Grasty v. Colorado Technical University
Filing
107
MEMORANDUM Opinion and Order Signed by the Honorable Sharon Johnson Coleman on 8/12/2014:Mailed notice(rth, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DIAHANN GRASTY,
Plaintiff,
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v.
COLORADO TECHNICAL UNIVERSITY,
Defendant.
Case No. 13 CV 3221
Judge Sharon Johnson Coleman
MEMORANDUM OPINION AND ORDER
Plaintiff Diahann Grasty filed the instant complaint on April 10, 2013 alleging she
applied for and was accepted to defendant Colorado Technical University’s (“CTU”) doctoral
program, but was ultimately denied financial aid in violation of federal financial aid regulations
and pursuant to Title VI of Civil Rights Act of 1964, 42 U.S.C. §2000d et seq. (Dkt. #1, Compl.)
CTU now moves to dismiss and to compel arbitration pursuant to Rule 12(b)(1). A court must
dismiss any action for which it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). When
considering a motion to dismiss challenging jurisdiction pursuant to Rule 12(b)(1), the Court can
review additional materials beyond the complaint. Alicea-Hernandez v. Catholic Bishop of
Chicago, 320 F.3d 698, 701 (7th Cir. 2003).
While the facts surrounding this dispute are less than clear, the most germane fact is not
in dispute: on December 15, 2012, Grasty executed an enrollment agreement (“Agreement”)
which, in relevant part, provides:
Agreement to Arbitrate: Any disputes, claims or controversies between the parties
to this Enrollment Agreement arising out of or related to (i) this Enrollment
Agreement; (ii) the Student’s recruitment, enrollment, attendance, or education;
(iii) financial aid or career service assistance by CTU; (iv) any claim no matter
how described, pleaded or styled, relating, in any manner to any act or omission
regarding the Student’s relationship with CTU, its employees, or with externship
sites or their employees; or (v) any objection to arbitrability or the existence,
scope, validity, construction, or enforceability of this Arbitration Agreement, shall
be resolved pursuant to this paragraph (the “Arbitration Agreement”). (Dkt. #951, Ex. A, ¶13.)
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Grasty initialed each page of the Agreement, acknowledging “I have received and reviewed this
page,” and, above her signature reads: “THIS CONTRACT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.” (Id.)
In 2012 and 2013, Grasty was accepted to CTU and enrolled in a three-credit course.
Grasty was allegedly told that her enrollment in the three-credit course was sufficient to qualify
her for federal financial aid and a stipend, but was later informed that federal regulations
mandated that she enroll in at least four credits to remain eligible financial aid. According to
Grasty, she was given two options: 1) CTU offered pay for the three credit course and Grasty
would forego her financial aid and stipend; or 2) CTU offered to allow Grasty to enroll in fivecredit course. Grasty refused both options and filed the instant complaint alleging CTU
discriminated against her and wrongfully refused to disperse her promised financial aid award.
CTU disputes that it ever promised Grasty any financial aid and argues that the complaint
should be dismissed and compelled to arbitration. CTU contends that, by executing the
Agreement, Grasty entered into an enforceable arbitration agreement with CTU in December
2012, which is further evidenced by the fact that she enrolled at CTU thereafter. Grasty argues
the Agreement is unenforceable for failure of consideration and, in the alternative, that CTU
anticipatorily breached and repudiated the contract when it failed to disburse financial aid as
allegedly promised. The parties do not dispute that Illinois law governs.
The Federal Arbitration Act governs the validity of agreements to arbitrate. Jain v. de
Mere, 51 F.3d 686, 688 (7th Cir. 1995). “A written provision in any ... contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter arising out of
such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Whether the
parties have validly agreed to arbitrate is governed by state-law principles of contract formation.
Id. Arbitration provisions may therefore be invalid by general contract defenses. Rent-A-Ctr., W.,
Inc. v. Jackson, 561 U.S. 63, 66 (2010). “[T]he decision whether to compel arbitration is not
discretionary. Where there is a valid arbitration agreement and the parties’ dispute falls within
the scope of that agreement, arbitration is mandatory and the trial court must compel it.” LRN
Holding, Inc. v. Windlake Capital Advisors, LLC, 409 Ill. App. 3d 1025, 1027 (3rd Dist. 2011)
(citation omitted).
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To form a contract under Illinois law there must be an offer, an acceptance and
consideration. Hedlund and Hanley, LLC v. Bd. of Trustees of Comm. College Dist. No. 508.,
376 Ill.App.3d 200, 206 (1st Dist. 2007). Acceptance of a written contract generally is evidenced
by a party’s execution of the contract. Id. Indeed, Grasty signed the Agreement and initialed each
page. (See Dkt. #95-1.) Consideration is the “bargained-for exchange of promises or
performances, which may consist of a promise, an act, a forbearance, or the creation,
modification, or destruction of a legal relation.” Ross v. May Co., 377 Ill. App. 3d 387, 391 (1st
Dist. 2007). “Any act or promise which is of benefit to one party or disadvantage to the other is a
sufficient consideration to support a contract.” Carter v. SSC Odin Operating Co., LLC, 976
N.E.2d 344, 352 (2012) (quoting Steinberg v. Chicago Medical School, 69 Ill.2d 320, 330
(1977)). Here, CTU promised to enroll Grasty as a student and Grasty promised to pay tuition.
As such, the Agreement is properly supported by consideration.
The Court further finds that Grasty’s claims clearly arise out of her “recruitment,
enrollment, attendance or education,” and “financial aid…assistance by CTU” and thus fall
squarely within the scope of the Agreement. (Dkt. #95-1, Ex. A, ¶13.) Indeed, “any claim no
matter how described, pleaded or styled, relating, in any manner to any act or omission regarding
the Student’s relationship with CTU, its employees […] or any objection to arbitrability or the
existence, scope, validity, construction, or enforceability of this Arbitration Agreement” shall be
submitted to arbitration. (Id.) Accordingly, any dispute as to what CTU said or promised to
Grasty with respect to her financial aid award, and whether CTU allegedly anticipatorily
breached the Agreement must be submitted to arbitration.
For all these reasons, CTU’s motion to dismiss and to compel arbitration is granted. The
Court thanks Cary A. Horvath for his able and zealous advocacy on behalf of plaintiff, Diahann
Grasty.
IT IS SO ORDERED.
___________________
Date: August 12, 2014
____________________________
Sharon Johnson Coleman
United States District Judge
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