Leibowitz v. Shindler et al
MEMORANDUM Opinion and Order Signed by the Honorable John J. Tharp, Jr on 8/9/2017: For the reasons stated in the accompanying Memorandum Opinion and Order, the motion to compel arbitration 19 is granted. The Court therefore compels arbitration in this matter and stays this case pursuant to 9 U.S.C. § 3. The parties are required to submit a report on the status of the arbitration proceeding on September 1, 2017, and every 90 days thereafter during the pendency of the arbitration, and a report within 30 days of the completion of the arbitration proceeding. Mailed notice(air, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
DAVID P. LEIBOWITZ, as Trustee of
the Bankruptcy Estate of Theodoric
Owens, Sr. aka Theo Owens, Sr.
KEITH SHINDLER and MICHAEL
JOYCE, individually and as a
partnership doing business as Shindler &
Judge John J. Tharp, Jr.
MEMORANDUM OPINION AND ORDER
Defendants Keith Shindler and Michael Joyce have moved to compel arbitration and stay
this Fair Debt Collection Practices Act (“FDCPA”) case. Because the defendants can enforce the
arbitration provision, the motion to compel arbitration and stay this case is granted.
Plaintiff David Leibowitz, acting as trustee for the bankruptcy estate of Theodoric
Owens, Senior (“Owens”), sued Defendants Keith Shindler and Michael Joyce as individuals and
the partnership Shindler & Joyce for violating the FDCPA.1 The facts are simple. On October 20,
2015, Shindler & Joyce sued Owens in Lake County, Illinois for defaulting on a retail
installment contract for a used car. Compl. ¶ 13. The issue is that Owens, according to the
complaint, entered into the contract in Griffith, Indiana. Id. at ¶ 14. Griffith is located in Lake
County, Indiana, not Lake County, Illinois. Id. at ¶ 15. The two Lake Counties are in fact over
70 miles apart and, according to the complaint, it is virtually impossible to get from one to the
As no distinction at this stage is made between the defendants, the Court refers to all the
defendants as “Shindler & Joyce.”
other via public transportation. Id. Owens has never lived in Lake County, Illinois. Id. at ¶ 16.
Through the trustee, he argues that Shindler & Joyce violated the FDCPA by suing him in Lake
County because the FDCPA allows suits to collect debts only in the judicial district where a
consumer lives or where he signed the contract. 15 U.S.C. § 1692i. Shindler & Joyce have
moved to compel arbitration based on an arbitration clause in the contract that states either party
may require arbitration in any “controversy or claim between You and Us arising out of or in any
way related to this Contract.” See Def.’s Ex. 1 at 5, ECF No. 19-1.
A district court may compel arbitration under the Federal Arbitration Act, 9 U.S.C. § 4, if
the movant makes three showings: “a written agreement to arbitrate, a dispute within the scope
of the arbitration agreement, and a refusal to arbitrate.”2 Zurich Am. Ins. Co. v. Watts Indus., 417
F.3d 682, 687 (7th Cir. 2005). The parties appear to agree that Owens and Credit Acceptance
Corporation signed a written agreement to arbitrate disputes that arose between them “arising out
of or in any way related to this Contract.”3 See Def.’s Ex. 1 at 5.
The first question, therefore, is whether the FDCPA claim falls within the ambit of the
arbitration agreement. Shindler & Joyce devote a single paragraph with no citations beyond the
language of the contract in arguing that it does. See Mot. at 6. While such poor argument would
generally be insufficient to prove a required condition, there is a presumption of arbitrability and
arbitration should be ordered unless the clause “is not susceptible of an interpretation that covers
the asserted dispute.” IBEW Local 2150 v. NextEra Energy Point Beach, LLC, 762 F.3d 592, 594
As an initial matter, the Court notes that Shindler & Joyce’s motion makes no mention
of the third element and does not suggest that it attempted to persuade the plaintiff to engage in
arbitration. Owens, however, makes no argument that this element is not met so the Court does
not address it further.
Credit Acceptance Corporation was originally named as a defendant but was voluntarily
dismissed with prejudice, see Dkt. 11, prior to the filing of this motion.
(7th Cir. 2014). Furthermore, the Seventh Circuit reads provisions requiring arbitration of
disputes “arising out of and relating to” a contract to be “extremely broad and capable of an
expansive reach.” Gore v. Alltel Communs., LLC, 666 F.3d 1027, 1033-34 (7th Cir. 2012). The
plaintiff has not argued that this suit is not “related to” the contract, so the Court considers this
prong conceded by the plaintiff.4
Both parties focus their arguments on whether or not Shindler & Joyce can equitably
enforce the arbitration agreement (having not been a party to the original contract). The
arbitration provision provides that “You” (the consumer) and “Us” are allowed to invoke the
provision. “Us” is defined as the “Seller and/or Seller’s assignee (including, without limitation,
Credit Acceptance Corporation) or their employees, assignees, or any third party providing any
goods or services in connection with the origination, servicing and collection of amounts due
under the Contract if such third party is named as a party between You and Us.” See Def.’s Ex. 1
at 4. It seems plain Shindler & Joyce was never so named as a party,5 but the defendants argue
that they can enforce the provision through equitable estoppel.
