Betancourt et al v. Green Tree Servicing, LLC

Filing 12

ORDER: Defendant's Motion to Stay Proceedings, All Discovery and Compel Arbitration (Dkt. #3) is GRANTED to the extent that Gary T. Shute is compelled to submit Counts I, III, and V to arbitration. Counts I, III and V are hereby STAYED as to Gary T. Shute only. The parties are instructed to file a notice with this Court within fourteen (14) days of a final decision by the arbitration panel. Defendant is directed to file an Answer within fourteen (14) days of the date of this Order as to Plaintiff Daniel Betancourt. This action has been designated as a Track Two case (Dkt. #11). The parties shall file a Case Management Report at the appropriate time. Signed by Judge James S. Moody, Jr on 12/17/2013. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

DANIEL BETANCOURT and
GARY T. SHUTE,
Plaintiffs,
v.

Case No: 8:13-cv-2759-T-30AEP

GREEN TREE SERVICING, LLC,
Defendant.

ORDER
THIS CAUSE comes before the Court upon the Defendant's Motion to Stay
Proceedings, All Discovery and Compel Arbitration (Dkt. #3) and Plaintiffs' Response in
Opposition to the Motion (Dkt. #10). It is the Court’s conclusion that the Motion should be
granted to the extent that Gary T. Shute must submit his claims to arbitration.
Background
Plaintiffs Daniel Betancourt and Gary T. Shute filed a complaint against Green Tree
Servicing, LLC (“Green Tree”) alleging causes of action for invasion of privacy and
violations of the Florida Consumer Collection Practices Act (“FCCPA”), Fla. Stat. §
559.55, et. seq. and the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227,
et. seq. The complaint refers to an “alleged debt” owed by Shute upon which Green Tree
repeatedly called both Shute and Betancourt on their cellular phones using automated
dialing systems and pre-recorded messages. It also alleges that Green Tree released

Shute’s debt information to Betancourt and others without his permission. Green Tree
moves to compel both Shute and Betancourt to mandatory arbitration under the terms of
the promissory note (the “Note”) upon which Shute allegedly defaulted. Shute executed
the Note in favor of Green Tree Financial Servicing Corporation (a separate entity from
the Defendant) on May 17, 1999. Green Tree is the loan servicer for the Note.
Discussion
I.

Legal Standard

It is well established that federal law strongly favors the arbitration of disputes and
requires that federal courts rigorously enforce arbitration agreements. See Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985); United States Fid. & Guar. Co. v. West
Point Constr. Co., Inc., 837 F.2d 1507, 1508 (11th Cir. 1988) (noting “the strong policy
favoring arbitration expressed by Congress in the Federal Arbitration Act”). “[A]rbitration
is a matter of contract [and] the [Federal Arbitration Act’s] strong proarbitration policy
only applies to disputes that the parties have agreed to arbitrate.” Lawson v. Life of the S.
Ins. Co., 648 F.3d 1166, 1170 (11th Cir. 2011) (internal citations omitted). One exception
to that rule is that a non-party, otherwise referred to as a non-signatory, may force
arbitration “if the relevant state contract law allows him to enforce the agreement” to
arbitrate. Id. (citing Arthur Andersen, LLP v. Carlisle, 556 U.S. 624, 632 (2009)).
“[T]raditional principles of state law may allow a contract to be enforced by or against
nonparties to the contract through assumption, piercing the corporate veil, alter ego,
incorporation by reference, third-party beneficiary theories, waiver and estoppel.” Id.

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An obligation to arbitrate is based on consent, and for this reason a non-signatory to
a contract containing an arbitration agreement ordinarily cannot compel a signatory to
submit to arbitration. Marcus v. Florida Bagels, LLC, 112 So. 3d 631, 633 (Fla. 4th DCA
2013). However, Florida law recognizes several exceptions to that general rule. Courts
broadly construe arbitration provisions containing the language, “arising out of or relating
to,” which allow, in certain instances, the clause to include non-signatories. Cuningham
Hamilton Quiter, P.A. v. B.L. of Miami, Inc., 776 So. 2d 940 (Fla. 3d DCA 2000). Further,
non-signatories can also compel signatories to arbitration based on the equitable estoppel
doctrine. Id. at 942; Marcus, 112 So. 3d at 633. There are three elements for courts to
consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid
written agreement to arbitrate exists, (2) whether an arbitrable issue exists, and (3) whether
the right to arbitration has been waived. Cuningham Hamilton Quiter, P.A., 776 So. 2d at
942.
II.

