Case Law Update: Fulmer v. EZ Auto — Federal Court Sends Vehicle Service Contract and GAP Claims to Arbitration

On November 4, 2026, U.S. District Judge James D. Maxwell II of the U.S. District Court for the Northern District of Mississippi, Oxford Division, granted Credit Acceptance Corporation’s motion to compel arbitration in Fulmer v. EZ Auto, Inc., Cause No. 3:26-cv-00121-JDM-RP (Doc. 93). Pro se plaintiff Carl Joseph Fulmer sued the Memphis dealer EZ Auto, Inc., its assignee Credit Acceptance, and the service-contract administrator First Automotive Service Corporation d/b/a iA American Warranty Group after alleging that a $2,674 vehicle service contract and $862 GAP coverage were misrepresented as lender-required. As of November 4, 2026, Fulmer must arbitrate all claims against EZ Auto and Credit Acceptance, those claims are stayed in court, and the claims against the warranty administrator continue separately.

What Fulmer Alleged

According to the complaint as summarized by the court, Fulmer bought a 2015 Subaru Forester from EZ Auto on March 21, 2026, putting $2,500 down on a displayed price of $7,995. At signing, the Retail Installment Contract listed a cash price of $8,490; EZ Auto allegedly said the $495 difference was the finance charge. Fulmer alleged that the salesman “stacked the documents on top of each other and directed him to sign without providing time to read the contents.”

The contract also included what Fulmer alleged were “optional” products: a Vehicle Service Contract for $2,674 and Guaranteed Asset Protection (GAP) coverage for $862. He alleged the salesman falsely represented that the lender required both, and that he would not have bought either had he known they were optional. In total, he claimed add-ons raised the financed amount from $5,495 to $11,535.21. Twenty-seven days after the purchase, the Forester allegedly suffered severe mechanical failure, with “oily globs” in the coolant system and a suspected blown head gasket. These are allegations, not findings.

Fulmer asserted fraudulent misrepresentation, breach of the implied warranty of merchantability, unjust enrichment, and Truth in Lending Act, Tennessee Consumer Protection Act, and Magnuson-Moss Warranty Act claims against EZ Auto, plus Truth in Lending Act and FTC Holder Rule claims against Credit Acceptance.

Why the Court Sent the Case to Arbitration

Applying Tennessee contract law under the contract’s governing-law clause, the court held that Fulmer assented to the Retail Installment Contract, including its two-page dispute resolution section, because the contract bore his electronic signature and every additional-terms page bore his electronic initials. He had also physically signed a declaration acknowledging that he “was in physical control of the keyboard, mouse or other device to click a button, signature box, or initial box that applied my e-signature to the documents.” The arbitration clause defined “We” and “Us” to include “any assignee of the Contract . . . (including Credit Acceptance Corporation),” so Credit Acceptance could invoke it.

Fulmer argued he was fraudulently induced to sign because terms were concealed. Citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), and Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the court ruled that a fraud claim aimed at the contract as a whole, rather than at the arbitration clause itself, is for the arbitrator: “Because his claim is for fraudulent inducement of the contract generally, the arbitrator must decide the contract’s validity.” The court distinguished Credit Acceptance Corp. v. Ledbetter, No. 1:16-cv-70-DAS (N.D. Miss. 2016), where the signature itself was allegedly forged.

Two further points matter for service-contract holders. First, Fulmer argued that a Mississippi-specific warranty addendum deleted the arbitration provision. The court found the addendum was part of the Vehicle Service Contract, not the Retail Installment Contract, so it had “no effect on whether Fulmer must arbitrate his claims under the Retail Installment Contract.” Second, because the contract incorporated the American Arbitration Association rules, the court held the parties “clearly and unmistakably” delegated arbitrability to the arbitrator, quoting Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199 (5th Cir. 2016): “If there is a delegation clause, the motion to compel arbitration should be granted in almost all cases.”

The court granted Credit Acceptance’s motion (Doc. 28), dismissed EZ Auto’s motion to dismiss (Doc. 23) without prejudice after EZ Auto waived personal jurisdiction for the limited purpose of compelling arbitration, stayed the case against those two defendants, and ordered status reports every 60 days. The order does not stay the case against First Automotive Service Corporation, which did not join the motion.

What This Means If You Have a Vehicle Service Contract Claim

This is a Mississippi federal ruling applying Tennessee contract law and Fifth Circuit precedent; it does not bind Florida courts. But the Supreme Court decisions it rests on apply nationwide, and the fact pattern is common.

• Know which contract holds the arbitration clause. A financed vehicle service contract often sits inside two documents: the dealer’s retail installment contract and the service contract itself. Each can carry its own dispute terms. A state addendum that removes arbitration from the service contract may not reach claims against the dealer or lender.
• Electronic initials count. A separate signed e-signature acknowledgment made the “pre-loaded” initials argument fail here. Keep copies of every page you signed, including any e-sign consent.
• A claim that terms were hidden usually goes to the arbitrator. Unless a challenge targets the arbitration clause specifically, courts generally let the arbitrator decide whether the whole contract is void.
• Administrator claims may stay in court. The warranty administrator did not move to compel arbitration, so Fulmer’s claims against it were not stayed. Read the service contract’s own dispute clause before assuming your repair-denial claim must be arbitrated.
• Florida note. Motor vehicle service agreement companies in Florida are regulated under Chapter 634, Part I, Florida Statutes. Whether a particular arbitration clause is enforceable depends on the contract language and governing law, so review your documents before acting.

See what a vehicle service contract is, our Case Law & Industry Insights page, or request a free case evaluation. This article is general information as of November 10, 2026, not legal advice.