Whitmore v. Universal American Mortgage Company LLC

Filing 26

ORDER - 1. Defendant's motion to set aside default (Doc. 17 ) is granted. 2. Defendant's motion to compel arbitration (Doc. 18 ) is granted. The parties shall proceed to arbitration in accordance with the terms of the ARG. 3. Plaintiff's request for damages (Doc. 22 , 10-11) is denied. 4. The Clerk shall terminate this action. (See document for further details). Signed by Judge David G Campbell on 10/27/14. (LAD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Michelle Whitmore,

No. CV-14-01299-PHX-DGC
Plaintiff,

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v.

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ORDER

Universal American Mortgage Company
LLC,

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Defendant.

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Defendant Universal American Mortgage Company LLC has filed motions to set

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aside entry of default and compel arbitration. Doc. 17; Doc. 18. Pro se Plaintiff Michelle

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Whitmore opposes both motions. Doc. 22. The Court will grant both motions.

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I.

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Background.
Defendant employed Plaintiff between October 15, 2012 and August 12, 2013.

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Doc. 1, ¶ 5.

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prospective employees to agree to the terms of Defendant’s employee handbook, styled

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the Associate Reference Guide (“ARG”). Doc. 18-1 at 2. One such term is a mandatory

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employment dispute resolution procedure.1

As a condition of employment, Defendant requires all current and

Doc. 18-1 at 5.

On October 12, 2012,

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“This dispute resolution procedure is a condition of employment with
[Defendant]. . . . If a dispute arises relating to your employment by [Defendant] . . . that
cannot be resolved informally after consultation with Human Resources, we require any
such dispute to be resolved and/or determined through the dispute resolution procedures
set forth in this policy.” Doc. 18-1, at 5. “If the dispute is not resolved through
mediation, Associate and [Defendant] agree to resolve the dispute exclusively by
confidential binding arbitration under the Federal Arbitration Act (‘FAA’) and this
policy.” Id. at 6.

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Plaintiff acknowledged in writing she had been given an opportunity to read the ARG and

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agreed to the policies, guidelines, and statements it contained. Id. at 10. On October 15,

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2012, Plaintiff agreed once more to the arbitration agreement after she completed an

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online training program regarding the ARG and its policies. Id. at 17. Plaintiff does not

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dispute these agreements. See Doc. 22.

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Plaintiff’s employment with Defendant ended on August 12, 2013. Doc. 1, ¶ 5.

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On February 6, 2014, Plaintiff and Defendant participated in a mediation facilitated by

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the Equal Employment Opportunity Commission (“EEOC”), but did not reach a

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settlement. Doc. 18-1 at 2. Plaintiff alleges that Defendant did not attend mediation to

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reach an agreement, but rather to engage in further retaliatory conduct against Plaintiff

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and to scare her into “signing under duress a release of claims with the EEOC.” Doc. 22,

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¶ 7. Following mediation, Plaintiff did not seek to pursue arbitration as provided in the

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ARG. Doc. 18-2, at 2. Instead, Plaintiff brought this action on June 11, 2014, after

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receiving a “right to sue” letter from the EEOC on April 30, 2014. Doc. 1, ¶ 11. On

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July 10, 2014, Defendant was served with a summons and complaint regarding Plaintiff’s

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lawsuit. Doc. 14 at 2. On August 21, 2014, Plaintiff asked the Clerk to enter default

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against Defendant pursuant to Rule 55(a) for failing to answer or otherwise defend. Id.,

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¶ 4. The Clerk entered default on August 25, 2014. Doc. 15. No motion for default

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judgment has been filed.

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Defendant filed its motion to set aside default on September 10, 2014. Doc. 17.

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According to the motion, Defendant learned on June 11, 2014, that Plaintiff might have

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filed a lawsuit against it.

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Counsel and asked that he investigate the matter. Id. Counsel checked the Court’s

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database and discovered that Plaintiff had indeed filed a lawsuit. Id. Defendant and

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Counsel then made the strategic decision to respond to Plaintiff’s complaint, once served,

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with a motion to compel arbitration. Id. Over the next few weeks, Counsel drafted the

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motion to compel. Id. Counsel asked Defendant about the status of the service at least

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once between June 12 and July 9, 2014. Id.

