4th DCA
4th DCA (Melanie Bell)

A state appellate court in West Palm Beach ruled Wednesday that an Arizona auto dealer may enforce an arbitration agreement in a dispute with a Seminole Tribe-affiliated company over car exports.

Fourth District Court of Appeal Judge Carole Taylor’s opinion concluded Phoenix Motor Co. should be allowed to enforce binding arbitration against Desert Diamond Player Club Inc., a Hollywood-based company.

They are disputing whether Phoenix Motor may impose liquidation damages on Desert Diamond because it allegedly exported four new automobiles within the first year of purchase.

Marc E. Brandes of Kurkin Brandes in Aventura represented Phoenix Motor, a Scottsdale, Ariz.-based Mercedes-Benz dealer. Like all automakers, Brandes said Mercedes-Benz enforces sales territories by imposing stiff penalties on new car exports to avoid disruption in its distribution chains.

The opinion said the transactions included a signed export policy. When Desert Diamond returned to purchase a fifth car, Phoenix Motor deducted liquidated damages from the payment, claiming Desert Diamond exported the first four vehicles in violation of the policy.

Desert Diamond took its dispute before Broward Circuit Judge Mily Rodriguez-Powell, arguing the arbitration clause was not enforceable because the export policy contained no arbitration agreement and doesn’t refer to an arbitration clause in the purchase agreement.

Taylor said the purchase agreement rather than the export policy is the controlling document.

She recognized that in a case with two contracts at issue, parties can’t be compelled to arbitrate disputes arising from a contract that doesn’t call for it unless the two can be connected by the doctrine of incorporation by reference.

“There must be some expression in the incorporating document … of an intention to be bound by the collateral document. A mere reference to another document is not sufficient,” the opinion states.

Taylor noted the purchase agreements say the purchaser “shall execute such other forms of agreement or documents as may be required by the terms and conditions of payment.”

The purchase agreement’s arbitration clause requires disputes to go to an American Arbitration Association mediator. If that doesn’t result in settlement, either party may submit the dispute to binding arbitration by a sole AAA arbitrator.

“The export policy reads in pertinent part that the ‘execution of the purchase/lease documents by the purchaser/lessee shall constitute acceptance of these terms and conditions,’ ” Taylor said.

The clauses read together indicate the intent for the purchase agreement and export policy to be part of the same contract, she concluded.

Concurring with Taylor was Fourth District Judge Burton Conner and Miami-Dade Circuit Judge Gladys Perez, who sat by designation.

Desert Diamond was represented by Robert Bissonnette of Fort Lauderdale. He did not respond to requests for comment by deadline.