The Court notes that it is not clear that this suit does in fact fall within the scope of the
arbitration agreement. The dispute here is not about the contract at all and the connection
between this FDCPA claim and the original contract is tenuous: the contract gave rise to the debt
that was the subject of the collection suit which in turn gave rise to this FDCPA suit. The only
relevant facts for the FDCPA claim come from outside the contract: where Owens lived at the
time he was sued, where he signed the contract (which is not apparent on the face of the
contract), and where Shindler & Joyce sued him. See 15 U.S.C. § 1692i. None of those are
determined by the contract; it is not the source of the right that Owens asserts in this action. The
right Owens asserts—to be sued on the debt only in Lake County, Indiana or the county where he
resides—is a right provided by the FDCPA, not by the automobile purchase contract. In asserting
that right, then, Owens is asserting a statutory right, not one that arises from the purchase
contract. However, Owens did not raise this argument, and in this circuit “unsupported and
undeveloped arguments are waived.” United States v. Diekemper, 604 F.3d 345, 355-56 (7th Cir.
2010) (quoting United States v. Turcotte, 405 F.3d 515, 536 (7th Cir. 2005)).
Plaintiff, however, cites an unpublished Eastern District of Pennsylvania case for the
proposition that the “named as a party” language extends to “claims against a third party only if
that third party was named in a lawsuit between the plaintiff and the other party.” Resp. at 4
Equitable estoppel generally applies when a “signatory's claims are grounded in or
intertwined with claims under the agreement that subjects the signatory to arbitration.” Pa.
Chiropractic Ass'n v. Blue Cross Blue Shield Ass'n, 713 F. Supp. 2d 734, 745 (N.D. Ill. 2010).
“[W]hen each of a signatory's claims against a nonsignatory 'makes reference to' or 'presumes the
existence of the written agreement, the signatory's claims arise out of and relate directly to the
written agreement and arbitration is appropriate.” Hoffman v. Deloitte & Touche, LLP, 143 F.
Supp. 2d 995, 1004-05 (N.D. Ill. 2001) (quoting MS Dealer Serv. Corp. v. Franklin, 177 F.3d
942, 947 (11th Cir. 1999)). Here, it is at least arguable that the claim presumes the existence of
the written agreement, because part of the plaintiff’s argument is that Owens signed the
agreement in a different judicial district.
More importantly, however, equitable estoppel also applies when the signatory and the
non-signatory are involved in “substantially interdependent and concerted misconduct.”
Hoffman, 143 F. Supp. 2d at 1005. An agent who sends debt collection letters on behalf of a
contract party can invoke the arbitration agreement signed by the principal. See Johnston v.
Arrow Fin. Servs., LLC, No. 06 C 0013, 2006 WL 2710663, at *5 (N.D. Ill. Sept. 15, 2006); see
also Holden v. Deloitte & Touche LLP, 390 F. Supp. 2d 752, 767 n.14 (N.D. Ill. 2005). Here, the
alleged FDCPA violation arises out of Shindler & Joyce’s representation of a contract party
(Credit Acceptance Corporation) in a lawsuit attempting to collect on the defaulted contract
balance. Originally both Credit Acceptance Corporation and Shindler & Joyce were named as
defendants in this suit and both were alleged to have violated the statute when they (together)
(citing Gonzalez v. DRS Towing LLC, Eastern District of Pennsylvania, 12-cv-5508, dkt. 8, filed
11/30/2012). In that case, only the debt collector had been named in the suit. In this case,
however, Credit Acceptance Corporation (which is listed as an assignee within the contract) was
initially named as a defendant in this suit. Thus, if the plaintiff’s reading of that language is
correct, his own actions have given Shindler & Joyce the ability to enforce the agreement as they
have now been named in a lawsuit between the plaintiff and the other party.
brought the collection suit in the wrong venue. Their actions were substantially interdependent
and concerted, as Shindler & Joyce were serving as Credit Acceptance Corporation’s lawyers.
Thus, Shindler & Joyce can invoke the arbitration agreement through equitable estoppel,
standing in the shoes of Credit Acceptance Corporation.
Finally, Owens argues that Shindler & Joyce waived their right to arbitrate when they
filed the debt collection suit against him rather than proceeding to arbitration. See Resp. at 10.
The arbitration agreement itself is voluntary, not mandatory – either party “may require any
Dispute to be arbitrated” — and the agreement specifically states that arbitration may be invoked
“before or after a lawsuit has been started over the Dispute.” See Def.’s Ex. 1 at 5. The right to
arbitrate is waived when “a party acted inconsistently with the right to arbitrate,” especially
when it was not diligent in asserting its right to arbitration. Kawasaki Heavy Indus. v.
Bombardier Rec. Prods., 660 F.3d 988, 994 (7th Cir. 2011). “Other factors that we consider
include whether the allegedly defaulting party participated in litigation, substantially delayed its
request for arbitration, or participated in discovery.” Id. As Shindler & Joyce notes, there has
been no discovery in this case and the request for arbitration was filed promptly after this case
Moreover, Shindler & Joyce invoked its right to arbitration at the first possible moment.
While Credit Acceptance Corporation obviously had a right to arbitrate the collections claim,
Shindler & Joyce only became able to assert the arbitration provision on its own behalf when it
was charged with misconduct as a party in this lawsuit. Few lawyers would assert they have the
ability to compel their clients to participate in arbitration regarding contracts between their
clients and third parties if they are not parties themselves to the dispute. Thus, Shindler & Joyce
acted promptly to invoke the arbitration clause and did not waive their right to arbitration.
For the reasons stated above, the motion to compel arbitration is granted. Shindler &
Joyce have the ability to equitably enforce the arbitration clause and have not waived their right
to do so. The Court therefore compels arbitration in this matter and stays this case pursuant to 9
U.S.C. § 3. The parties are required to submit a report on the status of the arbitration proceeding
on September 1, 2017, and every 90 days thereafter during the pendency of the arbitration, and a
report within 30 days of the completion of the arbitration proceeding.
Dated: August 9, 2017
John J. Tharp, Jr.
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?