Id. at 3.

Defendant immediately contacted Defendant’s

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On July 9, 2014, Counsel’s father passed away unexpectedly, leaving Counsel to

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handle family matters. Id. On July 10, 2014, Defendant was served with Plaintiff’s

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complaint. Id. On July 14, 2014, Defendant sent an e-mail to Counsel notifying him of

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the service, anticipating that Counsel would then file the motion to compel. Id. at 4. But

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Defendant’s e-mail was addressed to a personal e-mail of Counsel that is no longer used.

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Id. Defendant believed the response and motion would be filed, while Counsel remained

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unaware that Defendant had been served. Id. The miscommunication was discovered on

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September 9, 2014, during a face to face meeting between Defendant and Counsel. Id.

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Counsel checked the Court’s docket, discovered the entry of default, and proceeded to

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draft the motion to set aside the default. Id. at 5. On September 10, 2014, Counsel filed

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the motions to set aside default and compel arbitration. Docs. 17, 18.

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II.

Motion to Set Aside Default.

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Federal Rule of Civil Procedure 55(c) allows a court to “set aside an entry of

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default for good cause[.]” Fed. R. Civ. P. 55(c). Courts consider three factors in

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deciding whether good cause exists: (1) whether the moving party engaged in culpable

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conduct, (2) whether the moving party has a meritorious defense, and (3) whether setting

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aside the default will prejudice the non-moving party. United States v. Signed Pers.

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Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010). The moving

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party bears the burden of proving that the three factors weigh in favor of setting aside

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default. Franchise Holding II, LLC. v. Huntington Rest. Grp., 375 F.3d 922, 926 (9th

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Cir. 2004). This burden, however, is not extraordinarily heavy, and “judgment for default

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is a drastic step appropriate only in extreme circumstances[.]” Mesle, 615 F.3d at 1091.

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“A defendant’s conduct is culpable if he has received actual or constructive notice

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of the filing of the action and intentionally failed to answer.” Id. at 1092 (emphasis in

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original). Intentional conduct must rise to the level of conduct that is willful, deliberate,

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or done in bad faith. Id. Defendant asserts that a miscommunication between Defendant

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and Counsel, while Counsel was in the midst of a family emergency, was the cause of

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their failure to answer. Doc. 17 at 2. Nothing in Defendant’s conduct suggests a

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“devious, deliberate, willful, or bad faith failure to respond.” Mesle, 615 F.3d at 1092.

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Defendant’s conduct was not culpable for purposes of the good cause factors.

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“All that is necessary to satisfy the ‘meritorious defense’ requirement is to allege

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sufficient facts that, if true, would constitute a defense[.]” Mesle, 615 F.3d at 1094.

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Plaintiff alleges that Defendant engaged in discriminatory and retaliatory conduct based

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on her relationship with her disabled son.

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undisputedly an employment-related dispute within the bounds of the ARG’s mutually

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binding dispute resolution policy, and Defendant’s request to compel arbitration is a

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defense sufficient to satisfy the meritorious defense requirement.

Doc. 1, ¶ 8.

These allegations are

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“To be prejudicial, the setting aside of a judgment must result in greater harm than

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simply delaying resolution of the case.” Mesle, 615 F.3d at 1095 (citation omitted).

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“[T]he standard is whether [Plaintiff’s] ability to pursue [her] claim will be hindered.”

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Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). Plaintiff asserts that Defendant’s

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Counsel lied to the Court regarding the death of his father.2 Doc. 22, ¶ 4. Plaintiff also

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seems to claim that Defendant surreptitiously gathered information and evidence of

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Plaintiff’s claim through a “legal consultant who betrayed the plaintiff,” and intentionally

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stalled proceedings as a tactic because Defendant knew Plaintiff could not afford legal

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counsel. Id., ¶ 6. Even if taken as true, these allegations do not show that setting aside

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default would prejudice Plaintiff in any way other “than simply delaying resolution of the

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case,” and do not warrant the Court’s refusal to allow this case be decided on the merits.

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Mesle, 615 F.3d at 1095.

