Court Opinion

ID: 6216496
Source: CourtListenerOpinion
Date Created: 2022-02-08 19:11:08.733507+00
Date Added: 2024-06-11T08:57:09.429688
License: Public Domain

J-A28005-21

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    NICOLE ZENTNER AND ANDREW                  :   IN THE SUPERIOR COURT OF
    KIVETT                                     :        PENNSYLVANIA
                                               :
                                               :
                v.                             :
                                               :
                                               :
    BRENNER CAR CREDIT, LLC AND                :
    PAXTON SECURITIES CO.                      :   No. 751 MDA 2021
                                               :
                       Appellants              :

                 Appeal from the Order Entered May 19, 2021
       In the Court of Common Pleas of Lycoming County Civil Division at
                         No(s): CV-2020-0001193-CV

BEFORE:      LAZARUS, J., NICHOLS, J., and STEVENS, P.J.E.*

MEMORANDUM BY LAZARUS, J.:                          FILED: FEBRUARY 8, 2022

        Brenner Car Credit, LLC, and Paxton Securities Co. (collectively,

Appellants), appeal from the order, entered in the Court of Common Pleas of

Lycoming County, denying Appellants’ preliminary objections seeking to

compel arbitration.1 After careful review, we affirm.
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*   Former Justice specially assigned to the Superior Court.

1 This appeal is properly before this Court, despite the trial court’s urging that
the appeal is interlocutory. See Davis v. Ctr. Mgmt. Grp., LLC, 192 A.3d
173, 180-81 n.10 (Pa. Super. 2018), quoting Pa.R.A.P. 311(g)(1)(iv) (“Failure
to file an appeal from an interlocutory order refusing to compel arbitration,
appealable under 42 Pa.C.S.[A.] § 7320(a)(1) and subparagraph (a)(8) of this
rule, shall constitute a waiver of all objections to such an order.”). Therefore,
we may proceed to the merits of this appeal. See also Elwyn v. DeLuca, 48
A.3d 457, 460 n.4 (Pa. Super. 2012), quoting Shadduck v. Christopher J.
Kaclik, Inc., 713 A.2d 635, 636 (Pa. Super. 1998) (“As a general rule, an
order denying a party’s preliminary objections is interlocutory and, thus, not
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       The trial court set forth the factual and procedural history of this case

as follows:

       This matter was initiated by the filing of a class complaint[2] on
       December 11, 2020[, by Nicole Zentner and Andrew Kivett
       (collectively, Plaintiffs/Appellees)]. [Appellants, Defendants in the
       trial court,] filed a single preliminary objection to the complaint
       on February 19, 2021[,] pursuant to Pa.R.C.P. 1028(a)(6)[,]
       which [Appellees] answered on March 10, 2021. [Appellants] filed
       a reply brief on April 28, 2021[,] and oral argument was held [on]
       May 3, 2021.

       This action is based on [Appellants’] alleged improper notice of
       disposition of repossessed vehicles. [Appellees], who represent
       the class, purchased vehicles from . . . Brenner Car Credit, LLC,
       who “sold the vehicle, financed the transaction, and took a
       security interest in the vehicle pursuant to an installment sales
       contract entitled Retail Installment Contract and Security
       Agreement ([]RICSA[])[.]” See Plaintiffs’ Complaint[, 12/11/20,
       at ¶¶ 13, 29.] In addition to the RICSAs, and on the same day
       the RICSAs were executed, [Appellees] executed Buyers’ Orders
       in connection with the purchase of their respective vehicles. []
       Paxton Securities, Co., [after assignment,] became the secured
       party under the RICSA[s]. Due to failure to make the required
       payments, [Appellees’] vehicles were repossessed without proper
       notice, according to [Appellees].

Trial Court Opinion, 5/19/21, at 1-2 (unnecessary capitalization omitted).

