Court Opinion

ID: 3162496
Source: CourtListenerOpinion
Date Created: 2015-12-15 13:05:45.296976+00
Date Added: 2024-06-11T12:01:06.291145
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                       No. COA15-9

                               Filed: 15 December 2015

Wake County, No. 14 CVS 4465

RICARDO L. BAILEY, Plaintiff,

             v.

FORD MOTOR COMPANY, FORD MOTOR CREDIT COMPANY, LLC, and
KATHLEEN BURNS, individually, Defendants.

      Appeal by defendant from order entered on 20 August 2014 by Judge Elaine

M. Bushfan in Superior Court, Wake County. Heard in the Court of Appeals on 4

June 2015.

      Sharpless & Stavola, P.A., by Pamela S. Duffy, for plaintiff-appellee.

      Kilpatrick Townsend & Stockton LLP, by Adam H. Charnes and Chris W. Haaf,
      and Williams Mullen, by M. Keith Kapp, for defendant-appellant.

      STROUD, Judge.

      Ford Motor Company (“defendant”) appeals from an order denying its motion

to compel arbitration and dismiss. Defendant specifically argues that the trial court

erred in concluding that (1) the Federal Arbitration Act (“FAA”) did not apply to this

dispute; (2) the parties had agreed that a court, instead of an arbitrator, would decide

the arbitrability of plaintiff’s claims; and (3) that plaintiff’s claims were not

arbitrable. We reverse.

                                  I.      Background
                             BAILEY V. FORD MOTOR CO.

                                  Opinion of the Court

      In February 2003, Ricardo L. Bailey (“plaintiff’), an employee of defendant,

moved to Sanford to operate and invest in a car dealership. Plaintiff and defendant

executed a Stock Redemption Plan Dealer Development Agreement (“the Dealer

Development Agreement”) in which plaintiff invested $180,000 in exchange for 1,800

shares of common stock in the dealership and defendant invested $1,080,000 in

exchange for 10,800 shares of preferred stock in the dealership.              Under the

agreement, defendant also loaned $540,000 to the dealership.

      Under article 10 of the Dealer Development Agreement, plaintiff and

defendant agreed to arbitrate any dispute “arising out of or relating to” the

agreement:

                    10.01. Resolution of Disputes. If a dispute arises
             between [plaintiff] and [defendant] arising out of or
             relating to this Agreement, the following procedures shall
             be implemented in lieu of any judicial or administrative
             process:

                   (a)    Any protest, controversy, or claim by
                   [plaintiff] (whether for damages, stay of action or
                   otherwise) with respect to any termination of this
                   Agreement, or with respect to any other dispute
                   between [plaintiff] and [defendant] arising out of or
                   relating to this Agreement shall be appealed by
                   [plaintiff] to the Ford Motor Company Dealer Policy
                   Board (the “Policy Board”) within fifteen (15) days
                   after [plaintiff’s] receipt of notice of termination, or
                   within 60 days after the occurrence of any event
                   giving rise to any other claim by [plaintiff] arising
                   out of or relating to this Agreement. Appeal to the
                   Policy Board within the foregoing time periods shall
                   be a condition precedent to the right of [plaintiff] to

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          BAILEY V. FORD MOTOR CO.

               Opinion of the Court

pursue any other remedy available under this
Agreement or otherwise available under law.
[Defendant], but not [plaintiff], shall be bound by the
decision of the Policy Board.

(b)    If appeal to the Policy Board fails to resolve
any dispute covered by this Article 10 within 180
days after it was submitted to the Policy Board, or if
[plaintiff] shall be dissatisfied with the decision of
the Policy Board, the dispute shall be finally settled
by arbitration in accordance with the rules of the
CPR Institute for Dispute Resolution (the “CPR”) for
Non-Administered        Arbitration    for   Business
Disputes, by a sole arbitrator, but no arbitration
proceeding may consider a matter designated by this
Agreement to be within the sole discretion of one
party (including without limitation, a decision by
such party to make an additional investment in or
loan or contribution to [the dealership]), and the
arbitration proceeding may not revoke or revise any
provisions of this Agreement. Arbitration shall be
the sole and exclusive remedy between the parties
with respect to any dispute, protest, controversy or
claim arising out of or relating to this Agreement.

