Dana Jennings v. Carvana LLC

• Court: Court of Appeals for the Third Circuit
• Decided: March 21, 2024
• Docket: 22-2948
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_________________

No. 22-2948 _________________

DANA JENNINGS, on his own behalf and on behalf of other similarly situated persons; JOSEPH A. FURLONG, on his own behalf and on behalf of other similarly situated persons

v.

CARVANA LLC, Appellant _________________

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 5-21-cv-05400) District Judge: Honorable Edward G. Smith _________________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) on September 22, 2023

Before: RESTREPO, McKEE, and RENDELL, Circuit Judges

(Filed: March 21, 2024) ________________

OPINION ________________

 This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent. RESTREPO, Circuit Judge.

In 2021, Appellees Dana Jennings and Joseph A. Furlong (“Appellees”) each bought

a car from Appellant Carvana LLC, a nationwide online used car dealer. The Appellees

brought suit alleging that Carvana breached a contractual promise to properly license, title,

and register their vehicles in Pennsylvania. Carvana moved to compel arbitration or, in the

alternative, to dismiss the complaint for failure to state a claim. For the reasons that follow,

we will affirm the District Court’s order denying Carvana’s motion to compel arbitration

and remand for further proceedings on the issues raised in the complaint.

I. Facts and Procedural History

In January and June of 2021, respectively, Jennings and Furlong purchased cars

from Carvana. On the day of their purchases, each Appellee signed three documents: the

Retail Purchasing Agreement (“RPA”); the Retail Installment Sales Contract (“RISC”); and

the arbitration agreement.

In November 2021, the Appellees filed a class action lawsuit in Pennsylvania state

court seeking actual and treble damages for breach of contract on behalf of themselves and

a putative class consisting of “[a]ll persons in the United States east of the Mississippi

River who entered into contracts with Carvana to purchase vehicles since November 5,

2019, and Carvana agreed to provide car registration services with non-temporary and

permanent vehicle registrations in the state of their residence,” as well as a similarly

defined sub-class of Pennsylvania customers. JA99. The action arose from the Appellees’

claim that Carvana breached their contract and violated Pennsylvania’s Unfair Trade

2 Practices and Consumer Protection Law, 73 P. S. §§ 201-1 et seq., by failing to properly

register their vehicles in Pennsylvania.

In December 2021, Carvana successfully removed the case to federal district court

under the Class Action Fairness Act (“CAFA”). See 28 U.S.C. §§ 1441, 1446, 1453.

Carvana moved to compel arbitration, or in the alternative, to dismiss the claims. The

Appellees responded that the Pennsylvania Motor Vehicle Sales Finance Act (“MVSFA”)

invalidated the arbitration agreements because they are not expressly incorporated into the

RISCs. See 12 Pa. C.S. § 6221(a)(2). The District Court denied Carvana’s motion, finding

that the arbitration agreement was not enforceable under the MVSFA, and that the

complaint sufficiently alleged both breach of contract claims and violations of

Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCL”). Carvana

filed a timely notice of appeal.

II. Jurisdiction and Standard of Review

The District Court had subject matter jurisdiction under CAFA. 28 U.S.C. §§

1332(d), 1441, and 1452. Regarding the arbitration issue, this Court has jurisdiction

pursuant to 9 U.S.C. §16(a). See Palcko v. Airborne Express, Inc., 372 F.3d 588, 591–92

(3d Cir. 2004). We review only the arbitration issue because our jurisdiction is limited to

the portion of the District Court’s order justifying the immediate appeal. Id. at 594–95.

Our review of the District Court’s denial of Carvana’s motion to compel arbitration

is plenary. Century Indem. Co. v. Certain Underwriters at Lloyd’s, 584 F.3d 513, 521 (3d

Cir. 2009). We review findings of fact for clear error and legal conclusions de novo. Id. at

521.

3 III. Analysis

A. Arbitration Agreement

In deciding a motion to compel, courts look to state law to determine whether a

contractual arbitration agreement is enforceable. Trippe Mfg. Co. v. Niles Audio Corp., 401

F.3d 529, 532 (3d Cir. 2005); accord Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland

Stanford Junior Univ., 489 U.S. 468, 475 (1989). Here, both RISCs explicitly state that

Pennsylvania state law governs the terms of the sales agreement. The parties agree that we

apply Pennsylvania law to determine whether the arbitration agreements are enforceable.