       In its lone preliminary objection, Appellants claim that the Buyers’

Orders contain an arbitration clause that mandates arbitration in this matter.

Conversely, the trial court found that because the arbitration clause is only

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appealable as of right. There exists, however, a narrow exception to this oft-
stated rule for cases in which the appeal is taken from an order denying a
petition to compel arbitration.”).

2 Appellees filed this consumer class action, challenging Appellants’ vehicle
repossession practices under the Uniform Commercial Code (UCC, Division 9,
Secured Transactions), 13 Pa.C.S.A. § 9101 et seq.

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located within the text of the Buyers’ Orders—but not within the text of the

RICSAs—and since the RICSAs are entirely devoid of any mention of any

arbitration agreement or the Buyers’ Orders, Appellants’ preliminary objection

should be overruled. By order May 19, 2021, the court denied Appellants’

preliminary objection, and Appellants filed a timely notice of appeal. The court

did not order Appellants to file a concise statement of errors complained of on

appeal pursuant to Pa.R.A.P. 1925(b), but did file an opinion pursuant to Rule

1925(a).

      On appeal, Appellants present the following issues for our review:

      1. Whether the trial court erred in concluding the parties’
         arbitration agreement was unenforceable under Knight v.
         Springfield Hyundai, 81 A.3d 940 (Pa. Super. [] 2013)[,] and
         Pennsylvania law.

      2. Whether the trial court erred in failing to recognize that federal
         law requires the arbitrator to determine[,] in the first
         instance[,] the scope and application of the parties’ arbitration
         agreement as well as the validity of the underlying contract.

      3. Whether the trial court erred in concluding [Appellee]s’ claims
         were not within the scope of the parties’ broad arbitration
         agreement[,] as federal law requires that all presumptions be
         applied in favor of arbitration.

      4. Whether the trial court erred in failing to consider applicable
         federal law concerning the termination of agreements
         containing arbitration agreements.

      5. Whether the trial court erred in denying [Appellants’]
         preliminary objection pursuant to Pa.R.C[].P. 1028(a)(6).

Appellants’ Brief, at 6-8 (reordered for ease of disposition; unnecessary

capitalization omitted).

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      “[O]ur standard of review of an order of the trial court overruling or

granting preliminary objections is to determine whether the trial court

committed an error of law. When considering the appropriateness of a ruling

on preliminary objections, the appellate court must apply the same standard

as the trial court.” Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa. Super.

2011), quoting Haun v. Cmty. Health Sys., 14 A.3d 120, 123 (Pa. Super.

2011).

      When considering preliminary objections, all material facts set
      forth in the challenged pleadings are admitted as true, as well as
      all inferences reasonably deducible therefrom.          Preliminary
      objections which seek the dismissal of a cause of action should be
      sustained only in cases in which it is clear and free from doubt
      that the pleader will be unable to prove facts legally sufficient to
      establish the right to relief. If any doubt exists as to whether a
      demurrer should be sustained, it should be resolved in favor of
      overruling the preliminary objections.

Id. See also Fellerman v. PECO Energy Co., 159 A.3d 22, 26 (Pa. Super.

2017), quoting MacPherson v. Magee Mem. Hosp. for Convalescence,

128 A.3d 1209, 1218-19 (Pa. Super. 2017).

      Each of Appellants’ claims raises a challenge to the trial court’s order

overruling Appellants’ preliminary objection. Therefore, the sole issue on

appeal is whether the arbitration clause found in the Buyers’ Orders, but not

the RICSAs, is valid and enforceable, and, therefore, binding on the parties.

      “The issue of whether a writing constitutes an integrated contract is a

question of law.” Lenzi v. Hahnemann Univ., 664 A.2d 1375, 1379 (Pa.

Super. 1995).    “Whether an agreement to arbitrate disputes exists is a

question of law.” Neuhard v. Travelers Ins. Co., 831 A.2d 602, 604 (Pa.