(c)    Arbitration shall take place in the City of
Dearborn, Michigan unless otherwise agreed by the
parties. The substantive and procedural law of the
State of Michigan shall apply to the proceedings.
Equitable remedies shall be available in any
arbitration. Punitive damages shall not be awarded.
This Section 10.01(c) is subject to the Federal
Arbitration Act, 9 U.S.C.A. § 1 et seq., and any
judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction
thereof.

(d)    Any arbitration decision or award shall be
final and binding on all parties and shall deal with
the question of costs of arbitration, including

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                                 BAILEY V. FORD MOTOR CO.

                                    Opinion of the Court

                     without limitation, legal fees, which shall be borne
                     by the losing party to the arbitration proceeding, and
                     all matters related thereto.

(Portion of original in bold.)

       On 17 April 2009, defendant sent a letter (“Dollar Buyout Offer”) to plaintiff in

which it offered to “waive the repayment of the outstanding balance of preferred stock

and note associated with” the Dealer Development Agreement in exchange for one

dollar, provided plaintiff satisfied all of the offer’s conditions by 30 September 2009.

Plaintiff attempted to satisfy all of the conditions necessary to effectuate his

acceptance, but the parties dispute whether plaintiff was successful.

       On 10 April 2014, plaintiff sued defendant for breach of contract, breach of the

implied covenant of good faith and fair dealing, and unjust enrichment, as well as

Ford Motor Credit Company, LLC (“FMCC”) and Kathleen Burns, an employee of

FMCC, for related claims. Plaintiff alleged that one of the conditions of the Dollar

Buyout Offer was that he obtain a standby letter of credit for $300,000 and that he

successfully obtained such a letter from Branch Banking & Trust Company (“BB&T”).

Plaintiff also alleged that he satisfied all of the offer’s conditions but that defendant

later changed the offer’s conditions to require that his standby letter of credit “be

converted to cash[.]” Plaintiff further alleged that he spoke with Burns about this

new condition, that she agreed to contact BB&T, but that she never in fact contacted

BB&T, which prevented plaintiff from satisfying the new condition by the offer’s

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                                BAILEY V. FORD MOTOR CO.

                                    Opinion of the Court

deadline. Plaintiff alleged that as a result, he was “immediately terminated” and

“lost his home to foreclosure.”

      On 19 May 2014, defendant answered and moved to compel arbitration and

dismiss plaintiff’s claims against it. After holding a hearing on 22 July 2014, the trial

court denied the motion on 20 August 2014. On 4 September 2014, defendant gave

timely notice of appeal.

                              II.   Appellate Jurisdiction

      Although the trial court’s order is interlocutory, defendant contends that the

order is immediately appealable because it affects a substantial right. “[T]he right to

arbitrate a claim is a substantial right which may be lost if review is delayed, and an

order denying arbitration is therefore immediately appealable.”         Hobbs Staffing

Servs., Inc. v. Lumbermens Mut. Cas. Co., 168 N.C. App. 223, 225, 606 S.E.2d 708,

710 (2005) (brackets omitted). Accordingly, we hold that this appeal is properly

before us.

                  III.     Motion to Compel Arbitration and Dismiss

      Defendant contends that the trial court erred when it denied its motion to

compel arbitration and dismiss. Defendant specifically argues that the trial court

erred in concluding that (1) the FAA did not apply to this dispute; (2) the parties had

agreed that a court, instead of an arbitrator, would decide the arbitrability of

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                              BAILEY V. FORD MOTOR CO.

                                  Opinion of the Court

plaintiff’s claims; and (3) plaintiff’s claims were not arbitrable. Because we agree

with defendant on issue (2), we do not reach issue (3).

