Snyder v. CACH, LLC
Filing
49
ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS CLAIMS, DISMISSING DEFENDANTS' COUNTERCLAIM, AND DENYING PLAINTIFF'S MOTION TO DISMISS FOR LACK OF JURISDICTION DEFENDANTS' COUNTERCLAIM AS MOOT re 19 ; 21 - Signed by JUDGE ALAN C. KAY on 11/10/2016. "For the foregoing reasons, the Court GRANTS Defendants' Motion to Compel Arbitration and Dismiss Claims, ECF No. 19, and DENIES Plaintiff's Motion to Dismiss D efendant's Counterclaim, ECF No. 21, as moot. The Court dismisses the Complaint as well as the Counterclaim, as both must be submitted to arbitration. The Clerk of Court is directed to close the case." (emt, ) CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
MARIA SNYDER,
Plaintiff,
vs.
CACH, LLC, AND MANDARICH LAW
GROUP, LLP,
Defendants.
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)
)
)
)
) Civ. No. 16-00097 ACK-KJM
)
)
)
)
)
)
ORDER GRANTING DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND
DISMISS CLAIMS, DISMISSING DEFENDANTS’ COUNTERCLAIM, AND
DENYING PLAINTIFF’S MOTION TO DISMISS FOR LACK OF JURISDICTION
DEFENDANTS’ COUNTERCLAIM AS MOOT
For the reasons set forth below, the Court GRANTS
Defendants’ 1 Motion to Compel Arbitration and Dismiss Claims, ECF
No. 19, and DENIES Plaintiff’s Motion to Dismiss for Lack of
Jurisdiction Defendants’ Counterclaim, ECF No. 21, as moot.
The
Court dismisses the Complaint as well as the Counterclaim, as
both must be submitted to arbitration.
FACTUAL BACKGROUND
This action relates to Defendants and Counterclaimants
CACH LLC’s (“CACH”) and Mandarich Law Group, LLP’s (“Mandarich”)
(collectively, “Defendants”) efforts to collect a credit card
1
Although the Motion to Compel Arbitration and Dismiss
Claims was titled and filed as CACH’s Motion, Defendants’
attorney clarified at the motions’ hearing that the Motion to
Compel Arbitration and Dismiss Claims was brought on behalf of
both Defendants.
debt from Plaintiff and Counter-defendant Maria Snyder (“Snyder”
or “Plaintiff”).
I.
Plaintiff’s Allegations
Plaintiff alleges that she obtained a copy of her
credit report dated June 23, 2015, which showed that Bank of
America N.A. (“BANA”) had been communicating information to the
credit reporting agency related to her debt owed.
15, ECF No. 1.
Compl. ¶¶ 14-
BANA reported that Plaintiff’s account had been
“charged-off with a ‘Date of First Delinquency’” of April 2009.
Id. ¶ 15.
BANA reported that the balance of Plaintiff’s account
at the time of charge-off was $6,835.
Id. ¶ 16.
On May 2, 2015, Mandarich sent Plaintiff a letter
informing her that her BANA account had been sold and assigned
to Mandarich’s client, CACH.
Id. ¶ 19.
The letter stated that
Plaintiff had a current balance of $8,765.10 on a BANA account
number ending in 5522.
Id. ¶ 17.
On or around June 16, 2015, Mandarich sent Plaintiff
another letter attempting to collect the debt.
Id. ¶ 22.
The
account summary page attached to the letter provided that the
BANA account ending in 5522 was placed for collection with CACH
on November 19, 2009 with an account balance of $6,835.10.
¶ 25.
Id.
Plaintiff alleges that Defendants did not have records of
the underlying account, but that they “blindly assert[ed]” that
the debt was owed by Plaintiff and that Defendants “illegally
2
add[ed] interest to the account.”
Id. ¶¶ 26-27.
Plaintiff
further alleges that the time period to collect the debt had
expired at the time the collection letter was sent.
Id. ¶ 33-
34.
On or around February 24, 2016, Plaintiff called
Mandarich to discuss her account.
Id. ¶ 35.
At this time,
Mandarich informed her that she owed CACH $8,765.10 on her BANA
account number ending in 5522.
Id. ¶ 37.
Plaintiff claims that BANA charged off the alleged
debt in October 2009 in the amount of $6,835 and that this was
the amount of the debt when BANA sold it on November 19, 2009.
Id. ¶ 41.
Charge-off “means that the credit card receivable is
no longer carried on a bank’s books as an asset.”
Id. ¶ 40.
Plaintiff maintains that BANA did not charge interest after the
charge-off and that CACH was accordingly not “entitled to demand
payment of any amount of interest they added to the account
after [BANA] charged off the account.”
Id. ¶¶ 39, 43.
According to Plaintiff, BANA waived the right to add
interest after charge-off and CACH acquired the debt subject to
said waiver.
Id. ¶ 51.
Plaintiff also claims that Defendants
“demand odd amounts from” her, noting that the balance stayed
the same, at $6,835 between October 2009 and November 19, 2009
(with 0% interest); “mysteriously increases” to $8,765.10
between November 19, 2009 and May 2, 2015 (with an interest rate
3
of 4.665%); and then stays the same at $8,765.10 through
February 24, 2016 (with 0% interest).
II.
Id. ¶¶ 57-58.
Defendants’ Allegations
Defendants claim that on or around October 24, 2003,
Plaintiff opened an account with BANA to obtain an extension of
credit.
Counterclaim ¶ 1, ECF No. 11.
On October 31, 2009,
because of a lack of payment, BANA charged off the account with
a balance owed of $6,835.10.
Id. ¶ 3.
On November 17, 2009,
the account and underlying agreement were sold and transferred
to CACH “with fully [sic] authority to do and perform all acts
necessary for the collection, settlement, adjustment, compromise
or satisfaction of the Account.”
Id. ¶ 4.
According to
Defendants, the account records provided to them demonstrate an
applicable interest rate at the time of charge off of 10.24%.
Id. ¶ 7.
Defendants allege that CACH is entitled to at least
$8,765.10 pursuant to the account agreement.
Id. ¶¶ 19-20.
III. Background Relevant to Motion to Compel Arbitration
In support of their Motion to Compel Arbitration,
Defendants submitted a Declaration by Yekaterina Livits,
custodian of records for CACH.
Livits Decl., ECF No. 19-4. 2
2
CACH attached two Declarations by Yekaterina Livits to
its Motion to Compel Arbitration: one pertaining to the instant
case and one pertaining to Civ. No. 16-00174 HG-KSC. Throughout
this Order the Court refers only to the Declaration that applies
to the instant case, i.e., ECF No. 19-4 (and attached exhibits).
(continued . . . )
4
Livits states that on or around October 24, 2003, Plaintiff
opened a credit card account with BANA/FIA Card Services. 3
7.
Id. ¶
According to Livits, at the time Plaintiff opened the
account, she also received a Bank of America Credit Card Account
Agreement.