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This Circuit’s “rules for determining when a default should be set aside are

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solicitous towards movants[.]” Mesle, 615 F.3d at 1089. Whenever possible, a case

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should be decided on the merits and judgment by default is “appropriate only in extreme

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circumstances[.]” Id. The Court will set aside default in this case.

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In Defendant’s initial motion to set aside default was a copy of Mr. Meyer’s
death certificate. Doc. 17-1 at 13. The website to which Plaintiff cites as listing the
“actual date of death” is the online obituary for a man with a different name, in a different
state, who died on a different day. Plaintiff should rely on more accurate evidence when
making assertions to the Court.
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III.

Motion to Compel Arbitration.

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Under the Federal Arbitration Act, “[a] written provision in . . . a contract

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evidencing a transaction involving commerce to settle by arbitration a controversy

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thereafter arising out of such contract or transaction, or the refusal to perform the whole

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or any part thereof, . . . shall be valid, irrevocable, and enforceable[.]” 9 U.S.C. § 2; see,

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e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113-19 (2001) (holding that FAA

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applies to employment contracts except those of transportation workers) (citing 9

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U.S.C. §§ 1-2); Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th

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Cir. 2000); Tracer Research Corp. v. Nat’l Envtl. Servs. Co., 42 F.3d 1292, 1294

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(9th Cir. 1994), cert. dismissed, 515 U.S. 1187 (1995).

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“Notwithstanding the federal policy favoring it, ‘arbitration is a matter of contract

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and a party cannot be required to submit to arbitration any dispute which he has not

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agreed so to submit.’”

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Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960)).

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Where the arbitrability of a dispute is in question, a court must look to the terms of the

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contract. See Chiron Corp., 207 F.3d at 1130. “‘Any doubts concerning the scope of

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arbitrable issues should be resolved in favor of arbitration.’” Simula, 175 F.3d at 719

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(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983)).

Tracer Research Corp, 42 F.3d at 1294 (quoting United

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The dispute resolution procedure in the ARG states that “[i]f the dispute is not

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resolved through mediation, Associate and [Defendant] agree to resolve the dispute

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exclusively by confidential binding arbitration under the Federal Arbitration Act (‘FAA’)

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and this policy.” Doc. 18-1 at 6. Plaintiff does not dispute that she read, understood, and

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agreed to the terms of the arbitration policy. Doc. 18-1 at 10, 17. Plaintiff does not

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contend that the terms were unclear, unexplained, or waived. Nor does she allege that

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she was deceived or pressured into accepting the terms.

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The ARG’s mutually binding arbitration agreement covers all employment related

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disputes. Doc. 18-1 at 5. Because Plaintiff’s claim under the ADA is an employment-

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related dispute, it is covered by the dispute resolution procedure in the ARG.

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Plaintiff has offered no argument that would enable the Court to deny Defendant’s

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motion. Defendant’s motion to compel arbitration will be granted.3

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IV.

Dismissal.

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“If the court finds that an arbitration clause is valid and enforceable, the court

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should stay or dismiss the action to allow the arbitration to proceed.” Kam-Ko Bio-

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Pharm Trading Co. Ltd-Australasia v. Mayne Pharma (USA) Inc., 560 F.3d 935, 940 (9th

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Cir. 2009). In its discretion, the Court will dismiss this action to permit arbitration to

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proceed. Because Plaintiff is proceeding pro se, the Court will require Defendant, within

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seven days of this order, or provide a written explanation to Plaintiff concerning the

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precise procedures she must follow to commence arbitration. Defendant shall provide

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whatever assistance is necessary to assist Plaintiff in commencing arbitration. Once

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arbitration is completed, the parties can seek judicial enforcement, if necessary, under

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applicable law.

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IT IS ORDERED:

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1.

Defendant’s motion to set aside default (Doc. 17) is granted.

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2.

Defendant’s motion to compel arbitration (Doc. 18) is granted. The parties
shall proceed to arbitration in accordance with the terms of the ARG.

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3.

Plaintiff’s request for damages (Doc. 22, ¶¶ 10-11) is denied.

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4.

The Clerk shall terminate this action.

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Dated this 27th day of October, 2014.

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Because the Court has granted Defendant’s motion to compel arbitration,
Plaintiff’s request for damages in her response will not be addressed. Doc. 24, ¶10-11.
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