A.    Standard of Review

      “The trial court’s conclusion as to whether a particular dispute is subject to

arbitration is a conclusion of law, reviewable de novo by the appellate court.” Sloan

Fin. Grp., Inc. v. Beckett, 159 N.C. App. 470, 478, 583 S.E.2d 325, 330 (2003), aff’d

per curiam, 358 N.C. 146, 593 S.E.2d 583 (2004).            “[Q]uestions of contract

interpretation are reviewed as a matter of law and the standard of review is de novo.”

Price & Price Mech. of N.C., Inc. v. Miken Corp., 191 N.C. App. 177, 179, 661 S.E.2d
775, 777 (2008).

B.    Choice of Law

      We preliminarily note that the trial court’s order suggests that it based its

conclusion that the FAA did not apply to this dispute on its previous conclusion that

the parties had not agreed to arbitrate disputes arising from the Dollar Buyout Offer.

But the trial court should have addressed the issue of choice of law before addressing

any other legal issue. See King v. Bryant, 225 N.C. App. 340, 344, 737 S.E.2d 802,

806 (2013) (“[I]t is incumbent upon a trial court when considering a motion to compel

arbitration to address whether the Federal Arbitration Act (‘FAA’) or the North

Carolina Revised Uniform Arbitration Act (‘NCRUAA’) applies to any agreement to

arbitrate.” (emphasis added and quotation marks and brackets omitted)).          It is

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                              BAILEY V. FORD MOTOR CO.

                                   Opinion of the Court

undisputed that the parties agreed to arbitrate disputes “arising out of or relating to”

the Dealer Development Agreement. Accordingly, we must first address whether the

FAA applies to the Dealer Development Agreement. See id. at 344, 737 S.E.2d at

806.

       If the parties affirmatively chose the FAA to govern an agreement to arbitrate,

then the FAA will apply to that agreement. Id. at 345, 737 S.E.2d at 806-07; see also

9 U.S.C.A. ch. 1 (2009). Here, the parties affirmatively chose the FAA to govern the

Dealer Development Agreement: “This Section 10.01(c) is subject to the Federal

Arbitration Act, 9 U.S.C.A. § 1 et seq., and any judgment upon the award rendered by

the arbitrator may be entered by any court having jurisdiction thereof.” Accordingly,

we hold that the FAA applies to any dispute arising from the Dealer Development

Agreement. See King, 225 N.C. App. at 345, 737 S.E.2d at 806-07.

C.     Arbitrability

       Defendant next argues that the trial court erred in concluding that the parties

had agreed that a court, instead of an arbitrator, would decide the arbitrability of

plaintiff’s claims.

       i.     Substantive Arbitrability vs. Procedural Arbitrability

       “The twin pillars of consent and intent are the touchstones of arbitrability

analysis. Arbitration is a matter of contract and a party cannot be required to submit

to arbitration any dispute which he has not agreed so to submit.” Peabody Holding

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                              BAILEY V. FORD MOTOR CO.

                                  Opinion of the Court

v. United Mine Workers of America, 665 F.3d 96, 103 (4th Cir. 2012) (quotation marks

omitted).

                    Where ordinary contracts are at issue, it is up to the
             parties to determine whether a particular matter is
             primarily for arbitrators or for courts to decide. If the
             contract is silent on the matter of who primarily is to decide
             “threshold” questions about arbitration, courts determine
             the parties’ intent with the help of presumptions.
                    On the one hand, courts presume that the parties
             intend courts, not arbitrators, to decide what we have
             called disputes about “arbitrability.”       These include
             questions such as “whether the parties are bound by a
             given arbitration clause,” or “whether an arbitration clause
             in a concededly binding contract applies to a particular
             type of controversy.”
                    On the other hand, courts presume that the parties
             intend arbitrators, not courts, to decide disputes about the
             meaning and application of particular procedural
             preconditions for the use of arbitration. These procedural
             matters include claims of waiver, delay, or a like defense to
             arbitrability.     And they include the satisfaction of
             prerequisites such as time limits, notice, laches, estoppel,
             and other conditions precedent to an obligation to
             arbitrate.