Id.
The “Cardholder Agreement,” (the “Agreement”) which
according to Livits was sent to Plaintiff, id. ¶ 12, provides in
relevant part as follows:
7.18: Governing Law. THIS AGREEMENT IS GOVERNED
BY APPLICABLE ARIZONA AND FEDERAL LAW.
7.19: Arbitration. Any dispute, claim, or
controversy (“Claim”) by or between you and us
(including each other’s employees, agents or
assigns) arising out of or relating to this
Agreement, your Account, or the validity or scope
of any provision of this Agreement including this
arbitration clause shall, upon election by either
you or us, be resolved by binding arbitration.
. . . .
This arbitration section of the Agreement shall
be governed by the Federal Arbitration Act, 9
U.S.C. §1-16. Judgment upon arbitration may be
( . . . continued)
3
FIA Card Services, N.A. (“FIA”) was a wholly-owned
subsidiary of Bank of America Corporation “and was created from
a 2006 merger between Bank of America N.A. USA . . . and MBNA
America N.A.” See Comptroller of the Currency Administrator of
National Banks, Public Disclosure, Evaluation Period: January 1,
2007-December 31, 2009, at 2,
http://www.occ.gov/static/cra/craeval/oct10/22381.pdf. FIA was
merged with and into Bank of America, N.A. on October 1, 2014.
Mot. to Compel Arbitration, Ex. A (Affidavit of Sale and
Certification of Debt) ¶ 3, ECF No. 19-2.
5
entered in any court having jurisdiction.
Arbitration shall be conducted in the federal
judicial district in which your billing address
is located at the time the claim is filed.
. . . .
YOU UNDERSTAND AND AGREE THAT IF EITHER YOU OR WE
ELECT TO ARBITRATE A CLAIM, THIS ARBITRATION
SECTION PRECLUDES YOU AND US FROM HAVING A RIGHT
OR OPPORTUNITY TO LITIGATE CLAIMS THROUGH COURT,
OR TO PARTICIPATE OR BE REPRESENTED IN LITIGATION
FILED IN COURT BY OTHERS. EXCEPT AS OTHERWISE
PROVIDED ABOVE, ALL CLAIMS MUST BE RESOLVED
THROUGH ARBITRATION IF YOU OR WE ELECT TO
ARBITRATE.
Id., Ex. 2 §§ 7.18-7.19.
On or around November 12, 2009, BANA/FIA assigned
Plaintiff’s debt to CACH to collect the outstanding debt of
$6,835.10.
Id. ¶ 8.
CACH entered into a written Loan Sale
Agreement wherein it purchased “all rights, title and interest”
in several credit card accounts, including Plaintiff’s credit
card account number ending in “5522.”
Id. ¶ 9.
CACH also
received information and records pertaining to Plaintiff’s
account that were “incorporated into the business records of
CACH” and that were “relied upon by CACH in the ordinary course
of business.”
Id. ¶ 10.
PROCEDURAL BACKGROUND
On March 7, 2016, Plaintiff filed the instant lawsuit
seeking declaratory and injunctive relief, as well as actual and
statutory damages for Defendants’ alleged violations of the Fair
6
Debt Collection Practices Act (“FDCPA”), Hawaii Revised Statutes
(“HRS”) Sections 443B-18, 19, and 20 (regulating collection
agencies) and Hawaii’s Unfair or Deceptive Acts or Practices
law, HRS Chapter 480.
Compl. ¶¶ 62-133.
Plaintiff alleges that
Defendants made false, misleading, and deceptive representations
in connection to the interest rate used and the amount owed; and
that Defendants employed unfair practices in attempting to
collect the debt.
Id.
On April 22, 2016, Defendants filed a Counterclaim
seeking to collect the underlying debt from Plaintiff.
Counterclaim ¶¶ 1-4, 19-20.
On May 5, 2016, Defendants filed a Motion to
Consolidate the instant action with Snyder v. CACH, LLC et al.,
Civ. No. 16-00174 HG-KSC.
ECF No. 18.
On June 29, 2016,
Magistrate Judge Kenneth Mansfield denied the Motion to
Consolidate.
ECF No. 29.
On May 6, 2016, Defendants filed a Motion to Compel
Arbitration and Dismiss Claims (“Motion to Compel Arbitration”).
On May 13, 2016, Plaintiff filed a Motion to Dismiss for Lack of
Jurisdiction Defendant’s Counterclaim (“Motion to Dismiss the
Counterclaim”). 4
Defendants filed their Opposition to
4
On July 27, 2016, Defendants filed a Motion to Stay
Discovery pending the Court’s ruling on the Motion to Compel
Arbitration. ECF No. 31. On September 8, 2016, Magistrate
(continued . . . )
7
Plaintiff’s Motion to Dismiss the Counterclaim on September 9,
2016.
ECF No. 38.
Plaintiff filed her Opposition to
Defendants’ Motion to Compel Arbitration on September 12, 2016.
ECF No. 39.
Plaintiff filed her Reply on September 16, 2016 and
Defendants filed their Reply on September 19, 2016.
ECF Nos.
40, 41.
The Court held a hearing on Defendants’ Motion to
Compel Arbitration and Plaintiff’s Motion to Dismiss the
Counterclaim on October 25, 2016 at 11:00 a.m. 5
STANDARD
I.
Motion to Compel Arbitration
As provided in the Federal Arbitration Act (“FAA”),
written arbitration agreements “evidencing a transaction
involving commerce . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or equity
for the revocation of any contract.”
9 U.S.C. § 2.
“The FAA
embodies a clear federal policy in favor of arbitration” and
“[a]ny doubts concerning the scope of arbitrable issues should
( . . . continued)
Judge Mansfield denied the motion with respect to a handful of
Plaintiff’s discovery requests relevant to the Motion to Compel
Arbitration, but granted the motion in all other respects. ECF
No. 37.
5
The Court scheduled the hearing on the Motion to
Compel Arbitration and the Motion to Dismiss the Counterclaim
following the disposition of Defendants’ Motion to Consolidate.
ECF No. 23.
8
be resolved in favor of arbitration.”
Simula, Inc. v. Autoliv,
Inc., 175 F.3d 716, 719 (9th Cir. 1999) (citation omitted).
As
noted by the Ninth Circuit, “[t]he standard for demonstrating
arbitrability is not high” and arbitration agreements “are to be
rigorously enforced.”
Id.
In deciding whether to compel arbitration, the court
may not review the merits of the dispute.
Rather, “the court
must determine ‘(1) whether a valid agreement to arbitrate
exists and, if it does, (2) whether the agreement encompasses
the dispute at issue.’”
Lowden v. T-Mobile USA, Inc., 512 F.3d
1213, 1217 (9th Cir. 2008) (quoting Chiron Corp. v. Ortho
Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)).
The Court should also consider whether there exists “a defense
that would be available to a party seeking to avoid the
enforcement of any contract.”
