Wednesday, December 18, 2013

Thompson v. Lithia Chrysler Jeep Dodge of Great Falls, Inc. case brief

Thompson v. Lithia Chrysler Jeep Dodge of Great Falls, Inc. case brief summary
185 P.3d 332 (2008)

Plaintiff truck buyers brought an action against defendants seller, financing company, and finance manager in the District Court of the Eighth Judicial District, In and For the County of Cascade (Montana), alleging fraud, conversion, negligence, and other claims. The district court granted defendants' motion to stay the proceedings and compel arbitration based on the Federal Arbitration Act and Mont. Code Ann. § 27-5-115. The buyers appealed.

The buyers signed a Retail Installment Contract with the seller for the purchase of a truck at an annual percentage rate of 3.9 percent. The contract contained an arbitration provision. Within a week of the buyers taking the truck home, the finance manager told them that they would need to sign new finance papers with a higher rate of 4.9 percent. They refused and attempted to return the truck. The buyers argued that they were not required to arbitrate because the contract containing the arbitration clause had never been formed. Although the law provided that questions of the validity of a contract were for the arbitrator, they sought to distinguish their situation of non-formation of a contract because the 3.9 percentage rate was never accepted.


  • The court agreed, finding that the existence of the contract containing an arbitration clause, rather than the validity of such a contract, was for the trial court, not an arbitrator, because if the contract did not exist, there was no agreement to arbitrate. 
  • The court found that the contract was not binding on the buyers without approval of the 3.9 percent financing. 
  • Therefore, this was a condition precedent to the contract's formation.

The court reversed the order of the district court requiring arbitration and staying the proceedings and remanded the case for discovery and a determination of whether the contract containing the arbitration clause had ever been formed.

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