Under Pennsylvania’s MVSFA, a contract governing an installment sale must, inter

alia: (1) “be in writing;” (2) “contain all of the agreements between a buyer and an

installment seller relating to the installment sale of the motor vehicle sold;” and (3) “be

signed by the buyer and seller[.]” 12 Pa. C.S. § 6221(a); see also Knight v. Springfield

Hyundai, 81 A.3d 940, 948 (Pa. Super. Ct. 2013).1 The statute creates a one-document rule

for the installment purchases of vehicles requiring that all agreements between the parties

must be incorporated into the RISC. 12 Pa. C.S. § 6221(a)(2); Knight, 81 A.3d at 948 (citing

1 Pa. C.S. § 1921(b)). The language of the statute is clear: “when a buyer makes a purchase

of a vehicle by installment sale, the RISC subsumes all other agreements relating to the

1 Although not directly disputed on appeal, we agree with the District Court that the MVSFA does not conflict with the Federal Arbitration Act (“FAA”) and is therefore not preempted by it. MVSFA’s requirement that all agreements are included in the RISC does not treat arbitration agreements differently than other contract provisions, and therefore does not run afoul of the Supreme Court’s mandate in Kindred Nursing Centers Ltd. P’ship v. Clark, 581 U.S. 246, 251 (2017) (“The FAA thus preempts any state rule discriminating on its face against arbitration.”). 4 sale.” Id. (citing 1 Pa. C.S. § 1921(b)). Thus, no other “agreement” is enforceable as part

of the sale unless it is included in the RISC. Here, the arbitration agreements exist

independently of the RISCs and are therefore unenforceable.

Moreover, the RISCs themselves state that they represent the complete and

exclusive agreements between the parties. Under Pennsylvania law, “an integration clause

which states that a writing is meant to represent the parties’ entire agreement is also a clear

sign that the writing is meant to be just that and thereby expresses all of the parties’

negotiations, conversations, and agreements made prior to its execution.” Yocca v.

Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436 (Pa. 2004). If a contract is deemed to

represent the parties’ entire agreement, the parol evidence rule applies and precludes

consideration of other written agreements entered into by the parties. Id. at 436-37; see also

Allegheny Cnty. v. Allegheny Cnty. Prison Emps. Indep. Union, 381 A.2d 849, 853–54 (Pa.

1977). Accordingly, the District Court acted properly by not considering the independent

and separate arbitration agreements.

Carvana argues that because the Appellees signed the RISC, RPA, and arbitration

agreements on the same day and as part of the same transaction, the three documents should

be deemed one contract, which would render the arbitration agreements enforceable.

Although the “same transaction” concept exists in Pennsylvania contract law, the contracts

relating to the same transaction are enforceable only if they reference or incorporate one

another. See, e.g., Sw. Energy Prod. Co. v. Forest Res., LLC, 83 A.3d 177, 188 (Pa. Super.

Ct. 2013) (concluding that the trial court erred by not interpreting lease and letter

agreements as a single agreement where the documents referenced one another); see also

5 Richter v. Mozenter, 53 A.2d 76, 78 (Pa. 1947) (holding that a lease with an option to buy

and an accompanying agreement of sale may both be enforced if executed as part of the

same transaction). Here, the RISC, which “subsumes all other agreements relating to the

sale” of a car under the MVSFA, does not reference the arbitration agreement. Knight, 81

A.3d at 948 (interpreting 12 Pa. C.S. § 6221(a)(2)). The RISC instead unequivocally states

that it constitutes the entire agreement between the parties. Thus, Carvana’s argument fails.

Carvana next contends that even if the MVSFA imposes a one-document rule, it

does not apply to the arbitration agreement because the Act is only concerned with

financing terms. We disagree. MVSFA requires that certain financing terms be included in

the RISC, but it also dictates that all agreements be contained within the RISC. 12 Pa. C.S.

§ 6221(a). The arbitration agreement was not, and it is therefore unenforceable.

B. The Dismissal Order

Carvana requests review of the District Court’s entire order, which includes the

denial of its motion to dismiss. Such review would be contrary to the law. On interlocutory

appeals under the FAA, our jurisdiction is limited to the portion of the order justifying the

immediate appeal; all other portions are reviewable only if we exercise pendent

jurisdiction. Palcko, 372 F.3d at 594–95. See also O’Hanlon v. Uber Techs., Inc., 990 F.3d

757, 761 (3d Cir. 2021). We have the discretion to exercise pendent jurisdiction over a non-

appealable issue where (1) it is “inextricably intertwined” with the appealable issue or (2)

such review is otherwise “necessary to ensure meaningful review of the appealable order.”

E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269

F.3d 187, 203 (3d Cir. 2001). If we can adjudicate the appealable order “without venturing

6 into otherwise nonreviewable matters, we have no need—and therefore no power—to

examine” those matters. Reinig v. RBS Citizens, N.A., 912 F.3d 115, 131 (3d Cir. 2018)

(internal quotation marks and citations omitted).

Carvana contends exercising pendent jurisdiction is appropriate in this case because

the dismissal issue is “inextricably intertwined” with the arbitration issue. But we have

adjudicated the arbitration issue without considering the dismissal issue, which means

review of the appealable order does not require examining the nature of the claims raised

in the Appellees’ complaint. See Reinig, 912 F.3d at 130. The exercise of pendent

jurisdiction would therefore be inappropriate.

IV. Conclusion

For the foregoing reasons, we will affirm the District Court’s order denying the

motion to compel arbitration and remand this matter for further proceedings.