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General Motors Acceptance Corp. v. Johnson

Case Date: 12/27/2004
Court: 1st District Appellate
Docket No: 1-04-0633 Rel

FIRST DIVISION
December 27, 2004




No. 1-04-0633

 
GENERAL MOTORS ACCEPTANCE CORPORATION,

                                     Plaintiff,

v.

ROBERT JOHNSON and PAULINE JOHNSON,

                                     Defendants

(Pauline Johnson,

                                     Third-Party Plaintiff Appellant;

Gateway Chevrolet, Geo, Oldsmobile, Inc.,

                                      Third-Party Defendant-Appellee).

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)		 Appeal from the
Circuit Court of
Cook County.






No. 02 M1 164531






Honorable
Leon Wool,
Judge Presiding.


JUSTICE GORDON delivered the opinion of the court:

This cause of action arises from an order of the circuit court granting third-partydefendant's, Gateway Chevrolet, Inc. (Gateway), motion to stay litigation pending arbitrationbased on an arbitration agreement signed by Gateway and third-party plaintiff, Pauline Johnson(Pauline). Pauline contends that arbitration could not be ordered because her contract withGateway, along with the accompanying arbitration agreement, was void due to Gateway'sviolation of section 2B the Consumer Fraud and Deceptive Business Practices Act (hereinafterreferred to as the Consumer Fraud Act or Act) (815 ILCS 505/2B (West 2002)). She furtheralleges that the arbitration agreement was invalid due to a lack of consideration and that Gatewayimproperly failed to request arbitration in the first instance. For the following reasons, we affirm.

BACKGROUND

On October 17, 2001, Pauline and her husband, Robert Johnson, purchased a 2002Chevrolet Cavalier from Gateway. According to an affidavit signed by Pauline, a Gatewayemployee went to her home with her husband and persuaded her to sign a retail installmentcontract for the purchase of the vehicle. Pauline and Robert also signed an arbitration agreement,which provided in pertinent part:

"IMPORTANT ARBITRATION DISCLOSURES

The following Arbitration Clause significantly affects your rights in any disputewith Us. Please read these disclosures and the Arbitration Clause carefully beforeyou sign this Agreement.

1. Either You or Us may unilaterally choose to have any dispute between you andUs decided by arbitration and not in court.

2. If a dispute is arbitrated, both You and Us will give up the right to a trial by thecourt or a trial by jury.

3. If a dispute is arbitrated, You will give up Your right to participate as a classrepresentative and/or a class member on any class claim you may have against us.

4. In arbitration, the information which can be obtained through discovery by youfrom Us and/or by Us from You is generally more limited than the informationwhich can be obtained through discovery in a lawsuit.

5. Other rights that [Y]ou and/or Us would have had in court may not be availablein arbitration.

6. Even if [the] dispute is arbitrated, Your vehicle may still be repossessed if[Y]ou do not honor Your lease and both [Y[ou and Us may seek provisionalremedies from court [sic].

Any claim or dispute whether in contract, tort, fraud, breach of warranty orotherwise (including the interpretation and scope of this clause and the arbitrarility[sic] of any issue). Between You and Us or our employees, agents, successors orassigns, which arise out of or relate to this Agreement or any resulting transactionor relationship (including any such relationship with any third parties who do notsign this Agreement) shall at Your or Our election (or the election of any suchthird party). Be resolved by a neutral binding arbitration and not by a court action[sic]."

The day after purchasing the vehicle, Robert attempted to return it to Gateway, butGateway employees refused to take the vehicle back. Pauline asserted that she also attempted toreturn the vehicle two days after signing the contract, but was told she could not do so. TheJohnsons thereafter defaulted on their finance payments and the vehicle was repossessed. Theassignee of the contract, plaintiff, General Motors Acceptance Corporation, filed a complaintagainst the Johnsons seeking damages for breach of contract. Pauline then obtained leave fromthe court to file a third-party complaint against Gateway. The third-party complaint alleged thatGateway failed to give Pauline notice of her right of rescission and refused to cancel the contractand accept return of the vehicle all in violation of section 2B of the Consumer Fraud Act. 815ILCS 505/2B (West 2002).

On August 28, 2003, Gateway filed a motion to stay all trial court proceedings pendingarbitration pursuant to the arbitration agreement. Pauline opposed the motion, contending that itwould be fundamentally unfair to allow Gateway to benefit from the arbitration agreement, whichshe would have rescinded along with the retail installment contract had Gateway not violated theAct. A hearing on the motion was conducted on February 2, 2004. The court found that the solequestion before it was whether the arbitration agreement existed at all and whether the dispute fellwithin the terms of that agreement. Answering both questions in the affirmative, the courtgranted Gateway's motion to stay the litigation pending arbitration.

ANALYSIS

Pauline appeals the trial court order granting the stay, primarily contending that a contractdispute alleging the invalidity of the contract itself cannot be subject to an arbitration clause whichwas part of the allegedly invalid contract. Therefore, the question of whether the contract wasenforceable or "existed" must first be decided by a trial court and cannot be subject to arbitration. Pauline also very briefly asserts that the arbitration clause was invalid because it was obtainedwithout consideration and that Gateway never actually initiated a request for arbitration. For thefollowing reasons, we disagree and affirm the judgment of the circuit court.

Section 2B of the Consumer Fraud Act provides:

"