Kentucky Dealer Nearly Loses Arbitration Chance
Despite Randall’s repeated requests, the dealer allegedly failed to give him his paperwork for more than a month after the June 13, 2020 deal. He received it in July and noticed that his signature had been forged on some of the documents. between them, according to the lawsuit.
Randall’s lawsuit claims his experience constituted three violations of the Truth in Lending Act by the dealer; one count of deceptive sales practices in violation of Kentucky law by the dealer and the ACA, because the lender purchased the retail installment contract; one count of violation of the Kentucky Motor Vehicle Installment Sales Act by the dealer; and one count of common law fraud against the dealer.
The Suburban’s Bill of Sale and Installment Retail Sales Agreement contained an arbitration clause enforceable by either party, and the defendants sued it in the Western District of Kentucky.
District Judge Charles Simpson III said Kentucky law says anyone who signs a contract they’ve had a chance to read is bound by it. However, he said the Kentucky Supreme Court ruled in 2015 that the wording of the arbitration clause under a signature does not count as part of the contract if the wording before the signing does not reference and signal the agreement with subsequent arbitration wording.
Randall signed a bill of sale with language stating that signing signifies agreement to the arbitration clause, Hicks said. However, below it was a checkbox and wording indicating that checking the box acknowledged an arbitration agreement. Simpson ruled in February that its existence meant the arbitration clause was only included when the box was checked.
The box was not checked.
“Despite the document’s multiple attempts to secure a binding arbitration agreement, the dealer’s failure to check the box rendered the arbitration clause in the bill of sale useless,” Hicks said.
The arbitration clause of the retail contract involved a similar two-step process. The document bore a signature line below an “arbitration agreement” clause as well as a signature line at the end of the document. Simpson said this “leads to the reasonable conclusion” that the arbitration had to be signed separately for it to be incorporated.