State Supreme Court backs arbitration in car sale lawsuit

FAYETTEVILLE — A divided Arkansas Supreme Court on Thursday came down on the side of arbitration in a Springdale buy-here pay-here car deal.

The high court decision reversed a local judge’s ruling and vacated a state Court of Appeals opinion that upheld the judge’s ruling.

Leah Willis and Adrian Bartholomew bought a car from Automatic Auto Finance with an installment contract. The car dealer later assigned the contract to Jorja Trading, according to court documents. After failing to make scheduled payments, Willis and Bartholomew voluntarily surrendered the car.

It was sold, and their account was credited, but a balance remained. Jorja Trading sued in the small claims division of district court seeking payment for the balance. The district court entered judgment against the couple saying they had to pay $3,036, plus $225 in costs.

Willis and Bartholomew appealed to Washington County Circuit Court, where the car dealer filed a motion to compel arbitration.

Circuit Judge John Threet denied the dealer’s motion. The dealer appealed, and the court of appeals affirmed Threet’s ruling.

The Supreme Court overruled both lower courts, finding that most all arbitration agreements, like contracts, are enforceable. That hasn’t always been the case.

Justices said the Federal Arbitration Act of 1925 puts arbitration agreements on equal footing with all other contracts and they should be enforced accordingly. Specifically, justices said in arbitration agreements, like other contracts, not every provision within a contract has to apply equally to both parties.

Justice Robert F. Wynne, in a dissenting opinion, said the court was ignoring its own legal precedents regarding arbitration. Wynne said he would rule the arbitration provision was unenforceable.

The federal law was enacted in 1925 to ensure the validity and enforcement of arbitration agreements. The U.S. Supreme Court has recognized the act as a national policy favoring arbitration. Ron Wood can be reached by email at rwood@nwadg.com or on Twitter @NWARDW.