BG Group plc v. Republic of Arg., ___ U.S. ___, ___, 188 L. Ed. 2d 220, 228-29 (2014)

(citations and quotation marks omitted).

                    Both sections 3 and 4 [of the FAA] call for an
             expeditious and summary hearing, with only restricted
             inquiry into factual issues. Hence, whether granting an
             order to arbitrate under section 3 or section 4, the district
             court must first determine if the issues in dispute meet the
             standards of either “substantive arbitrability” or
             “procedural arbitrability.” A substantive arbitrability
             inquiry confines the district court to considering only those
             issues relating to the arbitrability of the issue in dispute

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                              BAILEY V. FORD MOTOR CO.

                                  Opinion of the Court

             and the making and performance of the arbitration
             agreement. . . . [T]he first duty of the district court when
             reviewing an arbitration proceeding under section 4 of the
             Act is to conduct a substantive arbitrability inquiry—
             meaning the court engages in a limited review to ensure
             that the dispute is arbitrable—i.e., that a valid agreement
             to arbitrate exists between the parties and that the specific
             dispute falls within the substantive scope of that
             agreement. If the court determines that an agreement
             exists and that the dispute falls within the scope of the
             agreement, it then must refer the matter to arbitration
             without considering the merits of the dispute. All other
             issues raised before the court not relating to these two
             determinations fall within the ambit of “procedural
             arbitrability.”
                    ....
                    It is clear from these decisions, which represent over
             thirty years of Supreme Court and federal circuit court
             precedent that issues of “substantive arbitrability” are for
             the court to decide, and questions of “procedural
             arbitrability[]” . . . are for the arbitrator to decide.

Glass v. Kidder Peabody & Co., Inc., 114 F.3d 446, 453-54 (4th Cir. 1997) (citations,

quotation marks, brackets, and footnotes omitted); see also 9 U.S.C.A. §§ 3, 4.

      Here, defendant argues that the trial court erred in concluding that plaintiff’s

claims did not fall within the scope of the arbitration clause of the Dealer

Development Agreement. This issue is a question of substantive arbitrability. Glass,
114 F.3d at 453; BG Group, ___ U.S. at ___, 188 L. Ed. 2d at 228. Therefore, as an

initial matter, we presume that the parties intended that the trial court decide this

issue of substantive arbitrability. Glass, 114 F.3d at 454; BG Group, ___ U.S. at ___,

188 L. Ed. 2d at 228.

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                             BAILEY V. FORD MOTOR CO.

                                  Opinion of the Court

      ii.    Clear and Unmistakable Intent

      A party can overcome this presumption if it shows that the parties “clearly and

unmistakably” intended for an arbitrator, instead of a court, to decide issues of

substantive arbitrability. See AT&T Technologies v. Communications Workers, 475
U.S. 643, 649, 89 L. Ed. 2d 648, 656 (1986); Peabody Holding, 665 F.3d at 102.

             Those who wish to let an arbitrator decide which issues are
             arbitrable need only state that “all disputes concerning the
             arbitrability of particular disputes under this contract are
             hereby committed to arbitration,” or words to that clear
             effect. Absent such clarity, we are compelled to find that
             disputes over the arbitrability of claims are for judicial
             resolution.

Carson v. Giant Food, Inc., 175 F.3d 325, 330-31 (4th Cir. 1999).

      At least eight federal appellate courts have held that the parties’ express

adoption of an arbitral body’s rules in their agreement, which delegate questions of

substantive arbitrability to the arbitrator, presents clear and unmistakable evidence

that the parties intended to arbitrate questions of substantive arbitrability. See

Petrofac, Inc. v. DynMcDermott Petroleum, 687 F.3d 671, 675 (5th Cir. 2012) (holding

that the parties’ express adoption of the American Arbitration Association rules in

their agreement constituted clear and unmistakable evidence); Fallo v. High-Tech

Institute, 559 F.3d 874, 878 (8th Cir. 2009) (same); Qualcomm Inc. v. Nokia Corp.,

466 F.3d 1366, 1373 (Fed. Cir. 2006) (same); Terminix Intern. v. Palmer Ranch Ltd.

Partnership, 432 F.3d 1327, 1332-33 (11th Cir. 2005) (same); Contec Corp. v. Remote

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                              BAILEY V. FORD MOTOR CO.