Brown v. Dillard’s, Inc., 430
F.3d 1004, 1010 (9th Cir. 2005); see also Williams v. 24 Hour
Fitness, USA, Inc., No. CIV. 14-00560 DKW, 2015 WL 4139227, at
*3 (D. Haw. July 8, 2015) (same).
On a motion to compel arbitration, the court “may
properly consider documents outside of the pleadings.”
Xinhua
Holdings Ltd. v. Elec. Recyclers Int’l, Inc., No. 1:13-CV-1409
AWI SKO, 2013 WL 6844270, at *5 (E.D. Cal. Dec. 26, 2013), aff’d
sub nom. Clean Tech Partners, LLC v. Elec. Recyclers Int’l,
Inc., 627 F. App’x 621 (9th Cir. 2015).
9
II.
Motion to Dismiss for Lack of Subject Matter Jurisdiction
Pursuant to Federal Rule of Civil Procedure (“Rule”)
12(b)(1), a party may move to dismiss based on a lack of subject
matter jurisdiction.
“[T]he party asserting subject matter
jurisdiction has the burden of proving its existence.”
Robinson
v. United States, 586 F.3d 683, 685 (9th Cir. 2009) (citation
omitted).
Pursuant to Rule 12(h)(3), “[i]f the court determines
at any time that it lacks subject-matter jurisdiction, the court
must dismiss the action.”
DISCUSSION
I.
Defendants’ Motion to Compel Arbitration and Dismiss Claims 6
6
The Court notes that the parties do not argue in their
briefing that the question of arbitrability should be decided by
the arbitrator. The Ninth Circuit has noted that “gateway
issues of arbitrability presumptively are reserved for the
court.” Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011).
However, “the parties may agree to delegate [issues of
arbitrability] to the arbitrator.” Id. In Momot, the court
stated:
Rather than applying “ordinary state-law
principles that govern the formation of
contracts” as we would when determining, for
example, the scope of a concededly binding
contract, the Supreme Court has cautioned that
‘[c]ourts should not assume that the parties
agreed to arbitrate arbitrability unless there is
‘clear and unmistakable’ evidence that they did
so.’”
Id. (alteration in original) (quoting First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 939 (1995)).
Thus, the Ninth Circuit held that “the question of
arbitrability is left to the court unless the parties clearly
and unmistakably provide otherwise.” Id. at 988 (emphasis
(continued . . . )
10
( . . . continued)
added); cf. Hawaii State Teachers Ass’n v. Univ. Lab. Sch., 322
P.3d 966, 971 (Haw. 2014) (noting arbitrability is decided by
the courts except if the parties “‘clearly and unmistakably’
reserved the issue of arbitrability for the arbitrator”). “Such
‘[c]lear and unmistakable ‘evidence’ of agreement to arbitrate
arbitrability might include . . . a course of conduct
demonstrating assent . . . or . . . an express agreement to do
so.’” Id. (alterations in original) (quoting Rent–A–Center,
West, Inc. v. Jackson, 561 U.S. 63, 79-80 (2010)).
The parties have not engaged in conduct demonstrating
their assent to have the threshold question of arbitrability
decided by the arbitrator. With respect to the terms of the
Agreement, the Agreement provides that
Any dispute, claim, or controversy (“Claim”) by
or between you and us (including each other’s
employees, agents or assigns) arising out of or
relating to this Agreement, your Account, or the
validity or scope of any provision of this
Agreement including this arbitration clause
shall, upon election by either you or us, be
resolved by binding arbitration.
Livits Decl., Ex. 2 § 7.18 (emphasis added).
While the Agreement includes the possibility that the
“validity or scope” of the arbitration clause may be subject to
arbitration, it also notes that claims are arbitrable “upon
election by either you or us.” Id. Neither party has elected
that the issue of arbitrability, i.e., the “validity or scope”
of the arbitration clause, be subject to arbitration.
Defendants seek to arbitrate the claims raised in Plaintiff’s
Complaint and in their Counterclaim, but have not asked that the
arbitrator decide whether the claims are arbitrable. Neither
has Plaintiff elected to arbitrate the issue of arbitrability.
The Court notes that Defendants on page 11 of their Memorandum
in Support of the Motion to Compel Arbitration state that the
“Agreement specifically provides that arbitration may be invoked
by either ‘you or us.’” However, the Court determines that this
language does not constitute clear and unmistakable evidence of
an agreement to have the issue of arbitrability determined by
the arbitrator rather than by the Court. Accordingly, there
appears to be no clear and unmistakable agreement to arbitrate
(continued . . . )
11
The Court notes at the outset that Defendants’ Motion
to Compel Arbitration applies to two different credit card
accounts, while only one account is relevant to the instant
case.
As acknowledged by Defendants in their Reply, the Motion
to Compel Arbitration was drafted to encompass the claims under
both the instant case and Civ. No. 16-00174 HG-KSC.
Reply, at 2, ECF No. 41.
Defendants’
However, as the two cases were not
consolidated, the account described as “Account 1” in
Defendants’ Motion, i.e., Plaintiff’s account number ending in
5522, is the only account relevant to this case and the motions
at issue.
Id. at 2, 9; see also Livits Decl. ¶ 9 (referring to
account number ending in 5522); Compl. ¶¶ 17, 23, 25, 37 (same).
As set forth below, the Court finds that a valid
arbitration agreement exists and that the agreement encompasses
the dispute at issue.
See Lowden, 512 F.3d at 1217.
The Court
additionally concludes that Plaintiff has failed to raise a
meritorious defense to arbitration.
Accordingly, the Court
directs the parties to proceed to arbitration. 7
( . . . continued)
the issue of arbitrability, and the Court thus decides the
issue.
7
Because the Court grants Defendants’ Motion to Compel
Arbitration, it rejects Plaintiff’s requests for costs. See
Pl.’s Resp. in Opp’n to Defendants’ Mot. to Compel Arbitration
(“Pl.’s Opp’n”), at 2, ECF No. 39.
12
A. The Livits Declaration and Exhibits
Prior to analyzing the validity of the arbitration
agreement, the Court considers Plaintiff’s contention that the
Livits Declaration contains “hearsay statements” because Livits
“has no personal knowledge of the formation of the agreement or
what terms were included therein.”
Pl.’s Opp’n, at 12.
The
Court rejects Plaintiff’s argument and agrees with Defendants
that the Declaration and the attached exhibits are admissible
pursuant to the business records exception to the Federal Rules
of Evidence (“FRE”).
CACH Reply, at 10-11.
In Davis v. CACH, LLC, the Northern District of
California, in dealing with a similar Declaration (where CACH
was also a defendant), noted as follows:
In [the Ninth] circuit, records that a business
“receives from others are admissible under
Federal Rule of Evidence 803(6)” when three
conditions are met: (1) the records are kept by
the recipient in the regular course of business,
(2) are relied upon by the recipient business,
and (3) the recipient business has a substantial
interest in the accuracy of the records. See,
e.g., MRT Const., Inc. v. Hardrives, Inc., 158
F.3d 478, 483 (9th Cir. 1998) (citing United
States v. Childs, 5 F.3d 1328, 1333–34 n.3 (9th
Cir. 1993)).