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Super. 2003).       Moreover, “[w]hether a claim is within the scope of an

arbitration provision is a matter of contract, and as with all questions of law,

our review of the trial court’s conclusion is plenary.” Elwyn v. DeLuca, 48

A.3d 457, 461 (Pa. Super. 2012).

        First, Appellants claim that the trial court erred in applying Knight,

supra, to the facts of this case. Specifically, Appellants argue that, in Knight,

the RICSA contained an integration clause and did not reference the Buyers’

Orders, whereas here, the Buyers’ Orders referenced the RICSAs. Appellants’

Brief, at 38. Additionally, Appellants claim that here the Buyers’ Orders and

RICSAs should be interpreted as a singular integrated agreement because the

agreements were executed at the same time and deal with, generally, the

same subject matter, and the Buyers’ Orders explicitly incorporate the RICSAs

by reference. Id. at 33-34. Appellants further contend that the Motor Vehicle

Sales Finance Act (MVSFA)3 does not preclude such incorporation, does not

define “installment sale contract,” and does not dictate the form of the

contract. Id. at 35-37. After review, we are satisfied that no relief is due.

        In Knight, supra, this Court interpreted section 613(A) of the MVSFA,4

and concluded that “it is apparent that when a buyer makes a purchase of a

vehicle by installment sale, the [RICSA] subsumes all other agreements

relating to the sale.”       Knight, supra at 948, quoting 69 P.S. § 613(A)
____________________________________________

3 Act of June 28, 1947, P.L. 1110 No. 476, as amended, 69 P.S. § 601 et seq,
recodified under the Consumer Credit Code, 12 Pa.C.S.A. § 6201 et seq.

4   Section 613 was recodified under 12 Pa.C.S.A. § 6221.

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(“Pursuant to the MVSFA, if a buyer is purchasing a vehicle via installment

sale, the contract must be in writing, signed by the buyer and the seller, ‘and

shall contain all of the agreements between the buyer and the seller

relating to the installment sale of the motor vehicle sold.’”) (brackets omitted;

some emphasis in original and some added). As here, the Buyer’s Order in

Knight contained an arbitration agreement, but the RICSA did not.            The

Knight Court concluded that there was no enforceable arbitration agreement

between the parties and that the trial court erred as a matter of law by

granting the preliminary objection and submitting the case to binding

arbitration, because the RICSA was required to contain all of the agreements

between the parties, the RICSA contained an integration clause, and the

RICSA made no mention of arbitration. Id. at 948-49.

        Here, the trial court applied Knight to the facts of this case and

determined that the arbitration clauses, which were only found in the Buyers’

Orders—and not the RICSAs—were not binding on the parties because the

subject matter of Appellees’ complaint related to the repossession of secured

interests, and because the Buyers’ Orders did not mention the parties’ rights

in that regard. Trial Court Opinion, 5/19/21, at 5. Additionally, the trial court

found that the parties intended for the language of the RICSA to stand alone.5

Id. at 5-6.

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5   Here, the trial court analyzed the terms of the instant RICSAs as follows:

(Footnote Continued Next Page)

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       We agree with the trial court and find Knight to be controlling. Here,

as in Knight, the parties signed Buyers’ Orders generally outlining the terms

of their vehicle sales contracts, which included an arbitration clause on the

reverse side.     Similarly, the parties in both cases subsequently agreed to

installment sale contracts, which specified the details of the sales and the

financing agreements for the purchased vehicles.6 Like the RICSA in Knight,

which contained an integration clause, here, the court found the parties

intended for the RICSAs to constitute stand-alone integrated agreements.

See Knight, supra at 948; 12 Pa.C.S.A. § 6221; see also supra, at n.5.