                                   Opinion of the Court

Solution, Co., Ltd., 398 F.3d 205, 208 (2d Cir. 2005) (same); Chevron Corp. v. Ecuador,

795 F.3d 200, 207-08 (D.C. Cir. 2015) (same result under the United Nations

Commission on International Trade Law rules); Oracle America, Inc. v. Myriad Group

A.G., 724 F.3d 1069, 1074-75 (9th Cir. 2013) (same); Apollo Computer, Inc. v. Berg,

886 F.2d 469, 473-74 (1st Cir. 1989) (same result under International Chamber of

Commerce rules).

      We note that three federal appellate courts have held that the parties had not

delegated issues of substantive arbitrability to the arbitrator despite their express

adoption of an arbitral body’s rules in their agreement.        See Quilloin v. Tenet

HealthSystem Philadelphia, Inc., 673 F.3d 221, 225-26, 229-30 (3rd Cir. 2012); Oblix,

Inc. v. Winiecki, 374 F.3d 488, 490 (7th Cir. 2004); Riley Mfg. Co. v. Anchor Glass

Container Corp., 157 F.3d 775, 777 n.1, 780-81 (10th Cir. 1998). But in each of these

cases, the court did not specifically address whether the parties’ express adoption of

these rules constituted clear and unmistakable evidence that they intended to

arbitrate questions of substantive arbitrability, nor did the court examine the rules

to determine if they delegated questions of substantive arbitrability to the arbitrator.

Quilloin, 673 F.3d at 229-30; Oblix, 374 F.3d at 490; Riley, 157 F.3d at 780-81.

Accordingly, we hold that Quilloin, Oblix, and Riley are inapposite.

      Plaintiff argues that while the Fourth Circuit Court of Appeals “has not ruled

explicitly” on this issue, two cases from that Court suggest that parties’ express

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                               BAILEY V. FORD MOTOR CO.

                                   Opinion of the Court

adoption of an arbitral body’s rules does not constitute “clear and unmistakable”

evidence that the parties intended to arbitrate questions of substantive arbitrability.

See Cathcart Properties, Inc. v. Terradon Corp., 364 F. App’x 17, 18 (4th Cir. Feb. 4,

2010) (per curiam) (unpublished); Central West Virginia Energy v. Bayer Cropscience,

645 F.3d 267, 273-74 (4th Cir. 2011). But neither case stands for this proposition or

even addresses this issue.

      In Cathcart Properties, the Fourth Circuit held that the parties did not “clearly

and unmistakably” agree to arbitrate questions of substantive arbitrability,

“[b]ecause there was no contract provision that expressly stated that the parties

agreed to arbitrate the arbitrability of a claim[.]” Cathcart Properties, 364 F. App’x

at 18. The Court did not address or even mention the issue of whether parties can

delegate questions of substantive arbitrability to the arbitrator by expressly adopting

an arbitral body’s rules. Plaintiff points out that in the relevant arbitration provision,

the parties identified the arbitral body that would decide any arbitration claims:

“[T]he parties agree that any dispute or controversy arising from this Contract which

would otherwise require or allow resort to any court or other governmental dispute

resolution forum, shall be submitted for determination by binding arbitration under

the Construction Industry Dispute Resolution of the America[n] Arbitration

Association.” Cathcart Properties, Inc. v. Terradon Corp., Civil Action No. 3:08-0298,

slip op. at 2 (S.D. W. Va. Feb. 6, 2009) (unpublished), aff’d per curiam, 364 F. App’x

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                              BAILEY V. FORD MOTOR CO.

