IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA16-429

Filed: 21 March 2017

Forsyth County, No. 15 CVS 3771

MICAH TERRELL, Plaintiff,

v.

KERNERSVILLE CHRYSLER DODGE, LLC, Defendant.

Appeal by defendant from order entered 17 December 2015 by Judge David L. 

Hall in Superior Court, Forsyth County. Heard in the Court of Appeals 6 October 

2016.

Public Justice, P.C., by Leah M. Nicholls, pro hac vice, and Norris Law Firm, 

PLLC, by J. Matthew Norris, for plaintiff-appellee.

Jeffrey F. Hutchins for defendant-appellant.

STROUD, Judge.

Defendant Kernersville Chrysler Dodge, LLC (“defendant”) appeals from the 

trial court’s order denying defendant’s motion to compel arbitration. Because the 

trial court failed to include any findings of fact in its order denying defendant’s 

motion, we must reverse its order and remand for the trial court to make findings 

and conclusions on the motion.

Facts
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Plaintiff’s complaint set forth the following allegations. On 23 April 2015, 

plaintiff contacted defendant about a vehicle defendant had advertised for sale (“the 

vehicle”). Plaintiff placed a $500.00 hold on the vehicle over the phone, and 

defendant’s employee, Larissa Santos, provided plaintiff with information and 

photographs of the vehicle. Plaintiff also gave Ms. Santos several questions to ask 

the service department about the vehicle’s condition. Ms. Santos contacted plaintiff 

the following day and let him know that his questions had been given to the service 

department and that the vehicle was currently being serviced. Ms. Santos gave 

plaintiff a price quote for the vehicle, and on 25 April 2015, plaintiff drove down from 

Charlottesville, Virginia, for a test drive and, if he decided to buy it, to complete his 

purchase of the vehicle.

After arriving, plaintiff met salesperson Brandon Widener and took the car for 

a test drive. During the test drive, plaintiff noticed a noise coming from the engine 

compartment and brought it to Mr. Widener’s attention, who took the vehicle to one 

of defendant’s mechanics for an inspection. After approximately two hours, plaintiff 

was told that the “ ‘tensioner pulley’ ” was causing the noise and that the part had 

been replaced. Plaintiff alleged that defendant “assured [p]laintiff that the Vehicle 

had undergone a thorough inspection prior to sale, that it was a safe Vehicle, and 

that there were no major structural or mechanical problems.” Relying on those 

representations, plaintiff purchased the vehicle and drove it home.
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On the way home, plaintiff noticed “some slight issues with the steering and 

the u-joint/ball joint/axle area.” Shortly after getting back home, plaintiff contacted 

defendant about these issues and let Ms. Santos know that he planned to have the 

issues looked at by a repair shop in Charlottesville. Plaintiff dropped the vehicle off 

on 30 April 2015, and two days later, the repair shop told plaintiff that the vehicle 

“had significant ‘frame rot’, caused by rust and decay over the entire underside frame 

and engine mount.” Because of this issue, the vehicle would not pass a Virginia State 

Inspection and was unsafe to drive. 

Plaintiff filed his complaint on 25 June 2015, alleging defendant engaged in 

unfair and deceptive trade practices, fraud, and breach of an express warranty. 

Defendant initially filed a pro se answer denying the material allegations in plaintiff’s 

complaint, which was stricken by the trial court on 1 September 2015. Defendant 

then filed a new answer on 17 September 2015, followed by a motion to compel 

arbitration on 13 November 2015. Defendant attached to the motion copies of the 

documents it alleged were the governing arbitration agreement and the retail 

purchase agreement. The copy of the retail purchase agreement -- as attached by 

defendant – appears to be signed and dated by plaintiff. The form has two signature 

lines for “purchaser” at the bottom left side and the signature appears on one of the 

lines. There are two additional blank lines at the bottom of the form on the right. 

