Court Opinion

ID: 8211805
Source: CourtListenerOpinion
Date Created: 2022-10-05 06:09:55.303515+00
Date Added: 2024-06-11T16:42:06.052786
License: Public Domain

Reverse and Remand and Opinion Filed September 27, 2022

                                       In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                               No. 05-22-00019-CV

                    TOYOTA OF RICHARDSON, Appellant
                                 V.
                      AZIZALLAH KOUROS, Appellee

                On Appeal from the County Court at Law No. 1
                            Dallas County, Texas
                    Trial Court Cause No. CC-20-03235-A

                        MEMORANDUM OPINION
                    Before Justices Osborne, Nowell, and Smith
                            Opinion by Justice Nowell
      After purchasing a vehicle from Toyota of Richardson, Azizallah Kouros sued

the dealership alleging it made misrepresentations about the vehicle. Toyota filed a

motion to compel arbitration, which the trial court denied. In a single issue, Toyota

asserts the trial court abused its discretion by denying the motion. Kouros did not

file an appellate brief. We reverse the trial court’s order denying Toyota’s motion to

compel arbitration and remand the cause to the trial court for further proceedings.
                              FACTUAL BACKGROUND

      Kouros’s petition alleges his claims arise from “contracts, transactions, and

other dealings concerning the purchase of a used motor vehicle from Toyota of

Richardson.” Kouros alleges he went to Toyota’s dealership to trade in his car and

purchase another used vehicle. The salesman offered to sell him a used 2016 Lexus

RX 350 (the Vehicle) and provided Kouros with a Carfax Vehicle History Report

showing “no accidents” involving the Vehicle; the salesman represented the Vehicle

was “clean and accident free.”

      Kouros alleges he executed a Retail Installment Sales Contract (the Contract)

and financing documents without test driving the Vehicle. The salesman told Kouros

that he could test drive the Vehicle after executing the Contract and, if he was not

happy, then Toyota would provide a different vehicle for him. When Kouros drove

the Vehicle, he was “shocked” because the check engine light was on and the Vehicle

had a warning light for a faulty blind spot monitor sensor. Kouros demanded the

salesman provide a different vehicle. Rather than doing so, the salesman “calmed

him down by saying go home and come back tomorrow” at which time Toyota would

exchange the Vehicle for a different car. However, the next day, the salesman

refused to exchange the Vehicle.

      Kouros alleges he took the Vehicle to a different Lexus dealership where he

learned the Vehicle previously had been in an accident, “non-compliant parts were

used in the repair,” and the Vehicle needed “extensive repairs.” After Toyota refused

                                        –2–
to rescind the contract, Kouros sued Toyota alleging claims under the Texas

Deceptive Trade Practices Act and for fraud and rescission.

       Toyota filed a motion to compel arbitration and attached the Contract to its

motion. The title of the Contract is “MOTOR VEHICLE RETAIL

INSTALLMENT SALES CONTRACT – SIMPLE FINANCE CHARGE

(WITH ARBITRATION PROVISION).” The Contract includes the following

paragraph:

       Agreement to Arbitrate. By signing below, you agree that, pursuant to
       the Arbitration Provision on page 6 of this contract, you or we may elect
       to resolve any disputes by neutral, binding arbitration and not by a court
       action. See the Arbitration Provision for additional information
       concerning the agreement to arbitrate.

Kouros’s signature appears immediately below the paragraph. Page 6 of the Contract

states in part:

                           ARBITRATION PROVISION
      PLEASE REVIEW – IMPORTANT – AFFECTS YOUR LEGAL
                                        RIGHTS
   1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY
      DISPUTE BETWEEN US DECIDED BY ARBITRATION AND
      NOT IN COURT OR BY JURY TRIAL.
      ...
      Any claim or dispute, whether in contract, tort, statute or otherwise
      (including the interpretation and scope of this Arbitration Provision,
      and the arbitrability of the claim or dispute), between you and us or our
      employees . . . which arises out of or relates to your credit application,
      purchase or condition of this vehicle, this contract or any resulting
      transaction or relationship . . . shall, at your or our election, be resolved
      by neutral, binding arbitration and not by a court action.

