LEXIS 3277, 2003 WL 1884889, Counsel Stack Legal Research, https://law.counselstack.com/opinion/autonation-usa-corp-v-leroy-texapp-2003.