Because the RICSAs at issue in this case did not contain any arbitration

clauses, the court properly applied Knight and determined the arbitration

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       The terms “Contract” and “this Contract” are used throughout the
       RICSAs and are undefined. The RICSAs contain[] no reference or
       indication that “this Contract” would include anything other than
       the RICSA itself. Finally, the section of the RICSAs titled “Entire
       Agreement” also use[s] the term “this Contract” when stating
       what the agreement is between the parties.

Trial Court Opinion, 5/19/21, at 5-6. We agree with the trial court that these
terms clarify that the parties did not intend to include any provisions not
explicitly stated within the RICSAs. See RICSA, 4/19/19, at 2 (“Your and our
entire agreement is contained in this Contract. There are no unwritten
agreements regarding this Contract. Any change to this Contract must be in
writing and signed by you and us.”) (emphasis added); id., 7/30/19, at 2
(same).
6 Kivett’s Buyer’s Order reflects a balance of $14,965.67, and the RICSA
reflects a total sales price of $21,008.82, payable in 196 weekly installments.
Similarly, Zentner’s Buyer’s Order reflects a balance of $14,630.67, and the
RICSA reflects a total sales price of $20,959.31, payable in 192 weekly
installments.

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clause in the Buyers’ Orders was not applicable to the instant suit.          See

Knight, supra; Feingold, supra; 12 Pa.C.S.A. § 6221 (“An installment sale

contract shall: (1) be in writing; (2) contain all the agreements between a

buyer and an installment seller relating to the installment sale of the motor

vehicle sold; (3) be signed by the buyer and seller; and (4) be complete as to

all essential provisions before the buyer signs the contract.”). Accordingly,

we discern no error. See Feingold, supra; Elwyn, supra at 461.

      Second, Appellants argue that federal law requires the arbitrator to

determine, in the first instance, the scope and application of the parties’

arbitration agreement as well as the validity of the underlying contract. See

Appellant’s Brief, at 43-45, quoting Buckeye Check Cashing Inc. v.

Cardegna, 546 U.S. 440, 445-46 (2006) (“[A]s a matter of substantive

federal arbitration law, an arbitration provision is severable from the

remainder of the contract,” and [], “unless the challenge is to the arbitration

clause itself, the issue of the contract’s validity is considered by the arbitrator

in the first instance.”); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

U.S. 395, 403 (1967) (“[T]he federal court is instructed to order arbitration to

proceed once it is satisfied that the making of the agreement for arbitration

or the failure to comply with the arbitration agreement is not in issue.”)

(brackets, quotation marks, and footnote omitted). See also MXM Constr.

Co. v. N.J. Bldg. Laborers Statewide Benefit Funds, 974 F.3d 386, 397

(3d. Cir. 2020) (“[A] claim of fraud in the inducement of the arbitration clause

is for the court to decide, but a claim of fraud in the inducement of the

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[underlying] contract is for the arbitrator. . . . Thus, under Prima Paint,

absent a specific challenge to the validity of the arbitration clause specifically,

the court must treat it as a valid and enforceable agreement and refer any

challenges to the [underlying] contract to arbitration.”). No relief is due.

       Here, Appellees’ challenge, in the trial court, was to the applicability and

validity of the arbitration clause itself as it related to the dispute alleged in the

complaint, not the validity of the RICSA or Buyers’ Orders. See Buckeye

Check Cashing, supra.             As such, the Prima Paint rule requiring the

arbitrator to pass, in the first instance, on the validity of the contract, is

inapplicable to the instant facts.             See also Fellerman, supra (“In

[determining whether the trial court improperly overruled preliminary

objections in the nature of a petition to compel arbitration], we employ a two-

part test[.] First, we examine whether a valid agreement to arbitrate exists.