Green Tree’s Motion for Arbitration

Green Tree argues that the Note provides a valid agreement to arbitrate. Plaintiffs
do not contest the validity of the arbitration provision. They also do not argue that Green
Tree wavied its right to arbitration. Their dispute is that no arbitrable issue exists since their
claims are completely unrelated to the Note or the terms of the Note. Green Tree further
argues that although it is a non-signatory to the Note, it is entitled to enforce the arbitration
agreement. Its argument relies heavily on Blinco v. Green Tree Servicing, LLC, 400 F. 3d

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1308 (11th Cir. 2005) and other Eleventh Circuit cases 1 that involved the question of
whether a non-party can enforce an arbitration clause against a party. In Lawson, the
Eleventh Circuit determined that those cases did not make it clear that the applicable state
law provides the rule of decision for that question. 648 F.3d at 1171. Therefore, to the
extent that those decisions indicate to the contrary, the Supreme Court decision in Carlisle
overruled or at least undermined those decisions to the point of abrogation. Id. (citing
Carlisle, 556 U.S. at 624). Plaintiffs argue that Green Tree cannot enforce the arbitration
agreement as a non-signatory under these facts. The only issues to decide are whether
Green Tree as a non-signatory may enforce the arbitration provision and whether an
arbitrable issue exists.
III.

Non-Signatory May Compel Arbitration

Green Tree, as a non-signatory, may enforce the arbitration provision against a
signatory. Florida courts broadly construe arbitration provisions containing the language,
“arising out of or relating to,” such that the clause may include non-signatories, in certain
situations. Cuningham Hamilton Quiter, P.A., 776 So. 2d at 942. See also Armas v.
Prudential Sec., Inc., 842 So. 2d 210, 211 (Fla. 3d DCA 2003) (reversing trial court’s
holding and finding that the language in the arbitration clause which contained the terms
“arising out of or related to” was broad enough to include non-signatory to the arbitration
agreement.) “[I]n order for the dispute to be characterized as arising out of or related to

1

Lawson also abrogated other cases relied on by Defendant including MS Dealer Svcs.
Corp. v. Franklin, 177 F. 3d 942 (11th Cir. 1999) and Sunkist Soft Drinks, Inc. v. Sunkist Growers,
Inc., 10 F. 3d 753 (11th Cir. 1993).

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the subject matter of the contract ... it must, at the very least, raise some issue the resolution
of which requires a reference to or construction of some portion of the contract itself.” Id.
The arbitration provision in the Note states as follows:
All disputes, claims or controversies arising from or relating to this Contract
or the relationships which result from this contract, or the validity of this
arbitration clause or the entire contract, shall be resolved by binding
arbitration by one arbitrator selected by you with consent of us. This
agreement is made pursuant to a transaction in interstate commerce, and shall
be governed by the Federal Arbitration Act at 9 U.S.C. Section 1. Judgment
upon the award rendered may be entered in any court having jurisdiction.
The parties agree and understand that they choose arbitration instead of
litigation to resolve disputes. The parties understand that they have a right or
opportunity to litigate disputes through a court, but that they prefer to resolve
their disputes through arbitration, except as provided herein. THE PARTIES
VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY
HAVE TO A JURY TRIAL EITHER PURSUANT TO ARBITRATION
UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY
YOU (AS PROVIDED HEREIN). The parties agree and understand that all
disputes arising under case law, statutory law and all other laws, including
but not limited to, all contract, tort and property disputes, will be subject to
binding arbitration in accord with this contract. The parties agree that the
arbitrator shall have all powers provided by the law, the Contract and the
agreement of the parties. These powers shall include all legal and equitable
remedies, including, but not limited to, money damages, declaratory relief,
and injunctive relief.
The arbitration provision is sufficiently broad to include Green Tree. Green Tree, as
the servicer for the mortgage company, is engaged in several aspects of enforcing the note,
and is in a relationship with Shute solely because of the Note. Therefore, the Court
concludes that Shute’s claims either arise from or relate to the Note or the relationships
which result from the Note. Therefore, the Court concludes that Green Tree as a nonsignatory may compel arbitration against Shute, a signatory, under the Note. Due to the

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foregoing conclusion, the Court does not reach the issue of whether Green Tree may
compel arbitration under the theory of equitable estoppel.
However, the exceptions to the general rule do not allow for Green Tree to compel
Betancourt to arbitration. Green Tree has not pointed to any legal or factual basis why this
exception, or the theory of equitable estoppel, should extend to a situation where a nonsignatory moves to compel another non-signatory to arbitration. Therefore, Green Tree
may not compel Betancourt to arbitration.
IV.

Significant Relationship or Nexus to the Note

Although the Note contains a broad arbitration provision that allows a non-signatory
to enforce it, “even in contracts containing broad arbitration provisions, the determination
of whether a particular claim must be submitted to arbitration necessarily depends on the
existence of some nexus between the dispute and the contract containing the arbitration
clause.” Careplus Health Plans, Inc. v. Interamerican Med. Ctr. Group, LLC, 38 Fla. L.
Weekly D2219 (Fla. 3d DCA 2013) (citing Seifert v. U.S. Home Corp., 750 So. 2d 633,
638 (Fla. 1999)). In order for an arbitrable issue to exist, there must be a significant
relationship between the dispute and the contract containing the arbitration clause. Id.
The Florida Supreme Court explained that a “significant relationship” or “nexus”
exists when “the claim presents circumstances in which the resolution of the disputed issue
requires either reference to, or construction of, a portion of the contract. More specifically,
a claim has a nexus to a contract and arises from the terms of the contract if it emanates
from an inimitable duty created by the parties' unique contractual relationship.” Jackson v.
Shakespeare Found., Inc., 108 So. 3d 587, 593 (Fla. 2013) (internal citations omitted).

