Pa. Superior Court: Phila. judge improperly dismissed contract suit against Metro Auto Sales

By Jon Campisi | Apr 8, 2014

A three-judge panel of the Pennsylvania Superior Court has reversed a

Philadelphia judge’s decision to dismiss a complaint by a consumer against a car dealer stemming from a failure to divulge the vehicle’s accident history.

The three appellate judges on Monday ruled that a Common Pleas Court judge was wrong in December 2012 to toss a complaint brought by Delecia Walker against Metro Auto Sales and Wells Fargo Dealer Services and order the matter to be re-filed in binding arbitration.

Walker sued in the fall of 2012 over allegations that Metro Auto, which does business as Value Kia, failed to disclose that the vehicle Walker purchased in early May 2011 had previously been involved in an accident.

In her complaint, Walker asserted that Metro had a duty to disclose the vehicle’s accident history and that failure to disclose this information constituted fraud.

In early October 2012, records show, Metro filed preliminary objections raising five issues, one of which was the argument that any dispute related to the sale of the vehicle is within the jurisdiction of extra-judicial arbitration as per the terms of the contract governing the transaction.

Walker subsequently filed a response to the objection in which she argued that the arbitration clause is null and void as a matter of law because it was not contained within the retail installment sales contract.

The Philadelphia judge ultimately agreed with the defense, dismissing the case and ordering that it be re-filed in a binding and final private arbitration pursuant to the arbitration clause.

The plaintiff appealed to Superior Court in January 2013.

The appeals panel ended up agreeing with the plaintiff that the arbitration clause was invalid and unenforceable because it was included solely in the buyer’s order rather than the retail installment sales contract.

In defense filings, Metro Auto had relied on a federal case titled Dunn v. B&B Automotive, in which a judge concluded that the separate arbitration agreement was incorporated by reference into the retail installment sales contract.

The Superior Court panel, however, wrote that it is not bound by the unreported federal district court case.

The appeals panel also noted that the trial judge in the Walker case was required to stay the proceedings before it while referring the matter to arbitration.

“However, as we determine, for the reasons discussed above, that the trial court erred by transferring the matter to arbitration in the first place, its further error in dismissing the case outright rather than issuing a stay as required by statute is rendered moot,” the Superior Court judge wrote.

The non-precedential decision was written by Superior Court President Judge Emeritus Kate Ford Elliot.

The other participating jurists were Judge David N. Wecht and Senior Judge John L. Musmanno.

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