No. 14-CV-03892-BLF, 2015 WL 913392, at *4 (N.D. Cal. Mar. 2,
2015), reconsideration denied, No. 14-CV-03892-BLF, 2015 WL
2251044 (N.D. Cal. May 13, 2015).
The court found the
Declaration and the associated card member agreement admissible
13
because “CACH testifie[d] [through the declaration] that it
received the Cardmember Agreement directly from Capital One,
maintains the agreement in its files, and relies upon the
Agreement in conducting its business of collecting debts.”
Id.
at *5.
Here, the Livits Declaration provides that Livits is
the custodian of records for CACH and that the Declaration is
based on her personal knowledge as the custodian of records as
well as a review of CACH business records “maintained in the
regular course and scope of business.”
Livits Decl. ¶¶ 1, 5.
Livits states that CACH purchased “a pool of account[s]” from
BANA/FIA, including Plaintiff’s account and that the records
associated with the account were transferred to CACH,
incorporated into CACH’s business records, and “relied upon by
CACH in the ordinary course of business.”
Id. ¶¶ 9-10.
Livits
further provides that CACH received from BANA/FIA “following a
specific request,” the relevant Credit Card Agreement attached
as Exhibit 2 to her Declaration.
Id. ¶ 12.
It is clear that
CACH has a substantial interest in the accuracy of the records
received from BANA/FIA, given that it relies on these records in
its function as a debt collector.
Accordingly, the Court
concludes that the exhibits attached to the Declaration are
admissible under FRE 803(6).
Moreover, Plaintiff has failed to
demonstrate that Livits does not have personal knowledge of the
14
relevant issues pursuant to her role as custodian of records.
As such, the Court finds the Declaration admissible.
B. Whether a Valid Arbitration Agreement Exists
i.
Choice-of-Law
Courts “apply state-law principles that govern the
formation of contracts to determine whether a valid arbitration
agreement exists.”
Lowden, 512 F.3d at 1217.
The parties
appear to dispute which state’s law should apply, although they
do not engage in a choice-of-law analysis.
Defendants argue
that because the Agreement states that it is governed by Arizona
and Federal law, the Court should apply Arizona law to determine
whether the arbitration clause is valid.
Mem. in Support of
Motion to Compel Arbitration, at 6, ECF No. 19-1; see also
Livits Decl., Ex. 2 § 7.18.
Plaintiff cites to Hawaii law in
her Opposition and maintains that she is “not seeking to have
. . . Arizona . . . law applied to the matter of whether her
alleged BOA account is subject to arbitration.”
Pl.’s Opp’n, at
3.
While in diversity cases, the choice-of-law rules of
the forum state apply, where jurisdiction is based on a federal
question, federal common law applies to the choice-of-law
determination.
See Huynh v. Chase Manhattan Bank, 465 F.3d 992,
997 (9th Cir. 2006) (noting federal common law choice-of law
rules apply where jurisdiction is not based on diversity of
15
citizenship); Schoenberg v. Exportadora de Sal, S.A. de C.V.,
930 F.2d 777, 782 (9th Cir. 1991) (same).
The Complaint alleges
that jurisdiction is pursuant to the FDCPA, 15 U.S.C. § 1692 et
seq.
Compl. ¶¶ 1-2.
The Ninth Circuit has also held that “where the
federal court is exercising supplemental jurisdiction over state
claims, the federal court applies the choice-of-law rules of the
forum state.”
Paracor Fin., Inc. v. Gen. Elec. Capital Corp.,
96 F.3d 1151, 1164 (9th Cir. 1996).
The Complaint also includes
state law claims and asserts supplemental jurisdiction pursuant
to 28 U.S.C. § 1367.
Compl. ¶ 1.
Federal common law follows the Restatement (Second) of
Conflict of Laws.
Huynh, 465 F.3d at 997.
Hawaii, the forum
state, also follows the Restatement to determine which state’s
law applies where there exists a contractual choice-of-law
provision.
See Standard Register Co. v. Keala, No. CIV. 14-
00291 JMS-RLP, 2015 WL 3604265, at *6 (D. Haw. June 8, 2015).
Thus, applying either federal common law or Hawaii law choiceof-law rules requires the Court to consider the Restatement.
The Restatement provides as follows
(2) The law of the state chosen by the parties to
govern their contractual rights and duties will
be applied, even if the particular issue is one
which the parties could not have resolved by an
16
explicit provision in their agreement directed to
that issue,[ 8] unless either
(a) the chosen state has no substantial
relationship to the parties or the transaction
and there is no other reasonable basis for the
parties’ choice, or
(b) application of the law of the chosen state
would be contrary to a fundamental policy of a
state which has a materially greater interest
than the chosen state in the determination of the
particular issue and which, under the rule of
§ 188, would be the state of the applicable law
in the absence of an effective choice of law by
the parties.
Restatement (Second) of Conflict of Laws § 187(2) (1971).
Here, it appears that subsection (a) applies, as
Arizona does not seem to have any substantial relationship to
the parties or the transaction.
Id. § 187(2)(a).
According to
the Complaint and Answer, Defendant CACH is organized in
Colorado and Defendant Mandarich is organized in California.
Compl. ¶¶ 5-6; Answer ¶¶ 5-6, ECF No. 11.
Honolulu County, Hawaii.
Compl. ¶ 4.
8
Plaintiff resides in
Plaintiff’s Declaration
Pursuant to the Restatement, “The law of the state chosen
by the parties to govern their contractual rights and duties
will be applied if the particular issue is one which the parties
could have resolved by an explicit provision in their agreement
directed to that issue.” Restatement (Second) of Conflict of
Laws § 187(1) (1971). The commentary to the Restatement
provides that “examples of . . . questions” that cannot be
determined by a provision in the agreement include “those
involving capacity, formalities and substantial validity.” Id.
cmt. d. Here, since the validity of the agreement is at issue,
the Court considers § 187(2) of the Restatement in its choiceof-law analysis.
17
provides that she has never lived in Arizona and has never
signed a contract in Arizona.
Snyder Decl. ¶ 3.
Moreover, CACH
has provided “no other reasonable basis for the parties’ choice”
of Arizona law.
187(2)(a).
See Restatement (Second) of Conflict of Laws §
Indeed, during the hearing on the motions,
Defendants’ counsel informed the Court that he did not know why
Arizona law was referenced in the Agreement.
Pursuant to the Restatement, “[i]n the absence of an
effective choice of law by the parties, the law to be applied is
that of the state with ‘the most significant relationship to the
transaction and the parties.’”
