Ford Motor Credit Company, LLC v. Ronald R. Miller ( 2023 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
FILED
January 2023 Term
_______________ May 30, 2023
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
No. 22-0007 SUPREME COURT OF APPEALS
OF WEST VIRGINIA
_______________
FORD MOTOR CREDIT COMPANY, LLC,
Plaintiff Below, Petitioner
v.
RONALD R. MILLER,
Defendant Below, Respondent
____________________________________________________________
Appeal from the Circuit Court of Wyoming County
The Honorable Micheal M. Cochrane, Judge
Civil Action No. 20-C-75
REVERSED AND REMANDED
____________________________________________________________
Submitted: April 19, 2023
Filed: May 30, 2023
Jessica L. Ellsworth, Esq. Troy N. Giatras, Esq.
Hogan Lovells US LLP Matthew Stonestreet, Esq.
Washington, District of Columbia Phillip A. Childs, Esq.
Pro Hac Vice The Giatras Law Firm, PLLC
Charleston, West Virginia
Michael Bonasso, Esq. Counsel for Respondent
Bryan N. Price, Esq.
Jason A. Proctor, Esq.
Flaherty Sensabaugh Bonasso PLLC
Charleston, West Virginia
Counsel for Petitioner
JUSTICE ARMSTEAD delivered the Opinion of the Court.
JUSTICE HUTCHISON concurs and reserves the right to file a separate Opinion.
SYLLABUS BY THE COURT
1. “An order denying a motion to compel arbitration is an interlocutory
ruling which is subject to immediate appeal under the collateral order doctrine.” Syl. Pt.
1, Credit Acceptance Corp. v. Front, 231 W. Va. 518, 745 S.E.2d 556 (2013).
2. “When an appeal from an order denying a motion to dismiss and to
compel arbitration is properly before this Court, our review is de novo.” Syl. Pt. 1, W. Va.
CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W. Va. 465, 796 S.E.2d 574 (2017).
3. A party that seeks to enforce an arbitration agreement must make an
initial, prima facie showing that the arbitration agreement exists between the parties. The
party may make this prima facie showing by attaching to the party’s motion to compel a
copy of the arbitration agreement signed by the non-moving party. When the party seeking
to compel arbitration received its right to arbitration by assignment, that party may meet
its initial, prima facie burden by attaching to the party’s motion to compel, along with the
arbitration agreement, a copy of each duly executed assignment necessary to show a chain
of assignment from an original party under the arbitration agreement to the party seeking
to compel arbitration.
i
Armstead, Justice:
Petitioner, Ford Motor Credit Company, LLC, (“Ford Credit”) sued
Respondent, Ronald R. Miller, in the Circuit Court of Wyoming County to collect the
unpaid balance on an automobile loan. When Mr. Miller filed a class-action counterclaim
to challenge Ford Credit’s collection practices, Ford Credit moved to compel arbitration
and attached to its motion a copy of a retail installment contract containing the arbitration
provisions that Ford Credit sought to enforce. Mr. Miller did not deny that he signed the
retail installment contract or that the copy attached to Ford Credit’s motion was authentic.
In fact, he attached a copy of the same retail installment contract to his own brief opposing
Ford Credit’s motion. Nevertheless, the circuit court found that Ford Credit failed to offer
any “admissible evidence” in support of its right to arbitration and denied Ford Credit’s
motion to compel arbitration. Ford Credit appeals from this decision, and, after review, we
find that the circuit court erred in determining that Ford Credit failed to meet its light
evidentiary burden to show the existence of an arbitration agreement. Accordingly, we
reverse the circuit court and remand this case to the circuit court for further proceedings
consistent with this opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND
Mr. Miller purchased a Lincoln MKX on credit through Ford Credit. When
he failed to make his payments, Ford Credit sued him in circuit court for the alleged balance
due on the loan. With its complaint, Ford Credit filed a copy of a retail installment contract.
The retail installment contract, which is dated February 18, 2017, and which purports to be
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signed by Mr. Miller in three places, contains an arbitration provision and assigns “all” the
dealership’s “rights, privileges, and remedies” to “Ford Motor Credit Company.” 1
Mr. Miller answered the complaint and asserted a class-action counterclaim
for unlawful debt collection practices. In response, Ford Credit moved to compel
arbitration and attached a second copy of the retail installment contract to its motion. Later,
Ford Credit moved to stay discovery.
