Affirming a trial court's denial of a motion to compel arbitration of a dispute between a consumer and car dealership, a Kentucky appellate court held that an arbitration agreement hidden in a customer service questionnaire was unenforceable because there was no meeting of the minds.

In Paul Miller Ford, Inc. v. Rutherford, No. 2007-CA-000293-MR, 2007 WL 4553662 (Ky. Ct. App. Dec. 28, 2007), Rutherford bought a car from Paul Miller Ford. She signed several documents in connection with the purchase including what appeared to be a customer service questionnaire regarding the transaction. The questionnaire also contained an arbitration agreement.

After she bought the car, a Paul Miller Ford representative contacted her to report that the financial services company had rejected her application, as it was unable to verify her income. To secure financing, Paul Miller Ford representatives allegedly forwarded her false tax returns grossly inflating her income. When Rutherford refused to execute those returns, Paul Miller Ford representatives repossessed her vehicle from her workplace.

Rutherford sued Paul Miller Ford for fraud and emotional distress. Paul Miller Ford moved to compel arbitration, asserting that Rutherford had entered into an arbitration agreement. The trial court denied the motion.

On appeal, the Court held that the arbitration agreement was unenforceable because there was no meeting of the minds. Kentucky law requires courts to uphold arbitration agreements "save upon such grounds as exist at law or equity for the revocation of any contract." One such equitable ground for revoking a contract is unconscionability.

Here, the Court found that the inclusion of the arbitration agreement violated equitable principles because the arbitration agreement was not set out in the sales contract or addendum, but instead the agreement was located in a questionnaire aimed at assessing customer satisfaction. Additionally, the arbitration clause altered the parties' agreement without placing Rutherford on notice that she was waiving her right to a trial by jury. Finally, when a Paul Miller Ford representative signed the arbitration agreement, he did so as a "witness" rather than as a principal authorized to bind the dealership.