Energy Oils, Inc. v. Montana
Power Co., 626 F.2d 731, 734 n.6 (9th Cir. 1980) (quoting
Restatement (Second) of Conflict of Laws § 188 9); cf. Standard
Register, 2015 WL 3604265, at *6 (“Under Hawaii law, courts
9
The Restatement provides that the factors to consider
include:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the
contract, and
(e) the domicil, residence, nationality, place of
incorporation and place of business of the
parties.
These contacts are to be evaluated according to
their relative importance with respect to the
particular issue.
Restatement (Second) of Conflict of Laws § 188(2).
18
‘look[ ] to the state with the most significant relationship to
the parties and subject matter’ in a choice-of-law analysis.’”
(alteration in original) (quoting Mikelson v. United Servs.
Auto. Ass’n, 111 P.3d 601, 607 (Haw. 2005))).
Here, the Court finds that Hawaii has the most
significant relationship to the transaction and the parties.
As
noted above, Defendants are organized in different states and
the parties do not request that the Court apply the substantive
law of these respective states (i.e., Colorado and California).
On the other hand, Plaintiff cites to Hawaii law in her
Opposition to the Motion to Compel Arbitration and Plaintiff is
a resident of Hawaii.
There is no indication in the record that
Plaintiff resided in a different state at the time she received
the credit card agreement at issue.
Further, the letters sent
to Plaintiff from Defendant Mandarich regarding the debt
collection were sent to Plaintiff’s Hawaii address.
Exs. 2, 3, ECF Nos. 1-2, 1-3.
See Compl.,
There is also no evidence before
the court that Plaintiff or Defendants have any contacts with
Arizona.
Accordingly, notwithstanding the reference to Arizona
law in the Agreement, the Court applies Hawaii law to determine
the validity of the Agreement.
See Standard Register, 2015 WL
3604265, at * 7 (applying Hawaii choice-of-law rules and
determining Hawaii law applied despite contract’s choice-of-law
19
provision where Hawaii had most significant relationship to the
case).
ii.
Validity of the Arbitration Agreement Under Hawaii
Law
Under Hawaii law, a valid arbitration agreement “must
have the following three elements: (1) it must be in writing;
(2) it must be unambiguous as to the intent to submit disputes
or controversies to arbitration; and (3) there must be bilateral
consideration.”
Douglass v. Pflueger Hawaii, Inc., 135 P.3d
129, 140 (Haw. 2006); see also Williams, 2015 WL 4139227, at *4.
The Court considers these elements in turn and finds each
element has been satisfied.
1. Existence of a Writing
Plaintiff argues that the Agreement provided to the
Court by Defendants does not govern the account at issue,
claiming that the only agreement with Plaintiff’s name on it
“has a copyright date of 2005” while Defendants assert that her
account was opened in 2003.
Pl.’s Opp’n, at 9-10.
However, the
agreement containing the 2005 copyright date referenced by
Plaintiff pertains to “Account 2” discussed in Defendants’
Motion, which is not relevant to the instant case.
The 2003 Agreement pertaining to the account at issue
here is attached to the Livits Declaration as Exhibit 2.
Livits’ Declaration provides that Plaintiff opened an account
20
with BANA/FIA in October 2003 and that CACH purchased this
account (ending in account number 5522) pursuant to the Loan
Sale Agreement and Bill of Sale.
Livits Decl. ¶¶ 7, 9, 11.
Plaintiff’s Complaint also refers to the BANA account number
ending in 5522.
Compl. ¶¶ 17, 23, 25, 37.
Livits additionally
states that the Credit Card Agreement pertaining to this account
was provided to CACH following a specific request and that
Exhibit 2 to her Declaration is a copy of said agreement, which
was sent to Plaintiff.
Id. ¶ 12.
The Agreement has a copyright
date of 2003, which is consistent with the date the account was
opened.
Livits Decl., Ex. 2.
Under these circumstances, Plaintiff’s claim that an
agreement has not been produced is unavailing.
Livits’
Declaration provides that Exhibit 2 is the written agreement
pertaining to Plaintiff’s account and this agreement includes
the arbitration clause at issue.
Accordingly, the requirement
that the agreement be in writing is satisfied.
2. Unambiguous Intent to Submit to Arbitration
Under Hawaii law, “[t]here must be a mutual assent or
a meeting of the minds on all essential elements or terms to
create a binding contract.”
Douglass, 135 P.3d at 140
(alteration in original) (quoting Earl M. Jorgensen Co. v. Mark
Construction, Inc., 540 P.2d 978, 982 (Haw. 1975)).
21
An
objective standard is applied to determine whether mutual assent
or intent exists.
Id.
Here, on its face, the Agreement is clear that the
parties shall be bound to arbitrate claims if either party so
elects.
See Brown v. KFC Nat’l Mgmt. Co., 921 P.2d 146, 159
(Haw. 1996).
As provided in the Agreement in capital letters,
YOU UNDERSTAND AND AGREE THAT IF EITHER YOU OR WE
ELECT TO ARBITRATE A CLAIM, THIS ARBITRATION
SECTION PRECLUDES YOU AND US FROM HAVING A RIGHT
OR OPPORTUNITY TO LITIGATE CLAIMS THROUGH COURT,
OR TO PARTICIPATE OR BE REPRESENTED IN LITIGATION
FILED IN COURT BY OTHERS. EXCEPT AS OTHERWISE
PROVIDED ABOVE, ALL CLAIMS MUST BE RESOLVED
THROUGH ARBITRATION IF YOU OR WE ELECT TO
ARBITRATE.
Livits Decl., Ex. 2 § 7.19.
Thus, Plaintiff’s contention that
there is no “competent evidence” as to what terms she agreed to
with respect to the Agreement is unavailing.
See Pl.’s Opp’n,
at 10.
Plaintiff also notes that the Agreement is not signed
and argues that there is no evidence that she entered into the
Agreement.
Pl.’s Opp’n, at 11.
Hawaii courts have not had the
opportunity to consider indications of mutual assent with
respect to arbitration provisions in credit card agreements.
However, the Hawaii Supreme Court has previously noted that
“while it is true that . . . the FAA ‘requires that an agreement
to arbitrate be in writing . . ., it does not require that the
writing be signed by the parties.’”
22
Brown, 921 P.2d at 159 n.
16 (second alteration in original) (internal quotation marks
omitted) (quoting Nghiem v. NEC Elec., Inc., 25 F.3d 1437, 1439
(9th Cir. 1994)).
Hawaii’s Intermediate Court of Appeals has
also recognized that assent to be bound to a contract can be
gleaned from the conduct of the parties even where the contract
is not signed.
See Credit Assocs. of Maui, Ltd. v. Carlbom, 50
P.3d 431, 437 (Haw. Ct. App. 2002) (noting that where a statute
or agreement does not require it to be signed, “parties may
become bound by the terms of a contract, even though they do not
sign it, where their assent is otherwise indicated” (quoting 17A
Am. Jur. 2d Contracts § 185, at 195-96 (1991))); see also
Capital One Bank (USA), N.A. v. Huffman, No. CAAP-13-0003149,
2014 WL 6488771, at *4 (Haw. Ct. App. Nov. 18, 2014) (holding
that a signed credit card agreement was not necessary to
maintain an action for assumpsit where the account holder
previously made timely payments and made credit card purchases
without disputing outstanding balances).