Mr. Miller opposed the motion to compel arbitration, arguing that the
arbitration agreement is unconscionable and that Ford Credit waived arbitration by filing
suit. Mr. Miller did not deny, however, that he signed the retail installment contract or that
the copies of the retail installment contract attached to Ford Credit’s complaint and its
motion to compel were authentic. On the contrary, he attached a third copy of the same
retail installment contract to his response (including a separate, enlarged page depicting the
arbitration provisions) and implicitly affirmed the contract’s authenticity:
On February 18, 2017, in search of a new vehicle, Mr.
Miller turned to Mountaineer Automotive in Beckley, West
Virginia. Mountaineer Automotive sold Mr. Miller a 2016
Lincoln MKX for $59,900.40. See Retail Installment Contract
and Security Agreement, attached hereto as Exhibit A.
Mr. Miller signed a contract as part of the purchase of
the MKX. See Retail Installment Contract and Security
Agreement, attached to Complaint. It was written in small
font, single-spaced and [sic] numerous compacted terms and
conditions. See Id. On the side opposite of the signing page
1
The affidavit attached to the complaint explains that “Ford Motor Credit
Company” is now known as “Ford Motor Credit Company LLC.” See id. (stating that Mr.
Miller is “indebted to Ford Motor Credit Company LLC, formerly Ford Motor Credit
Company”).
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there was an arbitration agreement with Ford Motor Credit.
See Arbitration Clause, attached hereto as Exhibit B.
In an affidavit attached to his response to the motion to compel arbitration,
Mr. Miller further authenticated the retail installment contract by alleging as follows:
3. I bought a 2016 Lincoln MKX from Mountaineer
Automotive in Beckley, West Virginia on February 18,
2017.
4. I financed my Lincoln MKX through Ford Motor
Credit Company, LLC.
5. At the time I signed the finance agreement, no one
explained to me what I was signing.
6. I was presented with the finance agreement with the
understanding I must sign it to get my vehicle.
7. The finance agreement was written in small print,
making it hard to understand what was written.
8. I did not understand that the contract had an arbitration
agreement and still do not understand what arbitration
is or what rights I am alleged to have waived.
9. No attention was drawn to the arbitration agreement in
the finance contract.
10. I never received any explanation from Ford Motor
Credit regarding the finance agreement or the
arbitration agreement contained therein.
(Emphasis added.)
The parties appeared for a hearing in September 2021 on the motion to
compel arbitration. During the hearing, Mr. Miller’s attorneys argued for the first time that
Ford Credit had failed to prove either the assignment or the arbitration agreement, citing
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our decision in Frontline Asset Strategies, LLC v. Rutledge, No. 20-0395, 2021 WL
1972277 (W. Va. May 17, 2021) (memorandum decision). Ford Credit’s attorney
confessed that he was unfamiliar with Frontline and requested that the court allow him to
file a brief after reviewing the decision. The court denied such request and said that it
would read the case itself.
Three days later, Ford Credit served a supplemental brief arguing, based on
our opinion in State ex rel. Troy Group, Inc. v. Sims, 244 W. Va. 203, 852 S.E.2d 270(2020), that Ford Credit had met its burden of proving the arbitration agreement’s existence
and that Mr. Miller’s argument to the contrary was untimely. Nevertheless, Ford Credit
also filed an affidavit authenticating the retail installment contract and confirming the
assignment from the dealership to Ford Credit.
Mr. Miller moved to strike these filings, and after further briefing and a
hearing on November 12, 2021, the circuit court denied Ford Credit’s motion to compel
arbitration. According to the circuit court, Ford Credit “failed to provide evidence that an
arbitration agreement exists or was transferred with the right to collect the original debt.”
Ford Credit appeals from the circuit court’s December 6, 2021 order refusing to compel
arbitration.
