Filed: Dec. 21, 2017
Latest Update: Mar. 03, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 17-1433 _ MICHELLE RENN CORCHADO; JONATHAN MUSSO v. FOULKE MANAGEMENT CORP., trading as CHERRY HILL MITSUBISHI & MT. EPHRAIM CHRYSLER DODGE, CHARLES KEARNS; ROBERT BADOLATO; STEVE DOE; SAID NAMES BEING FICTITIOUS; WELLS FARGO DEALER SERVICES; STEVEN R. CORSEY Foulke Management Corp.; Wells Fargo Dealer Services, Appellants _ On Appeal from the United States District Court for the District of New Jersey (District Court No
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 17-1433 _ MICHELLE RENN CORCHADO; JONATHAN MUSSO v. FOULKE MANAGEMENT CORP., trading as CHERRY HILL MITSUBISHI & MT. EPHRAIM CHRYSLER DODGE, CHARLES KEARNS; ROBERT BADOLATO; STEVE DOE; SAID NAMES BEING FICTITIOUS; WELLS FARGO DEALER SERVICES; STEVEN R. CORSEY Foulke Management Corp.; Wells Fargo Dealer Services, Appellants _ On Appeal from the United States District Court for the District of New Jersey (District Court No...
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 17-1433
_____________
MICHELLE RENN CORCHADO;
JONATHAN MUSSO
v.
FOULKE MANAGEMENT CORP., trading as CHERRY HILL MITSUBISHI &
MT. EPHRAIM CHRYSLER DODGE, CHARLES KEARNS; ROBERT BADOLATO;
STEVE DOE; SAID NAMES BEING FICTITIOUS; WELLS FARGO DEALER
SERVICES; STEVEN R. CORSEY
Foulke Management Corp.; Wells Fargo Dealer Services,
Appellants
______________
On Appeal from the United States District Court
for the District of New Jersey
(District Court No. 1:15-cv-06600)
District Judge: Hon. Jerome B. Simandle
______________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
September 26, 2017
______________
Before: SMITH, Chief Judge, McKEE and RESTREPO, Circuit Judges.
(Opinion filed: December 21, 2017)
_______________________
OPINION
_______________________
This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
McKEE, Circuit Judge.
Foulke Management Corporation and Wells Fargo Dealer Services appeal the
District Court’s order denying their motions to compel arbitration and directing limited
discovery. For the reasons that follow, we affirm the judgment of the District Court.
I.1
We first consider Appellants’ contention that the arbitration agreement should be
enforced because it is undisputed that Appellees’ signatures appear on a copy of the
agreement. The mere fact that Appellees signed copies of the arbitration agreement does
not definitively demonstrate that they intended to be bound by its terms, nor does it negate
their claims that they were fraudulently induced to sign it. Both Appellees specifically
allege that they were not aware of the terms of the arbitration agreement when they
signed, that they were prevented from reading it before signing, and that they were misled
about the nature and purpose of the document.
We have previously held that “if the plaintiff has responded to a motion to compel
arbitration with additional facts sufficient to place the agreement to arbitrate in issue, then
‘the parties should be entitled to discovery on the question of arbitrability before a court
entertains further briefing on [the] question.’”2 Here, after Appellant Foulke filed its
motion to compel arbitration, Appellees submitted declarations alleging “additional facts
1
The District Court had subject matter jurisdiction over the case pursuant to 28 U.S.C. §
1331. We have appellate jurisdiction to review the District Court’s denial of Appellants’
motions to compel arbitration under 9 U.S.C. § 16(a)(1)(B).
2
Guidotti v. Legal Helpers Debt Resolution, L.L.C.,
716 F.3d 764, 776 (2013) (quoting
Somerset Consulting, LLC v. United Capital Lender, LLC,
832 F. Supp. 2d 474, 482
(E.D.Pa. 2011)) (alteration in original).
2
sufficient to place the agreement to arbitrate in issue.”3 Thus, the District Court correctly
found that limited discovery concerning Appellees’ intent vel non to be bound by the
terms of the arbitration agreement was warranted, as they had entered into the record
evidence demonstrating that they did not intend to be bound by the terms of the
agreement.
We next consider Appellants’ assertion that Appellees failed to specifically allege
that they were fraudulently induced to sign the arbitration agreements, as opposed to the
contract documents collectively, and that they should therefore be compelled to arbitrate
the threshold question of arbitrability.4 Appellees have, in fact, specifically alleged in their
declarations that they were fraudulently induced to sign the arbitration agreements.
In discussing the requirements of the Federal Arbitration Act, the Supreme Court
has held that “if the [plaintiff’s] claim is fraud in the inducement of the arbitration clause
itself–an issue which goes to the ‘making’ of the agreement to arbitrate–the federal court
may proceed to adjudicate it.”5 The Act was intended “to make arbitration agreements as
enforceable as other contracts, but not more so.”6 Thus, an arbitration agreement, like any
other alleged contract, “may be invalidated by ‘generally applicable contract defenses,
such as fraud, duress, or unconscionability.’”7 As the District Court correctly noted here,
Appellees have “asserted a defense of fraud in the inducement of the respective stand-
3
Id.
4
Appellants’ Br. at 18-19.
5
Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 403-04 (1967).
6
Id. at 404 n. 12.
7
Rent-A-Ctr., W., Inc. v. Jackson,
561 U.S. 63, 68 (2010) (quoting Doctor’s Associates,
Inc. v. Casarotto,
517 U.S. 681, 687 (1996)).
3
alone arbitration agreements in opposition to Defendants’ motions to compel arbitration,
supported by sworn statements.”8 Thus, their contentions, if true, would be grounds for
invalidating the arbitration agreement under New Jersey law.9
II.
For the foregoing reasons, we affirm the District Court’s order in its
entirety.
8
Ohio App. at 35.
9
“An agreement to arbitrate, like any other contract, ‘must be the product of mutual
assent, as determined under customary principles of contract law.’” Atalese v. U.S. Legal
Servs. Grp., L.P.,
99 A.3d 306, 312 (N.J. 2014) (quoting NAACP of Camden Cnty. E. v.
Foulke Mgmt.,
24 A.3d 777, 790 (N.J. App. Div. 2011)).
4