Houston Independent Automobile Dealers Association November 2015 Issue: Be a Quality Dealer | Page 10

disputes, demands, or controversies concerning the vehicle, its sale, or its financing must be
settled by binding arbitration. The agreement contained another clause stating that actions in law
or equity by the lender to collect any debt owed by the consumer, enforce the security agreement
securing such debt, or exercise any right resulting from the consumer's failure to comply with the
provisions of any agreement concerning the debt or security agreement, including repossession,
were excepted from the arbitration agreement. Finally, the arbitration agreement stated that if the
lender or its assignees bring an action not subject to the arbitration agreement, "any counterclaim
or offset claim that is asserted by the consumer must nonetheless be arbitrated." The borrower
defaulted, and the lender repossessed the vehicle and filed a collection action to recover the
balance, interest, costs, and attorney's fees. The borrower answered and counterclaimed,
asserting that the lender violated the sale notice requirements of the UCC and the Merchandising
Practices Act. The lender moved to compel arbitration of the counterclaim. The trial court denied
the motion, finding that the arbitration agreement was unenforceable due to lack of consideration.
The lender dismissed its collection action and appealed the denial of its motion to compel
arbitration, arguing that the trial court erred in finding the agreement unenforceable. The appellate
court affirmed the trial court's decision, concluding that the arbitration agreement was
unenforceable for lack of consideration due to lack of mutuality because the lender could pursue its
claims in court, but the borrower could not. See Motormax Financial Services Corporation v.
Knight, 2015 Mo. App. LEXIS 815 (Mo. App. August 18, 2015).
Car Buyer Not Entitled to Recover Attorneys' Fees and Costs Incurred in Action Against
Dealership Brought After Dealership's Correction Offer. After driving a vehicle for over a year,
the buyer asserted that it had a damaged frame and demanded that the seller rescind the
purchase contract, return his payments, and pay a penalty and incidental damages. The buyer did
not wait for a response to his demands and instead filed a complaint alleging numerous causes of
action against the seller, including violation of California's Consumers Legal Remedies Act. Within
30 days of receiving the buyer's demand letters, the seller offered to settle the matter by rescinding
the contract, having the buyer return the vehicle, refunding all payments, satisfying the debt to the
finance company, paying $2,500 for incidental damages and attorney's fees, waiving any claim for
mileage, and executing a mutual settlement and release agreement. The buyer did not accept this
offer and demanded a higher amount to settle the case.
The seller eventually stipulated to a judgment against it and agreed to waive the balance owed.
The buyer agreed to return the vehicle. The settlement included a release of all claims. The buyer
then moved for attorney's fees and costs, and the trial court denied the motion. The trial court
noted that, under the CLRA, a plaintiff cannot maintain a suit for damages if the defendant made
an appropriate and timely correction offer. The buyer appealed, arguing that what the seller had
offered was not appropriate because, among other things, it included a settlement and release of
all his claims, not just his CLRA claim. The appellate court affirmed, concluding that the trial court
did not abuse its discretion in deeming the seller's correction offer appropriate and timely. The
appellate court also rejected the buyer's argument that the release of his other non-CLRA claims
rendered the correction offer inappropriate, finding that the buyer could not have obtained any
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