United States District Court, D. Maryland
L. Hollander United States District Judge
Memorandum Opinion resolves a motion to compel arbitration
with respect to a suit initiated by plaintiff National
Motors, Inc. (“National”), against Universal
Warranty Corporation (“Universal”). ECF 1-1
(“Complaint”). National is a Maryland corporation
engaged in the business of buying and selling used cars.
Universal is a Michigan corporation engaged in the finance
and warranty of motor vehicles. ECF 1-1 at 14-18.
suit is rooted in a contract between the parties dated April
2, 2012 (ECF 1-1 at 19-20), called “Universal Advantage
Agreement” (the “Agreement”). It concerns a
sales incentive program offered by Universal, by which
National was to sell Universal's vehicle service
contracts in exchange for payment of commissions. ECF 1-1.
According to National, Universal did not pay the commissions
due under the Agreement.
Complaint contains three counts. Count I is titled
“Action for Accounting and Injunctive Relief.”
Id. ¶¶ 8-12. Count II alleges breach of
contract. Id. ¶¶ 13-17. In Count III,
plaintiff lodges a claim for “Unjust Enrichment.”
Id. ¶¶ 18-21.
has moved to compel arbitration and to dismiss the suit (ECF
15), supported by a memorandum of law. ECF 15-1
(collectively, the “Motion”). According to
Universal, “every claim made in this action is subject
to the terms and conditions of an arbitration
provision” in the Agreement. ECF 15-1 at 1 (citing ECF
1-1 at 19-20); see also ECF 19-1 (same). Plaintiff
opposes the Motion. ECF 19. According to National, the
arbitration clause is unenforceable because it is
unconscionable, id. at 5, and because the
arbitration clause is “impermissibly vague.”
Id. at 8. Universal has replied (ECF 20), disputing
hearing is necessary to resolve the Motion. Local Rule 105.6.
For the reasons that follow, I shall grant the Motion.
buys and sells used cars throughout the State of Maryland.
ECF 1-1, ¶ 1; see ECF 19-2 (Affidavit of
Gabriela Furdyna), ¶ 4. It maintains its principal place
of business in Ellicott City, Maryland. ECF 1-1, ¶ 1.
Universal provides automotive financial services, including
vehicle financing and warranties. Id. ¶ 2. Its
principal place of business is located in Detroit.
April 2, 2012, Tom Hanlon, a salesperson from Universal, and
Mark Brownhill, a representative from Ally Financial
(“Ally”), which owns and operates Universal, met
with Ms. Furdyna, a manager of National, at National's
headquarters. ECF 19-2, ¶ 5. Mr. Hanlon and Mr.
Brownhill proposed that National enroll in the Universal
Advantage Program (the “Program”). Id.
In general terms, under the Program, National would sell
Universal's products, namely vehicle service contracts
(“Qualifying VSCs”), in exchange for a commission
and/or payment on those sales. ECF 1-1, ¶ 5.
to Ms. Furdyna, Mr. Hanlon and Mr. Brownhill represented that
there were no drawbacks to joining the Program, and they
averred that National would receive payments within a year of
joining. ECF 19-2, ¶ 7. Further, they allegedly advised
that participating in the Program would improve
National's relationship with Ally, which is a major
creditor in the automotive sales industry. Id.
¶¶ 6, 7.
on these representations, National and Universal executed the
Agreement on April 2, 2012. ECF 1-1, ¶ 5; ECF 19-2,
¶ 11; see also ECF 1-1 at 19-20. The Agreement
contains seven sections. Relevant here, Section IV provides,
ECF 1-1 at 20:
If either party fails to agree with respect to this Program,
such differences shall be submitted to arbitration upon the
request of either party. Each party shall then nominate a
competent and disinterested arbitrator within thirty (30)
days of being requested to do so and the two named shall
select a competent and disinterested umpire before entering
into arbitration. In the event that either party fails to
appoint a competent and disinterested arbitrator within the
time specified, the other party shall have the right to
appoint said arbitrator. If the arbitrators do not agree as
to a competent and disinterested umpire within thirty (30)
days of this appointment, a third arbitrator shall be chosen
by the manager of the American Arbitration Association. The
said arbitrators shall not be under the control of either
party to this Agreement.
Each party shall submit its case to its arbitrator within
thirty (30) days of the appointment or within such period as
may be agreed by consent of both arbitrators.
The decision in writing of any two of these three, when filed
with both parties, shall be final and binding. Each party
shall bear the expense of its own arbitrator and shall
jointly and equally bear the expense of the umpire and of the
arbitration. Any arbitration shall take place in the State of
Nebraska unless otherwise mutually agreed.
Section V contains a choice of law provision. Id. at
20. It states: “The parties expressly agree that this
Agreement is to be interpreted and the right of the parties
governed and enforced by the substantive law of the State of
alleges that, following execution of the Agreement, it sold
Qualifying VSCs to customers. ECF 1-1, ¶ 6. However,
according to National, it has not received payment for these
sales, as provided by the Agreement. Id. ¶ 7.
Further, Universal allegedly failed to furnish information or
reports as to National's performance under the Program,
despite such requests. See Id. ¶¶ 8-11.
lawsuit followed. Additional facts are included in the
The Federal Arbitration Act
moves to compel arbitration and to dismiss this action
pursuant to the Federal Arbitration Act (“FAA”),
9 U.S.C. § 1 et seq. The FAA, which was enacted
in 1925, “requires courts to enforce covered
arbitration agreements according to their terms.”
Lamps Plus, Inc. v. Varela, __U.S.__, 139 S.Ct.
1407, 1412 (2019); see also McCormick v. Am. Online,
Inc., 909 F.3d 677, 679 (4th Cir. 2018) (the FAA
“provides for the enforceability of arbitration
agreements and specifies procedures for conducting
arbitrations and enforcing arbitration awards”). Under
§ 2 of the FAA, an arbitration contract is “valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any
contract.” Thus, the FAA “establishes ‘a
liberal federal policy favoring arbitration
agreements.'” Epic Sys. Corp. v. Lewis,
__U.S.__, 138 S.Ct. 1612, 1621 (2018) (quoting Moses H.
Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S.
1, 24 (1983)); see also McCormick, 909 F.3d at 680
(“[T]he FAA elevates the arbitration of claims as a
favored alternative to litigation when the parties agree in
writing to arbitration.”).
Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th Cir.
2002), the Fourth Circuit explained, id. at 500-01
(quoting Whiteside v. ...