                                   Opinion of the Court

17 (4th Cir. Feb. 4, 2010) (unpublished). But the parties did not expressly adopt the

rules of an arbitral body; rather, they merely identified the arbitral body.

Accordingly, we distinguish Cathcart Properties. We also note that as an unpublished

opinion, Cathcart Properties is not binding precedent in the Fourth Circuit. Cathcart

Properties, 364 F. App’x at 18.

      Plaintiff next points out that in Central West Virginia Energy, the Fourth

Circuit held that the parties’ dispute was “not a matter of arbitrability that

necessitates resolution by a court” and that “delineating an issue as either one of

arbitrability or one of procedure serves the goal of preserving the former for judicial

resolution.” Central West Virginia Energy, 645 F.3d at 273-74. But the Court also

qualified this distinction in accordance with U.S. Supreme Court precedent and

quoted Howsam v. Dean Witter Reynolds, Inc.: “[T]he question whether the parties

have submitted a particular dispute to arbitration, i.e., the question of arbitrability,

is an issue for judicial determination unless the parties clearly and unmistakably

provide otherwise.”   Id. at 273 (emphasis added and brackets omitted) (quoting

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 154 L. Ed. 2d 491, 497 (2002)).

      As the Fourth Circuit has not yet addressed the issue of whether parties’

express adoption of an arbitral body’s rules, which delegate questions of substantive

arbitrability to the arbitrator, constitutes “clear and unmistakable” evidence that the

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                              BAILEY V. FORD MOTOR CO.

                                   Opinion of the Court

parties intended to arbitrate questions of substantive arbitrability, we will follow the

majority rule.

      We recognize that this Court has held that the parties’ adoption of an arbitral

body’s rules was clear and unmistakable evidence that the parties intended for an

arbitrator to decide a question of procedural arbitrability. See Smith Barney, Inc. v.

Bardolph, 131 N.C. App. 810, 817, 509 S.E.2d 255, 259-60 (1998).             There, the

defendant argued that an arbitrator should decide the question of whether his claims

were barred as untimely under the National Association of Securities Dealers

(“NASD”) arbitration rules. Id. at 813, 509 S.E.2d at 257. This Court held: “The

parties’ adoption of [the NASD rules] is a ‘clear and unmistakable’ expression of their

intent to leave the question of arbitrability to the arbitrators. In no uncertain terms,

Section 10324 [of the NASD rules] commits interpretation of all provisions of the

NASD Code to the arbitrators.” Id. at 817, 509 S.E.2d at 259 (brackets omitted).

Following the majority rule among the federal appellate courts, we extend this

holding to the context of substantive arbitrability.

      In article 10.01(b) of the Dealer Development Agreement, the parties expressly

adopted the CPR Institute for Dispute Resolution (“CPR”) rules:

             If appeal to the Policy Board fails to resolve any dispute
             covered by this Article 10 within 180 days after it was
             submitted to the Policy Board, or if [plaintiff] shall be
             dissatisfied with the decision of the Policy Board, the
             dispute shall be finally settled by arbitration in accordance
             with the rules of the CPR Institute for Dispute Resolution

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                                BAILEY V. FORD MOTOR CO.

                                    Opinion of the Court

               (the “CPR”) for Non-Administered Arbitration for Business
               Disputes, by a sole arbitrator, but no arbitration proceeding
               may consider a matter designated by this Agreement to be
               within the sole discretion of one party (including without
               limitation, a decision by such party to make an additional
               investment in or loan or contribution to [the dealership]),
               and the arbitration proceeding may not revoke or revise
               any provisions of this Agreement. Arbitration shall be the
               sole and exclusive remedy between the parties with respect
               to any dispute, protest, controversy or claim arising out of
               or relating to this Agreement.

(Emphasis added.) Rule 8.1 of the CPR rules provides: “The Tribunal shall have the

power to hear and determine challenges to its jurisdiction, including any objections

with respect to the existence, scope or validity of the arbitration agreement.”