Federal courts considering the issue have determined
that a credit card agreement need not be signed to demonstrate
that the holder of the card is bound by its terms.
These courts
have reasoned that use of the credit cards indicates an intent
to be bound by the terms of the credit card agreement, including
provisions to arbitrate within the agreement.
See, e.g.,
Stinger v. Chase Bank, USA, NA, 265 F. App’x 224, 227 (5th Cir.
23
2008) (holding that by using the credit cards at issue,
plaintiff “demonstrated an intent to be bound by the terms of
the [cardmember agreements] and thus agreed to the arbitration
provisions in the [cardmember agreements])”; Cage v. Cach, LLC,
No. C13-01741RSL, 2014 WL 2170431, at *3 (W.D. Wash. May 22,
2014) (holding defendants could invoke arbitration clause of
credit card agreement although they were not signed where
plaintiffs did not dispute their use of the credit cards); Brown
v. Federated Capital Corp., 991 F. Supp. 2d 857, 861 (S.D. Tex.
2014) (“In the context of a credit card, a party is bound by the
terms of a credit card agreement if the party uses the credit
card, even if the party does not sign the credit card agreement
and even if the credit card agreement is not delivered to the
party.”).
Here, Plaintiff does not dispute Defendants’ claims
that she applied for the credit card at issue and used the
credit card.
See, e.g., Pl.’s Opp’n, at 11 (“The terms of
exactly what, if anything, Ms. Snyder agreed to when she applied
for the credit card are unknown.”).
In addition, the Agreement
provides that it “becomes effective and you agree to its terms
by either using your Account or by not closing your Account
within 3 days of receipt of this Agreement.”
Livits Decl., Ex.
2 § 1.1; see also Stinger, 265 Fed. Appx. at 227 (noting the
credit card agreements at issue “provided they would become
24
effective upon use of the cards” in supporting a finding that
plaintiff’s use of the credit card reflected an intent to be
bound by the terms of the agreements).
The Affidavit of Sale
and Certification of Debt signed by a BANA representative also
provides that Plaintiff opened the account with BANA and used or
authorized the use of the account “for the acquisition of goods,
services, or cash advances in accordance with the customer
agreement . . . governing use of the Account.”
Arbitration, Ex. A ¶ 4.
Mot. to Compel
Accordingly, because Plaintiff does not
dispute her use of the credit card, the Court finds there was
mutual assent to arbitrate despite the lack of a signature on
the Agreement. 10
10
The Court is aware that in Douglass, which is not
discussed by the parties, the Hawaii Supreme Court considered
whether there was an unambiguous intent to submit to arbitration
based on an arbitration provision contained in an Employee
Handbook. 135 P.3d at 531. The court determined that although
the employee signed the acknowledgement form verifying receipt
of the 60 page Handbook, he did not unambiguously assent to
arbitration because, inter alia, the acknowledgement form did
not refer to the arbitration provision and there was no evidence
that the employee was otherwise informed of the arbitration
provision. Id. at 531-34. Importantly, the court pointed out
that language immediately preceding the acknowledgement form
provided that the policies within the Handbook “ARE NOT INTENDED
TO AND DO NOT CREATE A CONTRACT BETWEEN YOU AND THE COMPANY” and
the acknowledgment section stated, “The provisions contained in
this handbook are presented as a matter of information only and
do not constitute an employment contract.” Id. at 532.
Here, in contrast, the Agreement states that it
“governs [the] credit card account” and that it “becomes
effective and you agree to its terms by either using your
Account or by not closing your Account within 3 days of receipt
(continued . . . )
25
Finally, Plaintiff claims that there is “no reliable
evidence” that the Agreement was sent to her.
11.
Pl.’s Opp’n, at
However, Livits’ Declaration states that Exhibit 2 to her
Declaration (i.e., the Agreement) was sent to Plaintiff.
Decl. ¶ 12.
Livits
Plaintiff has not provided evidence to rebut this
statement, and accordingly, Plaintiff’s argument fails. 11
3. Bilateral Consideration
The Hawaii Supreme Court “has held that mutual assent
to arbitration provides bilateral consideration.”
Williams,
2015 WL 4139227, at *5; see also Brown, 921 P.2d at 159-60
( . . . continued)
of this Agreement,” clearly providing that the Agreement is
binding. Livits Decl., Ex. 2 § 1.1. Moreover, Douglass and the
cases it relied on pertained to arbitration provisions in
employee handbooks and similar documents provided to employees,
and thus, is distinguishable.
11
Plaintiff has not argued that Defendants cannot compel
arbitration because Defendants were not parties to the
Agreement. Nonetheless, the Court notes that the arbitration
clause indicates that the right to arbitration extends to BANA’s
assigns. See Livits Decl., Ex. 2, § 7.19 (“Any dispute, claim,
or controversy by or between you and us (including each other’s
employees, agents or assigns) . . . shall, upon election by
either you or us, be resolved by binding arbitration.”).
Moreover, Defendants can enforce the arbitration clause because
the claims against them “are encompassed by the Agreement,”
Davis, 2015 WL 913392, at *5 n.7, which provides that claims
“arising out of or relating to this Agreement” will be subject
to arbitration, Livits Decl., Ex. 2, § 7.19. See Mohebbi v.
Khazen, No. 13-CV-03044-BLF, 2014 WL 6845477, at *7 n.7 (N.D.
Cal. Dec. 4, 2014) (holding defendant non-signatories could
enforce arbitration clause where “the claims against those
Defendants are encompassed by the express terms of the
arbitration clause”).
26
(noting that an agreement to arbitrate was supported by
bilateral consideration where both parties to the agreement
agreed to “forego their respective rights to a judicial forum”).
Here, pursuant to the Agreement, the parties agreed
that if arbitration was elected, claims arising out or relating
to the Agreement “shall . . . be resolved by binding
arbitration.”
Livits Decl., Ex. 2 § 7.19.
The Agreement
specifically notes, “YOU UNDERSTAND AND AGREE THAT” if either
party elects arbitration, the arbitration provision “PRECLUDES”
the parties from litigating claims in court.
Id.
Thus, it is
clear that the parties to the Agreement agreed to arbitrate the
claims at issue.
Moreover, Plaintiff has failed to put forth
any argument with respect to the issue of consideration.
Accordingly, the Court finds this requirement satisfied. 12
12
The Court notes that even if Arizona law were to be
applied, the Court’s conclusion regarding the validity of the
agreement to arbitrate would not change. Under Arizona law, an
arbitration agreement is enforceable where there exists “(1) an
offer communicated to the offeree, (2) acceptance of the offer
by the offeree, and (3) consideration.” Taleb v. AutoNation USA
Corp., No. CV06-02013-PHX-NVW, 2006 WL 3716922, at *2 (D. Ariz.
