Md. Ct. of Appeals upholds dispute arbitration clauses in financed vehicle sale contracts

Md. Ct. of Appeals upholds dispute arbitration clauses in financed vehicle sale contracts

In an important court case favoring dealers and vehicle buyers who agree up front to arbitrate disputes that may arise in financed transactions, the Maryland Court of Appeals this week determined that arbitration clauses written into key parts of the contract paperwork are enforceable in the state. While this decision helps dealers and consumers, it sets back plaintiffs lawyers, who for years have opposed dispute resolution by arbitration because of how it curtails, if not eliminates, their ability to launch class action suits against dealers and others.

Rejecting plaintiff lawyersê arguments in the Baltimore case, W.M. Ford v. Antwerpen Motorcars (440 Md 114; 99 A. 3d 778, 2014), the Court of Appeals affirmed the lower court, holding that the so-called –single document rule” the term plaintiffs lawyers coined from section 11.12.01.15A of the Code of Maryland Regulations (COMAR) did not mean what they said it meant, namely, that all terms of a financed vehicle sale agreement were required to be contained in one document, the Retail Installment Sales Contract (RISC). Instead, the Court found that that the arbitration clause contained in the Buyers Order in the case would stand because the Buyers Order was, indeed, as much a part the vehicle sales agreement as the RISC, which, when read together, formed the entire agreement.

Helpful to the success of this useful outcome for the utilization of arbitration clauses in this precedential decision in Maryland was the statement in the RISC that said –Äthis contract along with all other documents signed by you in connection with the purchase of this vehicle, comprise the entire agreement.” The Court of Appeals judges said they relied upon the Common Law of contracts in the context of case law in evaluating the pertinent COMAR provisions presented by the plaintiffs lawyers in this case.

In view of this favorable high court decision in Maryland for dispute resolution by arbitration, WANADA members are advised to review their Buyers Order forms in comparison with RISC forms used by lender partners to act as the basis for review by legal counsel, and, if necessary, a conversation with lender representatives.

Thanks to Mike Charapp, Esq., Charapp and Weiss, for inspiring this article.