E-Alert Case Updates

Order Denying Petition to Compel Arbitration Was Not Immediately Appealable Where Another Matter Was Pending Between the Same Parties Regarding the Same Substantive Dispute

Deer Automotive Group. LLC t/a Liberty Ford v. Barbara Brown, et al.
No.62 (Court of Appeals of Maryland)
by Colleen K. O’Brien, Associate & Paige A. Neville, Law Clerk
Wilson Elser LLP (www.wilsonelser.com)

Available at: http://www.mdcourts.gov/opinions/coa/2017/62a16.pdf

Plaintiffs Barbara Brown and Herbert E. Spencer, Jr. (“Plaintiffs”), on behalf of a class of persons similarly situated sued Defendant Deer Automotive Group, LLC t/a Liberty Ford (“Liberty Ford”) to challenge Liberty Ford’s free lifetime limited vehicle warranty. Plaintiffs contended that the free warranty was conditioned on the consumer’s continued use of and payment for other services provided by Liberty Ford, which was averred by Plaintiffs to be a “tying arrangement” in violation of the federal Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. § 2301 et seq.

Liberty Ford commenced an independent action in the same circuit court seeking to compel arbitration in Plaintiffs’ Class Action case. Plaintiffs Brown and Spencer filed a Motion to Consolidate the Class Action and the Arbitration Action. The circuit court denied the Motion to Consolidate. It further ruled in the Arbitration Action that Plaintiffs’ MMWA claims in the Class Action case were not subject to binding arbitration under Koons Ford of Baltimore, Inc. v. Lobach, Inc., 398 Md. 38 (2007) because Congress intended to preclude arbitration of MMWA claims. Liberty Ford appealed the denial of its arbitration petition.

As a matter of first impression, the appellate court considered whether an order denying a petition to compel arbitration filed as a freestanding action is a final judgment subject to an appeal when there is a previously filed pending case between the same parties and involving the same issues and facts.

The Court of Appeals held that the circuit court’s order denying Liberty Ford’s petition to compel arbitration was not a final, appealable judgment under Md. Code Ann., Cts. & Jud. Proc. §12-301. The Court determined that the order denying Liberty Ford’s petition to compel arbitration neither decided and concluded its rights, nor denied Liberty Ford the opportunity to further prosecute or defend its rights in the pending matter. Where an order puts the parties out of court, with no recourse to prosecute or defend their rights with respect to the claim that may be subject to arbitration, an order denying a petition to compel arbitration is a final, appealable order. Where, however, there is a pending case involving a claim that is allegedly subject to arbitration, an order denying a petition to compel arbitration that is filed in a separate, independent action is not a final, appealable order because the party seeking to compel arbitration is not put out of court—indeed, the party is mandated to stay in court to litigate the underlying claim.

The Court reviewed its prior precedent on appealing arbitration orders. First, orders granting requests to compel arbitration are final, appealable orders because they terminate the underlying action and put the parties out of the court issuing the order. Second, an order denying a petition to compel the consolidation of separate arbitration proceedings is a final judgment where there is no other case pending in the circuit court other than the petition to compel consolidation. Third, orders denying motions to compel arbitration filed in an existing action are not final judgments. Fourth, the Court had previously in dicta expressed that orders denying petitions to compel arbitration, filed as independent actions, are final orders subject to the final judgment rule, but that was limited to instances where there was not an already pending matter between the same parties regarding the same substantive dispute.

In sum, the Court of Appeals ruled that the circuit court’s order denying Liberty Ford’s petition to compel arbitration was not a final, appealable judgment under Cts. & Jud. Proc. § 12-301. As such, the Court of Special Appeals had no jurisdiction to hear the appeal of that order.