Nov. 13, 2006). Plaintiff does not appear to dispute the
existence of an offer or consideration, and the Court’s
preceding discussion demonstrates that these were both present
in the instant case. To the extent Plaintiff disputes that
there was acceptance, the above discussion regarding the mutual
assent of the parties applies.
27
C. Whether the Agreement Encompasses the Dispute at Issue
After determining the validity of the agreement, the
Court must consider “whether the dispute is arbitrable, that is,
whether it falls within the scope of the parties agreement to
arbitrate.”
Chiron Corp., 207 F.3d at 1131.
“Interpretation of
the scope of the arbitration clause is governed by the FAA.”
Williams, 2015 WL 4139227, at *6.
In determining whether a
dispute is arbitrable, the Court “must be cognizant of the Act’s
federal policy favoring arbitration agreements.”
F.3d at 1131.
Chiron, 207
“[A]ny doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration.”
Id.
(quoting Moses H. Cone Memorial Hosp. v. Mercury Const. Corp.,
460 U.S. 1, 24–25 (1983)).
Moreover, the “factual allegations
need only ‘touch matters’ covered by the contract containing the
arbitration clause.”
Simula, 175 F.3d at 721.
Here, it is clear that the Agreement covers the
dispute at issue.
The arbitration clause is “broad and far
reaching,” Chiron Corp., 207 F.3d at 1131, providing that “[a]ny
dispute, claim or controversy . . . arising out of or relating
to this Agreement, your Account, or the validity or scope of any
provision of this Agreement . . . shall, upon election . . . be
resolved by binding arbitration,” Livits Decl., Ex. 2 § 7.19.
Contrary to Plaintiff’s contention, her claims arise out of or
28
relate to the Agreement and the account at issue. 13
Plaintiff’s
FDCPA and state law claims involve allegations that Defendants
sought to collect from her a debt higher than the amount
actually owed under her account and that Defendants improperly
calculated the amount of interest on the debt at a rate that was
contrary to the original contract.
68, 104-06.
See, e.g., Compl. ¶¶ 65, 67-
Thus, Plaintiff’s claims involve debt collection
activity related to the account at issue and the Agreement
concerning the account.
Cf. Davis, 2015 WL 913392, at *6
(holding similar arbitration provision in credit card agreement
encompassed FDCPA claim).
To the extent Plaintiff argues that because a federal
question is implicated, arbitration should not be compelled,
such an argument is unavailing.
See Pl.’s Opp’n, at 5.
Plaintiff cites to no caselaw supporting this proposition and
the Supreme Court has held that federal statutory claims may be
subject to arbitration unless “Congress intended to preclude a
waiver of a judicial forum.”
Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 26 (1991).
13
Plaintiff states that she “is not making any claim
relating to the Agreement,” but also notes that “[s]he is
asserting that Defendants deceived her, mislead her, and
attempted to collect interest and fees that were never owed
under the Agreement.” Pl.’s Opp., at 5 (emphasis added). In
this respect, Plaintiff appears to concede that the claims at
least “touch matters” related to the Agreement.
29
Plaintiff points to no evidence of Congress’s intent
to preclude the arbitration of claims under the FDCPA and many
courts have found that FDCPA claims are arbitrable.
See, e.g.,
Davis, 2015 WL 913392, at *6 (“Myriad courts have analyzed the
text and purpose of the FDCPA and found that FDCPA claims are
arbitrable.”); Brown v. Sklar-Markind, No. Civ. No. 14-0266,
2014 WL 5803135, at *12 (W.D. Pa. Nov. 7, 2014) (“[B]ecause the
FDCPA is silent with regard to arbitration of claims brought
under its auspices, the overwhelming majority of cases to
consider the matter have . . . compelled arbitration of FDCPA
claims finding such claims not categorically exempt from the
FAA’s reach.”); Miller v. Nw. Tr. Servs., Inc., No. CV-05-5043RHW, 2005 WL 1711131, at *4 n.4 (E.D. Wash. July 20, 2005)
(“Neither the text of the FDCPA, its legislative history, nor an
examination of the FDCPA’s underlying purpose reveals any
indication that Congress intended to preclude FDCPA claimants
from resolving their disputes in arbitration.”).
The Court
finds no reason to stray from these decisions.
D. Defenses
The Court next considers and rejects the defenses to
the enforceability of the Agreement raised by Plaintiff.
i.
Settlement Agreement
Plaintiff claims that Defendants should be barred from
enforcing the agreement to arbitrate based on BANA’s settlement
30
of a class action lawsuit in Ross et al. v. Bank of America,
N.A. et al., Civ. No. 5-7116 (WHP) (S.D.N.Y. July 22, 2010) (the
“Ross Settlement” or the “Settlement Agreement”).
at 8.
Pl.’s Opp.,
In the Ross Settlement, according to the exhibits
attached to Plaintiff’s Opposition, BANA agreed not to enforce
“an Arbitration Clause . . . against a member of the Settlement
Class based on currently existing or pre-existing United States
Cardholder Agreements” as of December 11, 2009.
Ex. 1, at 7, 10.
Pl.’s Opp’n,
The Settlement Agreement applied to “All
Persons holding during [the period from the first Bank
Defendant’s adoption of an Arbitration Clause in its consumer
Credit Card agreement through the date of execution of the
settlement agreement] a Credit Card under a United States
Cardholder Agreement.”
Id. at 8, Ex. 2, at 2.
Plaintiff maintains that she is a member of the
settlement class.
She further argues that because BANA sent a
statement to Plaintiff with a due date of November 23, 2009,
Defendants’ “assertion” that BANA sold the account prior to
November 23, 2009 “appear[s] inaccurate” as “[it] makes no sense
that BANA would sale [sic] an account prior to the due date it
had afforded to the account holder.”
Pl.’s Opp., at 8-9.
Although Plaintiff does not clearly explain the relevance of
this argument, it appears Plaintiff means to imply that the Ross
31
Settlement, which became effective on December 11, 2009, is
applicable to her because BANA owned her account on that date.
However, as Defendants point out, there is nothing in
the record to demonstrate that Plaintiff’s account could not
have been sold prior to the statement due date.
Reply, at 7.
Defendants’
To the contrary, the unrebutted documents
submitted to the Court by Defendants provide that Plaintiff’s
Account was sold to CACH—at the latest—on November 19, 2009. 14
Because BANA/FIA no longer owned the account on the date the
relevant portion of the Settlement Agreement became effective,
Plaintiff has failed to demonstrate that the settlement
agreement applies to bar Defendants’ rights to arbitration.
Although not raised by the parties, the Court notes
that Section 13(b) of the Settlement Agreement provides that for
accounts Bank of America transferred to a third party after
February 1, 2010, Bank of America would contract with the third
party “for said third party to abide” by Bank of America’s
commitment not to enforce pre-existing arbitration clauses.
