AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• In the summer of 2013, the Plaintiffs were in search of a used vehicle for their son and visited DriveTime’s Albuquerque location, where they were assisted by Jeremy Mendoza. Mendoza allegedly informed the Plaintiffs that the 2005 Dodge Durango they were considering had never been in an accident, supporting this claim with an AutoCheck report. On July 1, 2013, the Plaintiffs entered into a contract with the Defendants for the purchase of the vehicle, which included an arbitration agreement as part of the contract terms (paras 2-3).

Procedural History

• District Court of Bernalillo County, May 8, 2014: The district court found the arbitration agreement substantively unconscionable and unenforceable under New Mexico law, denying Defendants' motion to compel arbitration (para 5).

Parties' Submissions

• Plaintiffs: Argued that the Defendants knowingly misrepresented the vehicle history and omitted information related to a previous accident and repairs. They also contended that the arbitration agreement was unenforceable as a matter of New Mexico law (para 4).
• Defendants: Argued that the arbitration agreement is not substantively unconscionable under New Mexico law and that the district court’s order is preempted by the Federal Arbitration Act (FAA) (para 1).

Legal Issues

• Whether the arbitration agreement is substantively unconscionable under New Mexico law.
• Whether the district court’s order is preempted by the Federal Arbitration Act (FAA).

Disposition

• The Court of Appeals affirmed the district court's decision, holding that the arbitration agreement is substantively unconscionable under New Mexico law and not preempted by the FAA (para 1).

Reasons

• Per WECHSLER, J. (SUTIN, J., and VANZI, J., concurring): The Court found that the arbitration agreement contained one-sided carve-out provisions for self-help and small claims remedies, which have been previously declared to be substantively unconscionable by this Court. The practical effect of these provisions was to mandate arbitration of Plaintiffs’ most likely claims while exempting Defendants’ most likely judicial and non-judicial remedies from arbitration. The Court also determined that the presence of an additional opportunity for each party to seek injunctive relief with respect to self-help remedies did not significantly benefit consumers, as it provided only limited protection in the context of used automobile sales and finance contracts. Consequently, the Court concluded that the arbitration agreement was impermissibly one-sided and substantively unconscionable as a matter of New Mexico law. The Court further held that the district court’s order was not preempted by the FAA, as the exemptions of certain claims from arbitration were so central to the agreement that they were incapable of separation from the agreement to arbitrate. Therefore, the only appropriate action was to strike the arbitration clause from the contract in its entirety (paras 7-25).