The top line is labeled as “salesperson” and is filled in with the typewritten name 
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“Brandon P. Widener.” The bottom line is labeled “accepted by authorized dealership 

representative” and the handwritten initials “RCM” appear above this line. We also 

note that it is not clear if the retail purchase agreement as it appears in our record 

has only one page or if the “Governing Arbitration Agreement” is a separate form, 

although the arbitration agreement may be on the reverse side of the retail purchase 

agreement.1 One section of the retail purchase agreement, entitled “OTHER 

MATERIAL UNDERSTANDINGS AND INCORPORATED DOCUMENTS” has a 

provision which states as follows:

4. I understand that any dispute arising from, or relating 

to this transaction, shall be settled by neutral arbitration 

pursuant to the GOVERNING ARBITRATION 

AGREEMENT signed by my hand and incorporated into 

this Agreement.

(CONTINUED ON THE REVERSE SIDE OF 

THIS AGREEMENT)

I HAVE BEEN GIVEN AMPLE OPPORTUNITY TO 

EXAMINE THIS ENTIRE RETAIL PURCHASE 

AGREEMENT, FRONT AND BACK, AND I HEREBY 

ACCEPT THE TERMS AND CONDITIONS INCLUDING 

THOSE LISTED ON THE REVERSE SIDE OF THIS 

AGREEMENT.

The retail purchase agreement also has the following provision just above the 

signature lines: 

 

1 We are unable to determine if the arbitration agreement is on the reverse side of the retail 

purchase agreement because only one of the three copies in our record presents the document in this 

manner. But based upon the provisions of paragraph 4 of the retail purchase agreement, it appears 

that the arbitration agreement was probably on the reverse side. 
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I HEREBY ACKNOWLEDGE THIS AGREEMENT IS 

COMPLETE AND ACCURATELY REFLECTS ANY AND 

ALL RELATED DOCUMENTS SIGNED BY MY HAND 

AND REFERENCED AS INCORPORATED INTO THIS 

AGREEMENT BETWEEN THE DEALERSHIP AND 

MYSELF.

I ACKNOWLEDGE RECEIPT OF A COPY OF THIS 

AGREEMENT WITH THE UNDERSTANDING THIS 

AGREEMENT IS NOT BINDING UPON THE 

DEALERSHIP OR PURCHASER(S) UNTIL SIGNED BY 

AN AUTHORIZED DEALERSHIP REPRESENTATIVE. 

The arbitration agreement states at the beginning as follows:

This Governing Arbitration Agreement shall be 

incorporated into the vehicle purchase/lease contract 

executed as of the date recorded below and is between the 

“Purchaser(s)” and the “Retailing Dealership” listed below 

herein referred to as the “Parties.”

The copy of the arbitration agreement attached to the defendant’s motion has 

two signature lines for “purchaser” at the bottom left and the top line was signed by 

plaintiff. The form has two signature lines at the bottom right side. The top line is 

labeled “RETAILING DEALERSHIP” and is filled in with typewritten 

“KERNERSVILLE CHRYSLER DODGE JEEP.” The bottom signature line is labeled 

“DEALERSHIP REPRESENTATIVE” and is blank. 

At a hearing on the motion to compel arbitration on 7 December 2015, 

defendant presented evidence in support of the motion and counsel for both parties 

made arguments. Defendant called Ronald Craig McCullough to testify at the 

hearing, who explained that he was one of defendant’s finance managers at the time 
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of the sale of the vehicle to plaintiff. Mr. McCullough testified that his initials, 

“RCM,” were on the retail purchase agreement. However, another copy of the retail 

purchase agreement in the addendum to the record, apparently Plaintiff’s copy of the 

retail purchase agreement, shows no signature on the purchaser line for plaintiff and 

does not have the initials “RCM.” Mr. McCullough also testified that he did not sign 

the governing arbitration agreement. Plaintiff argued that without a signature from 

the dealership on the arbitration agreement, “it creates a one-sided obligation to 

arbitrate disputes[,]” and plaintiff “could not compel the defendant to arbitrate a 

dispute that it had against him if the defendant did not have a signature agreeing to 

arbitrate.”