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This case involves similar claims to those in Ownings v. T-Mobile USA, Inc., 3:12CV-1385-J-12, 2013 WL 4401824 (M.D. Fla. 2013), where the court held that Plaintiff’s
TCPA and FCCPA claims were significantly related to a cellular contract service
agreement. In that case, the Plaintiff brought claims against his former cellular service
provider for “willfully and knowingly placing non-emergency calls to Plaintiff's cellular
telephone, using an artificial dialing system and/or an artificial or pre-recorded voice,
without Plaintiff's prior express consent.” The complaint further alleged that “telephone
communications … occurred with such frequency as could reasonably have been expected
to abuse or harass the Plaintiff.”
When the Plaintiff terminated his cellular service contract early he owed a past due
balance and was charged an early termination fee and late charges. The service agreement
had an arbitration clause. The Court held that since the alleged TCPA and FCCPA
violations were tied directly to the late fees and early termination charges set forth in the
service agreement, the requisite significant relationship and nexus between Plaintiff's claim
and the agreement to arbitrate existed. The Ownings court cited to Jackson in support of
its holding.
The Court finds the holding in Ownings persuasive. The Plaintiffs’ allegations are
tied directly to Shute’s alleged failure to pay on the Note and Green Tree’s authority to
collect on the Note. 2 The FCCPA provides prohibitions against debt collectors when

2

This case is distinguishable from this Court’s holding in Harrier v. Verizon Wireless
Pers. Communications LP, 903 F. Supp. 2d 1281 (M.D. Fla. 2012) where the Court denied
Defendant’s motion to compel arbitration. In Harrier, the plaintiff obtained a discharge in
bankruptcy for all consumer debts. Two years after the discharge, the Defendant started making

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engaged in “collecting consumer debts.” Fla. Stat. §559.72. Therefore, Shute’s FCCPA
claim must be tied to a consumer debt; namely the Note. Further, Shute’s claims for
invasion of privacy and violation of the TCPA also have a nexus to the Note, since all of
the claims are tied to Green Tree’s actions in attempting to collect on the Note. See also
Rhodall v. Verizon Wireless of E., L.P., CA 1:10-3195-MBS, 2011 WL 4036418 (D.S.C.
2011) reconsideration denied, CA 1:10-3195-MBS, 2012 WL 1825259 (D.S.C. 2012)
(finding disputes over collection of past due charges fall within the ambit of a similarly
broad arbitration provision); Shea v. BBVA Compass Bancshares, Inc., 1:12-CV-23324KMM, 2013 WL 869526 (S.D.Fla. 2013) (holding that Plaintiff’s TCPA claim against bank
based on unsolicited text message “clearly arises from the Parties’ contractual relationship
as embodied by the Agreements and relate to the Plaintiff’s accounts with Defendant.”)
Therefore, the Court concludes that the Shute’s claims have a significant relationship or
nexus to the Note and should be submitted to arbitration.
Conclusion
The Court concludes that Green Tree, as a non-signatory to the Note that contains
an arbitration provision, may compel the Plaintiff Gary T. Shute to arbitration. Further,
Shute’s claims in the complaint are significantly related and have a nexus to the Note, and

collection calls on the discharged debt, and Plaintiff filed suit for violation of the FCCPA and
TCPA. The Court stated that “Harrier is not attempting to take advantage of any agreement with
Verizon. Indeed, the existence of an agreement with Verizon is not an element to any of Harrier's
claims asserted in the instant action. The claims here are statutory and relate to Verizon's allegedly
harassing conduct.” Id. at 1282. This Court ultimately held that compelling arbitration was
inappropriate under the facts of the case, because “the plaintiffs' bankruptcy discharge rendered
the parties' arbitration agreement unenforceable” and the debtor had not reaffirmed the debt. Id. at
1283.

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therefore Shute must submit all of his claims to arbitration. Green Tree is unable to compel
Betancourt to arbitration since it has no basis, as a non-signatory to the Note, to bind
another non-signatory to arbitration.
It is therefore ORDERED AND ADJUDGED that:
1.

Defendant's Motion to Stay Proceedings, All Discovery and Compel
Arbitration (Dkt. #3) is GRANTED to the extent that Gary T. Shute is
compelled to submit Counts I, III, and V to arbitration.

2.

Counts I, III and V are hereby STAYED as to Gary T. Shute only.

3.

The parties are instructed to file a notice with this Court within fourteen (14)
days of a final decision by the arbitration panel.

4.

Defendant is directed to file an Answer within fourteen (14) days of the date
of this Order as to Plaintiff Daniel Betancourt.

5.

This action has been designated as a Track Two case (Dkt. #11). The parties
shall file a Case Management Report at the appropriate time.

DONE and ORDERED in Tampa, Florida, this 17th day of December, 2013.

Copies furnished to:
Counsel/Parties of Record
S:\Odd\2013\13-cv-2759 arbitration 3.docx

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