Second, we must determine whether the dispute is within the scope of the

agreement.”);7 Bair v. Manor Care of Elizabethtown, PA, LLC, 108 A.3d

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7 Initially, we find that Zentner agreed to arbitration in her Buyer’s Order in
satisfaction of the first prong of the Fellerman test because she checked a
box on the document indicating that her agreement was subject to arbitration.
Conversely, the same box was not checked on Kivett’s Buyer’s Order.
Nevertheless, both Zentner and Kivett fail the second Fellerman prong,
insofar as we have already determined that the parties did not include an
arbitration agreement in the RICSAs, and that the RICSA—and not the Buyer’s
Order—must contain all of the agreements between the parties as it relates to
issues arising out of the installment sale of a vehicle. See Knight, supra;
see also 12 Pa.C.S.A. § 6221. Therefore, the scope of the arbitration clauses
in the Buyers’ Orders do not extend to the disputes in this case arising from
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94, 96 (Pa. Super. 2015) (“The issue of whether parties agreed to arbitrate is

generally one for the court, not the arbitrators.”).

        Third, Appellants argue that federal law requires that all presumptions

be applied in favor of arbitration.            Specifically, Appellants argue that the

Federal Arbitration Act (FAA)8 mandates that “any doubts concerning the

scope of arbitrable issues should be resolved in favor of arbitration.”

Appellants Brief, at 27-28, quoting Moses H. Cone Mem. Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24-25 (1983). Additionally, Appellants cite to the

United States Supreme Court decision in AT&T Techs. v. Communs.

Workers of Am., 475 U.S. 643 (1986), for the proposition that:

        [W]here the contract contains an arbitration clause, there is a
        presumption of arbitrability in the sense that “an order to arbitrate
        the particular grievance should not be denied unless it may be
        said with positive assurance that the arbitration clause is not
        susceptible of an interpretation that covers the asserted dispute.
        Doubts should be resolved in favor of coverage.”

Id. at 650 (citation omitted). No relief is due.

        Here, we conclude, “with positive assurance,” see id., that the MVSFA

requires any RICSA to contain all of the agreements between buyer and seller

relating to the installment sale of a motor vehicle, see Knight, supra; see

also 12 Pa.C.S.A. § 6221, and because the RICSAs at issue in this case did

not include any arbitration agreement, there was none made between the

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the repossession of secured vehicles sold by installment contract. See Elwyn,
supra at 461.

8   9 U.S.C. § 4.

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parties covering the instant dispute. See Feingold, supra; Elwyn, supra at

461.    As such, the arbitration clause found in the Buyers’ Orders is not

“susceptible of an interpretation that covers the asserted dispute.” See AT&T

Techs., supra at 650.

       Fourth, Appellants argue that federal law provides for arbitration clauses

to remain in effect after the termination of the agreements in which they are

contained. See Appellant’s Brief, at 48, citing Litton Fin. Printing Div. v.

NLRB, 501 U.S. 190, 208 (1991).         Specifically, Appellants argue that the

arbitration clause in the Buyers’ Orders survived, even if it was subsumed by

the RICSA, and was included in the final agreement between the parties. Id.

at 49, citing Bank Julius Baer & Co., Ltd. v. Waxfield Ltd., 424 F.3d 278

(2d Cir. 2005).

       Nevertheless, here, again, the entire agreement was required to have

been included in the RICSA. See Knight, supra; see also 12 Pa.C.S.A. §

6221. Moreover, the agreement in Bank Julius Baer contained an arbitration

clause that was never terminated and, instead, was expressly incorporated,

because the text of the incorporation clause stated, “without exception, all the

rights and remedies provided in this Agreement are cumulative and not

exclusive of any rights or remedies provided under any other agreement or

by law or in equity.” Bank Julius Baer, supra at 283 (emphasis in original).

Conversely, here, the parties agreed that the RICSAs would constitute the

entirety of the agreements. See supra, at n.5.

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     Accordingly, having failed to discern any abuse of discretion or error of

law, see Feingold, supra; Fellerman, supra, we conclude that the court

properly overruled Appellants’ preliminary objection seeking to compel

arbitration. See Pa.R.C.P. No. 1028(a)(6).

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/08/2022

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