At the hearing, there was factual dispute over if and how an authorized 

representative for the dealership had signed the retail purchase agreement. The 

retail purchase agreement form was apparently a triplicate form with a white top 

page, a yellow middle page, and a pink last page. Plaintiff had received the yellow 

middle page, which is the version in the addendum to the record that has no 

signatures. The copy as attached to the motion by defendant had both plaintiff’s 

signature and the initials “RCM” for the dealership. According to Mr. McCullough, 

the dealership normally scanned forms to be stored in a digital format and after a 
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period of time, the original documents are shredded.2 But the copies of the 

“Governing Arbitration Agreement” are all the same, and unsigned by a dealership 

representative. 

It appears from the transcript that the trial court ultimately agreed with 

plaintiff and stated at the hearing that “the contract should be construed against the 

drafter and it is just not sufficient for this Court to find a binding, a mutual binding, 

arbitration agreement.” On 17 December 2015, the court entered its order simply 

denying defendant’s motion to compel arbitration, without any findings of fact or any

explanation of the basis for the ruling. Defendant timely appealed to this Court.

Discussion

We first note that while an order denying a motion to compel arbitration is 

interlocutory, it is nevertheless immediately appealable, “because the right to 

arbitrate a claim is a substantial right which may be lost if review is delayed.” 

T.M.C.S., Inc. v. Marco Contractors, Inc., __ N.C. App. __, __, 780 S.E.2d 588, 592 

(2015) (citations, quotation marks, and brackets omitted).

Defendant argues that the trial court erred by failing to find that a valid 

agreement to arbitrate was entered into by the parties and by not granting its motion 

to compel arbitration. Noting that this State “has a strong public policy favoring 

 

2 There was some discussion at the hearing by counsel regarding the dealership’s document 

retention policies and an inspection of the defendant’s records by a DMV inspector, but there was no 

testimony or evidence offered on these matters.
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arbitration[,]” defendant contends that the parties had a valid agreement to arbitrate, 

claiming both parties signed “the contract which incorporated the arbitration 

agreement into the agreement. The plaintiff also signed the arbitration agreement. 

No evidence was ever presented by either party that the plaintiff failed to provide a 

copy of the arbitration agreement. No [e]vidence was ever presented by either party 

that the plaintiff did not sign the arbitration agreement or the contract.” 

A trial court reviewing a motion to compel arbitration must conduct “a twostep analysis . . . to ascertain both (1) whether the parties had a valid agreement to 

arbitrate, and also (2) whether the specific dispute falls within the substantive scope 

of that agreement.” Slaughter v. Swicegood, 162 N.C. App. 457, 461, 591 S.E.2d 577, 

580 (2004) (citations and quotation marks omitted). See also T.M.C.S., Inc., __ N.C. 

App. at __, 780 S.E.2d at 593 (“When, as here, one party claims a dispute is covered 

by an agreement to arbitrate and the other party denies the existence of an 

arbitration agreement, the trial court must determine whether an arbitration 

agreement actually exists.” (Citation and quotation marks omitted)).

The trial court’s findings regarding the existence of an 

arbitration agreement are conclusive on appeal where 

supported by competent evidence, even where the evidence 

might have supported findings to the contrary.

Accordingly, upon appellate review, we must determine 

whether there is evidence in the record supporting the trial 

court’s findings of fact and if so, whether these findings of 

fact in turn support the conclusion that there was no 

agreement to arbitrate. 
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Sciolino v. TD Waterhouse Inv’r Servs., Inc., 149 N.C. App. 642, 645, 562 S.E.2d 64, 

66 (2002) (citations omitted).

In this case, the hearing transcript indicates that the trial court found 

plaintiff’s counsel’s argument regarding lack of mutuality and the ability of plaintiff 

to enforce the arbitration agreement against defendant to be most persuasive. The 

court noted that “basic contract law is that the contract should be construed against 

the drafter. Here the drafter is the dealership. Given the totality of the submissions 

before me, I am unable to conclude that there is a binding arbitration agreement.” 

The trial judge pointed out to defendant’s trial counsel that the arbitration agreement 

“is not signed by your client.” The court then concluded:

All right. I am denying the motion to compel 

arbitration because I do not find -- I find that there is no 

binding arbitration agreement between the parties.