II. STANDARD OF REVIEW
Although Ford Credit appeals an interlocutory order, we note that this appeal
is properly before us. We have held that “[a]n order denying a motion to compel arbitration
is an interlocutory ruling which is subject to immediate appeal under the collateral order
4
doctrine.” Syl. Pt. 1, Credit Acceptance Corp. v. Front, 231 W. Va. 518, 745 S.E.2d 556(2013). “When an appeal from an order denying a motion to dismiss and to compel
arbitration is properly before this Court, our review is de novo.” Syl. Pt. 1, W. Va. CVS
Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W. Va. 465, 796 S.E.2d 574 (2017).
With this standard of review in mind, we will consider Ford Credit’s appeal.
III. ANALYSIS
Ford Credit argues that the circuit court erred in two respects. First, Ford
Credit alleges that the circuit court erred by finding that it failed to prove that an arbitration
agreement exists between the parties. Secondly, Ford Credit maintains that the circuit court
erred by denying it an opportunity to respond to Mr. Miller’s last-minute argument
opposing arbitration. Ford Credit asks us to vacate the circuit court’s order and remand
this case to the circuit court with instructions to either compel arbitration or rule on Mr.
Miller’s waiver and unconscionability objections.
Mr. Miller responds that the record shows Ford Credit’s “absolute failure” to
prove the existence of a valid arbitration agreement through “affidavits, witnesses, or even
a simple request to enter evidence into the record” and that it was hardly a “surprise tactic”
for him to insist that Ford Credit provide “threshold evidence for its own motion.” He
maintains that “[t]his appeal is nothing more than an attempt to re-do a hearing that did not
go well” for Ford Credit. We disagree.
When a party moves to compel arbitration pursuant to the Federal Arbitration
Act (“FAA”), 9 U.S.C. § 1 et seq., the trial court must determine “(1) whether a valid
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arbitration agreement exists between the parties; and (2) whether the claims averred by the
plaintiff fall within the substantive scope of that arbitration agreement.” Syl. Pt. 2, in part,
State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W. Va. 250, 692 S.E.2d 293 (2010). In
this case, no one denies that the FAA applies or that Mr. Miller’s claims fall within the
arbitration agreement contained in the retail installment contract. The question is whether
Ford Credit has made a prima facie showing that a valid arbitration agreement exists
between the parties.
In his written response below to Ford Credit’s motion to compel arbitration,
Mr. Miller alleged that the arbitration agreement is not enforceable because Ford Credit
waived its right to arbitration (by filing an action in circuit court) and because the
arbitration agreement is procedurally and substantively unconscionable. However, the
nature of Mr. Miller’s argument changed when the parties appeared before the circuit court
for the hearing on the motion to compel arbitration. At the hearing, Mr. Miller instead
questioned whether there is an arbitration agreement between the parties. He did not deny,
however, that he signed the retail installment contract or that the copies of the retail
installment contract filed with the court were authentic. To do so would have contradicted
his own sworn statements. What he argued, and what the circuit court subsequently found,
was that Ford Credit failed to establish the arbitration agreement’s existence as a matter of
evidence. According to the circuit court, Ford Credit “did not move for the admission of
any evidence, provide any witness testimony, or provide an affidavit prior to or during its
hearing to compel arbitration.” Thus, it made no difference to the court (a) that Ford Credit
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had filed multiple copies of the retail installment contract with the court, (b) that Mr. Miller
had filed a copy of the same retail installment contract with the court, or (c) that Mr. Miller
had filed an affidavit admitting that he signed the retail installment contract and financed
his purchase through Ford Credit. We find that the circuit court misinterpreted Ford
Credit’s duty as the party seeking to compel arbitration.
A party who seeks to enforce an arbitration agreement must make an initial,
prima facie showing that the agreement exists between the parties. See Troy Group, 244
W. Va. 203, 209-10, 852 S.E.2d 270, 276-77; See also Begonja v. Vornado Realty Tr., 159
F. Supp. 3d 402, 409 (S.D.N.Y. 2016) (quoting Hines v. Overstock.com, Inc., 380 Fed.
Appx. 22, 24 (2d Cir. 2010) (summary order)) (stating that “[t]he party moving to compel
arbitration ‘must make a prima facie initial showing that an agreement to arbitrate existed
before the burden shifts to the party opposing arbitration to put the making of that
agreement ‘in issue’”); Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850, 857 (Ky. 2004)
(noting that “once prima facie evidence of the agreement has been presented, the burden
shifts to the party seeking to avoid the agreement”); Ex parte Greenstreet, Inc., 806 So.
