Piterman v. Gold Coast Exotic Imports LLC

Background

Dmitry Piterman sued Gold Coast Exotic Imports LLC, Joseph Perillo, Rolls-Royce Motor Cars NA, LLC, Rolls-Royce Financial Services, LLC, BMW Financial Services NA, LLC, and other defendants. He alleged fraud, unfair business practices, breach of contract, breach of the implied duty of good faith and fair dealing, and rescission arising from his purchase and lease of a 2018 Rolls-Royce Dawn for $390,995.

Piterman alleged that the defendants did not disclose before he signed the lease that the vehicle had been in an accident, had been repainted, had begun its warranty eight months earlier, and was a demonstration or executive vehicle rather than a new vehicle. After a later inspection, he demanded cancellation of the sales contract and lease and repayment of amounts he had paid.

The lease contained an arbitration clause covering disputes arising from or relating to the credit application, lease, purchase, condition of the vehicle, or resulting transactions and relationships. The clause also referred to relationships with third parties who did not sign the lease. Piterman later attempted to begin arbitration with the American Arbitration Association, which declined to administer the claim after stating that the business had not complied with its consumer-claim policies.

Gold Coast Defendants’ Motion to Dismiss

Gold Coast and Perillo moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), which allows dismissal for lack of personal jurisdiction. They alternatively asked the court to compel arbitration. The court considered personal jurisdiction first because it must have personal jurisdiction over a party before compelling that party to arbitrate.

Gold Coast was an Illinois-licensed motor-vehicle dealer located in Illinois. The opinion states that it had no California license, physical location, operations, or employees and did not advertise in California. Piterman argued that Gold Coast’s website and its communications about the vehicle created specific jurisdiction in California.

The court rejected that argument. It found that Piterman viewed the vehicle listing while he was in Europe, and that the later communications occurred by telephone, email, or Federal Express rather than through the website. The court concluded that the website, the single vehicle transaction, the related communications, and one later email about another vehicle did not show that Gold Coast purposefully directed its activities toward California or purposefully conducted business there.

The court separately considered Perillo, whom the opinion identifies as Gold Coast’s manager and dealer operator. It found that Piterman had not provided allegations specific to Perillo sufficient to establish personal jurisdiction over him. The court therefore found that Piterman failed to establish personal jurisdiction over either Gold Coast or Perillo and granted the Gold Coast Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction. Because it granted that motion on jurisdictional grounds, the court did not reach their alternative request to compel arbitration.

Rolls-Royce Defendants’ Motion to Compel Arbitration

The Rolls-Royce Defendants argued that they could enforce the lease’s arbitration clause even though they were not all signatories. The court explained that an intended third-party beneficiary—an entity the contract was intended to benefit—may enforce an arbitration agreement as a non-signatory.

The court found that the clause expressly covered claims concerning the vehicle’s condition and relationships with non-signing third parties. It also found that the lease identified affiliates of the dealership and its assignee, and that the Rolls-Royce Defendants were affiliates of the identified financial-services trust. The lease also contemplated that Rolls-Royce would provide the vehicle’s warranty. The court concluded that the Rolls-Royce Defendants were intended third-party beneficiaries and could enforce the arbitration clause.

Piterman argued that the Rolls-Royce Defendants had waived arbitration by failing to pay arbitration fees when he first attempted to arbitrate. The court found that the American Arbitration Association letter did not identify which entity failed to comply with its policies, did not mention the Rolls-Royce Defendants, and did not establish that any alleged waiver by Gold Coast or Perillo applied to them. Piterman also did not address the required showing of prejudice. The court therefore found that he had not shown waiver and granted the Rolls-Royce Defendants’ Motion to Compel Arbitration.

Disposition

The court granted the Gold Coast Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction, granted the Rolls-Royce Defendants’ Motion to Compel Arbitration, and stayed the action pending arbitration. The parties were ordered to file a joint status report within fourteen days after the arbitration proceedings ended. The court did not decide whether Piterman’s fraud, contract, unfair-business-practices, or rescission claims were substantively valid.