. . . .

. . . . Again, the contract should be construed against 

the drafter and it is just not sufficient for this Court to find 

a binding, a mutual binding, arbitration agreement. I wish 

the parties well in resolving the matter.

The court then entered a written order on 17 December 2015. But the trial 

court’s order simply stated, without any findings of fact:

THIS MATTER coming to be heard, and being 

heard, at the December 7, 2015, civil session of the Forsyth 

County Superior Court, on Defendant’s Motion to Compel 

Arbitration and the Court, having carefully considered the 

matters of record including pleadings, authorities and 

arguments of both counsel, finds that Defendant’s Motion 

to Compel Arbitration should be denied.
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NOW, THEREFORE, it is ORDERED, ADJUDGED, 

and DECREED as follows:

1. Defendant’s Motion to Compel Arbitration is 

denied.

This Court has addressed the sufficiency of written orders denying motions to 

compel arbitration many times. In Cornelius v. Lipscomb, this Court reversed an 

order denying a motion to compel and remanded for additional findings of fact:

As an initial matter, defendants argue that the order 

denying their motion to compel arbitration is facially 

defective because it “contains no findings whatsoever” and 

does not “identify any basis for the refusal to dismiss or 

stay this action and compel arbitration.” We agree.

This Court has repeatedly held that an order 

denying a motion to compel arbitration must include 

findings of fact as to whether the parties had a valid 

agreement to arbitrate and, if so, whether the specific 

dispute falls within the substantive scope of that 

agreement. When a trial court fails to include findings of 

fact in its order, this Court has repeatedly reversed and 

remanded to the trial court for a new order containing the 

requisite findings. 

In this case, the trial court’s order denying 

defendants’ motion to compel arbitration stated in relevant 

part only:

Prior to ruling on the motions, the 

Court considered all pleadings and other 

materials contained in the file. The Court 

considered the briefs submitted by the 

parties with regard to the motions. Further, 

the Court considered the materials and 

testimony submitted at the hearing on the 
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motions. Finally, the Court considered the 

arguments of counsel with regard to the 

motions. 

After consideration of all matters as 

set forth above in this Order, it appears to 

the Court that both Motions as to both 

Defendants should be denied.

NOW, THEREFORE, IT IS ORDERED:

1. The Defendants Sunset Financial 

Services, Inc. and Jeffrey Lipscomb’s 

Joint Motion to Compel Arbitration and 

to Stay Court Action is denied as to both 

Defendants.

The order provides no findings and no explanation 

for the basis of the court’s decision to deny the motion to 

compel arbitration. We, therefore, must reverse the trial 

court’s order and remand for findings of fact regarding 

whether the parties had a valid agreement to arbitrate 

and, if so, whether the dispute between the parties falls 

within the substantive scope of that agreement.

Cornelius v. Lipscomb, 224 N.C. App. 14, 16-17, 734 S.E.2d 870, 871-72 (2012)

(citations and quotation marks omitted).

Here, as in many of the cases stated as examples in Cornelius, the trial court’s 

order contained absolutely no findings and simply concluded without explanation

that the motion would be denied. Although it seems from the hearing transcript that 

the trial judge may have determined that defendant did not sign the retail purchase 

agreement, the governing arbitration agreement, or both, the court did not include 

any findings whatsoever in its written order. It is also possible that the trial court 
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determined that plaintiff had not signed the retail purchase agreement, as one 

version of that agreement in our record is unsigned by either party. Nor did the court 

resolve the question of whether signatures only on the retail purchase agreement, 

which explicitly incorporated by reference the Governing Arbitration Agreement 

(which may have been on the reverse side of the form) would be sufficient to bind the 

dealership. Our review on appeal of a trial court’s denial of a motion to compel 

arbitration is limited to the trial court’s findings and conclusions of law. Accordingly, 

we must remand for the trial court to enter an order that clearly states its findings 

and conclusions supporting its decision to denying the motion to compel arbitration. 

REVERSED AND REMANDED.

Judges McCULLOUGH and ZACHARY concur.