                                          –3–
On the Contract’s preceding page, Kouros also signed a statement acknowledging

that he had received a completed copy of the Contract. That provision states:

      BUYER’S ACKNOWLEDGEMENT OF CONTRACT RECIEPT:
      YOU AGREE TO THE TERMS OF THIS CONTRACT AND
      ACKNOWLEDGE RECEIPT OF A COMPLETED COPY OF IT.
      YOU CONFIRM THAT BEFORE YOU SIGNED THIS
      CONTRACT, WE GAVE IT TO YOU, AND YOU WERE FREE
      TO TAKE IT AND REVIEW IT. YOU ACKNOWLEDGE THAT
      YOU HAVE READ ALL PAGES OF THIS CONTRACT,
      INCLUDING THE ARBITRATION PROVISION ON PAGE 6,
      BEFORE SIGNING BELOW.

      Kouros opposed the motion to compel arbitration, but did not present any

evidence in opposition to Toyota’s motion. After considering “the pleadings, the

response, the evidence and arguments of counsel,” the trial court denied the motion,

and this appeal followed.

                               STANDARD OF REVIEW

      We review a trial court’s order denying a motion to compel arbitration for

abuse of discretion. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). We

defer to the trial court’s factual determinations if they are supported by evidence but

review its legal determinations de novo. Id. Whether the claims in dispute fall within

the scope of a valid arbitration agreement is a question of law that we review de

novo. Id.

      Both Texas policy and federal policy favor arbitration. Id. Thus, courts

“resolve any doubts about an arbitration agreement’s scope in favor of arbitration.”

Id. Further, courts focus on the factual allegations and not on the legal causes of

                                         –4–
action asserted. Id. The presumption in favor of arbitration “is so compelling that a

court should not deny arbitration ‘unless it can be said with positive assurance that

an arbitration clause is not susceptible of an interpretation which would cover the

dispute at issue.’” Id. (quoting Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896,

899 (Tex. 1995)).

                                  LAW & ANALYSIS

      “Motions to compel arbitration are ordinarily decided in summary

proceedings ‘on the basis of affidavits, pleadings, discovery, and stipulations.’” GJ

Partners, LTD. v. Cima Contractors, LLC, No. 05-18-01412-CV, 2020 WL 400180,

at *3 (Tex. App.—Dallas Jan. 23, 2020, pet. denied) (mem. op.) (quoting Kmart

Stores of Tex., L.L.C. v. Ramirez, 510 S.W.3d 559, 565 (Tex. App.—El Paso 2016,

pet. denied after merits briefing)).

      A party seeking to compel arbitration must establish two things: (1) the

existence of a valid, enforceable arbitration agreement and (2) the disputed claim

falls within the scope of that agreement. See Wagner v. Apache Corp., 627 S.W.3d

277, 284 (Tex. 2021). Although there is a strong presumption favoring arbitration,

that presumption arises only after the party seeking to compel arbitration proves that

a valid arbitration agreement exists. See id. Once the validity of an agreement is

established, the presumption applies to determine an agreement’s scope. Id.

      After the party seeking to compel arbitration satisfies its initial evidentiary

burden, the burden shifts to the party seeking to avoid arbitration to raise an

                                         –5–
affirmative defense to the enforcement of the otherwise valid arbitration provision.

See Haddington Fund, LP v. Kidwell, No. 05-19-01202-CV, 2022 WL 100111, at

*4 (Tex. App.—Dallas Jan. 11, 2022, pet. denied) (mem. op.). Generally applicable

contract defenses under state law—such as fraud, duress, or unconscionability—may

be applied to invalidate arbitration agreements. Id. at *5. Because of the strong

policy favoring arbitration, any doubts in determining whether the defendant met its

burden to prove an affirmative defense must be resolved in favor of arbitration. Id.

(citing Pilot Travel, 416 S.W.3d at 177). In the absence of a valid defense, the trial

court has no discretion—it must compel arbitration and stay its own proceedings. Id.

at *4.