2d 1203, 1209 (Ala. 2001) (holding “that once a moving party has satisfied its burden of
production by making a prima facie showing that an agreement to arbitrate exists . . . , the
burden of persuasion shifts to the party opposing arbitration”); and Kindred Nursing
Centers Ltd. P’ship v. Chrzanowski, 338 Ga. App. 708, 713, 791 S.E.2d 601, 605 (2016)
(noting that party who bore “the burden of proving the existence of a valid and enforceable
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agreement to arbitrate” “established a prima facie case” by producing a signed alternative
dispute resolution agreement).
In Troy Group, we explained that this initial burden of establishing the
existence of an arbitration agreement is a light burden. Troy Group, 244 W. Va. at 210,
852 S.E.2d at 277 (stating that “the burden of establishing prima facie evidence of an
agreement to arbitrate is a light one”). Specifically, in Troy Group, we found that the
parties seeking to compel arbitration “met their initial burden of proving the existence of
an agreement to arbitrate by producing, as an attachment to their motion to dismiss/compel
arbitration, a written copy of the arbitration agreement containing . . . [the non-moving
party’s] signature.” Id. (emphasis added). 2 Likewise, in this case, Ford Credit attached the
retail installment contract, which included the arbitration agreement, to its motion to
compel arbitration. Moreover, Mr. Miller’s own documents filed with the circuit court
included such agreement and confirm the arbitration agreement’s existence and
authenticity. Accordingly, Ford Credit clearly met its light burden to establish the
existence of an arbitration agreement. Once this burden is met, it becomes the non-moving
party’s burden to show that the arbitration agreement is not authentic and that it is not the
2
See also MHC Kenworth-Knoxville/Nashville v. M & H Trucking, LLC, 392
S.W.3d 903, 906 (Ky. 2013) (stating that a party seeking to compel arbitration “me[ets] the
prima facie burden by providing copies of [a] written and signed agreement[ ] to arbitrate”
(alterations in original) (quoting Louisville Peterbilt, 132 S.W.3d at 857).
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non-moving party’s signature on that agreement. Troy Group, 244 W. Va. at 213, 852
S.E.2d at 280. 3
Despite the fact that Ford Credit included the arbitration agreement as an
attachment to its motion to compel arbitration, Mr. Miller cites our decision in Frontline
and contends that Ford Credit failed to “provide evidence that an arbitration agreement . .
. was assigned with the right to collect the original debt.” We find that the holding in
Frontline unpersuasive in the current matter. In Frontline, the debtors, as the non-moving
parties, conceded that they had entered into arbitration agreements with their original
creditors, and we found that this concession “relieve[d] Frontline of a portion of its initial
burden of proving the existence of an agreement to arbitrate.” Id., No. 20-0395, 2021 WL
1972277, at *3. Nevertheless, because Frontline was neither the original creditor nor the
3
Mr. Miller attempts to distinguish Troy Group by noting that the moving
party in Troy Group “actually proved it possessed arbitration rights” and participated in
discovery. He objects that Ford Credit, by contrast, “outright refused to participate in any
discovery” and sought a protective order. This objection ignores the fact that, in Troy
Group, the employee initially swore that she did not recall “seeing or signing” the
arbitration agreement. Id. at 206, 852 S.E.2d at 273. This prompted the circuit court to
order ninety days of limited discovery “on any issues related to the arbitration agreement
and the pending motion to dismiss/compel arbitration.” Id. Later, the employee swore that
the signature on the agreement was not genuine. Id. at 207, 852 S.E.2d at 274. Thus, in
Troy Group the question was not whether the moving parties had met their “light” prima
facie burden. The court in Troy Group expressly found that the moving parties met that
burden by attaching a copy of the arbitration agreement to their motion. Id. at 210, 852
S.E.2d at 277. The question was whether, once the moving parties’ prima facie burden had
been met, the employee, as the non-moving party, met her burden of disproving the
agreement’s authenticity. Id. (stating that “[p]etitioners met their initial burden of proving
the existence of an agreement to arbitrate by producing . . . a written copy of the arbitration
agreement containing Ms. Willis’ signature” and that “Ms. Willis then challenged the
admissibility and authenticity of the arbitration agreement . . . under the West Virginia
Rules of Evidence”).
