The Arkansas Court of Appeals on Wednesday said an Ashley County Circuit judge was wrong when he denied a motion for arbitration filed by an automobile dealership in Georgia.
The case was sent back for another hearing on the issue of arbitration.
Asbury Automotive Group, Inc. and Asbury Atlanta Jaguar, L.L.C., had sought the arbitration after they were sued by an Arkansas couple who bought a vehicle via the Internet.
Robert Floyd McCain Jr., and Tafta McCain purchased a 2008 GMC Acadia in May 2009 from Asbury Atlanta Jaguar in Roswell, Ga. Asbury Automotive Group is the parent company of Asbury Atlanta Jaguar, which does business as Nalley Jaguar-Roswell.
The contract provided that the vehicle was sold “as is,” along with any remaining balance on the limited factory warranty, and the sale was not binding unless it was signed by an officer or manager of the seller. The McCains signed the contract, but a representative of the company did not.
The contract also provided for arbitration in the event of a dispute between the vehicle’s owners and the company, and said that arbitration would be conducted in the county where the dealership is located.
According to the appeals court decision, the McCains experienced significant problems with the vehicle shortly after it was purchased, and were unsuccessful in getting it repaired. In June 2011, they sued Asbury, Holt Auto Group, a local dealer that had performed repair work on the vehicle, and General Motors Corp.
Asbury moved to dismiss the complaint because it had not sold the vehicle, and moved to order arbitration in the case.
The McCains filed two amended complaints, the first adding Nalley Jaguar, the second claiming breach of implied and express warranties, Arkansas’ lemon law and Arkansas product liabilities statutes, among other things.
At a hearing on the complaint, an attorney for the McCains argued that the sales contract was not enforceable because it had not been signed by an officer of the company, and that it would be “unconscionable” for them to have to travel to Atlanta or New York for an arbitration hearing.
Gibson denied the motion for arbitration and the company appealed his decision to the Court of Appeals.
Appeals Court Judge Robin Wynne said in the ruling Wednesday that the Federal Arbitration Act does not require that an arbitration provision be signed by the parties, even though it does require that the agreement be in writing. In addition, the law in Georgia, where the sale took place, does not require parties to sign a contract to be bound by it.
Wynne also said in the ruling that although no representative of the company signed the contract, the vehicle was delivered to the McCains, who paid the purchase price the company asked for, making the contract, including the arbitration clause, binding.