         In support of its motion to compel arbitration, Toyota provided the Contract

and a supporting business records affidavit. In his petition, Kouros acknowledged

he executed the Contract and his claims arise from the Contract. The Contract states

that Kouros read the terms of the Contract, including the arbitration provision, and

agreed to the Contract. We presume that someone such as Kouros “who has the

opportunity to read an arbitration agreement and signs it, knows its contents.” EZ

Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996) (per curiam) (orig.

proceeding).

         The Contract states that “[a]ny claim or dispute . . . between you and us . . .

which arises out of or relates to your . . . purchase or condition of this vehicle,. . .

shall, at your or our election, be resolved by neutral, binding arbitration and not by

                                           –6–
a court action.” Kouros’s claims against Toyota are that Toyota engaged in

fraudulent activity by misrepresenting the condition of the Vehicle and by telling

him he could exchange the Vehicle for a different car; Kouros’s claims arise out of

or relate to his purchase of the Vehicle or the condition of the Vehicle.

      Based on the evidence in the record, we conclude Toyota met its initial

evidentiary burden to establish the existence of a valid, enforceable arbitration

agreement and that the disputed claim falls within the scope of that agreement. See

Wagner, 627 S.W.3d at 282. The burden then shifted to Kouros.

      Although Kouros asserted the arbitration agreement was unenforceable

because it was unconscionable, Kouros presented no evidence to support this

defense. See Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494,

500 (Tex. 2015) (“parties asserting defenses to arbitration clauses have the burden

to prove the defenses—including unconscionability”); Lopez v. Casa Pontiac GMC

Buick, Inc., No. 14-11-00001-CV, 2011 WL 5926683, at *4 (Tex. App.—Houston

[14th Dist.] Nov. 29, 2011, no pet.) (mem. op.) (“Although [party resisting

arbitration] raised an unconscionability defense by asserting that their lack of

education and sophistication in legal and financial matters, coupled with their weak

English skills, rendered the arbitration agreement unconscionable, they presented no

evidence to support this defense.”); Washburne v. Lynn Pinker Cox & Hurst, LLP,

No. 05-19-00716-CV, 2020 WL 4034978, at *6 (Tex. App.—Dallas July 17, 2020,

pet. denied) (mem. op.) (“The burden of proving unconscionability rests on the party

                                         –7–
seeking to invalidate the arbitration agreement.”). By failing to present any evidence,

Kouros failed to meet his burden.

      Because Toyota met its initial burden and Kouros failed to present evidence

supporting any defense to arbitration, the trial court had no discretion but to compel

arbitration and stay its own proceedings. See In re First Merit Bank, N.A., 52 S.W.3d

749, 753–54 (Tex. 2001); see also Nichols Ford, Ltd. v. Garza, No. 02-20-00191-

CV, 2021 WL 3931916, at *5 (Tex. App.—Fort Worth Sept. 2, 2021, no pet.) (mem.

op.); Lopez, 2011 WL 5926683, at *4. Accordingly, the trial court erred by denying

Toyota’s motion to compel arbitration. We sustain Toyota’s sole issue.

                                    CONCLUSION

      We reverse the trial court’s order denying Toyota’s motion to compel

arbitration. We remand the case to the trial court for entry of an order compelling

arbitration and staying further proceedings pending completion of the pending

arbitration.

                                            /Erin A. Nowell//
220019f.p05                                 ERIN A. NOWELL
                                            JUSTICE

                                         –8–
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                  JUDGMENT

TOYOTA OF RICHARDSON,                          On Appeal from the County Court at
Appellant                                      Law No. 1, Dallas County, Texas
                                               Trial Court Cause No. CC-20-03235-
No. 05-22-00019-CV           V.                A.
                                               Opinion delivered by Justice Nowell.
AZIZALLAH KOUROS, Appellee                     Justices Osborne and Smith
                                               participating.

      In accordance with this Court’s opinion of this date, we reverse the trial
court’s order denying Toyota of Richardson’s motion to compel arbitration. We
remand the case to the trial court for entry of an order compelling arbitration and
staying further proceedings pending completion of the pending arbitration.

      It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 27th day of September 2022.

                                         –9–