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purchaser of the debtors’ obligations, we found that Frontline had failed to “prove that such
[arbitration] agreement exists ‘between the parties.’” Id. (quoting TD Ameritrade, 225 W.
Va. at 251, 692 S.E.2d at 294, syl. pt. 2, in part). We further stated that, “[t]o compel
arbitration, Frontline [as the party seeking to compel arbitration] must prove the assignment
of that particular right from the original creditor to its current client or to itself.” Frontline,
No. 20-0395, 2021 WL 1972277, at *3.
In Frontline, despite the passage of approximately two years, Frontline
produced no “documents from the purported current owners of the subject debts.” Id. at
*4. The only proofs it could offer were copies of its own letters to the debtors, documents
that it claimed “only the current owner of the subject debts” would possess, and a
“conclusory” and unnotarized declaration to the effect that Frontline had “determined” that
it was assigned the delinquent accounts. Id. On those facts, we affirmed the circuit court’s
refusal to compel arbitration, finding that Frontline had failed to establish “that the
arbitration rights of the original creditors were effectively assigned to it” and, accordingly,
that “Frontline ha[d] failed to show that a valid arbitration agreement exists between it and
Respondents.” Id. at *5.
The facts of this case are plainly distinguishable from those in Frontline.
Ford Credit has produced a signed document that contains not only the arbitration
agreement between Mr. Miller and the dealership but also the express assignment of “all”
the dealership’s “rights, privileges, and remedies” to Ford Credit. Nothing in Frontline
suggests that the initial burden to produce prima facie evidence of the existence of an
10
arbitration agreement is any greater when the party that seeks to compel arbitration
received its right to compel arbitration by assignment. Accordingly, a party that seeks to
enforce an arbitration agreement must make an initial, prima facie showing that the
arbitration agreement exists between the parties. The party may make this prima facie
showing by attaching to the party’s motion to compel a copy of the arbitration agreement
signed by the non-moving party. When the party seeking to compel arbitration received
its right to arbitration by assignment, that party may meet its initial, prima facie burden by
attaching to the party’s motion to compel, along with the arbitration agreement, a copy of
each duly executed assignment necessary to show a chain of assignment from an original
party under the arbitration agreement to the party seeking to compel arbitration. 4
Accordingly, and on the facts of this case, we find that Ford Credit made an
initial, prima facie showing that an arbitration agreement exists between the parties when
it attached to its motion to compel a copy of the signed retail installment contract containing
both the arbitration agreement and the assignment of “all” rights from the dealership to
Ford Credit. We find, further, that the circuit court erred when it determined that Ford
Credit failed to meet this light evidentiary burden. Because Mr. Miller does not contest his
4
In his brief, Mr. Miller cites several cases from other jurisdictions that he
claims support the circuit court’s decision. However, this Court has spoken in Troy Group,
and we see no reason to revisit that decision. We also note that the cases he cites are
distinguishable from the facts of the present case.
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signature on the retail installment contract or the contract’s authenticity, we find that the
existence of an arbitration agreement between the parties has been established. 5
IV. CONCLUSION
Based on the foregoing, we reverse the circuit court’s December 6, 2021
order denying Ford Credit’s motion to compel arbitration, and we remand this case to the
circuit court for further proceedings consistent with this opinion.
Reversed and Remanded.
5
Ford Credit also asks us to (1) decide that it has not waived its right to
arbitration, (2) enforce the arbitration agreement’s delegation clause, and (3) remand this
case with instructions to compel arbitration. However, we note that, because the circuit
court erroneously held that Ford Credit had failed to meet its initial burden to establish the
existence of an arbitration agreement between the parties, the circuit court has yet to rule
on these matters in the first instance; therefore, we decline to rule on them at this time.
Furthermore, because we have heard the parties’ arguments regarding our
prior decisions in Troy Group and Frontline, and have remanded this case for further
proceedings, we need not decide whether the circuit court erred by not affording Ford
Credit an opportunity to brief its position below.
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