(Emphasis added.) Given the parties’ adoption of the CPR rules, which includes CPR

Rule 8.1., we hold that the parties clearly and unmistakably intended that an

arbitrator would decide questions of substantive arbitrability, like the one at issue

here. See Petrofac, 687 F.3d at 675; Fallo, 559 F.3d at 878; Qualcomm, 466 F.3d at

1373.

        iii.   “Wholly Groundless” Exception

        Plaintiff responds that even if the parties intended to arbitrate issues of

substantive arbitrability, the trial court did not err in denying defendant’s motion to

compel arbitration because defendant’s motion was “wholly groundless.” If a party’s

claim of arbitrability is “wholly groundless,” the trial court must deny the party’s

motion to compel arbitration even if the parties have agreed that an arbitrator should

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                               BAILEY V. FORD MOTOR CO.

                                   Opinion of the Court

decide questions of substantive arbitrability. See Local No. 358, Bakery & Confec.,

etc. v. Nolde Bros., 530 F.2d 548, 553 (4th Cir. 1975) (“[T]he arbitrability of a dispute

may itself be subject to arbitration if the parties have clearly so provided in the

agreement. Of course, the court must decide the threshold question whether the

parties have in fact conferred this power on the arbitrator. If they have, the court

should stay proceedings pending the arbitrator’s determination of his own

jurisdiction, unless it is clear that the claim of arbitrability is wholly groundless.”)

(emphasis added), aff’d, 430 U.S. 243, 51 L. Ed. 2d 300 (1977). The purpose of this

inquiry is to “prevent[] a party from asserting any claim at all, no matter how divorced

from the parties’ agreement, to force an arbitration.” Qualcomm, 466 F.3d at 1373

n.5.

             Because the wholly groundless inquiry is supposed to be
             limited, a court performing the inquiry may simply
             conclude that there is a legitimate argument that the
             arbitration clause covers the present dispute, and, on the
             other hand, that it does not[,] and, on that basis, leave the
             resolution of those plausible arguments for the arbitrator.
             Nevertheless, the wholly groundless inquiry necessarily
             requires the courts to examine and, to a limited extent,
             construe the underlying agreement.

Douglas v. Regions Bank, 757 F.3d 460, 463 (5th Cir. 2014) (quotation marks,

brackets, and ellipsis omitted).

       Here, the scope of the parties’ arbitration agreement is broad and covers “any

dispute, protest, controversy or claim arising out of or relating to” the Dealer

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                                   Opinion of the Court

Development Agreement. See American Recovery v. Computerized Thermal Imaging,

96 F.3d 88, 93 (4th Cir. 1996) (holding that substantively identical language in an

arbitration provision was “capable of an expansive reach” and “embraced every

dispute between the parties having a significant relationship to the contract

regardless of the label attached to the dispute” (brackets omitted)). All of plaintiff’s

claims against defendant arise from his allegation that after he satisfied all of the

conditions necessary to effectuate his acceptance of the Dollar Buyout Offer,

defendant unilaterally changed one of the offer’s conditions, which plaintiff then was

unable to satisfy. Under the Dollar Buyout Offer, defendant offered to “waive the

repayment of the outstanding balance of preferred stock and note associated with”

the Dealer Development Agreement in exchange for one dollar, provided plaintiff

satisfied all of the offer’s conditions. Given the broad scope of the parties’ arbitration

clause in the Dealer Development Agreement and the fact that the Dollar Buyout

Offer directly relates to the Dealer Development Agreement, we hold that it is

plausible that plaintiff’s claims are arbitrable and thus defendant’s motion to compel

arbitration is not “wholly groundless.” See Douglas, 757 F.3d at 463. Accordingly,

we hold that the trial court erred in concluding that the parties had agreed that a

court, instead of an arbitrator, would decide the arbitrability of plaintiff’s claims.

                                   IV.    Conclusion

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                                 Opinion of the Court

      For the foregoing reasons, we reverse the trial court’s order denying

defendant’s motion to compel arbitration and dismiss.

      REVERSED.

      Judges McCULLOUGH and INMAN concur.

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