Pl.’s Opp’n, Ex. 1, at 10, 23.
This section of the agreement
14
The Court notes that the Loan Sale Agreement had an
effective date of November 12, 2009. Livits Decl. ¶ 11, Ex. 1.
The Affidavit of Sale and Certification of Debt signed by a BANA
representative provides that the sale date was November 17,
2009. Mot. to Compel Arbitration, Ex. A ¶ 6. The Bill of Sale,
however, was executed on November 19, 2009. ECF. No. 11-3.
32
does not apply to Plaintiff, however, as her Account was sold
prior to February 1, 2010.
The Court additionally notes that the Settlement
Agreement states that many of Bank of America’s obligations
under the agreement, including its commitment not to enforce
pre-existing arbitration clauses, expire five “years after the
date of execution” of the agreement.
See id. at 24.
The
Settlement Agreement was executed in February 2010 and the
Motion to Compel Arbitration was filed in May 2016.
Thus, even
if the Settlement Agreement applied to Plaintiff, it appears
that any relevant obligations under the agreement have expired.
ii.
Other Claims of Waiver and Estoppel
Plaintiff raises several additional claims that
Defendants waived their right to arbitration or should be
estopped from arbitration.
“‘Waiver of a contractual right to arbitration is not
favored,’ and, therefore, ‘any party arguing waiver of
arbitration bears a heavy burden of proof.’”
Richards v. Ernst
& Young, LLP, 744 F.3d 1072, 1074 (9th Cir. 2013) (quoting
Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir.
1986)); see also Fireman’s Fund Ins. Co. v. AIG Hawai’i Ins.
Co., 126 P.3d 386, 397 (Haw. 2006) (“[W]aiver of the right to
arbitration pursuant to a valid arbitration agreement will not
be lightly inferred.” (citation omitted)).
33
To demonstrate
waiver, the party must show “(1) knowledge of an existing right
to compel arbitration; (2) acts inconsistent with that existing
right; and (3) prejudice to the party opposing arbitration
resulting from such inconsistent acts.”
Richards, 744 F.3d at
1074; see also Fireman’s Fund Ins. Co., 126 P.3d at 397 (noting
that an arbitration agreement “may be waived by the actions of
a party which are completely inconsistent with any reliance
thereon” (citation omitted)).
First, Plaintiff argues that Defendants waived or are
estopped from arbitration based on the filing of their
Counterclaim.
Pl.’s Opp’n, at 7.
However, Plaintiff has not
shown that the filing of the Counterclaim was inconsistent with
Defendants’ request for arbitration.
To the contrary,
Defendants state that their Counterclaim should also be resolved
through arbitration.
See Defs.’ Opp’n to Pl.’s Mot. to Dismiss
Counterclaim (“Defs.’ Opp’n”), at 3, ECF No. 38.
Moreover,
Defendants have maintained throughout the litigation—including
in their Answer—that they are entitled to arbitration in the
instant case.
See Answer, ¶ 138.
And, the Motion to Compel
Arbitration was filed two weeks after the filing of Defendants’
Answer and Counterclaim.
Finally, even assuming Plaintiff
demonstrated inconsistent conduct, Plaintiff has not claimed any
prejudice; and given that Defendants moved to compel arbitration
34
early on in the litigation, the Court finds there has been no
prejudice to Plaintiff.
Under these circumstances, Plaintiff has failed to
meet her heavy burden of demonstrating that the filing of
Defendants’ Counterclaim resulted in a waiver of Defendants’
right to seek arbitration in the instant case.
Cf. Davis, 2015
WL 913392, at *7 (determining defendants did not waive their
right to compel arbitration of FDCPA claim by suing in state
court to collect debt owed by Plaintiff);
Hodson v. Javitch,
Block & Rathbone, LLP, 531 F. Supp. 2d 827, 831 (N.D. Ohio 2008)
(holding the filing of state court collections actions did not
result in a waiver of the right to seek arbitration of FDCPA
claims later brought by debtor).
Plaintiff additionally claims that Defendants “engaged
in conduct constituting an undue delay” by filing the Motion to
Compel Arbitration “while citing to inapplicable state statutes
and caselaw.”
Pl.’s Opp’n, at 13.
However, Defendants’
citation to Arizona law was based on the choice-of-law clause in
the Agreement.
In addition, as noted above, Defendants promptly
moved for arbitration of Plaintiff’s claims.
Accordingly,
Defendants have not caused undue delay.
Finally, Plaintiff states that Defendants acted in
contradiction to the obligations under the contract because they
“added interest and fees to the account that were never owed.”
35
Id.
Plaintiff does not, however, explain how this alleged
conduct is inconsistent with Defendants’ right to arbitrate.
Additionally, as noted above, Plaintiff has not put forth any
claim of prejudice.
II.
Plaintiff’s Motion to Dismiss the Counterclaim
Defendants’ Counterclaim seeks to collect on the
underlying debt.
Counterclaim ¶¶ 12-21.
Given the Court’s
determination that Plaintiff’s case is subject to arbitration,
the Court need not decide Plaintiff’s Motion to Dismiss the
Counterclaim.
Defendants maintain that their Counterclaim is
subject to arbitration, and accordingly, seek to have their
Counterclaim arbitrated.
See Defs.’ Opp’n, at 3.
Pursuant to the Court’s above discussion, there is a
valid arbitration agreement and Plaintiff has not put forth a
viable defense to the arbitration.
Moreover, as with
Plaintiff’s claims, the Counterclaim also “falls within the
scope of the parties agreement to arbitrate.”
F.3d at 1131.
Chiron Corp., 207
Indeed, as discussed above, the Agreement’s
arbitration provision encompasses claims arising out of or
related to the Agreement, and Defendant’s Counterclaim seeking
to collect the underlying debt clearly falls within the
provision’s broad language.
36
Thus, because the Counterclaim is subject to
arbitration, the Court dismisses the Counterclaim along with
Plaintiff’s Complaint.
CONCLUSION
For the foregoing reasons, the Court GRANTS
Defendants’ Motion to Compel Arbitration and Dismiss Claims, ECF
No. 19, and DENIES Plaintiff’s Motion to Dismiss Defendant’s
Counterclaim, ECF No. 21, as moot.
The Court dismisses the
Complaint as well as the Counterclaim, as both must be submitted
to arbitration.
The Clerk of Court is directed to close the
case.
IT IS SO ORDERED.
DATED:
Honolulu, Hawaii, November 10, 2016.
________________________________
Alan C. Kay
Sr. United States District Judge
Snyder v. CACH, LLC, and Mandarich Law Group, LLP, Civ. No. 16-00097 ACK-KJM
Order Granting Defendants’ Motion to Compel Arbitration and Dismiss Claims,
Dismissing Defendants’ Counterclaim, and Denying Plaintiff’s Motion to
Dismiss for Lack of Jurisdiction Defendants’ Counterclaim as Moot.
37
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